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date: 23 May 2018

National Parks in Developed Countries

Summary and Keywords

Economics plays an important role not only in the management of national parks in developed countries, but also in demonstrating the contribution of these areas to societal well-being. The beneficial effect of park tourism on jobs and economic activity in communities near these protected areas has at times been a factor in their establishment. These economic impacts continue to be highlighted as a way to demonstrate the benefit and return on investment of national parks to local economies. However, the economic values supported by national parks extend far beyond local economic benefits. Parks provide unique recreation opportunities, health benefits, preservation of wildlife and habitat, and a wide range of ecosystem services that the public assigns an economic value to. In addition, value is derived from the existence of national parks and their preservation for future generations. These nonmarket benefits can be difficult to quantify, but they are essential for understanding and communicating the economic importance of parks. Economic methods used to estimate these values have been refined and tested for nearly seven decades, and they have come a long way in helping to elucidate the extent of the nonmarket benefits of protected areas.

In many developed countries, national parks have regulations and policies that outline a framework for the consideration of economic values in decision-making contexts. For instance, large oil spills in the United States, such as the Exxon Valdez spill of 1989 and the Deepwater Horizon spill of 2010, highlighted the need to better understand public values for affected park resources, leading to the extensive use of nonmarket values in natural resource damage assessments. Of course, rules and enforcement issues vary widely across countries, and the potential for economics to inform the day-to-day operations of national parks is much broader than what is currently outlined in such policies. While economics is only one piece of the puzzle in managing national parks, it provides a valuable tool for evaluating resource tradeoffs and for incorporating public preferences into the decision-making process, leading to greater transparency and assurance that national parks are managed for the benefit of society. Understanding the full extent of the economic benefits supported by national parks helps to further the mission of these protected areas in developed countries.

Keywords: national parks, total economic value, consumer surplus, benefit-cost analysis, economic benefits, economic impacts, damage assessment

Introduction

Economics has long played a role in the establishment and management of national parks. In the early days of the national park idea, lands with great scenic value were set aside, yet there was often a focus on designating lands with little commercial value and high tourism potential, with the railroad companies important promoters. Indeed, questions surrounding the regional economic development opportunities brought about by protected area designations have persisted for as long as national parks have been around, and are still prominent in the 21st century in many developed countries. By the 1940s, there was a growing need for information on recreation values and other nonmarket benefits of national parks, especially as the use of cost‐benefit analysis became formalized. Although methods for estimating these welfare effects would not be formally established until the 1960s, they developed rapidly. Significant advancements in the fields of environmental and natural resource economics made throughout the 20th century have proved critical for evaluating resource trade-offs from proposed regulatory actions as well as valuing damages to park resources following catastrophic events, such as the Exxon Valdez oil spill of 1989. Beyond these operational uses, economics is increasingly used to demonstrate the overall relevancy of national parks.

In developed countries throughout the world, studies are being undertaken to communicate the breadth of economic impacts and values supported by protected areas, including various components of total economic value and the value of ecosystem services, the estimation of which has benefitted from progress in stated preference methods. New modeling capabilities, such as bioeconomic models that incorporate both biological and economic components, have facilitated a more rigorous understanding of complex management issues. Successful integration of economics with other sciences (e.g., biology, ecology, soil science) is often imperative for an accurate understanding of people’s preferences for environmental services. Economics is an integral part of the larger field of environmental sciences, focusing on human values for aspects of the environment where people are willing to make trade-offs.

This article discusses the evolution of the role that economics has played to support the mission of preservation and human use unique to national parks. It first charts the use of economics over time, starting with the establishment of national parks in the late 1800s, its expanded use after World War II, and the significance of the Exxon Valdez oil spill. The state of economics in the early 21st century to support national parks is then discussed, focusing on both economic impact analysis and welfare economics. The article concludes with a summary of the state of the science and a discussion of promising areas for future research. Although a number of developed countries are referenced, this article is not comprehensive in its coverage of countries, and an emphasis on the United States should be noted.

Historical Context

Early National Park Establishment and the Role of Economics

In the late 1800s, a movement toward the protection of lands with great scenic value began, with the designation of such national parks as Yellowstone in the United States in 1872, Royal National Park in Australia in 1879, Banff National Park in Canada in 1885, and Tongariro National Park in New Zealand in 1887. In the United States, a positive appreciation of nature began to develop as early as the late 1700s (Hall & Page, 2014). By the time of the American Civil War, there was a growing desire for tradition and cultural identity that could ultimately be expressed not through man-made marks of achievement, but by the ageless monumental scenery of the West (Runte, 1997). With the help of explorers, painters, photographers, writers, and the popular press, majestic western landscapes piqued the curiosity of many Americans, who increasingly valued the aesthetic beauty of wild lands. Congress responded by setting aside some of the nation’s most renowned scenic wonders as national parks, initially as symbols of national pride, and later as areas for public recreation (Runte, 1997). Yet, even with the move toward preservation, a focus on making lands as productive as possible for material gain still heavily dominated. As a result, in the early years of national park designation, only lands that were deemed “worthless,” in the sense that they had no economic value for agriculture, grazing, timber, or mining, were set aside for scenic preservation (Hall & Page, 2014; Runte, 1997).

There was also a growing utilitarian conservation movement in the United States, which stressed the importance of managing natural resources for their long-term sustainable commercial use, as opposed to absolute preservation. Many professional foresters, for example, believed that managing trees as crops, rather than preserving them indefinitely, would lead to long-term productivity (Runte, 1997). This concept was championed by President Theodore Roosevelt’s chief advisor, Gifford Pinchot, who became the first chief of the United States Forest Service in 1905 (Loomis, 2002; Runte, 1997). Pinchot’s philosophy of wisely using resources ran contrary to that of preservationists, who did not promote any particular use of national parks, but instead believed that scenic preservation had value in and of itself. From an economic standpoint, such debates foreshadowed the eventual need for economic methods that could be used to value not only marketed resources, such as timber, but also nonmarket resources, such as the preservation of scenic views and passive-use values.

By the early 1900s, the protection of national parks in the United States faced a number of increasing threats. Decades of artifact looting and destruction of Native American sites ultimately led to the Antiquities Act of 1906 (National Park Service, n.d.). An even more persistent threat, however, came from large development projects. Dam builders and the city of San Francisco viewed Yosemite National Park’s Hetch Hetchy Valley as the ideal site for a dam and reservoir that could provide a permanent freshwater supply to the city of San Francisco, an idea that was supported by Gifford Pinchot (Burns, 2009; Loomis, 2002). After much controversy, Congress passed the Raker Act in 1913, authorizing construction of the dam. This major setback for John Muir and other scenic preservationists made it clear that additional development projects would threaten the protection of national parks if there was not a single preservation-oriented agency whose sole purpose was to manage the parks’ lands (Foresta, 1984; Loomis, 2002).

Although there was strong support for a parks bureau (Foresta, 1984), it was not until Stephen Mather and his principal aide Horace Albright emphasized the economic value of parks as tourist destinations that Congress responded with the establishment of the National Park Service (Mackintosh, 1999). Mather, a conservationist, wealthy businessman, and friend of John Muir, came to Washington, DC in 1915 as special assistant to Secretary of the Interior Franklin K. Lane. Mather had been inspired by the availability and accessibility of parkland in Europe (Department of the Interior, 1967). He was able to build tremendous public and political support for a parks bureau, in part by forming an alliance with railroad companies that would profit from increased park tourism (Burns, 2009). The Hetch Hetchy controversy had taught preservationists to rely on economic rationales for protection just as much as emotional ones (Runte, 1997). An emphasis on the revenue that could be generated by domestic tourism was the economic argument that defenders of scenic preservation needed. American tourists from the East Coast were already collectively spending $500 million each year visiting Europe for scenic travel (Burns, 2009). With the cessation of overseas travel during World War I, the “See America First” campaign promoted by the railroads gained popularity and was enthusiastically embraced by Mather (Burns, 2009).

