Raising funds for protected area finance: Using donations and/or

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Raising funds for protected area finance:

Using donations and/or entrance fees*

Francisco Alpízar, EfD CATIE, Costa RicaA

Peter Martinsson, University of Gothenburg, SwedenB

Anna Nordén, EfD CATIE, Costa Rica, and University of Gothenburg, SwedenC

Abstract

We use stated preferences to explore whether entrance fees and donations are alternative or

complementary strategies for raising funds for conservation. Results from a protected area in

Costa Rica show that establishing a small entrance fee does not reduce daily visits, and it is

rather a complementary strategy to allow for the possibility to donate. Still, although a mixed

system could increase funding for conservation, the key issue is the calibration of the mix, as

high entrance fees could lead to reduced income not only by lowering visitation rates but also by

crowding out voluntary donations.

JEL Classification: Q26, Q28.

Keywords: entrance fee; voluntary contribution; stated preferences; protected areas; Costa Rica.

* Acknowledgments: We gratefully acknowledge the financial support from Sida to the Environmental Economics Unit at the University of Gothenburg and to CATIE via the Environment for Development Initiative, the Swedish Research Council (Vetenskapsrådet), and the Jan Wallander and Tom Hedelius Foundation. A (Corresponding author) Environment for Development Center for Central America, CATIE, 7170 Turrialba, Costa Rica; Ph +506 2558-2215; Fax +506 2558-2625; E-mail [email protected] B Department of Economics, University of Gothenburg, Box 640, 405 30 Gothenburg, Sweden; Ph +46 31 786 52 55; Fax +46 31 786 10 43; E-mail [email protected] C Environment for Development Center for Central America, CATIE, 7170 Turrialba, Costa Rica, and Department of Economics, University of Gothenburg; Ph +506 2558-2379; Fax +506 2558-2625; E-mail [email protected]

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1. Introduction

All too frequently, important public goods such as national parks and cultural institutions (e.g.,

museums, opera houses) find themselves under financial pressure, making the search for an

optimal funding strategy a key component of management and policy decisions (e.g., Ferraro et

al. 2007, Gjertsen and Barrett 2004, and Pannell 2008). In the case of environmental

conservation, far too many protected areas around the globe are under financial pressure and lack

funding to cover even basic management and protection. The boom in tourism in general (World

Tourism Organization, UNWTO, 2011) and in ecotourism in particular (The International

Ecotourism Society, TIES, 2006) brings new challenges and opportunities for management of

protected areas. As far as threats, increased demand for visitation to protected areas means that

both human and financial resources are being increasingly diverted from maintenance, protection

and control to tourism management. As far as opportunities, increased visitation means new

opportunities to raise funds from visitors.

Entrance fees have been promoted as a successful strategy to raise money from tourism. It keeps

conservation from becoming a burden on public finances and also helps avoid the budgetary ups

and downs associated with government budgets. Based on standard price theory, entrance fees

are expected to have a directly negative effect on visitation. Assuming that tourists buy only

recreation when they visit a park, the size of this effect depends solely on the price elasticity of

recreation. Although estimated price elasticities of recreation are typically low (see Rosenberg

and Stanley 2010 for US and Canada, and Alpízar 2006, Chase et al. 1998, and Lindberg and

Aylward 1999 for Costa Rica), it is not surprising to find that local communities tend to prefer as

low of an entrance fee as possible, or none at all, as its been shown that they may gain indirect

economic benefits from high visitation rates. For example in developing countries, protected

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areas open to recreation have been shown to increase off-farm wages, boost average

consumption, and alleviate poverty in nearby locations (Robalino and Villalobos-Fiatt 2010,

Andam et al. 2010, Sims 2010, Mullan et al. 2010). This positive spillover on local community

has to be considered when looking for the optimal pricing of recreation in protected areas.

In this paper we use a stated preference approach to investigate people’s preferences for a mixed

funding strategy involving donations and entrance fees collected to raise funds for a protected

area. Within the stated preference framework, we also explore the potential effect of these

fundraising mechanisms on visitation rates. We use Cahuita National Park in Costa Rica as our

case study.

From a conceptual perspective, the introduction of a mixed payment system comprising

donations and a fixed entrance fee requires a better understanding of how those components

work together in affecting people’s behavior. In contradiction to neoclassical theory, people are

willing to make voluntary contributions to the provision of public goods. In the behavioral

economics literature, motives like altruism, warm-glow, self-image, and fairness, among others,

have been put forward as explanations (Andreoni 1995, 1989, Ellingsen and Johannesson 2008,

Fehr and Schmidt 2006). The behavioral economics literature provides support to the idea that

voluntary donations do not necessarily lead to reductions in utility, but can the same be said

about entrance fees? In the present study, this question entails exploring whether the net

marginal utilities from paying an entrance fee and from making a donation, both estimated in a

stated preference study, are negative when the money is used for on-site conservation.

