Political Economy of Protecting Unique Recreational Resources: Hanauma Bay, Hawaii

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 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. As Honolulu's experience demonstrates, goals (a) and (b) often conflict with (c), yielding typically a second-best outcome. Efficiency can be attained only if it is also consistent with attaining political equilibrium.