On August 25, 1916, the National Park Service (NPS) Organic Act was passed, stating the new agency’s mission was “to conserve the scenery and the natural and historic objects and the wild life therein and to provide for the enjoyment of the same in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.” Mather became the first director of the NPS, and although preservation was the agency’s primary objective, he focused on attracting and accommodating an increasing number of visitors in order to build public support for existing parks and to get new parks designated by Congress (Loomis, 2002). For many years, railroads played a significant role in the development and operation of visitor facilities at parks, such as Yellowstone, Glacier, and Grand Canyon.

The focus on tourism as a driver of economic activity was not unique to the creation and promotion of national parks in the United States. Canada’s first national park was established in 1885, just thirteen years after Yellowstone. Initially a Hot Springs Reserve, Banff National Park was created as an upper-class tourist spa, and received considerable support from the Canadian Pacific Railway (Frost & Hall, 2009; Hart, 1983; Marsh, 1985). As in the United States, in Canada the government saw national parks as a way to promote economically beneficial tourism in the West (Frost & Hall, 2009). There was a dominant utilitarian desire to develop western lands through extractive industries, such as lumber and mining, where possible, complemented by the development of otherwise “low-value” land through tourism (Frost & Hall, 2009). The Canadian Pacific Railway also played a large part in the establishment of Yoho National Park and British Columbia’s Glacier National Park in 1886, as well as the expansion of Banff in 1902 (Frost & Hall, 2009). Using tourism as a way to promote regional development also led to the establishment of Waterton Lakes National Park in 1895 (Frost & Hall, 2009; Marsh, 1983). As noted by Wangler (2007), while a utilitarian ethic may have driven the supply side of the creation of parks like Banff, ironically, the demand for these protected areas was at least in part motivated by visitors who saw nature as a necessary counterbalance to materialistic, utilitarian ideology.

In 1911, the Dominion Forest Reserves and Parks Act was passed, leading to the establishment of the world’s first national parks administration, initially called the Dominion Parks Branch and currently designated Parks Canada. The legislation, however, did not distinguish parks from commercially oriented forest reserves (Frost & Hall, 2009), and many existing parks were reduced in size due to the creation of such reserves (Parks Canada, n.d.). J. B. Harkin became the first commissioner of the Dominion Parks Branch, and like Stephen Mather, he soon realized the importance of developing infrastructure and promoting tourism to national parks (Frost & Hall, 2009). Harkin believed that persuading politicians to create additional national parks would “require that their value be clearly demonstrated by increased visitation and economic return” (Marsh, 1983, p. 278). Harkin noted the profitability of tourist parks in the United States, and he even determined the relative economic value of picturesque park land to that of a wheat field—$13.88 to $4.91 (Marty, 1984, as referenced in Wangler, 2007).

New Zealand’s early years of national parks followed a path similar to that of the United States and Canada, with a strong focus on economic development through tourism and designating only those lands that had no commercial value. The country’s first national park, Tongariro, was donated to the New Zealand government in 1887 by an indigenous tribe, but it was not officially designated until 1894, when it became clear that the land to be included in the park was “worthless” (Frost & Hall, 2009; Harris, 1974). Early establishment of national parks in Australia differed from that in other countries in some significant ways, including a much heavier focus on urban recreation and management by individual states as opposed to the national government (Frost & Hall, 2009). Australia’s system of protected areas is complex, with eight independently governed states and territories that have their own legislation for national parks and their own approaches for the management of recreation and tourism (Buckley, 2010).

Although some European countries had designated protected areas in the early and middle 1800s, national parks in particular were not established until the early 20th century, with the first being a set of nine national parks in Sweden in 1909, followed by the Swiss National Park in 1914. After World War I, additional countries in Europe designated national parks, including Spain (1918), Italy (1922), Iceland (1928), Poland (1932), Romania (1935), and Greece (1938). People in the United Kingdom began demanding greater access to the countryside following industrialization and urban growth in the early 20th century, yet the establishment of national parks would not occur until after World War II. In East Asia, Japan was the first country to attempt to establish an official park system through government legislation (Eagles, Bowman, & Tao, 2001). A petition for creating national parks was submitted to the national legislature in 1911 and by 1931, the National Park Act was enacted. Twelve national parks were designated in Japan between 1934 and 1936 (Japan Ministry of the Environment, n.d.).

The Expanded Use of Economics in the Postwar Period

After World War II, the United States saw a major expansion in the need for economics to inform decision-making on federal lands. As a result, considerable developments in the fields of environmental and natural resource economics were made throughout the middle of the 20th century. Benefit‐cost analysis, widely recognized as the primary appraisal technique for public investments and public policy, has theoretical origins dating back to France in the 19th century (OECD, 2006). Its official use, however, developed in the United States in response to legislation, such as the Flood Control Act of 1936. In the early 1900s, most benefit‐cost analyses were performed with little input from economists, and prices were the only widely accepted measure of benefits (Banzhaf, 2010). After World War II, however, an expanded economy, increased competition over resources (such as water), and greater pressure to ensure that public funds were being used efficiently, all contributed to the need for improved benefit‐cost analyses, with a drive for new thought and participation by economists (Banzhaf, 2010). This postwar period ultimately began a fusion of new welfare economics, characterized mostly by benefit‐cost analysis, with practical decision-making (OECD, 2006). To improve the authenticity and consistency of benefit‐cost analysis, in 1946 Congress created the U.S. Federal Inter-Agency River Basin Committee, with a Subcommittee on Benefits and Costs (Banzhaf, 2010). Although the committee considered various issues, considerable attention was focused on the measurement of outdoor recreation benefits (Banzhaf, 2010), which would elude economists for quite some time.

The NPS in particular had been grappling with the difficulties of valuing the benefits of recreation since the early 1940s. By the mid 1940s, the NPS and U.S. Fish and Wildlife Service were tasked with estimating recreation values for the U.S. Bureau of Reclamation (Banzhaf, 2010). Struggling to find a satisfactory approach, the NPS began invoking the arbitrary assumption that benefits were equal to costs, until complaints from the Bureau of Reclamation led the agency to simply assume that benefits were equal to two times costs (Banzhaf, 2010; Trice & Wood, 1958). However, this complacency was not due to a lack of effort. In 1947, the Associate Director of the NPS, A. E. Demaray, wrote a letter of inquiry to ten economists and analysts throughout the country, expressing the agency’s interest in conducting a comprehensive economic study of the national park system. Demaray explained that “the purposes for which these areas were established for the most part preclude commercial use of the resources within these areas. It is believed, however, that there are secondary or indirect economic benefits derived from these areas which are in excess of the economic returns and benefits that would accrue if the areas were used for other purposes” (NPS, 1949, p. 2). Demaray discussed methodological challenges that economists still deal with, such as how to handle primary purpose versus incidental visitors, and how to address the fact that a considerable amount of park visitor expenditures may simply be a transfer from one geographical area to another, rather than a net addition. Demaray’s two-page letter showed a great deal of foresight into the eventual need to capture both economic impacts and values supported by national parks.