Cahuita National Park is located on the southern Caribbean coast of Costa Rica, at the doorstep

to the town of Cahuita. It makes a good case study for at least three main reasons. First, entry to

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the protected area is free of charge and the park relies solely on donations. Hence the whole

relevant population of those interested in visiting the park, at all fee levels, is available when

sampling at the park. This avoids the potential sample selection bias that results from exploring

behavior for recreational activities that already charge a fee, in which case those not willing to

pay the current fee would be absent from the study population. By conducting our study in

Cahuita National Park, we are able to explore tourists’ preferences for entrance fees and

donations, as well as how length of stay is affected by increased entrance fees for the whole

population of potential visitors. Second, Cahuita National Park is co-managed with local

community members, who fear the establishment of a fee would lower visitation and hence

spending in the local town. This has resulted in permanent tension between the government

authority, who favors an entrance fee of 6 USD1, and the community, who wants no entrance

fees. Third, Cahuita National Park receives large amounts of international tourists (mostly from

Europe and USA), which allows us to generalize our results to the behavior of tourists in

general.2 These factors make Cahuita National Park not only appealing in terms of research

design, but also interesting from a policy perspective.

The rest of the paper is organized as follows. In the next section we describe our case study of

Cahuita National Park, which is followed by a section describing our survey and methods. In

Section 4 we present our results, and in the last section we summarize and conclude the paper.

2. Our case study

Cahuita National Park is one of the most frequently visited parks in Costa Rica with around

50,000 visitors per year from all over the world. The park has two entrances: the remote Sector

Puerto Vargas, which is administrated by the Costa Rican park authority (i.e., SINAC3) and

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where international visitors face a fixed entrance fee of 6 USD, and Sector Playa Blanca, which

is located at the doorstep to the town of Cahuita and receives 95% of all visitors, who pay no

entrance fee but are kindly invited to make a voluntary donation upon arrival and compulsory

registration. The economy of the town of Cahuita has today moved from one based on extractive

activities to one based fully on services supplied to tourists. In the 1990s, the park authority tried

to increase entrance fees for all parks in the country by up to 1,100% (Chase et al. 1998), a

remarkable number that is explained by the very low initial entrance fees. The suggested increase

in entrance fees was met with civil unrest that led to conflicts between the park authority and the

local communities. In the case of Cahuita, the local protests finally resulted in the community

taking control of the park, and government officials eventually left the area and reluctantly

accepted a co-management system funded by donations, which is maintained until this day

(Weitzner and Borrás 1999). However, tensions still remain, and the park authority has not

abandoned its hope of charging an entrance fee similar to all other parks. The local community,

on the other hand, is more interested in keeping the donation system to facilitate increased

visitation, thereby contributing to local revenues from lodging and dining in the area.

3. Design of study and method

Our research approach is based on the collection of personal interviews of visitors to Cahuita

National Park. The survey, including a stated preference study, consisted of several parts. First

there was a battery of socio-economic questions such as age and education, followed by a

number of questions related to the length of their visit and how much money they had spent in

the town of Cahuita. The stated preference part of the study started with a contingent behavior-

style question asking what their reaction would be in terms of length of stay in the town of

Cahuita and number of visits to Cahuita National Park if the entrance fee were 6 USD, which at

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the time of the study was the most common entrance fee for international visitors to other

national parks in Costa Rica. This was followed by a choice experiment exploring visitors’

preferences for a mixed payment system involving an entrance fee and a donation upon entering.

We also included attributes related to proposed improvements in the park, as planned by the park

authority for the future. A final section of the survey included several attitudinal questions,

including reasons for visiting the park and for donating or not donating upon entry.

In our choice experiment, each respondent made four repeated choices between two different

alternatives of how Cahuita National Park could look next time they visited the park. The

alternatives were described by four attributes: use of the revenues from recreation in Cahuita

National Park, information signs available, entrance fee, and donation. As mentioned above,

since we aim to obtain generally applicable results, the focus of this study is on international

visitors to Cahuita National Park. Moreover, since international visitors tend to stay more days

and spend more money in the town of Cahuita, they are also the primary focus of concern for the

co-management board.

Two key elements in any choice experiment are credibility and saliency of all attributes,

particularly for the price attribute. In our case, we faced a strong focal point in the value of the

entrance fee that most parks charged international visitors in Costa Rica: 6 USD. Focus groups

and discussions with the park authority made it clear that any claim of charging an entrance fee

higher than 6 USD would not be credible unless all other parks also increased their fees. In any

case, our task is not to estimate a demand equation for visits to Cahuita National Park, but rather

to explore the marginal utility of entrance fees and donations for the relevant range of both

attributes, which is then set from zero up to 6 USD. Table 1 summarizes the attributes and their

levels, and an example of a choice set is presented in Figure 1.

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Figure 1. Example of a choice set.

