Capturing Economic Rents to Pay for Conservation of Sensitive Sites

In this paper, John A. Dixon discusses a type of Payment for Environmental Services (PES) system that he calls Direct Rent Capture (DRC). He argues that the reason for the lack of funding to conserve ecologically and culturally sensitive sites such as tropical rain forests, coral reefs, upland watersheds, landscapes, and cultural monuments is the disconnection between providers and users of environmental services. DRC, often in the form of admission or user fees, creates a direct link between the two parties by acknowledging environmental services as national assets and also recognizing the ability of consumers to pay for these services. Setting rules for making these services sustainable in the long run is a key component of these systems.

To illustrate how the DRC approach works, Dixon examines six cases, including Hanauma Bay in Hawaii, Bonaire Marine Park in the Caribbean, Galapagos National Park in Ecuador, Petra in Jordan, myriad sites in Egypt, and a landscape management system in Bhutan. In these cases, entrance fees and charges are used to raise revenues for maintaining the ecological and cultural services over time. DRC also helps users and providers to recognize the value and vulnerability of the services, thereby forging a partnership among government, civil society, and private groups to preserve these resources.

Dixon cautions that DRC may not work in situations where property rights to the natural resources are not well-defined. The implementation of such a system also requires some familiarity with market mechanisms and tourism. He reports that underpricing of services is common. The idea of raising prices to prevent excess demand often engenders political or social opposition, thereby rendering the approach to address overcrowding ineffective. Other rationing approaches, such as restrictions on the number of visitors, parking spaces, or licensed tourist companies, also are needed.

This paper was presented at the Lincoln Institute’s Land Policy Conference of 2010 and is Chapter 12 of the book Climate Change and Land Policies.