Several of the responses to Demaray’s letter addressed the possibility of evaluating local economic impacts, but most discouraged attempts to measure the value of more intangible park services. The exception was Harold Hotelling, who thought it was indeed possible to measure recreation benefits. He recommended an approach in which visitor travel costs could be used to derive a demand curve for park services, and a measure of consumer surplus resulting from the availability of the park. “It is this consumers surplus . . . which measures the benefits to the public in the particular year” (NPS, 1949). This would become the basis for the much-used travel cost method. Although the concept of consumer surplus dates back to the work of French engineer Jules Dupuit in 1844, which was later built upon by Austrian theorists Auspitz and Lieben and Alfred Marshall in England (Houghton, 1958), at this point in time, consumer surplus was far from an accepted measure of economic benefits (Banzhaf, 2010).

NPS economist Roy Prewitt reviewed the responses to Demaray’s letter, consulted with other federal agencies, and developed a summary of the proposed comprehensive economic study of the national park system (NPS, 1949). In this report, Prewitt concluded that it would be too difficult to measure the economic value of recreation because recreation is intangible, unique to the individual, and not sold for a price under marketplace rules. He did, however, point to the possibility of measuring other benefits, such as watershed and wildlife protection, stimulation of business in local communities, and increases in nearby property values that have a more “tangible” economic value. Prewitt explored the idea of using visitor spending as a measure of economic value and noted that “the expenditures made to realize public recreation cannot be said to measure its value and it might be better to forget the words ‘economic value of recreation’ and focus attention on the expenditures induced by recreation” (NPS, 1949, p. 19).

The NPS, continuing to struggle to find an adequate approach to measuring recreation benefits, started gathering data on entrance fees at parks and other recreation areas. They estimated a price of $1.41 per visit as a lower bound to value, and in 1957, began officially using the unit-day approach (Banzhaf, 2010). Recreation continued to play a prominent role in federal decision-making in the United States in the coming years. National park visitation grew rapidly alongside the post-World War II automobile boom, leading the NPS to develop its Mission 66 program, which sought to upgrade visitor facilities to accommodate this growth in time for the agency’s 50th anniversary (Loomis, 2002). In 1958, Congress created the Outdoor Recreation Resources Review Commission. By 1962 it was required that recreation be considered in benefit‐cost analyses for water projects, and it was becoming clear that economics was needed to ensure the efficient allocation of resources (Banzhaf, 2010). Significant developments in valuing recreation benefits continued throughout the late 1950s and 1960s. Trice and Wood (1958) first implemented Hotelling’s travel cost approach to measure recreation benefits in California, and this work was expanded upon by Marion Clawson, an agricultural economist who was extremely influential in public land policy. Clawson served as the Director of the Bureau of Land Management from 1948 to 1953, and spent the remainder of his career at Resources for the Future (RFF). Founded in 1952, RFF helped to pioneer the field of environmental economics and has remained a leading think tank devoted to natural resource and environmental issues.

In 1962, Jack Knetsch came to RFF to work with Clawson, and together they produced the 1966 seminal book Economics of Outdoor Recreation, one of the first studies in economics to accurately quantify consumer surplus (Banzhaf, 2010). Around the same time, Davis (1963) became the first economist to implement a contingent valuation survey in his dissertation focused on the value of outdoor recreation in Maine, and soon after, Knetsch and Davis (1966) conducted the first test of convergent validity between a contingent valuation estimate and an estimate based on the travel cost method (Carson & Hanemann, 2005). The following year, Krutilla (1967) published one of the most influential articles in environmental economics, making the compelling case for passive-use values by evoking places like the Grand Canyon and people like John Muir. Yet, despite these significant advancements in welfare economics, the NPS would proceed down a path of focusing on the economic impacts of visitor spending, rather than measures of consumer surplus, for quite some time.

Most of the major European powers did not establish national parks until after World War II. Frost and Hall (2009) offered several possible explanations for this delay, including the view by some decision makers that there were no areas with monumental scenery comparable to those in the United States; the fact that most land was privately owned, making it prohibitively expensive to purchase; and the concept that national identity and tourist appeal were defined more by cultural heritage and historic sites. In the United Kingdom, public pressure for national parks had its roots in various movements—poets inspired public interest in preserving the aesthetic value of the English countryside, conservationists saw the scientific value of the lands, and the working class pushed for greater access and recreational opportunities in the countryside (Litke, 1998). By the time of postwar reconstruction, a seminal report making the case for British national parks was released in 1945 by John Dower, secretary of the Standing Committee on National Parks. In 1949, the National Parks and Access to the Countryside Act was passed and by 1951, Britain’s first national park was designated. France would establish its first two national parks in 1963, followed by Germany in 1970. Despite this delay, Europe experienced remarkable achievements in nature conservation in the postwar period, as illustrated by the large number of national parks created, especially in Western European countries (Denisiuk, Stoyko, & Terray, 1997).

In Japan, where there is a long history of private land ownership, development of a national park system differed considerably from the experience in the United States and Australia, and instead paralleled that of Britain (Eagles et al., 2001; Japan Ministry of the Environment, n.d.). Rather than limiting itself to land that it owned, the Japanese government instead focused on creating parks where there was a recognized need to preserve nature (Eagles et al., 2001; Japan Ministry of the Environment, n.d.). Following World War II, efforts to designate new parks and expand existing ones were actively promoted by emphasizing the economic potential of parks as tourist destinations (Japan Ministry of the Environment, n.d.). South Korea adopted its national park system in 1967, designating the first national park, Mount Jirisan, that same year (Dudley, Kim, & Shin, 2010). There are more than twenty national parks managed by the Korea National Park Service (KNPS). As is true of the park services in other countries, KNPS maintains its own law enforcement, and park areas adhere to strict rules limiting development (Hoare, 2015). As highlighted by Dudley et al. (2010), South Korea provides an example of a successful protected area system that has gained considerable support in a short period of time, providing a newly wealthy and urbanized society opportunities for recreation in the countryside.

Environmental Disasters Motivate Use of Economic Analysis: The NPS Experience

In the United States, environmental disasters motivated the development of policies that prescribe the use of economic analysis to address natural resource management issues, including those that occur in protected areas, such as national parks. For example, the tragedy of the Love Canal toxic waste site in upstate New York ultimately led to enactment of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA, 42 U.S.C. 9601 et seq.; U.S. Environmental Protection Agency, 2017a, 2017b; Tolan, 2008). In similar fashion, enactment of the Oil Pollution Act of 1990 (OPA, 33 U.S.C. 2701 et seq.) was largely motivated by the Exxon Valdez oil spill in Prince William Sound, Alaska (Ryan, 2011). Both of these statutes specify the use of economic analysis in a process termed damage assessment. This process is employed by federal and state agencies, and other “Natural Resource Trustees” to determine the amount of monetary compensation, or “damages,” required to make the public whole for injuries to natural resources. The provisions under CERCLA are specific to injuries that result from the release of hazardous substances (e.g., heavy metals, dioxins, radionuclides, etc.) and those under OPA are specific to injuries from oil spills.

The enactment of these statutes and the promulgation of their implementing regulations spurred an academic and governmental examination of the appropriate types of economic values to include in damage assessments and the appropriate methods with which to estimate those values. This examination eventually led to theoretical developments and a general maturing of the nonmarket economics literature (Kling, Phaneuf, & Zhao, 2012). The enactment of the statutes also spurred institutional change. For example, the NPS established an economics capacity specifically to prepare damage assessments under CERCLA and OPA. Ancillary to that need, this capacity also became available for other purposes, such as the analysis of regulatory costs and benefits, and the analysis of socioeconomic impacts under the National Environmental Policy Act. This institutional change promoted the use of economic analysis in agency planning and decision-making that yielded operational benefits for natural resource management.

