The Great Walks may be free, but they are not free

My blog's been a bit quiet the last couple of weeks while I've been buried in exam marking. Now that marking is done, I can start to post on some things I had put aside over that time. Starting with the controversy over comments made by Department of Conservation director-general Lou Sanson, reported here:

It may be time to start charging for the use of the country's Great Walks, Department of Conservation director-general Lou Sanson says.

Foreign tourists could pay $100 and New Zealanders $40 to cope with a huge increase in trampers — especially overseas travellers — and their effect on the environment, he suggested.

Sanson said the country's Great Walks brand had "exploded" but this popularity had created some problems...

In March, he took the United States ambassador to the Tongariro Alpine Crossing — a 19.4km one-day trek between the Mangatepopo Valley and Ketatahi Rd in the North Island.

"Every time we stopped we were surrounded by 40 people. That is not my New Zealand. We have got to work this stuff out — these are the real challenges," Sanson told the Queenstown Chamber of Commerce yesterday...

Introducing differential charges on the Great Walks was one potential mechanism to alleviate pressure, Mr Sanson said.

"We have got to think [about that]. I think New Zealand has to have this debate about how we're going to do bed taxes, departure charges — we have got to work our way around this.

"I think a differential charge [is an option] — internationals [pay] $100, we get a 60 per cent discount."

The New Zealand Herald then ran an editorial the next day, entitled "Turnstiles on wilderness is not the answer". The editorial raised some good practical issues with charging a fee for trampers on the Great Walks:

Would rangers be posted to collect cash, or check tickets that would have to be bought in advance? How would they be enforced?

It also raised an important issue about the perception of the service provided by DoC:

A charge changes the way users regard it. The track and its surrounds would cease to be a privilege for which they are grateful, and become something they feel they have paid for.

They will have an idea of the value they expect and rights they believe due for their expense. They may be more likely to leave their rubbish in the park. The costs of removing litter and cleaning camping areas may quickly exceed the revenue collected.

However, the editorial ignored the fundamental issue of providing goods and services for 'free'. If something comes with no explicit monetary cost associated with it, that does not mean that it is free. Economists recognise that there are opportunity costs (because in choosing to do a Great Walk, we are foregoing something else of value we could have done in that time), but this is about more than just opportunity costs.

When a good or service has no monetary cost, there will almost always be excess demand for it - more consumers wanting to take advantage of the service than there is capacity to provide the service. Excess demand can be managed in various ways - one way is to raise the price (as suggested by Sanson). Another is to limit the quantity and use some form of waiting list (as is practiced in the health sector). A third alternative is to degrade the quality of the service until demand matches supply (because as the quality of the service degrades, fewer people will want to avail themselves of it).

The latter option doesn't sound particularly appealing, but it's the option that Sanson is most against, and would be the necessary consequence of the laissez faire approach the Herald editorial advocates for. Sanson already notes one way that the quality of the Great Walks is affected, when he notes "Every time we stopped we were surrounded by 40 people". If you want to take a Great Walk in order to experience the serene beauty and tranquillity of our natural landscape, the last thing you want is to be constantly mobbed by selfie-taking dickheads. The quality of the experience degrades the more people are on the Great Walks.

Pricing might not be appetising to some, but at least it would manage the demand for the Great Walks. Providing lower prices to locals is, as I have noted previously, an appropriate form of price discrimination that I remain surprised that we don't see more of in New Zealand. Of course, that doesn't negate the practical concerns raised in the Herald editorial. But if we want to maintain the quality of the experience on the Great Walks, this is a conversation that we should be having.