Characteristics Alternative 1 Alternative 2

Funds will be used for the overall maintenance of the park, community projects…

… and improved picnic huts and

tables for visitors

...and the construction of elevated trails to

allow access into the forest and towers to

observe wildlife

Information signs will be available…

...by the entrance there will be a

large sign board with a map

describing the park’s facilities

...by the entrance there will be a large sign board with a map

describing the park’s facilities, and

information signs about wildlife along the trail

Entrance fee of… 3 USD 1 USD

Your donation is… 1 USD 2 USD

Which alternative would you prefer?

Alternative 1 Alternative 2

Before the respondents were asked to answer the choice experiment, the enumerator read a

scenario (see Appendix 1). The survey and attributes were developed in cooperation with the

community and the park authority, and were then refined through several pilot studies. After

careful selection of the attributes and levels, we used a linear D-optimal design to create our

desired forty choice sets. The forty choice sets were blocked into ten groups, which were then

randomly allocated to the respondents. Moreover, each subject faced the four choice sets in the

block in random order to reduce potential order effects.

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The survey was given to international visitors who were walking along the only trail in the park

or were on the beach on a Tuesday-Saturday.4 The enumerators5 were carefully instructed to

select without following a discernible pattern, and we regularly controlled the representativeness

of the sample by comparing the sample (and subsamples by enumerators) to the population as

registered in the park’s registration book, which all visitors entering the park had to fill out (see

Table 2 Descriptive statistics). Moreover, the field supervisors were present in the park at all

times, and the quality of the field work was controlled through daily debriefings and frequent

monitoring.

Table 1. Attributes and attribute levels of the choice experiment.

Attributes Levels

Financing maintenance and community projects…

… and environmental education for the population of Cahuita

…. and improved picnic huts and tables for visitors

….and the construction of elevated trails to access the forest, including wildlife observation towers

Information signs available…

…by the entrance on a large poster (map) describing the park’s facilities

…by the entrance on a large poster (map) describing the park’s facilities, and information signs about wildlife along the trail

…by the entrance on a large poster (map) describing the park’s facilities, and in a free leaflet about wildlife

Entrance fee

0,1,2,3,4, and 6 USD

Donation 0,1,2,3,4, and 6 USD

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Discrete-Choice Analysis

We use a standard random utility approach, where individuals’ choices depend on the observed

variables in the survey as well as the unobserved variables, which are captured in the error term.

The respondents are assumed to consider the two alternatives offered in choice situation t and

then choose the park alternative that would give them the highest utility next time they visit the

park. At each choice situation t, we can express the utility of individual q from alternative i as

iqtiqtqiqt xU ,

where iqtx is the vector of observable variables including the attributes describing alternative i,

namely different uses of the revenues from recreation in Cahuita National Park, availability of

information signs, different levels of entrance fees and donations (including no fees and no

donations), and the socio-economic characteristic of the respondent. The vector of taste

parameters, q , will be the focus of our estimation and iqt is an error term representing the

unobservable factors or measurement errors. We apply a random parameter logit model in our

estimations since we expect heterogeneity in preferences among respondents (McFadden and

Train 2000). In this model, we do not know q and can hence not use the probability

conditional upon q . The unconditional probability that an individual q chooses any given

alternative in any given choice set is instead given by the integrals of the standard logit

probabilities over all possible values of

dfLP qq )()( ,

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where )(f is a density function allowing the parameter vector q to vary across individuals,

and )(qL is the conditional probability evaluated for any parameter . Since this integral in

general does not have closed forms, the probabilities are usually estimated through simulations.

By using Halton draws, a q was drawn from its distribution and the logit formula was

calculated from this draw. This procedure was repeated 500 times and the average of the result is

presented as the parameters of each attribute.

Since we expect visitors’ marginal (dis)utility of paying to enter the park to be heterogeneous,

we let both entrance fees and donations be random.6 Regarding the distribution, we argue for a

normal distribution. Following the discussion in the introduction, we believe that none of the

price attributes necessarily has an unequivocal sign: some people might not mind donating

money, and some people might not mind paying an entrance fee as they are presumably paying

for a good cause. Consequently, we use a normal distribution for both donations and entrance

fees.

Moreover, application of the random parameter logit model allows us to retrieve the individual

parameters of each respondent by using Bayes Theorem (e.g., Train 2003). To get a better

picture of the heterogeneity in the coefficients, i.e., of which types of utility are more and less

affected by donations and entrance fees, we also estimated an Ordinary Least Squares (OLS) on

the individual-specific estimated parameters, against attitudinal and socioeconomic

characteristics.

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4. Results

We interviewed 771 adults from a total population of 8,420 international visitors coming to

Cahuita National Park from the 3rd to the 20th of December 2007 and from the 8th of January to

the 15th of March 2008. Table 2 shows the descriptive statistics of all international visitors

visiting the park during the study period and of our selected sample. While the majority of the

interviewed visitors are Europeans and, in general, highly educated, there are visitors from all

over the world. A total of 74% of all international visitors entering the park through Sector Playa

Blanca made a donation (compared to 77% in our sample who stated that they gave a donation).