President Jimmy Carter signed CERCLA into law on December 11, 1980, and the Department of the Interior (DOI) first promulgated implementing regulations in 1986 (43 C.F.R. Part 11). Following promulgation, a number of petitioners, including states, environmental organizations, and industry representatives, sued DOI to contest various measures of the regulations (Ohio v. U.S. Department of the Interior; D.C. Cir. 1989). One of the contested measures was the so-called “lesser of” rule. This rule limited the recovery of damages to the lesser of the costs required to restore injured resources, or the value of lost use resulting from the injury. Some petitioners supported this measure on economic efficiency grounds, citing an analogy to auto insurance coverage, which generally follows the same rule. Nevertheless, the Court rejected the “lesser of” rule, citing the “paramount restorative purpose” of the Act (Ohio v. U.S. Department of the Interior; D.C. Cir. 1989). The effect of this decision was to clarify that both restoration costs and the value of lost use may be included in damage assessments (Tolan, 2008). That clarification ensured a role for economic analysis in determining both.1

Another contested measure of the original CERCLA regulations was a prescribed hierarchy of economic methods that permitted only the inclusion of market values in damage assessments when such values were available. Additionally, when nonmarket methods were allowed (i.e., when market values were not available) the hierarchy permitted only the inclusion of direct-use values and not passive-use values. This feature of the original regulations was prejudicial against resources and services that are not traded in established markets, and thus have no market price with which to calculate a market value. This is a common situation in protected areas. Accordingly, the D.C. District Court of Appeals rejected this hierarchy of economic methods (Ohio v. U.S. Department of the Interior; D.C. Cir. 1989). Quoting from a supporting decision, the Court noted a warning against making “a fetish” of market value “since that may not be the best measure of value in some cases” (Ohio v. U.S. Department of the Interior; D.C. Cir. 1989). As a result, this decision clarified the role of nonmarket valuation in damage assessments. In 2008, DOI updated its CERCLA regulations, eliminating both the “lesser of” rule and the hierarchy of economic methods (Department of the Interior, 2008).

President George H. W. Bush signed OPA into law on August 18, 1990, and the National Oceanic and Atmospheric Administration (NOAA) promulgated implementing regulations in 1996 (15 C.F.R. Part 990). In developing the regulations, NOAA established a “Blue Ribbon” panel of prominent economists and survey research experts, including two Nobel Prize winners, to examine whether contingent valuation (CV), a nonmarket valuation method, was sufficiently reliable to value natural resource injuries in damage assessments (National Oceanic and Atmospheric Administration, 1993). The panel concluded that “CV studies can produce estimates reliable enough to be the starting point of a judicial process of damage assessment, including lost passive-use values” (National Oceanic and Atmospheric Administration, 1993). The panel’s use of the phrase “to be the starting point” implied that estimates from CV studies should not be automatically accepted without appropriate quality control measures (National Oceanic and Atmospheric Administration, 1993). Thus, the panel provided support for the use of methodologies that are capable of measuring the loss of all nonmarket values, including passive-use value. Consequently, NOAA promulgated implementing regulations that permit the use of such methods (National Oceanic and Atmospheric Administration, 1996).

NPS provides one example of how these policy developments facilitated institutional changes in the way natural resources in protected areas are analyzed and managed. The 1989 Exxon Valdez oil spill impacted Kenai Fjords National Park, Katmai National Park and Preserve, and Aniakchak National Monument and Preserve—all protected areas within the National Park System. At the time of the spill, NPS had little institutional infrastructure with which to manage such environmental disasters—there was no established spill response plan and NPS had no internal capacity with the expertise required to effectively manage a damage assessment (Kurtz, 1995). As a result, NPS decisions and actions were not well coordinated with other affected parties, and opportunities to adequately assess injuries to NPS resources and recover appropriate compensation were lost (Kurtz, 1995).

In response to its disappointing experience with the Exxon Valdez oil spill, NPS created the Environmental Response, Damage Assessment, and Restoration Program in its Washington, DC, office in 1993 (Kurtz, 1995; NPS, 2005). The enactment of CERCLA in 1980 and OPA in 1990 provided this new program the legal structure and tools to oversee the preparation of emergency response plans and to assist parks that are affected by hazardous substances or oil. Additionally, the Park System Resource Protection Act (16 U.S.C. 19jj) was enacted in 1990 to provide NPS additional damage assessment authorities2 for parks with marine or Great Lakes aquatic resources. That statute was later revised in 1996 to apply to all units of the national park system, and then recodified as the System Unit Resource Protection Act in 2014 (SURPA, 54 U.S.C. 100721 et seq.). This NPS program is now known as the Resource Protection Program.

Current State of the Science

Required and Other Operational Uses of Economics

Since the inception of the NPS’s Resource Protection Program in 1993, the agency has prepared 23 emergency response plans and recovered at least $71 million to fund the restoration of park resources and services that were injured as a result of oil spills, releases of hazardous substances, forest fires, boat groundings, property encroachments, and other incidents. In the years since its Exxon Valdez experience, NPS has successfully concluded 927 damage assessments in 180 parks throughout the national park system. All that activity was ultimately motivated by the policy responses to the Love Canal and Exxon Valdez environmental disasters, and it was facilitated by economic analysis. The recently concluded settlement for the 2010 Deepwater Horizon oil spill in the Gulf of Mexico presents a contrasting “bookend” to the NPS experience with damage assessments. Unlike its earlier involvement with the Exxon Valdez oil spill, NPS fully participated in the Deepwater Horizon damage assessment and settlement negotiations, and was thus well positioned to adequately assess injuries to park resources and to recover appropriate compensation. Included in the $20.8 billion global settlement with the BP oil company is $8.1 billion in natural resource damages for all of the Natural Resource Trustees (Department of Justice, 2015). The NPS portion of that recovery will fund significant restoration projects in Gulf Islands National Seashore, Jean Lafitte National Historic Park and Preserve, and Padre Island National Seashore. Those projects will help restore the endangered Kemp’s ridley sea turtle, avian and other beach habitat, submerged aquatic vegetation, recreational use, and other park resources and services that were injured by the oil spill.

In addition to damage assessments, economics has a variety of other operational uses to support national parks. In the United States, federal agencies have been required to conduct a benefit‐cost analysis for every major regulatory initiative since President Reagan signed Executive Order 12291 in 1981. This requirement has been updated and expanded upon by subsequent administrations through the use of executive orders. In general, a regulatory analysis should include a written explanation of why the proposed action is needed—for example, because it addresses a market failure, such as an externality—and it should carefully evaluate the expected outcomes of the proposed action and alternatives to that action in order to guide efficient decision-making. For instance, because of negative externalities associated with the use of snowmobiles, since the 1990s the NPS had considered restricting snowmobile use in parks within the Greater Yellowstone Area, including Yellowstone National Park, Grand Teton National Park, and the John D. Rockefeller, Jr., Memorial Parkway. The operation of snowmobiles was imposing costs, such as noise and air pollution, on other park visitors. In 2005, an analysis of the economic outcomes of seven winter-use alternatives for regulating snowmobile use was completed, focusing on the social welfare gains under each alternative (Mansfield, Johnson, Whitmore, & Phaneuf, 2005). This analysis of costs and benefits provided an important source of information for a controversial and high-profile proposed regulation.

Other countries and international communities follow similar protocols. In 1999 Canada instituted the Government of Canada Regulatory Policy, requiring that a cost‐benefit analysis be carried out for all significant regulatory proposals. This was replaced by the Cabinet Directive on Streamlining Regulation in 2007, which requires agencies to assess both regulatory and nonregulatory options to maximize net benefits to society (Treasury Board of Canada Secretariat, 2007). As noted in regulatory analysis guidance in the United States and Canada, willingness-to-pay is the guiding principle for the measurement of benefits (Office of Management and Budget, 2003; Treasury Board of Canada Secretariat, 2007). Since the vast majority of benefits supported by national parks are not priced in conventional markets, developments in nonmarket valuation have been critical for the improved accuracy of regulatory analyses for protected areas.

