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2015-10-15 | project

Peak Load Pricing and Welfare Effects of Policy Changes for National Parks in South Africa

The purpose of this study is to estimate the optimal entrance fees that should be charged during peak and off peak periods and derive welfare outcomes of selected policy changes in selected clusters of national parks in South Africa.  

Despite the centrality of African parks and other protected areas to nature-based tourism, they capture only a fraction of its value. For this reason, national parks and other protected areas have mostly relied on fiscal transfers from the state to fund their conservation activities. However, the rise in calls for governments to also focus on other national objectives such as poverty reduction and enhancement of economic development has increased the competition for national parks and other protected areas in securing funds from the state. The result has been a general decrease in funds for conservation and this threatens the existence of national parks and other protected areas. There is an enormous amount of pressure on park agencies to consider alternative financing mechanisms. The main goal of the proposed research program is to support the use optimal pricing of park resources to achieve sustainable park management and to maximize the value of parks in Eastern and Southern Africa for a combination of parks and national interests. The proposed research program aims to provide formal frameworks that could be used by the park agencies in determining the optimal pricing of national park resources in Eastern and Southern Africa. The current phase of the research program will focus on South Africa. This work will serve as a pilot and thereby help develop a standard survey template for Eastern and Southern Africa. Currently, South African National Parks (SANParks) manages 22 parks, and categorizes them into six regional park clusters. Parks that have similar ecosystem characteristics are clustered into the same group. As a result, the park agency assumes that there are substitutes. These parks though, vary in several significant ways. Although ecological similarities may be broadly shared across the parks, the question remains whether economic significance in terms of welfare gain derived from each park within a cluster is comparable. Answering this question is appropriate in view of identifying the weight that should be accorded to each park to inform SANParks budget allocation for the management of the park. The idea here is that the demand for SANParks managed parks differs demonstrably over the course of a year. This is due to variations in the quality of game viewing-rainy season or not. It is also due to variations in the availability of time that people have for travel. So there are both site and individual characteristics that determine demand. The purpose of this study is to estimate the optimal entry price that SANParks should charge during peak and off peak periods. This will be achieved by using the Travel Cost Method to selected parks within SANParks-determined clusters. Furthermore, in this study, we provide an empirical application of the Kuhn-Tucker model to the problem of recreation demand and site selection for selected national parks in South Africa where we derive the expected welfare effects of selected policy changes (change in attributes; physical size, infrastructure, price) in clusters of parks. Face to face surveys will be conducted at SANParks managed parks. The research’s main outcome is develop a peak load pricing strategy for South African park systems in an attempt to capture a bit the differing demand functions for different nations.