The average donation for the total population is 1.70 USD per person. We observed a slightly

higher stated average donation of 2.29 USD, which might be a result of some respondents stating

a group donation rather than a per person donation as entered in the registration book.

Conditional on a positive donation, the population mean is 2.22 USD per person. The average

daily expenditure in the town of Cahuita is 24 USD per person excluding accommodation and

donations to the park. Most of the international visitors (52%) planned to visit Cahuita National

Park more than once during their stay. As tourism is the main source of income, this pattern of

multiple visits by a single visitor is important for the development of the community.

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Table 2. Descriptive statistics on the population of international visitors and on our sample in Cahuita National Park.

International visitors

Information from registration book

Information from our survey

Observations/Respondents 8, 420 obs. 771 resp.

Country

USA/Canada 33% 33.5%

Latin America/Caribbean 8% 6.5%

Europe 57% 58%

Others 2% 2%

Male 48% 46%

Gave donation when entering the park 74% 77%

Average donation per person 1.70 USD 2.29 USD*

Average conditional donation per person 2.22 USD 3.08 USD*

Average age - 38 years

Education

University (with or without degree) - 78.5%

Main reason for visiting Cahuita National Park

Only beach - 28%

Only nature - 40%

Mix of both 32%

Average daily spending on other activities in Cahuita per person (not including accommodation)

- 24 USD

Plan to visit the park again - 52% * The donation as registered in the registration book was controlled to be a per person donation. The stated donation in the survey could be subject to some respondents not stating a per person donation (even though the survey asked for per person donation), which might be one valid explanation to the differences between average donations.

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In our econometric analyses of the choice experiment, we code the levels of each attribute using

a dummy variable approach, which allows us to describe utility changes at all levels of donations

and entrance fees without assuming a particular functional form. Our results from the random

parameter logit model, presented in Table 3,7 show that none of the donation levels appear to

enter the utility function as costs, i.e., no donation level actually reduces utility, supporting the

consistent finding that people do make voluntary contributions to public goods. Clearly for 4

USD or more, visitors derive no further utility from donating, given the insignificant results. In

practice then, one should not expect average donations in excess of 3 USD, which is not far from

the true observed average conditional donation of 2.22 USD observed at the time of the study.

Low entrance fees also seem to have a positive effect on the visitors’ utility of the park. The

coefficient for the dummy of an entrance fee at 1 USD is significantly positive, meaning that

compared to not paying at all, international visitors seem to gain utility from paying an entrance

fee of 1 USD. From 2 USD up to 4 USD we find negative but insignificant coefficients, meaning

that visitors do not seem to mind an entrance fee in that range. For our highest entrance fee of 6

USD, which is equal to the most common entrance fee at the time of the study (2007/2008) in

other national parks in Costa Rica, we find a significantly negative effect on utility.

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Table 3. Random parameter logit estimations (p-values in parentheses)

Mean Coefficient Coeff. Std.

Baseline Environmental Education

Dummy Financing picnic huts -2.012 (0.00) 2.044 (0.00)

Dummy Financing elevated trails - 0.538 (0.00) 1.432 (0.00)

Baseline Information at Entrance

Dummy Information at entrance and along trail 0.364 (0.00) 0.536 (0.00)

Dummy Information at entrance and free leaflet 0.052 (0.34) 0.584 (0.00)

Baseline No Donation

Dummy for donation of 1 USD 0.182 (0.05) 0.255 (0.01)





Baseline No Entrance Fee

Dummy for fee of 1 USD 0.157 (0.07) 1.316 (0.00)


Dummy for fee of 3 USD - 0.087 (0.35) 1.601 (0.00)

Dummy for fee of 4 USD -0.049 (0.58) 0.689 (0.00)


Number of observations 3084

Number of respondents 771

Clearly these results require further explanations. A common assumption in microeconomic

theory is to assume non-satiation, i.e., that a consumer prefers more to less for all levels of the

good. This means that indifference curves must be thin, as thick indifference curves would

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violate local non-satiation. Translated into our context, this means that an individual should not

be indifferent between the levels of the fee attribute as that would imply thick indifference

curves. Although aware of this standard neoclassical prediction, we argue that previous findings

in the behavioral economics literature provide credibility to our result.8 As mentioned in the

introduction, substantial lab and field experimental evidence supports the idea that economic

agents do like to sacrifice own financial gains for the provision of public goods. This has been

found in the context of voluntary donations (see for example Alpizar et al. 2008). A preference

for cooperative behavior could also provide an explanation for the positive or indifferent

preferences for entrance fees of 4 USD or lower. In our survey, when asked about their motives

for donating upon entering the park, 61% of the visitors stated that they happily donated for

conserving nature.