Europe and the United States have also begun to converge on the analytic basis for regulation (Wiener, 2006), with the European Commission recommending the quantification of all significant costs and benefits of proposed regulations where feasible (Renda, Schrefler, Luchetta, & Zavatta, 2013). In addition, a benefit‐cost analysis is explicitly required as a basis for decision-making on the financing of all major projects supported by the European Regional Development Fund and the Cohesion Fund (European Commission, 2014). These have been used to support a variety of projects in national parks (see http://ec.europa.eu/regional_policy/en/projects).

Although the Australian Government Guide to Regulation (Australian Government, 2014) requires evaluation of the net benefits of proposed regulations, Dobes, Leung, and Argyrous (2016) argued that the framework does not reflect a rigorous, conventional cost‐benefit analysis and there is often confusion regarding the appropriate economic principles to apply. Rolfe, Bennett, and Kerr (2015) also highlighted the lack of a rigorous approach to policy evaluation and limited use of cost‐benefit analysis by state and national governments in Australia and New Zealand. Land designations under international treaties and conventions can influence the level of analysis used to evaluate decisions. For instance, in Australia, the technical standard of environmental impact assessment is often higher when the federal government is involved, such as for projects within or near World Heritage Areas (Buckley, 2010).

In the United States, particular interest has been focused on the estimation and inclusion in benefit‐cost analyses of a specific type of nonmarket value: passive-use value.3 Passive-use value is independent of the direct (or on-site) use of resources and is generally motivated by peoples’ preferences for the existence and preservation of resources. Together, passive-use value and direct-use value constitute total economic value. Some nonmarket valuation methods, such as contingent valuation and conjoint analysis, are capable of measuring total economic value, while other nonmarket valuation methods, such as travel cost, are capable of measuring only the direct-use portion of total economic value. An early example of the analysis of passive-use value within DOI is the 1995 contingent valuation study conducted for the analysis of Glen Canyon Dam operations, upstream from Grand Canyon National Park (Welsh, Bishop, Phillips, & Baumgartner, 1995). That study estimated the total economic value of three operations alternatives and was decisive in the ultimate action (DOI, 1996). A subsequent analysis of Glen Canyon Dam operations using conjoint analysis (Duffield, Neher, & Patterson, 2016) was equally decisive (DOI, 2016). It indicated a total economic value of nearly $4.5 billion for implementing the preferred operations alternative.

In many countries, questions surrounding the effects of national park tourism on employment and income generation in nearby communities are frequently raised. For instance, in Sweden there is an ongoing debate regarding the regional development opportunities brought about by protected areas, such as national parks, versus keeping lands available for forestry, with little evidence on either side (Lundmark, Fredman, & Sandell, 2010). Although employment opportunities were not believed to be a factor in early national park establishment in Sweden (Fredman & Sandell, 2009), the government now argues in many official statements that protection of land will benefit the tourism industry (Government of Sweden, 2002, 2004, as referenced in Lundmark et al., 2010). The forestry sector, however, has argued that land conservation causes a loss in forest-sector employment, especially in sparsely populated rural communities. Similar issues have been raised in Germany, as seen by the controversial establishment of a national park in the northern Black Forest in 2013, as well as in Finland, where rural landowners resisted the introduction and development of the EU-wide protected areas network known as Natura 2000 (Hiedanpää, 2002). The designation of certain protected areas in the United States has been met with just as much controversy. In Maine’s Katahdin region, a private landowner’s desire to donate tens of thousands of acres of land to the NPS was met with both strong support and considerable resistance. In a region with high unemployment and a declining paper mill industry, supporters of the park saw an opportunity for tourism to benefit the local economy, while those opposed viewed federal management of the land as an overreaching force that would harm the local timber industry.

Economic analyses can often provide an unbiased, analytical approach to inform such controversies. For instance, studies like those of Lundgren (2005) and Keskitalo and Lundmark (2010) find that protected areas in northern Sweden have little or no negative impact on forest-sector employment. In the United States, positive regional development, such as population, income, and employment growth, has been found to be positively correlated with the presence of national parks in the rural west (Johnson, Maxwell, & Aspinall, 2003; Lorah & Southwick, 2003). Headwaters Economics evaluated the economic conditions of Maine’s Katahdin region, demonstrating how the establishment of a new protected area could stimulate the economy as the region transitions from a resource-based economy to one increasingly dependent on service industries (2013a, 2013b). In Australia, there has been considerable debate surrounding the potential transfer of publicly owned forests to parks agencies. The Wet Tropics of Queensland World Heritage Area provides a well-known example of an area formerly dedicated to logging that ended up generating a regional tourism industry with annual income much greater than that of the former timber industry (Buckley, 2010).

Positive socioeconomic outcomes were a factor in early national park establishment in many countries, and they may continue to be necessary to ensure community support for environmental protection (Heagney, Kovac, Fountain, & Conner, 2015). However, there are other cases where protected area designation is found to have neither a positive nor a negative effect on per capita income in the surrounding area (Jakus & Akhundjanov, 2017), thus laying bare the fact that issues other than regional economic development are fueling controversy over land designations. In addition, there may be considerable differences in such effects across countries. In northern Sweden, for example, Lundgren (2005) and Lundmark et al. (2010) failed to find the positive connection between protected areas and tourism employment commonly seen in the United States and United Kingdom.

Of course, the majority of economic benefits provided by national parks are nonmarket in nature, and determining whether a park is justified on grounds of economic efficiency requires comprehensive quantification of such benefits. This is now feasible given the considerable developments made in the fields of environmental and natural resource economics. For example, Lockwood and Tracy (1995) assessed the nonmarket economic benefits of an urban recreation park in Sydney, Australia. Using the travel cost and contingent valuation methods, they estimated the nonmarket economic value of Centennial Park to be between Aus $23 and $33 million, with at least $2.6 million due to passive-use value. They concluded that, compared to an annual expenditure of $6 million, this value makes the public investment in the management and maintenance of the park justified on economic grounds (Lockwood & Tracy, 1995). Mayer (2014) compared the costs and benefits of Germany’s Bavarian Forest National Park, noting the need for objective information on economic values to inform land use conflicts, and the importance of going beyond the economic impacts of national park tourism by estimating total economic value, including the opportunity costs of maintaining the park. Mayer (2014) determined that the park is an economically favorable land use option under most scenarios. In South Korea, Lee and Han (2002) applied the contingent valuation method to estimate the use and preservation values of five national parks. These values were found to outweigh current admission fees and maintenance costs, thus providing justification for the possible increase of park admission fees.

Economic analyses are frequently used to inform decisions surrounding entrance fees to national parks. Aadland et al. (2008, 2012) used a household survey with a contingent valuation question to assist policymakers in setting the price of the America the Beautiful annual pass, which covers entrance fees at more than 2,000 federal recreation sites throughout the United States, including all national parks. Other studies have examined the effect of park entrance fees on visitation. Most of these studies find that entrance fees have little or no impact on visitation, especially because they comprise a relatively small portion of the overall cost of visiting a park (Factor, 2007; Ostergren, Solop, & Hagen, 2005; Watson, 2013). Similar findings of an inelastic price elasticity of demand has been found for Australia’s national parks (Herath, 2000), which suggests that increasing entrance fees could help parks increase their revenues. Wilson and Tisdell (2004) surveyed visitors to Lamington National Park, Queensland, finding that visitors were more willing to pay an entrance fee if the money was used to improve park facilities and for conservation work. When asked the maximum amount they would pay for a visit, the average was Aus $4.30 for Australians and Aus $9.56 for foreigners. The authors noted that a fee of around Aus $10 per vehicle could result in $1.5 million per year in revenues. Yet, as in any evaluation of entrance fees, concerns about equity and public support are important.

