ESTIMATING THE VALUE OF NATIONAL PARKS TO THE QUEENSLAND ECONOMY Sally Driml, Richard Brown, Claudia Moreno Silva UQ Business School and School of Economics ESTIMATING THE VALUE OF NATIONAL PARKS TO THE QUEENSLAND ECONOMY Sally Drimla, Richard P.C. Brownb and Claudia Moreno Silvac a Business School, University of Queensland b School of Economics, University of Queensland c Business School (Research Assistant), University of Queensland Corresponding Authors: Sally Driml, [email protected] Richard Brown, [email protected] 2020 ABSTRACT We estimate the annual contribution of national parks to the Queensland economy through the collection and analysis of primary data from surveys of national park users, combined with secondary tourism data. We calculate the annual value added and jobs supported, direct and indirect, from additional tourist expenditure attributable to national parks. The questionnaire also allowed for the application of an adapted Travel Cost Method to estimate the non-market values (consumer surplus) to direct users of the parks for recreational purposes. We address a number of methodological challenges in survey design and apply innovative adaptations to standard techniques to address these. We also provide upper- and lower-bound estimates. Our estimates suggest that the equivalent of $6.3 in benefits are generated per $1 spent on national park visitor management each year, excluding other non-monetary benefits such as conservation, health, and other environmental and social benefits, highlighting the implications for government funding of national parks management and conservation . Keywords: National Parks’; Queensland economy; tourism expenditure; consumer surplus; non-market valuation JEL Classification: Q26; Q51; Z30 To quote this Report Driml, S., Brown R., P., C., Moreno Silva, C. (2020). Estimating the Value of National Parks to the Queensland Economy. School of Economics Discussion Paper Series 636. School of Economics, The University of Queensland. http://www.uq.edu.au/economics/abstract/636.pdf. 2 This report is a result of collaboration between the University of Queensland and the Queensland Department of Environment and Science. The University of Queensland research team was led by Dr Sally Driml of the Business School and Associate Professor Richard Brown of the School of Economics. The research was funded by the Queensland Department of Environment and Science. The University of Queensland research team would like to acknowledge and thank the officers of the Queensland Government who contributed during the project. The team also thanks the many tourism businesses and their staff, visitor centres and community groups in four destinations who helped with the distribution of the survey used for this study and the hundreds of visitor groups who made their time available to participate in the survey. The research team would also like to acknowledge Dr Prabha Prayaga, Dr Amar Doshi and Dr Sabah Abdullah for input to an initial workshop to design the research. The University of Queensland authors of the report are: Dr Sally Driml Business School [email protected] Associate Professor Richard Brown School of Economics [email protected] Mrs Claudia Moreno Silva Business School The research team also included: Ms Lily Li School of Economics Mr Tyler Riordan Business School Dr Niromi Naranpanawa Business School 3 Executive Summary National parks contribute a range of environmental, social, cultural and economic values to our society. This report has a focus on understanding the economic value of Queensland national parks as a tourism and recreation asset in terms of: (i) benefits to the Queensland economy through spending by tourists who visit national parks and their resulting contribution to Gross Value Added and employment; (ii) direct use benefits to visitors enjoying national parks; and (iii) net benefits to the Queensland economy, accounting for costs of visitor management. Economic contribution of spending by visitors to Queensland national parks Because the entry to national parks in Queensland is free, costs of camping are low and most visitors provide their own transport and accommodation arrangements outside national parks when visiting national parks, the economic value of national parks is not generally evident. One way of understanding the economic value of national parks is through quantifying the spending that visitors make in association with their visits to national parks. This is the traditional ‘economic contribution’ approach. We generated three measures of economic contribution by visitor spending: • National Park Associated Spending (NPAS) is all expenditure in a tourism region by people who visit a national park in that region over the time spent in that region. • National