A fundamental concern of any CV study is hypothetical bias. Respondents have a well-established
tendency to state willingness to pay values that are significantly greater than those revealed in real-market
interactions (e.g., Diamond and Hausman, 1994; Harrison and Rutstrom, 2006). While different methods
have been proposed to obtain more accurate WTP values from non-market valuation surveys (Boyle,
2003), our study has a built-in mechanism to calibrate hypothetical WTP values with real choices. We
take advantage of the fact that the NRP is nearly identical to the existing GEP, which has been previously
sold in the marketplace. Our survey design (described in more detail below) uses revealed-preference
data from the GEP market to estimate the degree of awareness and hypothetical bias within our survey
sample. We use these estimated calibration factors to adjust WTP values from the survey so they are
consistent with the actual, incentive-compatible purchasing decisions of households. The details of this
calibration exercise are described in more detail below.
3.2 Calculating NRP and Gate Revenues
Initially, we assume households are motivated to purchase the NRP based solely on its economic
value. That is, people purchase the pass if it reduces the total planned entrance expenses for visitation to
federal recreation sites and do not place any value on convenience or stewardship. With this assumption,
it is straightforward to use our estimated WTP values to project NRP and gate revenues associated with
various NRP fee levels. NRP revenue is defined as the revenue generated directly from sales of the NRP.
Gate revenue is the revenue generated from on-site entrance fees at federal recreation sites.
To further clarify, consider the case in which a household’s maximum WTP for the NRP is greater
than the price of the NRP. In this case, the household purchases the pass and contributes nothing to gate
revenues. Conversely, if the household’s maximum WTP is less than the cost of the NRP, the household
will not purchase the pass and instead pay at the gate. If the household’s WTP for the NRP is driven by
economics, the most they would be willing to pay for the pass would be the exact amount they expect to
spend at the gate. This produces a straightforward method for calculating NRP and gate revenues: