Revenue and Distributional Consequences of Alternative Outdoor Recreation Pricing Mechanisms: Evidence from a Micro Panel Data Set

Abstract

Recreation demand models in environmental economics are typically used to predict welfare measures for changes in site quality or site access conditions. In an application using the Iowa Lakes data set, we consider a different task: estimating the revenue potential, behavioral response, and distributional and welfare consequences of site user fees. We examine the revenue raising potential associated with uniform, site differentiated, and income differentiated access fees using a system of Poisson demand equations for more than 130 lakes. We also consider optimal user fees in the spirit of Ramsey (1927) and demonstrate how the new insights from Banzhaf and Smith (2021) can empirically inform discussions of user fees. We find that user fees could be used to raise revenue for the maintenance of recreation infrastructure but that they are generally regressive. Fees differentiated by income groups can attenuate, but not eliminate, this regressivity.