Study: Fee hike will hurt economy

Economic theory holds that an increase in the cost of a good will always diminish demand, all other things remaining equal. In recent weeks, researchers at the University of Montana have been trying to determine the extent to which that applies to entrance at some of the most beautiful, protected vistas in the country.

The National Park Service is predicting that any decrease in visitation due to a proposal to raise entrance fees will be more than offset by the 133 percent increase those who do come will pay to enter the park.

A new report from the Montana Institute for Tourism and Recreation Research at the University of Montana reinforces that notion, but also lends credence to the concern that it could create problems for doorstep communities.

“It is likely a fair assumption on behalf of the NPS that the directional change of the revenue from entrance fees will be positive,” the report reads. “However, revenue to the parks is only a portion of the economic picture.”

The National Park Service faces a $12 billion maintenance backlog, and in an effort to erase that the Department of the Interior, run by former Montana Congressman Ryan Zinke, has proposed raising entrance fees to the park from $30 to $70 for a seven-day, single-car pass. The researches say the Park Service will almost surely see an increase in revenue, but that increase could be less than the decrease area businesses are going to see due to the lower numbers of visitors.

The findings from the recent study are two-fold. First, the fee increase will do much more to dissuade locals from entering the park than non-locals. Since the entire cost of their trip is much lower when visitors simply drive a few hours, the $40 increase represents a much larger change than for out-of-staters who are already spending thousands on plane tickets, car rentals and lodging.

Jeremy Sage, economist and associate director at the tourism institute and lead author of the study, said they crunched the numbers for Glacier National Park and found that for every 10 percent increase in the total cost of the trip, they expected visitation numbers to decrease by about 2.4 percent. That number takes into account much more than just the entry fee, including things like gas, lodging and food, but the fee increases will constitute a direct impact.

He said when the Park Service announced the fee proposal to raise funds to address the maintenance backlog, it immediately caught the attention of him and his colleagues.

“That sent up some pretty significant red flags right away,” Sage said.

The report uses Yellowstone National Park and its gateway communities for a case study, but said the results will likely have relevance on the doorsteps of all 17 of the parks included under the fee proposal.

The change in total trip cost for local visitors, defined in the report as those hailing from Idaho, Montana and Wyoming, will be 37.6 percent. The change for non-locals from the elsewhere in the U.S. and Canada will be a more tolerable 13.9 percent. Other international visitors will see an average change in cost of less than 1 percent for their entire trip.

The report projects the changes in trip cost will lead to a 2.98 percent decline in local visitors, a 1.1 percent decline in non-local U.S. and Canada visitors and a 0.07 percent decline for other international visitors. Overall, a 1.2 percent dip in traffic due to the cost increases is projected.

Second, and perhaps more importantly, the fee increase is likely to raise millions for the National Park Service but sap millions from the economy of private businesses built up around the park entrance.

Fewer visitors and more revenue is a perfect situation for the impact on the park, but fewer visitors will lead to less revenue for gateway businesses.

“There is no upside financially for those communities, at least right away,” Sage said.

He also noted that some argue over the long run it could have a positive impact if the extra money raised by the increased fees is used on additional infrastructure that leads to even more visitors. However, such prognosticating was merely speculation, he said, and any such effects would take years to manifest.

The report projects that the dip in visitors would lead to approximately 0.6 percent less revenue for the local economy in Yellowstone, which amounts there to about $3.4 million. The report also said the other parks, including Glacier, would see similar declines.

Those losses only take into account the changes to the seven-day pass, but not the changes to the motorcycle fees, foot or bike entry fees and park-specific annual entry passes. The report concludes that if all those factors are combined, total spending losses to the surrounding communities could be even greater than revenue gains for the park.

Sage said it is important to note that they are not predicting a lower visitation year for the park next year compared to last. Rather, they are identifying the relationship between trip cost and visitor attendance. The estimated decreases would be better considered as the difference between what the 2018 numbers would have been without the price increases, and what they will be if the price increases take effect.

“We’re not forecasting, we are just identifying the relationship between this one piece and another piece,” Sage said, referencing total trip cost for visitors and park attendance numbers.

The report also noted that in other national park programs around the globe, it is common to have a different pricing structure for the country’s citizens and non-citizens. Sometimes the difference is drastic, but it has generally had little impact on numbers of international visitors because they are choosing to visit the area at great cost anyways. In a survey of about 50 countries around the globe, the UM research team found that around three-quarters had different prices for domestic and international visitors.

Sage encouraged members of the public to leave a comment with the National Park Service, which is accepting public feedback until Dec. 22 of this year on their website at www.nps.gov.

Reporter Peregrine Frissell can be reached at (406) 758-4438 or pfrissell@dailyinterlake.com.