The Use of Economics to Demonstrate Relevancy

In the context of national parks, economics is used not only to inform a wide range of decisions and resource trade-offs, but also to more generally demonstrate the economic importance of the protected areas in terms of both regional economic impacts and total economic value. For instance, analyses highlighting the employment and other local economic activity supported by national park visitation are released annually in the United States (Cullinane Thomas, Huber, & Koontz, 2015; Cullinane Thomas & Koontz, 2016, 2017) and Finland (Parks and Wildlife Finland, 2014, 2015, 2016), and have also been conducted for parks in Canada (The Outspan Group Inc., 2011) and Germany (Mayer, Müller, Woltering, Arnegger, & Job, 2010). Visitors to Natura 2000 sites, the largest coordinated network of protected areas in the world stretching across 18% of the European Union’s land area and 6% of its marine territory, were estimated to spend between 50 and 90 billion euros in 2006, generating around 4.5 to 8 million jobs (BIO Intelligence Service, 2011). Heagney et al. (2015) used a unique longitudinal analysis to identify socioeconomic outcomes from protected areas in New South Wales, Australia. The authors found that such areas have led to increased local housing demand, have stimulated local business investment, and have improved local council financing.

In terms of net economic values, direct-use values from on-site use and enjoyment of national parks have been estimated for many parks in the United States, including Yellowstone (Benson, Watson, Taylor, Cook, & Hollenhorst, 2013; Richardson, Rosen, Gunther, & Schwartz, 2014), Great Sand Dunes (Heberling & Templeton, 2009), and Stones River, Monocacy, and Fort Donelson National Battlefields (Melstrom, 2014), as well as a set of 58 parks using existing visitor survey data (Neher, Duffield, & Patterson, 2013). In Australia and New Zealand, recreation benefits have been estimated for such national parks as Carnarvon Gorge (Beal, 1995), Mount Cook (Gough, 1987), Fiordland (Woodfield & Cowie, 1977), and a set of around 70 national parks in Victoria (Sturgess & Associates, 1999). Recreational benefits supported by Natura 2000 sites have been valued at 5 to 9 billion euros annually, an average willingness-to-pay of 4 euros per visit (BIO Intelligence Service, 2011). In Japan, Okubo (2013) estimated the economic value of visitation to Aso Kuju National Park using the travel cost method.

In addition to recreation benefits, the concept of total economic value has been instrumental in positioning agencies such as the NPS to better advocate for its mission to conserve park resources unimpaired and to provide for the use and enjoyment of those resources by future generations. Using a conjoint analysis, Haefele, Loomis, and Bilmes (2016) estimated the total economic value of the parks and programs managed by the NPS to be $92 billion a year, including $33.5 billion in passive-use value for parks, $28.5 billion in direct-use value for parks, and $30 billion for the programs that operate outside national parks (e.g., the National Natural Landmarks program). Comparing those values to the total NPS budget authority of $3.4 billion in 2016 demonstrates the substantial return on investment the NPS provides the American public. This study allowed NPS to reach audiences that are conversant with the economic justification of government programs. Equally important, the study demonstrated that the value of conserving park resources unimpaired for future generations is on a par with the value of on-site visitor use.

Interest in assessing and valuing the ecosystem services provided by protected areas has grown rapidly following international efforts such as the United Nations Convention on Biological Diversity of 1992 and the Millennium Ecosystem Assessment, initiated in 2001 to assess the consequences of ecosystem change on human well-being. Additional efforts include the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) and The Economics of Ecosystems and Biodiversity (TEEB), a global initiative aimed at incorporating the economic values provided by biodiversity and ecosystem services into decision-making. In Australia, Parks Victoria and the Department of Environment, Land, Water and Planning are working toward establishing a comprehensive framework to “recognize, quantify and value the ecosystem services provided by Victoria’s parks and the environmental and societal benefits generated, based on international best practice” (Parks Victoria & DELWP, 2015). Findings from the first phase of this work are outlined in Table 1. In Spain, Martín-López, Montes, and Benayas (2007) used the contingent valuation method to determine park visitors’ values for various ecosystem services provided by the biodiversity of Doñana National Park. Federal agencies in the United States are increasingly being directed to incorporate the value of ecosystem services into planning and decision-making (Executive Memorandum M-16-01, 2015; President’s Council of Advisors on Science and Technology, 2011). Richardson, Huber, Zhu, and Koontz (2014) quantified the value of terrestrial carbon sequestration in national parks in the 48 conterminous United States, estimated at nearly $583 million annually.

Table 1. Summary of Ecosystem Flows and Benefits of Parks Ecosystem Services Assessed

Ecosystem service

Quantity of ecosystem service flow (currently delivered by parks)

Annual benefits (AUD $)─welfare gains compared to surrounding land use

Other measures of economic activity

Level of confidence in flow quantities/ monetary values

Provisioning services

Water supply

Water run-off of 3,392 GL (from nine highest-yielding parks)

Value of water of $244 million per year for supply (imputed)

Higher/Medium

Honey supply

Honey products of 1,119–1,615 tons per year

Benefit to producers only: $0.6–$1 million per year

Gross value of production of honey: $3.4–$4.6 million per year

Lower/Higher

Regulating services

Water purification (metro parks)

31,425 kg of total nitrogen per year going in metro waterways (a reduction of 182,000 kg from the counterfactual)

Avoided costs to maintain water quality at current levels: $33 million per year

Higher/Higher

Water purification (non-metro parks)

4,165 tons of sediment per year entering regulated rivers (preventing release of 47,000 tons from the counterfactual)

Avoided value of lost storage in regulated rivers (net of water yield reduction): $50 million per year

Higher/Higher

Coastal asset protection

Mangrove, saltmarsh, and dune park ecosystems protect 285 km of coast near communities

Avoided costs for built assets or improved management: $24–$56 million per year

Medium/Lower

Flood protection

34,372 ML of storm water per year going into Melbourne‘s waterways (avoiding 40,000 extra storm water from the counterfactual)

Avoided infrastructure costs to deal with additional storm water: $46 million per year

Higher/Higher

Climate regulation: Carbon storage

270 million tons of carbon stored in terrestrial parks and 850,000 tons stored in marine parks

Annual value not assessed1

Higher/Higher

Carbon sequestration (from revegetation)

An average of 21,000 tons of carbon sequestered per year through two revegetation programs in parks

Value of carbon absorbed is $1–$5 million per year over the first 30 years of plantings

Medium/Higher

Pollination & seed dispersal

1,235–1,700 honeybee sites

Benefit to agriculture (producers and consumers): $123–$167 million per year

Service payments to beekeepers: $0.6–$1 million per year

Medium/Medium

Habitats for species (intermediate service)

638 parks provide 50%–100% habitat suitability for over 888 rare and threatened species

Maintenance of nursery populations

92 tons of fish stock enhanced (King George whiting only)

Not assessed

$1.1 million of fish catch per year (imputed)

Higher/Lower

Cultural services

Recreation opportunities

51 million visits to parks and 45 million visits to bays

Value to visitor enjoyment: $600 million–$1 billion per year

Higher/Medium

16.9 million park tourist visitor nights per year

Economic contribution of park-related tourism: $1 billion GVA and 13,783 FTEs per year

Medium/Higher

23.1 million visits to parks for physical exercise

Avoided health costs of physical inactivity: $80–$200 million per year (may overlap with enjoyment)

Higher/Medium

Education opportunities

183,000 participants in education programs per year

Scientific research opportunities

215 research permits issued per year

Amenity (Melbourne‘s parks)

12,000 immediate neighbors around 70 Greater Melbourne parks; 85,000 immediate neighbours around parks outside Melbourne

Amenity benefit for residents of $21–$28 million per year (Greater Melbourne only)

Medium/Lower

Opportunities for cultural connection

54%–69% Victorians valuing park related historical heritage

Willingness-to-pay to maintain heritage: $6–$23 million per year

Higher/Lower

Indigenous heritage under joint or comanagement with Traditional Owners across 643,513 hectares

Social cohesion and sense of place

211,000 volunteering hours per year

Opportunity cost of time: $6 million per year

Labor value: $6 million per year (imputed)

Higher/Higher

Notes: Total values have been annualized over 30 years at a discount rate of 5%, where appropriate. Imputed values represent the value of transactions expected to be observed if there was a market for this product or service.

