Pricing our natural resources

Ruapehu Bulletin, Volume 6, Issue 294, 11 July 1989, Page 1 (Supplement)

Pricing our natural resources

How much would you be prepared to pay annually, out of your own pocket, for the use of a natural resource like Whakapapa skifield? $10? $50? $1000? More? or nothing?

Attempts to put an economic value on some of our natural or recreational resources are being made by Massey University researchers in order to provide better information needed to manage these resources in an optimal way for society. Despite howls of protest from those who claim you can't debase our national parks by anything so tacky as placing a price tag on them, the need for economic evaluation of natural resources is being recognised. Most New Zealanders, from the sports nut or culture buff to the classic "couch potato", appreciate this country's natural resources. Its "great outdoors" and scenic wonders are touted by travel agents, conservationists, sportspeople and patriots alike. But, while everyone is quick to enjoy or make a buck out of our beautiful environment, few give much thought to its economic value because, by and large, our natural resources are free for all to enjoy.

However, economic evaluation of recreational land is widespread overseas, and it is increasing in New Zealand.

Whakapapa value Massey University researchers have been involved in a number of projects evaluating the

economic worth of natural resources, including the just completed analysis of the economic value of Whakapapa skifield in Ton-

gariro National Park on the slopes and foothills of Mount Ruapehu. The study, commissioned by the former Department of Lands

and Survey (now the Department of Conservation) and supported by the National Park Board, aimed to estiTurn paee 2

What price our wilderness?

From page 1 mate the contribution of the skifield to the local region, and its value to the nation. The results were to provide information to help in reassessing and planning management of the resource in light of increasing pressure for commercial and non-commercial uses of the area. The "economic worth" of the resource would be useful in assessing future levels of expenditure because it would enable tangible comparisonfr to be made. In addition, the study provided incidental information on public attitudes to management practices and facilities. Researchers Research economist with the New Zealand Institute of Economic Research, Peter Clough, undertook the study while working for the Massey-based Centre for Agriculture Policy Studies. He worked in collaboration with Dr Anton Meister, a reader in natural resource and environmental economics in the Department of Agricultural Economics and Business. The researchers used two methods to appraise the economic value of the Whakapapa area: a "non-market valuation" approach to estimate the resource's value to the nation and,

a direct expenditure approach to estimate the economic impact of visitors to the Whakapapa area. Non-market valuation works on the premise that although a commodity may not be traded in a market (e.g clean air), it still has a value. This value is reflected in the fact that people are willing to incur costs just to be able to enjoy the good in question (e.g drive long distances to get to the Whakapapa area, or move house to live in an area with less air pollution). These costs (in this case the driving and associated costs) can be used in a travel cost approach, to determine what people would be willing to pay for use of the resource, rather than having to do without it. The direct expenditure approach uses the data gathered and, using economic multipliers, assesses the total economic impact on the local economy. The information for both approaches was gathered through two visitor surveys, held over several weeks in winter and summer and covered visitor profiles, expenditure and travel information, visitor behaviour and opinions on facilities and management practices in the Whakapapa area. $124 per head The Massey study in-

dicated that, in cold monetary terms, winter visitors to Whakapapa would be willing to pay $124 per head annually to use the area. Summer visitors value it at $66. These figures, on their own, don't mean much say the researchers. They are indicative rather than precise. But, taken in conjunction with the results of the entire survey, show that Whakapapa is a resource of national significance. Similar analyses of other natural resources such as Lake Tutira in Hawkes Bay, the Kaimanawas, and Mount Cook National Park carried out earlier by Massey and other researchers, came up with estimated price tags of $20, $37 and $53 respectively. These lower valuations can partly be explamed by the first two resources' principally regional significance, in contrast to Whakapapa's role as a national resource. The difference between this study and the Mount Cook study lies in the way travel costs are adjusted for multiple-stop trips. "The Whakapapa visitor surveys showed that over the 1 1 -week winter survey period approximately 320,000 visitors arrived at the skifield. Over the 8.5 weeks of the summer survey visitors num-

bered about 22,000. The economic impact, over and above the money spent, runs into millions of dollars and this in turn supports many jobs within the region. Visitor statistics The researchers point out that 'visitor arrivals' is likely to understate the number of days spent in the area by each visitor because a proportion of visitors were accommodated above the survey point. In both surveys, most groups of visitors were family groups, and predominantly higher income people from professional, technical or managerial occupations. The 'average' winter visitor arrived in a party of four people, stayed on the skifield for about four days and was away from home for five nights. Only 20 per cent of winter visitors were on their first visit to Whakapapa, and 87 per cent gave skiing as the main reason for their visit. All but three per cent of winter visitors were New Zealanders, and 40' per cent came from Auckland alone. Nearly two-thirds of respondents came from regions north of Whakapapa (including Hawkes Bay), and 14 per cent came from Wellington. Winter

visitors tended to be younger (under 26 years) and included a higher proportion of young people travelling independently of their parents. Summer visitors The 'average' summer visitor arrived in a party of two or three, stayed two days in the Whakapapa area on a trip away from home of around 19 nights. About 20 per cent were on their first visit to the area and no single aetivity (such as sightseeing, tramping or natural history study) predominated in their stated reasons for the visit. One-third of summer visitors came from overseas, mostly from Australia but with a significant proportion coming from Western Europe, in which case they spent on average less than two days at Whakapapa on a tour averaging 39 nights away from home (compared with eight nights for New Zealanders). Most winter visitors came from Auckland (22 per cent), followed by Australia (17 per cent) and Wellington (14 per cent). The survey identified significant differences between winter respondents who arrived on week days and those who arrived at weekends. Weekend respondents spent less money each day they were in the area, were more likely to perceive the field as overcrowded, were more likely to regard Whakapapa as the sole destination of their trip, and more likely to live in Auckland. Peak or off peak? The researchers say these findings, combined with the fact that 60 per cent of visitors arrive on weekdays, illustrate some aspects of a classic dilemma for park management: whether to allocate resources to servicing peak (weekend) users,

or whether to concentrate more on off-peak users. "In the context of a park with a conservation objective, the ideal, minimum-impact solution is to try to spread use from peak to off-peak periods, but there is a limit to the extent to which this can be achieved," said the researchers. Incidental information gained through the surveys identified that there was no clear balance of opinion in favour or against heliskiing. It also showed a majority of people were dissatisfied with the area's eating places; perceived there was congestion on the lower skilifts and slopes; and were dissatisfied with the separate

car park and lift ticket purchase. There was satisfaction with, but low use of, park interpretive facilities and a lack of awareness of the park's opportunities in distant areas. "These are all subjects which, either singly or in conjunction with other bodies such as skifield operators, tourist promoters and so on, the park authorities may wish to address in new policies," the researchers say. "Such policies might be aimed at increasing visitors' satisfaction, evening out excessive peak use, increasing their length of stay in the area and, coincidentally increasing the economic impact of visitors."