A further explanation is based on the idea that humans have a preference for fairness, and the

context strongly shapes our evaluation of what is fair and what is not. A total of 64% of the

respondents had visited other national parks in Costa Rica and had paid an entrance fee of 6 USD

before coming to Cahuita National Park. The fact that a majority of the respondents are used to

paying entrance fees of 6 USD to enter national parks in Costa Rica might make them feel that

paying less than 6 USD is both good for them and fair to a park that currently charges no fee at

all. In a way, they are striking a good deal by paying an entrance fee below that level.9 To

explore this argument we ran the random parameter logit model dividing the sample into two

groups: those with and without previous experience of paying an entrance fee for entering a

national park in Costa Rica. The results, presented in Appendix 2, show that those who indicated

that Cahuita National Park was their first experience of national parks in Costa Rica are

generally less positive to donations and entrance fees.

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To check for heterogeneity, Table 3 also reports the coefficients of the standard deviations from

the mean coefficients. The results suggest that there is considerable heterogeneity in

respondents’ preferences for both entrance fees and donations, supporting our choice of the

random parameter logit model. The standard deviations of the coefficients of entrance fees are

highly significant at all levels while the same is only true for donations of 1, 2 and 6 USD. These

results open up for targeting of those who want to donate, without hurting those who do not, and

also for differentiated entrance fees. Nevertheless, such targeting requires a better understanding

of which socioeconomic characteristics actually explain the heterogeneity. To gain more

information we ran an Ordinary Least Squares (OLS) on the individual-specific estimates, which

were obtained from the random parameter logit estimates, against attitudinal and socioeconomic

characteristics. We find that for the donation coefficients, only the highly educated visitors are

significantly more positive to high donations, which is good news as the majority of visitors are

highly educated. We find no significant coefficients for country of origin, gender, age, or

purpose of visiting the park, making targeting on these variables not advisable. For entrance fees,

though, we find support for targeting at higher fee levels; see results for an entrance fee of 6

USD in Table 4 and for the other levels of both entrance fee and donation in Appendix 3.

Targeting depending on the purpose of visiting the park appears to be a good strategy, with

nature lovers being significantly happier to pay an entrance fee of 6 USD compared to beach

goers (who make up 28% of those visiting the park). We also find that visitors from Latin

American and the Caribbean tend to be more positive to a higher entrance fee than visitors from

USA and Canada, and more negative to a lower entrance fee (i.e., 2 USD), although building a

case for price discrimination based on this information seems difficult.

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Table 4. Ordinary Least Squares (OLS) of individual parameters for 6 USD entrance fee (p-values in parentheses)

Coefficient

Dependent Variable

Individual parameters for 6 USD entrance fee

Explanatory Variables

Region of origin (baseline USA & Canada)

Latin America & Caribbean 0.028 (0.09)

Europe 0.007 (0.39)

Other (Asia/Africa/Oceania) 0.036 (0.22)

Male -0.013 (0.10)

Age -0.000 (0.99)

Education

University education (with or without degree) 0.007 (0.44)

Main reason for visiting Cahuita National Park (baseline only nature)

Only beach -0.030 (0.00)

Mix of both -0.013 (0.16)

Constant -0.772 (0.00)

Number of observations 750

R-Squared 0.02

To facilitate further information about the effect on utility derived from a visit to the park, we

predicted the effect of introducing an entrance fee on the level of utility for different levels of

donations and keeping the levels of all other attributes fixed at their status quo. The key question

is whether a possible mix of entrance fee and donation is associated with disutility (i.e., a

negative numeraire value in the vertical axis). If a given mix leads to disutility, we should be

worried about reductions in visits, although our model does not allows us to directly predict the

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size of such an effect. In Figure 2, the continuous line shows the status quo level of utility, i.e.,

the level of utility according to our estimated model, in the absence of entrance fees. Utility

increases with higher donations and peaks at 2 USD, remaining positive even for larger

donations. Further, our simulations show that entrance fees of 3 USD or higher are associated

with lower utility and even disutility over part of the range of realistic donations compared to

status quo. Notably, entrance fees bring significant disutility only for 6 USD. On the contrary,

entrance fees of 1 and 2 USD marginally increase utility at all donation levels. This means that

visitors will derive little or no additional utility, nor will they suffer utility losses from

establishing a mixed system of entrance fees equal to or smaller than 2 USD and voluntary

donations. According to our results, the concern of the local community in our study case of an

entrance fee having a negative effect on donations and accordingly on visitation rates only seems

to be valid for entrance fees of 3 USD and beyond.

Figure 2. Predicted utility of a mixed payment system and different donation levels.

Finally, we turn to the question of the effect of entrance fees on visitation. As mentioned in

Section 3, our survey included questions regarding the visitor’s expected behavior in the

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presence of an entrance fee of 6 USD. We believe that this fee level merited further attention

because of the alleged intention of the park authority to raise the entrance fee to this level. As

stated by the respondents, a fixed entrance fee of 6 USD would lower the number of days spent

in the town of Cahuita for 23% of the interviewees, and 52% would visit the park fewer times.

