The economics of developing a long-distance walking track in North Queensand

Cook, Averil (2005). The economics of developing a long-distance walking track in North Queensand PhD Thesis, School of Economics, The University of Queensland.

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Author Cook, Averil
Thesis Title The economics of developing a long-distance walking track in North Queensand
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 2005-11-29
Thesis type PhD Thesis
Supervisor Assoc Prof Steven Harrison
Total pages 343
Language eng
Subjects 1506 Tourism
350000 Commerce, Management, Tourism and Services
Formatted abstract Walking tracks with provision for overnight stays exist in many countries. They are a tourism drawcard and some (e.g. the Milford Track in New Zealand) have icon status. In Australia, long-distance tracks exist in most states but had not until recently been developed in north Queensland. The working hypothesis for this thesis is that a new long-distance walking track in the tropical rainforest environment could be a valuable recreation asset for the region, and a major tourism attractor. Since a long-distance walking track in a natural environment would be situated in a rural region away from major cities, there is potential for tourism expenditure by long-distance hikers to contribute positively to the economy of remote towns.

It is proposed that a walking track can be created relatively easily in the rainforests if disused former logging roads are used as the basis. The new walking track on a logging road base could be developed at moderate cost, and with minimal ecological and environmental disturbance. A new track created within a protected natural area is usually regarded as a public good and most associated costs may be considered to be appropriately funded through the taxation system. However, it may be argued that the recreational use of a long-distance walking track provides benefits to those who use it, and that hikers should contribute towards the recovery of managerial costs. An appropriate level of user fee may be obtained from a market model. In this thesis, an annual market model is estimated for the recreation service which provides a short-term efficient price. A long-distance walking track is an investment in recreation infrastructure the benefits of which are intergenerational. Thus efficiency in the long-term is also an important consideration.

Both a static analysis and cost-benefit dynamic analysis are presented in this thesis. When a track does not exist (as was the case in north Queensland when this thesis commenced) or when it is under construction (as when the thesis was nearing completion), direct evaluation is not possible and so demand (consumer surplus) and supply (marginal cost of recreation service) estimates for a new track must be obtained Walking tracks with provision for overnight stays exist in many countries. They are a tourism drawcard and some (e.g. the Milford Track in New Zealand) have icon status. In Australia, long-distance tracks exist in most states but had not until recently been developed in north Queensland. The working hypothesis for this thesis is that a new long-distance walking track in the tropical rainforest environment could be a valuable recreation asset for the region, and a major tourism attractor. Since a long-distance walking track in a natural environment would be situated in a rural region away from major cities, there is potential for tourism expenditure by long-distance hikers to contribute positively to the economy of remote towns.

It is proposed that a walking track can be created relatively easily in the rainforests if disused former logging roads are used as the basis. The new walking track on a logging road base could be developed at moderate cost, and with minimal ecological and environmental disturbance. A new track created within a protected natural area is usually regarded as a public good and most associated costs may be considered to be appropriately funded through the taxation system. However, it may be argued that the recreational use of a long-distance walking track provides benefits to those who use it, and that hikers should contribute towards the recovery of managerial costs. An appropriate level of user fee may be obtained from a market model. In this thesis, an annual market model is estimated for the recreation service which provides a short-term efficient price. A long-distance walking track is an investment in recreation infrastructure the benefits of which are intergenerational. Thus efficiency in the long-term is also an important consideration.

Both a static analysis and cost-benefit dynamic analysis are presented in this thesis. When a track does not exist (as was the case in north Queensland when this thesis commenced) or when it is under construction (as when the thesis was nearing completion), direct evaluation is not possible and so demand (consumer surplus) and supply (marginal cost of recreation service) estimates for a new track must be obtained from other sources. A key original contribution in this thesis is the application of economic transfer to derive a market model for a proposed recreation service infrastructure item, and a further appreciation of economic transfer involves the use of the benefit level from the market model as an input into the cost-benefit analysis.

Demand estimates have been obtained from surveys of visitors on two other walking tracks in north Queensland. Zonal travel cost methodology has been applied to the survey data to develop demand curves for these long-distance hiking opportunities and measures of value in terms of consumer surplus. Zonal rather than individual travel cost was necessary since most respondents were walking the particular track for the first time. Since the Centenary of Federation in Australia in 2001, when seed funding was made available, some new long-distance walking tracks have been developed in the Queensland Wet Tropics World Heritage Area. One of these has been selected as the case study developing track for this thesis. Demand and cost estimates for the new trail have been transferred, with appropriate adjustments, from the studies conducted on the two other trails. An interesting feature in this transfer process is that close substitutes exist for the target walking track but not for either of the two source walking tracks. An innovation in this thesis is the development of a market model for the new track. Two market models are derived, one from each of the source tracks, and are used to determine the socially efficient price and visitation levels. These may be used by management as a basis for the setting of user fees.

The equilibrium values obtained from the static analysis have also been incorporated into the dynamic analysis together with the consumer surplus estimates from the travel cost demand curve. The equilibrium quantities provide the basis for an estimate of the visitation level expected for the new track on which many of the continuing management costs depend. Two scenarios (with and without hut infrastructure) have been investigated in cost-benefit analyses. Both scenarios were found to be economically worthwhile.
Keyword Trails -- Economic aspects -- Queensland, Northern
Tourism -- Economic aspects -- Queensland, Northern
Additional Notes The author has given permission for this thesis to be made open access.

 
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