1 Annual benefit values could not be assessed for carbon storage due to lack of models to assess carbon releases under the counterfactual. However, if all carbon currently stored in parks was released, the cost to offset these emissions would be valued at around $15 billion. The social cost of the emissions (without any offsets) is estimated at $63 billion.

Source: Parks Victoria & DELWP (2015). The abbreviation p.a. in the source document has been changed to “per year” for ease of interpretation.

Methodological Advancements

Significant methodological advancements in applied welfare economics have undoubtedly improved economists’ ability to describe the benefits provided by national parks. Travel cost models have evolved from simple zonal models to more sophisticated approaches using individual level data and random utility models based on an individual’s choice among alternative recreation sites (see Chen, 2016, for an application to national parks in the southwestern United States). One difficulty in estimating standard individual trip-frequency travel cost models in the context of national parks stems from the fact that few visitors take more than one trip per year, resulting in a lack of variation in the dependent variable. This has been overcome by employing variations of the standard model. For instance, Martínez-Espiñeira and Amoako-Tuffour (2008) used visitation over a 5-year period to create the dependent variable in their recreation demand model for Gros Morne National Park in Newfoundland. Kerkvliet, Nowell, and Lowe (2002) used an on-site travel cost model to value recreational fishing in and around Yellowstone National Park, while Heberling and Templeton (2009) redefined the dependent variable as the number of trips taken to the site in the last year multiplied by the size of the visitor group in their travel cost model for Great Sand Dunes National Park and Preserve. These simple variations can often be applied to data already collected for the purpose of tourism research. Other revealed preference approaches, such as the hedonic pricing method, are now widely applied to value the benefits of environmental amenities such as open space. In Australia, Pearson, Tisdell, and Lisle (2002) used this approach to evaluate the effect of Queensland’s Noosa National Park on land values, finding that the presence of this urban national park generated a 6% to 7% increase in nearby land values. In addition, defensive behavior approaches are now capable of valuing people’s preferences for reductions in environmental contaminants.

Stated preference methods have also seen significant developments. One of the first applications of an attribute-based stated preference approach for environmental valuation was Rae’s (1983) use of rankings to value visibility improvements at Mesa Verde and Great Smoky Mountains National Parks (Holmes & Adamowicz, 2003). By the early 1990s, choice experiments (also called conjoint analysis) began to appear in the environmental economics literature and have since gained popularity because they offer several advantages over other valuation methods (Holmes, Adamowicz, & Carlsson, 2017). The choice experiment approach has numerous national park applications. It has been applied by Haefele et al. (2016) to estimate the total economic value of the NPS and by Duffield et al. (2016) to estimate passive-use values associated with Grand Canyon National Park and Glen Canyon National Recreation Area. Juutinen et al. (2011) used a choice experiment to value biodiversity and recreational services provided by Oulanka National Park in Finland, and Lee (2012) similarly applied it to value ecological and recreational attributes of Abel Tasman National Park in New Zealand. In a unique application, Jacobsen and Thorsen (2010) designed a choice experiment as Denmark was deciding to establish the country’s first-ever national parks. The authors were specifically interested in examining the extent to which people’s preferences were influenced by values associated with a specific site versus values for generic improvements in environmental functions. Choice experiments can also provide useful information for planning purposes by facilitating the estimation of values for different management alternatives. For example, Han, Lee, Mjelde, and Kim (2010) used a choice experiment to estimate visitor willingness-to-pay for various management strategies associated with the endangered mountain goral in South Korea’s Woraksan National Park. The strategies included reintroduction, establishment of a core zone, and establishment of a buffer preservation zone.

With any application of stated and revealed preference methods of nonmarket valuation, the “true” value of interest is unknown. Information from choices made within markets or responses to survey questions provide proxy information about people’s preferences that economists use to estimate values, but each individual’s true willingness-to-pay is unobservable (Bishop & Boyle, 2017). Assessing the accuracy of such estimates is challenging, but it is especially important when values are used to support a particular management decision. This has led to numerous approaches to assess the reliability (variance) and validity (bias) of value estimates. Three types of validity are commonly assessed—criterion, content, and construct (Bishop & Boyle, 2017; Carmines & Zeller, 1979). For instance, Bishop and Heberlein (1979) compared estimates from a contingent valuation study (a method with uncertain validity) to actual cash transactions (a presumed measure of the true value); this is a test of criterion validity. Content validity evaluates whether the study is designed and implemented in a way that is consistent with economic theory and is conducive to measuring the value of interest, while construct validity explores whether the relationship between variables conforms to prior theoretical expectations (e.g., price is inversely related to quantity demanded).

A common type of construct validity involves the comparison of results from stated and revealed preference approaches. For instance, Herath and Kennedy (2004) compared contingent valuation estimates with travel cost estimates of the recreational value of Mt. Buffalo National Park in Victoria, Australia—this is referred to as convergent validity. Continued research on the validity of contingent valuation estimates will be important, especially as this approach remains the subject of criticism. For instance, acceptance in Australia has been limited following intense controversy over the results of a contingent valuation analysis of the environmental costs associated with proposed mining activities at Coronation Hill, adjacent to Kakadu National Park (Bennett, 1996; Rolfe et al., 2015).

Often, original research is not feasible due to time or budget constraints, and parks agencies frequently rely on the use of existing value estimates for policy analysis. Benefit transfer is described as “the use of existing data or information on nonmarket values in settings other than where they were originally collected” (Rosenberger & Loomis, 2017, p. 432). In the early 1980s, Freeman (1984) began the formal process of evaluating this method (Rosenberger & Loomis, 2017). Since then, guidelines and special issues of journals dedicated to the topic have been published, including a special section of Water Resources Research in 1992 and Ecological Economics in 2006. When this approach was first used, applications were limited to value transfers—the transfer of single point estimates or measures of central tendency. By the early 1990s, its use had expanded to include benefit function transfers (Desvousges, Naughton, & Parsons, 1992; Loomis, 1992) and meta-regression function transfers (Smith & Kaoru, 1990; Walsh, Johnson, & McKean, 1992).

In an effort to evaluate and improve the accuracy of benefit transfers, there exists a large body of literature summarizing the theory, applications, and issues associated with this valuation approach (see Johnston, Rolfe, Rosenberger, & Brouwer, 2015; Johnston & Rosenberger, 2010; Rosenberger & Loomis, 2017; Rosenberger & Stanley, 2006). Benefit transfer is used frequently by the NPS for benefit‐cost analyses and natural resource damage assessments. This approach has been identified as critical for estimating benefit‐cost ratios associated with the European Commission’s Water Framework Directive (Hanley, Colombo, Tinch, Black, & Aftab, 2006). Additional research has focused on the feasibility of international benefit transfer—the use of values estimated in one country to value policy changes in another country (Ahtiainen, Artell, Czajkowski, & Meyerhoff, 2015; Bateman et al., 2011; Ready & Navrud, 2006). Although results have been mixed (Johnston & Rosenberger, 2010), numerous studies have found that transfer errors are comparable to those seen in intracountry transfers, which is promising given that the majority of nonmarket valuation studies have been conducted in the United States and Western Europe (Ready & Navrud, 2006).