An entrance fee of 6 USD for international visitors not only decreases the probability of

choosing an alternative in the choice experiment, but might also reduce the number of days spent

in the town of Cahuita and the number of visits to the park.

In order to explore which type of visitor is expected to answer that they would reduce the

number of days spent in the town of Cahuita if faced with an entrance fee of 6 USD (a key

concern to the town´s service industry), we run a logit model (0=I would stay fewer days; 1= I

would stay the same number of days). The more salient features of the econometric model

(included in Appendix 410) are related to the main reason for visiting the park. Those interested

in visiting the park to do hiking and bird watching (we call them nature lovers) are less likely to

reduce their stay in the town of Cahuita. Yet those interested in visiting the park for the beach

and the attractions in the sun are more prone to leaving the town earlier if faced with high

entrance fees. This result is expected as there are more substitutes for the beach activities nearby.

4. Conclusions and policy advice

Securing sustainable funding sources for protected areas has high priority in both global and

national conservation agendas, and the establishment of entrance fees for recreation is regarded

as a key component of any successful strategy aimed at reducing the burden of conservation

efforts on public funds. On the other hand, local communities that are highly dependent on the

tourism service sector have raised concerns about the potentially negative effect of entrance fees

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on visitation. In the park studied here, Cahuita National Park in Costa Rica, this concern resulted

in the abandonment of entrance fees in favor of voluntary donations.

In this paper we showed that small entrance fees, when suitably designed to fit the context in

which they will be implemented, rather serve as a fair outlet for peoples willingness to

contribute, and hence do have a potential to raise revenues for conservation without jeopardizing

visitation rates. In the case of Cahuita National Park, entrance fees lower than or equal to 2 USD

are apparently perceived as a contribution to the funding of nature conservation, or maybe as a

good deal from which utility is derived, given that entrance fees are lower than previous

experiences in other parks.

We are certainly aware that the positive or insignificant estimated coefficients associated with

lower levels of entrance fees are in contradiction to the standard neoclassical prediction that

monetary disbursements lead to reduced utility. Substantial evidence in the behavioral economics

literature points to the fact that people do like to contribute to the provision of public goods,

meaning that money contributed to a good cause is not necessarily associated, in the net, with

disutility. The motives for prosocial behavior11 are still widely discussed, but most authors agree

on a combination of intrinsic motivations (e.g., if utility is obtained from the success of a good

cause) and the search for improved social status and self-image (Andreoni 1995, 1989, Ellingsen

and Johannesson 2008, Charness and Dufwenberg 2006).

A second relevant finding in the behavioral economics literature is a preference for fairness.

Using very different research strategies (e.g., public goods experiments, dictator games, revealed

behavior), authors have shown that economic agents are willing to forgo private financial gains if

these are the product of an unfair situation or an unequal allocation of initial endowments (e.g.,

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Fehr and Schmidt 2006). Following these findings, the question is whether 1 or 2 or 3 USD is a

fair price for a full day of spectacular sceneries when considering similar recreational facilities

that require an entrance fee (say national parks in Europe or the U.S., amusement parks, and art

exhibitions).

Finally, another important result in behavioral economics is that context matters. Going back to

fairness for example, authors have shown that the perception of what is fair depends a lot on the

context. In our context, since a majority of the respondents are used to paying entrance fees of 6

USD to enter national parks in Costa Rica, paying a much smaller entrance fee to enter Cahuita

National Park could make them gain utility from striking a good deal (for an example from the

housing market see Simonsohn and Loewenstein 2006).

Our aim is not to produce a definite explanation for our findings; whatever the explanation

though, it is clear that for the case of Cahuita National Park, neither the park authority nor the

local community should object to the establishment of low entrance fees since their effect on

visitation rates seems minor. Future studies should look deeper into the triggering factors

associated with deriving positive or non-negative utility from paying small fees to enjoy

activities associated with a good cause.

Our argument in favor of a mixed fundraising system is also based on the strong observed

heterogeneity in preferences for entrance fees, meaning that it makes sense to establish low

entrance fees to deal with potential free-riders, and allowing for voluntary donations from those

who are more prosocially oriented. Further, our estimations even provide inputs for

differentiating entrance fees, for example based on reasons for visiting the park.

Despite the small donations per visitor discussed here, it is important to stress that on average,

22

Cahuita National Park receives approximately 50,000 visitors per year, who on average donate

1.70 USD. Hence, each year the park has a budget of approximately 85,000 USD. An entrance

fee of for example 1 USD, which according to our results is predicted to leave visitation

unaffected, means an almost 60% increase in the park´s budget, a large increase from every

perspective. Small budgets for appropriate management and protection are the rule for most

conservation projects worldwide, and our study calls for exploration of these potentially “low

hanging fruit” sources of funding.

Still, the key to these “low hanging fruit” opportunities is in the detail. This is a particularly

sensitive issue since success depends on the motivations for prosocial behavior among visitors to

the park. Introducing a mixed payment system would demand a rigorous study of what is an

appropriate entrance fee, so as not to risk a negative effect on visitation rates and/or crowding

out donations.

