Valuation of nature-based tourism using contingent valuation survey: evidence from South Africa

ABSTRACT

The increasing pressure within developing countries to focus on other national objectives has led to declining fiscal transfers for conservation. This paper assesses the potential for a typical large African park such as the Kruger National Park to generate additional revenue through an entrance fee hike in order to finance park operations. This is investigated by estimating international tourists’ willingness to pay (WTP) for possible future visits. The estimated WTP is substantial, ranging from $216 to $255 per trip and $79 million to $94 million per year for all international tourists. Using a non-parametric survival function to calculate the consumer surplus that could be extracted from tourists, we show that park authorities can increase total revenue by 57% to 61% ($38 million and $40 million) per year. These findings indicate that unique African parks such as the Kruger National Park can contribute to African economies through revenues from increased entrance fees.

KEYWORDS:

• Contingent valuation method
• entrance fee
• Kruger National Park
• willingness to pay

Acknowledgements

For helpful comments and discussions, we thank participants at the 26th Annual Conference of the European Association of Environmental and Resource Economists. We also benefited from insights by Gardner Brown, Jr., Fredrik Carlsson and David F. Layton during the initial stages of the project. We thank Gerald Kibira, Stephen Kirama, Amanda Musandiwa, Realeboga Ngwanaeng and Nomsa Nkosi for assistance with the fieldwork and grateful to Joep Stevens of SANParks (South African National Parks) for assistance with data.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Knowledge about the revenue potential of national parks is also crucial for ascertaining the value of national parks.

2 Regional tourists are classified as those coming from the 15 Southern African Development Community countries.

3 Whether it is also possible to generate additional revenue from domestic tourists is an empirical question that needs to be investigated.

4 According to KNP gate arrivals data, international tourists from overseas comprised 22.3% of total tourists visiting KNP in 2014, while domestic and regional tourists made up the remaining 75.9% and 1.8%, respectively. Regional tourists pay twice the R70 tariff levied on local residents at the time of the survey, while all other nationalities pay an entrance fee of R248 (equivalent to $23 at the time of the survey).

5 Ordinarily, the activities and experiences offered by the different parks differ with respect to developments inside the parks but not in terms of the variety of wildlife species they offer.

6 In using the mean/median WTP to estimate revenue, we also take into account the fact that revenues depend on the number of people visiting the park.

7 The other parks generating a surplus are Addo Elephant National Park, Augrabies Falls National Park, Kgalagadi Transfrontier Park and Table Mountain National Park (SANParks refers to the following as Table Mountain: Boulders, Cape of Good Hope, Newlands, Ouderkraal, Silvermine and Tokai Picnic & Braai Area. The Cableway and Kirstenbosh are independently operated) (SANParks 2018b).

8 The KNP recorded a decrease in rhino poaching by 23.6% (from 502 to 384) and elephant poaching by 35% in 2018/2019 versus the previous year, but poaching activity remained at 2460 (7 poaching activities per day) over the two years. The decline in poached animals has been largely attributed to increased anti-poaching activities, which have led to more arrests (233 poachers were arrested in 2018/2019 versus 190 the previous year). Despite this, the intent to poach remains strong (SANParks 2019b).

9 Data for contingent valuation studies is mostly gathered using on-site surveys, as on-site surveys guarantee sampling users of the recreational site in question. This, however, makes it rather difficult to estimate comprehensively the WTP for other important values of the park, such as optional and existence values, which are normally measured from the point of view of both users and non-users of the park (Garrod and Willis 1997; Pearse 1968).

10 Parsons (2003) recommends sampling visitors when they depart the recreational site. However, it was not possible to implement this since the majority of international visitors are on guided tours and there is therefore little time to interview them when they are leaving the park.

11 The Skukuza camp also has a small airport, making it more accessible than some of the others.

12 The use of electronic gadgets to collect data made it easy to present the fee hikes in the respondents’ own country’s currency, thus helping respondents to relate to the magnitude of the proposed hike easily. The entrance fee hike was presented in eight different major currencies. The currencies were chosen based on KNP historical gate entrance data. This unique feature of the survey enabled us to elicit valid responses and, to the best of our knowledge, is relatively new in this literature.

13 For the purposes of the analysis of this variable and also the variable wildlife interest, we combine the first five categories into a single category as they have fewer observations in them.

14 The Turnbull estimator was proposed much earlier by Ayer et al. (1955). For other earlier applications, see also Carson, Wilks, and Imber (1994).

15 SANParks adopted segment reporting during the 2015/2016 financial year. Revenues for KNP were not published prior to that.

16 Currently, a one-hour permit for tracking Mountain Gorillas costs $400 in Congo, $700 in Uganda, and $1500 in Rwanda.

17 SANParks has adjusted entrance fees by about 9% annually since 2009. However, these changes are in the local currency and barely compensate for inflation and adverse changes in the exchange rate. Thus, international tourists see little impact.

Additional information

Funding

Financial support from the Swedish International Development Cooperation Agency (Sida) through the Environment for Development Initiative (EfD) is gratefully acknowledged.