Park Generated Spending (NPGS) is expenditure by those visitors who stated that national parks were very important to their travel and spending. This is our recommended ‘upper bound’ of the value of national parks as key attractions for visitors • National Park Generated Spending - ‘Unambiguous Component’ (NPGS-UC) is visitor spending that unambiguously accrues to Queensland only because national parks are accessible by visitors, i.e. in the absence of accessibility to national parks the value of this component would be zero. This is our recommended ‘lower bound’ for valuing national parks as key attractions for visitors. Visitor spending National Park Associated Spending: • All visitors to Queensland national parks spent an estimated $3,711 million ($3.711 billion) in Queensland in association with their visits to national parks in 2018. • Of these visitors, Queensland residents spent $960 million (26%) while significantly, visitors from outside Queensland spent $2,751 million (74%) of NPAS expenditure. • National parks are important in promoting spending in Queensland regions; the southeast corner regions (Brisbane, Gold Coast, and Sunshine Coast) accounted for $2,074 million (56%), with the other regions receiving $1,637 million (44%) of NPAS expenditure. National Park Generated Spending: • NPGS spending in Queensland was $2,640 million ($2.640 billion) in 2018 (upper bound). • NPGS-UC was $419 million in 2018 (lower bound). Economic contribution To translate tourist spending into economic benefits to the Queensland economy, economic models represented as Tourism Satellite Accounts (TSA) were drawn upon to estimate how much value in terms of contribution to Gross State Product (GSP) and how many additional full-time equivalent jobs can be attributed to the expenditure. The estimates for GSP and employment are reported for ‘direct’, ‘indirect’ and ‘total’ contribution. The ‘direct’ contribution of tourist expenditure is made in ‘front line’ tourism businesses (e.g. accommodation, transport) and ‘indirect’ contribution occurs as other businesses are supported by flow-on of that tourism expenditure in the economy. National Parks Associated Spending: • NPAS contributed $1,574 million directly and $2,743 million in total to the Queensland GSP and supported 16, 793 jobs directly and 24,190 jobs in total in the Queensland economy. 4 National Park Generated Spending: • NPGS spending contributed $1,130 million directly and $1,978 million in total to the Queensland GSP and supported 11,877 jobs directly and 17,241 jobs in total in the Queensland economy. • NPGS-UC contributed $172 million directly and $297 million in total to the Queensland GSP and supported 1,933 jobs directly and 2,725 jobs in total in the Queensland economy. Direct use benefit to visitors to Queensland national parks This report also recognises the economic welfare benefits to individuals arising from their opportunity to visit national parks. This is termed the direct use benefit. As national parks often have no or low access prices, this value is not revealed in any existing markets and therefore needs to be estimated using an appropriate non-market valuation methodology. In economics the direct use benefit is measured by the value of the benefits to the park visitors over and above what they have to pay for the privilege of experiencing national parks. This net benefit is referred to as ‘consumer surplus’ (CS). There are several techniques used in environmental economics to estimate non-monetised benefits. In this study, we employed the Travel Cost Method (TCM). Robust estimates were derived for consumer surplus per visitor day for Noosa, Rainforest, Carnarvon and Outback national parks. These are: $7.72 for Noosa National Park – based on day-trippers only; $150.62 for Rainforest national parks; $43.41 for Carnarvon National Park; and, $45.24 for Outback national parks. The price elasticity of demand is inelastic for all these national park destinations, meaning that for a given percentage increase in the cost of access to the park, e.g. travel costs, there would be less than a proportional decrease in visitors travelling (for low cost increases relative to the total cost of travel). Annual consumer surplus A conservative estimate of annual consumer surplus accruing to all visitors to Queensland national parks is $659 million per annum, with the proportion accruing to Queensland-resident visitors being $238 million. Long-term value The ‘partial asset value’ of direct use benefits accounts for the value into the future of direct use benefits from national parks but does not include all the ecosystem service or non-use benefits. A conservative estimate of partial asset value of direct use benefits from national parks over a 30- to 50-