Political Economy of Protecting Unique Recreational Resources: Hanauma Bay, Hawai'i

The impact of tourism growth on the environment has become an increasingly important public issue in travel destinations. We review Honolulu's recent experience in designing management strategies to protect one of its most popular, unique and endangered natural recreational resources, Hanauma Bay Nature Park. We explain why Honolulu City Council members first adopted non-price rationing techniques to reduce visits at the park and later added an admission fee only to replace it with a lower and less efficiency-enhancing fee structure. Lawmakers charged with governing the Park desire (a) a quality environment, (b) to collect economic rents (i.e., achieve economic efficiency) for the benefit of the general public, and yet must (c) achieve a political equilibrium. Honolulu's experience demonstrates that protecting the environment and extracting rent often conflict with achieving political equilibrium. The final outcome is typically a second best world. Hanauma Bay provides an excellent example of this conflict. Efficiency can be attained only if it is also consistent with attaining political equilibrium.