23

APPENDIX 1 - Scenario

Thank you. Let’s continue with the next part. In order to make sure that we can provide you with the best experience in Cahuita, I will ask you to do four evaluations. Here is an example of one such evaluation.

(GIVE THE RESPONDENT THE EXAMPLE CARD. PLEASE POINT AT THE EXAMPLE WHEN YOU DESCRIBE THE FOLLOWING.)

Each card will have two different alternatives. Each alternative describes how Cahuita National Park could look the next time you visit. For each card, your task is to choose the alternative that you prefer. Either alternative one or alternative

two. The alternatives are described by four different characteristics. (POINT AT THE EXAMPLE CARD) The characteristics and the different levels are explained on this card. (TURN THE EXAMPLE CARD) On each card you will always find these four characteristics, but you will only find one of these levels in an

alternative (POINT AT THE LEVELS). So, only the levels will change. The alternatives will not differ in any other aspect than those shown on the card Please read them carefully.(GIVE THEM TIME TO READ)

Do you have any questions?

Let´s go back to the example card. As you can see here (POINT AT THE EXAMPLE):

Alternative one will fund improved picnic huts and tables for visitors while Alternative two will fund the construction of elevated trails to allow access into the forest and towers to observe wildlife.

In Alternative one there will be a large sign board with a map by the entrance describing the park’s facilities, while in Alternative two there will also be information signs about wildlife along the trail.

In Alternative one the entrance fee is 3USD and your donation is assumed to be 1 USD, and Alternative two has an entrance fee of 1 USD and your donation is assumed to be 2 USD.

Imagine that each alternative describes how Cahuita national park could look the next time you visit. Please look at each alternative and tell me which one you prefer. Take your time!

(MARK THE ALTERNATIVE THAT THE RESPONDENT PREFERRED ON THE EXAMPLE CARD)

ALTERNATIVE 1

ALTERNATIVE 2

Please turn back to the explanation of characteristics and let’s continue.

(SHOW ONE CHOICE-SET CARD AT A TIME)

24

APPENDIX 2

Table A. Random parameter logit estimations for those who indicated that Cahuita National Park was their first experience of national parks in Costa Rica (p-values in parentheses)

Mean Coefficient Coeff. Std.

Baseline Environmental Education

Dummy Financing picnic huts - 2.004 (0.00) 1.925 (0.00)

Dummy Financing elevated trails - 0.458 (0.00) 1.500 (0.00)

Baseline Information at Entrance

Dummy Information at entrance and along trail 0.337 (0.00) 0.597 (0.00)

Dummy Information at entrance and free leaflet - 0.002 (0.98) 0.879 (0.00)

Baseline No Donation


Dummy for donation of 2 USD - 0.122 (0.46) 0.235 (0.16)




Baseline No Entrance Fee






Number of observations 1100 obs.

Number of respondents 275 resp.

25

APPENDIX 3

Table B1. Ordinary Least Squares (OLS) of individual parameters at each entrance fee level (entrance fee of 6 USD is also presented in Table 4 in the paper) (p-values in parentheses)

Coefficients

Dependent Variable Entrance fee 1 USD Entrance fee 2 USD Entrance fee 3 USD Entrance fee 4 USD Entrance fee 6 USD



Latin America & Caribbean -0.062 (0.404) -0.042 (0.003) 0.137 (0.192) -0.015 (0.494) 0.028 (0.091)

Europe 0.019 (0.610) -0.015 (0.037) 0.063 (0.230) -0.005 (0.636) 0.007 (0.391)

Other (Asia/Africa/Oceania) -0.046 (0.728) -0.063 (0.013) 0.195 (0.297) 0.047 (0.243) 0.036 (0.217)

Male 0.060 (0.083) 0.003 (0.607) -0.080 (0.102) 0.002 (0.830) -0.013 (0.102)

Age -0.000 (0.721) -0.000 (0.844) -0.003 (0.141) -0.000 (0.605) -0.000 (0.989)

Education

University education (with or without degree) 0.051 (0.216) 0.000 (0.979) -0.075 (0.197) 0.017 (0.175) 0.007 (0.440)


Only beach 0.070 (0.102) -0.005 (0.545) 0.040 (0.499) 0.009 (0.491) -0.030 (0.002)

Mix of both 0.000 (0.993) -0.003 (0.695) 0.019 (0.746) 0.020 (0.111) -0.013 (0.163)

Constant 0.142 (0.056) 0.109 (0.000) 0.001 (0.990) -0.083 (0.000) -0.772 (0.000)

Number of observations 750 750 750 750 750

R-Squared 0.012 0.020 0.016 0.009 0.024

26

Table B2. Ordinary Least Squares (OLS) of individual parameters at each donation level (p-values in parentheses)

Coefficients

Dependent Variable Donation 1 USD Donation 2 USD Donation 3 USD Donation 4 USD Donation 6 USD



