Valuing Access to U.S. Public Lands: A Unique Pricing Experiment

We report the findings of a unique nation-wide experiment to price access to U.S. public lands. In 2004, the U.S. Federal Lands Recreation Enhancement Act mandated the creation of a new annual pass to cover all federal recreation sites that charge an entrance or access fee. Our task was to assist federal policymakers in determining an appropriate price for this new pass. Toward that end, we administered a national telephone survey to over 3,700 households and used contingent valuation to estimate households’ willingness to pay (WTP) for the new pass at different prices. Our innovative experimental design allows us to estimate three distinct components of hypothetical bias in order to calibrate our WTP estimates against actual purchasing decisions. In a sample of the general U.S. population – most of whom have little experience with similar federal passes – respondents tend to greatly exaggerate their WTP for the pass when contrasted with previous pass sales. A sample of recent pass purchasers, however, exhibits little bias, confirming other recent research showing that market experience can mitigate hypothetical bias. Calibrated for bias, our results indicate that the $80 pass price ultimately adopted by policymakers implies an increase of nearly 2.5% in total revenue relative to the former pass, priced at $65, but a 4.5% loss in potential revenue absent any such pass.