various NRP prices will impact total pass and gate revenues, and whether the prices satisfy the “fairness
and revenue neutrality” constraints mentioned in the Introduction.
The value of the NRP is derived from both use and non-use sources. The NRP provides access to
recreation at federal sites, without paying daily entrance or usage fees. We refer to this as use value,
which can in turn be separated into convenience and economic value. Convenience refers to the reduced
transaction costs associated with using the NRP rather than having to make separate payments for each
entrance fee.2 Economic value is derived from the expected cost in entrance fees, given the number of
planned visits to recreation sites and the current entrance fee structure. The NRP may also provide agents
with a sense of satisfaction in helping to fund the creation and maintenance of federal recreation sites that
may be used by others. We refer to this non-use value as stewardship value.3
In deciding whether to purchase the NRP, households weigh all the benefits and costs. The benefits
include convenience, economic value, possible stewardship motives and option values; the relevant cost is
the price of the pass. The household’s decision is straightforward - if the total benefits outweigh the
private costs, purchase the pass; otherwise, pay the gate fees. To better understand this decision, we
undertake a CV experiment designed to simulate the actual market environment and NRP purchasing
decisions of households.
3.1 Hypothetical Bias
2 We note that some may find an offsetting inconvenience in having to remember to bring the pass for each visit.
3 Our discussion assumes households base their personal value of the pass exclusively on the expected number of
recreation trips and the current gate fees, not the amount uncertainty associated with future trips. We recognize,
however, that households might incorporate the option value of the pass into their decision making. Similar to a real
option, the NRP can be thought of as an irreversible investment under uncertainty (Dixit and Pindyck, 1994).
Imagine a household has already purchased the pass and has previously decided the expected benefits exceeded the
cost of the pass. Once the NRP is purchased, the decision is final and irreversible because of legal restrictions on the
resale of purchased passes. Now suppose a household receives an adverse shock (e.g., sudden loss in income, rising
gasoline prices, family illness, etc.) and decides it must forgo a previously planned family vacation to a national
park. The household may ex post regret the decision to purchase the NRP as it no longer passes the internal cost-
benefit test. But it also seems reasonable that the household will, at least to some degree, anticipate this possibility
ex ante and place a value on the option to delay the purchase. While we do not formally model the option value for
the NRP, we recognize the household will likely incorporate the value of delaying purchase into its stated WTP for
the pass.