Latin America & Caribbean 0.003 (0.445) 0.003 (0.738) 0.001 (0.293) 0.000 (0.746) -0.074 (0.186)

Europe -0.002 (0.336) 0.005 (0.284) -0.000 (0.386) -0.000 (0.941) 0.033 (0.232)

Other (Asia/Africa/Oceania) -0.005 (0.454) -0.002 (0.896) 0.001 (0.226) 0.002 (0.264) 0.067 (0.499)

Male 0.001 (0.622) 0.001 (0.846) -0.000 (0.666) 0.000 (0.832) 0.040 (0.122)

Age 0.000 (0.870) 0.000 (0.573) 0.000 (0.458) 0.000 (0.340) -0.000 (0.720)

Education

University education (with or without degree) -0.003 (0.213) -0.003 (0.557) 0.000 (0.108) 0.000 (0.779) 0.067 (0.032)


Only beach -0.003 (0.254) 0.009 (0.075) -0.000 (0.146) -0.000 (0.700) -0.013 (0.677)

Mix of both -0.001 (0.676) 0.005 (0.289) 0.000 (0.337) 0.000 (0.635) 0.002 (0.948)

Constant 0.261 (0.000) 0.427 (0.000) 0.231 (0.000) 0.031 (0.000) 0.022 (0.686)

Number of observations 750 750 750 750 750

R-Squared 0.007 0.007 0.019 0.004 0.016

27

APPENDIX 4

Table C. Logit estimated on which types of visitors are expected to answer that they would stay the same number of days in the town of Cahuita if faced with an entrance fee of 6 USD (p-values in parentheses).

Coefficient

Dependent Variable

Dummy for reaction to an entrance fee of 6 USD (1=I would stay the same number of days; 0= I would stay fewer days)



Latin America & Caribbean 0.066 (0.87)

Europe 0.305 (0.13)

Other (Asia/Africa/Oceania) -0.564 (0.40)

Male -0.035 (0.86)

Age -0.009 (0.23)

Education

University education (with or without degree) 0.226 (0.32)

Spending on other activities in Cahuita per day per person (not including accommodation) 0.010 (0.13)

Previously visited other national parks in Costa Rica before Cahuita National Park -0.087 (0.66)

Main reason for visiting Cahuita National Park (baseline Only nature)

Only beach -1.066 (0.00)

Beach and nature -0.788 (0.00)

Constant 1.614 (0.00)

Number of observations 662 obs.

Pseudo R2 0.042

28

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1 6 USD was the most common entrance fee for international visitors to national parks in Costa Rica in 2007/2008 when the study was conducted. 2 For this reason, we chose to focus on international visitors to Cahuita National Park only. Moreover, previous studies (e.g., Hearne and Salinas 2002 and Chase et al. 1998) show that resident and international visitors have very different preferences for recreation in protected areas, and should be treated as separate populations. 3 The National System of Conservation Areas of Costa Rica (SINAC; Sistema Nacional de Areas de Conservación) branching from the Ministry of Environment, Energy and Telecommunication (MINAET). 4 We excluded Sundays from the sample since a large fraction of visitors on this day are local residents living in the town of Cahuita. Mondays was a low visitation day which was then used for preparation of materials and data coding. 5 In order to ensure the quality of the field work, we implemented a highly ambitious training and supervision program (see excellent advice on this topic in Whittington 2002). Enumerators went through a thorough two-week training program, where they were instructed and guided on how to conduct interviews. The training also included understanding of the method of choice experiment and the importance of their role as enumerators in the research process. 6 An argument in favor of keeping the price parameters fixed is to facilitate calculation of marginal substitution rates and marginal willingness to pay, which is not of interest in our case. 7 Table 3 also shows the coefficients of the attributes describing different improvements to the park. In general, visitors are significantly positive to the provision of information along the trails. The insignificant result for distributing a leaflet indicates that visitors can not be rationally expected to voluntarily pay for the additional cost connected with printing the leaflet since they do not seem to derive any additional utility from it. Further, international visitors derive disutility from financing improvements such as picnic huts and elevated trails inside the park, and instead favor financing environmental education projects in the community. 8 At this stage it is important to stress again that our intention is not to estimate a demand curve for Cahuita National Park, in which case we could be accused of having too small fees in our monetary attributes. Instead, our aim is to explore whether the fees in the relevant range of 0 to 6 USD are regarded as true costs or not. 9 This idea is also related to the concept of transaction utility (Thaler 1985, 1999), where individuals are not only assumed to gain utility from consumption but also from striking a good deal. 10 Included variables are region of origin, gender, age, education level, spending on other activities, experience, and main reason for visiting the park. The number of observations is 662 and the model´s pseudo is R2 = 0.042. 11 In this paper we use the term prosocial behavior to denote individual actions that favor social outcomes, and that in doing so go beyond selfish financial interests.

Documents

Raising funds for protected area finance: Using donations and/or