Pricing Policy for Tourism in Protected Areas: Lessons from Komodo National Park, Indonesia

Abstract: Protected areas are under increasing pressure to provide economic justification for their existence, particularly in developing countries where demand for land and natural resources is high. Nature-based tourism offers a mechanism to generate substantial benefits from protected areas for both governments and local communities, and ecotourism is increasingly promoted as a sustainable use of protected areas. The extent to which ecotourism offsets the costs of a protected area has rarely been examined. We used financial data from Komodo National Park, Indonesia, and a willingness-to-pay questionnaire of independent visitors to (1) examine the financial contribution of tourism in offsetting the costs of tourism and wider management and (2) assess the effect of hypothetical fee increases on park revenues, visitation patterns, and local economies. Although only 6.9% of park management costs were recovered, visitors were willing to pay over 10 times the current entrance fee, indicating a substantial potential for increased revenue. The potential negative effect of large fee increases on visitor numbers and the resultant effect on local economic benefits from tourism may limit the extent to which greater financial benefits from Komodo National Park (KNP) can be realized. Our results suggest that a moderate, tiered increase in entrance fees is most appropriate, and that partial revenue retention by KNP would help demonstrate the conservation value of tourism to both visitors and managers and has the potential to increase visitors' willingness to pay.