Securing benefits for local communities from international visitors to the Kgalagadi Transfrontier Park

Abstract

This article estimates the visitation demand function for Kgalagadi Transfrontier Park (KTP) in order to determine the scope for raising fees charged to international tourists in order to fund revenue-sharing schemes for local communities. International and Southern African Development Community tourists account for approximately 25% and 2% of the total number of visitors to South African national parks, with domestic visitors making up the remaining portion. Although small, the South African international tourism market is mature and accounts for a disproportionately large share (around 42%) of net revenue. To estimate visitation demand at the KTP and three other national parks, random effects Tobit Model was used. Using the estimated elasticities, the revenue-maximizing daily conservation fee was computed to be R1 131.94 (US$144.20) for KTP, which can be compared with the R180 (US$22.93) currently charged. Furthermore, the study also demonstrated that there is a possibility of raising fees at the other three parks. Sharing conservation revenue with communities surrounding parks could demonstrate the link between ecotourism and local communities’ economic development and promote a positive view of land restitution involving national parks.

Recreation demand and pricing policy for international tourists in developing countries: evidence from South Africa

“…(1998) and Dikgang, Muchapondwa, and Stage (2017) recognize this aspect, and consider multiple national parks simultaneously in order to arrive at appropriate entrance fees.…”

“…There are three main ways to think about optimal entrance fees. The objective could be efficiency (Mendes 2003), revenue maximization (Alpízar 2006;Chase et al 1998;Dikgang, Muchapondwa, and Stage 2017;Walpole, Goodwin, and Ward 2001) or equity where domestic tourists form the bulk of the tourists. 25 The main justifications for an entrance fee in many public national parks are rationing (given the uneven demand that characterizes recreation demand), equity (an application of the 'user pays' principle), and financial considerations.…”

“…The impact of changes in entrance fees on revenue depends on the price elasticity of demand (e p ). Recreation demand tends to be price inelastic (see also Dikgang, Muchapondwa, and Stage 2017;Pandit, Dhakal, and Polyakov 2015;Simões, Barata, and Cruz 2013), with a semi-log demand function, e p = b tc • tc where tc is the average round-trip travel cost per day (travcost). When the opportunity cost of recreation time is taken as 1/3, price elasticity of demand ranges from -0.94 to -0.95 indicating demand is inelastic (raising entrance fees will raise revenue).…”

“…The importance of appropriate user fees to support conservation is widely recognized in the literature (see Emerton, Bishop, and Thomas 2006;Inamdar et al 1999;Spenceley, Rylance, and Laiser 2017;Whitelaw, King, and Tolkach 2014). A number of past studies, for example, Alpízar (2006), Chase et al (1998), Dikgang and Muchapondwa (2017a) and Dikgang, Muchapondwa, and Stage (2017) have therefore tried to estimate appropriate user fees. 5.…”

“…Park pricing as a tool for natural resource management is still under-utilized, partly because revenue-maximizing behaviour is not the usual culture of park administrators, as most professional rewards are tied instead to program development (Laarman and Gregersen 1996). Yet international tourists are often willing to pay higher entrance fees (Naidoo and Adamowicz 2005;Pandit, Dhakal, and Polyakov 2015), provided these are earmarked for conservation and park management (Baral, Stern, and Bhattarai 2008;Buckley 2003;Dikgang, Muchapondwa, and Stage 2017). An appropriate pricing policy can help fulfill conservation objectives, incentivize local communities to take a proactive conservation role and support tourism-related activities in surrounding areas, free up public finances for important social programs, and subsidize land-dispossessed local communities.…”