A Calculus of Efficiency for Public Goods: The Case of Public Outdoor Recreation
A Calculus of Efficiency for Public Goods: The Case of Public Outdoor Recreation
Files
Publication or External Link
Date
1972
Authors
Ulfat, Abderrahman
Advisor
Tuthill, Dean F.
Citation
DRUM DOI
Abstract
The characteristics of public outdoor recreation as a public good
are ascertained. A cost-benefit analysis is applied which ensures
efficiency, while allowing for the pecuniary and technological externalities
that exist in the development of outdoor recreation resorts.
A total willingness to pay technique is utilized to approximate the
consumer's valuation of benefits from recreation. Essential to the
technique is the derivation of total willingness to pay curve which
parallels the demand curve for private goods. Total willingness to
pay is used instead of consumer's surplus, because the latter is associated
with a market price which is not determined for public outdoor recreation.
Since the total willingness to pay curve is a function of income
distribution, once derived, the curve can be adjusted to rid the analysis
of income distribution bias. The adjustment helps achieve equity in
the allocation of recreational resorts.
Fort Frederick State Park provided a case of application for the
technique. A sample survey conducted in the Fort was the basis for the
derivation of a total willingness to pay curve. The curve shows the
relation between expenditures incurred, in time and money, to visits at
Fort Frederick. The rates of growth for expenditures, income and
population were the basis for the simulation of the total willingness
to pay up to the year 2000. Integration of the areas under the simulated
demand curves was an approximation of the future willingness to pay or
benefits derived from recreational experience at the Fort.
After dividing the discounted value of benefits by the estimated
costs of developing the Fort, a benefit-cost ratio was obtained, which
was a quantitative endorsement in favor of the development of Fort
Frederick.