To support benefit transfers, databases of existing nonmarket valuation studies have been developed, examples of which are shown in Table 2. These resources will continue to be extremely useful for agency planning, yet they are not a substitute for original research. The accuracy and usefulness of benefit transfer for decision-making in the context of national parks will in large part depend on the continued growth of the existing stock of value estimates. This is especially true for countries, such as Australia and New Zealand, that have a limited pool of source studies to draw on (Kaval & Yao, 2010; Rolfe et al., 2015).

Table 2. Examples of Nonmarket Valuation Literature Reviews and Databases Useful for National Park Benefit Transfers

Source

Regions Covered

Description

Website

Recreation Use Values Database

United States, Canada

Database containing more than 3,000 recreation use value estimates from more than 400 economic studies conducted between 1958 and 2015 on various land types (national parks, national forests, state parks, etc.). Values reported in per person per day units. Detailed information about each study is reported in the database. Developed by Dr. Randy Rosenberger at Oregon State University.

http://recvaluation.forestry.oregonstate.edu/

Benefit Transfer Toolkit

United States

Contains databases of recreation use values, as well as total economic values for salmon, threatened and endangered species, and water quality. Detailed information about each study is reported in the databases, including land type (e.g., national park). Also includes average value tables, meta-regression models for fishing, hunting, trail use, and wildlife viewing, as well as a user-friendly map displaying the location of studies included in the recreation values databases. Developed by the U.S. Geological Survey, in collaboration with the National Park Service, Bureau of Land Management, Colorado State University, and Oregon State University.

https://my.usgs.gov/benefit-transfer/

Neher, Duffield, and Patterson (2013)

United States

Reports willingness-to-pay values for 58 U.S. national parks, estimated using travel cost models applied to visitor survey data.

N/A

New Zealand Non-Market Valuation Database

New Zealand

Database of nonmarket valuation studies conducted in New Zealand. Includes study reference, mean value, methodology, and reviews of the study if available. Studies are searchable by author name, date of study, study methodology, object of study (recreation, pollution, aesthetics, environmental preservation, etc.), and practitioner/analyst.

http://selfservice.lincoln.ac.nz/nonmarketvaluation/

Kaval and Yao (2010)

New Zealand

Summarizes 19 studies containing 58 recreation use values conducted in New Zealand between 1973 and 2002. Also reports average values for backpacking/tramping, mountain/rock climbing, fishing, general recreation, camping, and picknicking, with comparisons to U.S. estimates.

N/A

ValueBase

Sweden

Database containing detailed information about economic valuation studies on environmental change in Sweden. Developed at the Beijer Institute of Ecological Economics within a project funded by the Swedish Environmental Protection Agency.

http://www.beijer.kva.se/valuebase.htm

Environmental Valuation Reference Inventory (EVRI)

International

Database of valuation studies searchable by title, author, date of study, continent, environmental asset type (air, land, water, man-made/infrastructure, animals, plants, microorganisms, humans), and valuation technique. Detailed information about each study is reported in the database. Registration required. Developed by Environment Canada in collaboration with the U.S. EPA and other international experts and organizations.

https://www.evri.ca/

Envalue

International

Database of environmental valuation studies. Can be sorted by ‘Natural Areas - National Parks and Wilderness Areas.’ Provides information on the transfer of estimates to other sites, some of which is generic and some that is specific to the individual study. Developed by Australia’s New South Wales Environment Protection Authority.

http://www.environment.nsw.gov.au/envalueapp/

Conclusion

Protected areas around the world share many features, yet there is a strong focus on preservation unique to national parks. This reflects the public’s demand not only to have access to these special places, but also to ensure that some of the world’s most treasured scenic and cultural wonders are protected unimpaired for future generations. Supporting this dual mission of preservation and visitor use has benefitted greatly from the evolution of the meaning and measurement of value from an economic perspective. Over time, it became clear that valuing people’s preferences for the nonmarket resources supported by national parks would be necessary to make well-informed management decisions and to demonstrate the contribution of national parks to societal well-being. As noted by Loomis (2005), nonmarket valuation can bring a more balanced perspective to the allocation and management of natural resources, alleviating the false characterization of many policies as a choice between “the economy versus the environment” and often demonstrating that most public policies need not be “all or nothing.”

Developments in applied welfare economics, spurred in part by the demand for more rigorous cost‐benefit analyses and the need to comprehensively value damages to park resources, have facilitated the estimation of total economic value central to the mission of national parks. Not only can the value of on-site use and enjoyment be expressed in economic terms, but also passive-use values capturing people’s preferences for the mere existence of national parks and their preservation for future generations are now regularly quantified. Even the scenic resources that preservationists knew had value in the earliest days of the national park idea have been quantified in economic terms, such as in studies by Chestnut and Rowe (1990), Smith, Kemp, Savage, and Taylor (2005), and Boyle et al. (2016). These analyses will continue to be important, especially as protected areas are under increasing pressure to provide economic justification for their existence (Tisdell & Wilson, 2012; Walpole, Goodwin, & Ward, 2001). As noted by Heagney et al. (2015), international best practice standards promote protected area assessment that accounts for socioeconomic outcomes (International Union for Conservation of Nature, 1998; UNESCO, 1996).

Of course, there is significant room for further advancements. Greater convergence between countries on protocols for benefit‐cost analysis could help places like Australia and New Zealand that lack rigorous and consistent use of this analytical tool (Dobes et al., 2016; Rolfe et al., 2015). This includes ensuring that social costs and benefits are estimated by a trained economist applying established theory and techniques. Best practices are also critical in the growing field of ecosystem services, where valuation techniques have often been misused (see Bockstael, Freeman, Kopp, Portney, & Smith, 2000, and Wainger, Johnston, Bagstad, Casey, & Vegh, 2014, for a critique and review of best practices). Quantification of passive-use values will continue to be important given the preservation aspect of national parks, but further validity testing may be necessary to promote wide acceptance of stated preference approaches. Continuing to conduct original research on the direct-use and passive-use values supported by protected areas can facilitate greater use of benefit transfer and improved decision-making. In general, this economic research helps to further the mission of national park agencies throughout the world.

Acknowledgment

Facts and views expressed in this article are those of the authors and do not necessarily reflect opinions or policies of the National Park Service. Mention of trade names or commercial products does not constitute an endorsement or recommendation for use by the National Park Service.

Suggested Readings

Champ, P. A., Boyle, K. J., & Brown, T. C. (Eds.). (2017). A primer on nonmarket valuation: The economics of non-market goods and resources (Vol. 13). Dordrecht, The Netherlands: Springer.Find this resource:

Freeman, A. M. III. (2003). The measurement of environmental and resource values: Theory and methods. Washington, DC: Resources for the Future.Find this resource:

References

Aadland, D., Anatchkova, B., Grandjean, B., Shogren, J., Simon, B., & Taylor, P. A. (2008). Valuing access to U.S. public lands: A unique pricing experiment. MPRA Paper 8725. University Library of Munich, Germany.Find this resource:

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Notes:

(1.) While economic analysis plays an obvious role in determining the value of lost use, it is also instrumental in determining whether restoration costs are reasonable and in determining the scale of restoration.

(2.) While CERCLA and OPA apply only to natural resources and to injuries caused either by the release of hazardous substances or oil spills, these additional authorities apply to all resources within a national park and to injuries arising from all causes.

(3.) These values are also known as non-use values and existence and bequest values.