Pricing and Management of Recreational Activities Which Use Natural Resources

This paper analyses the economic efficiency of management regimes for the recreational use of a natural resource. Management must determine the use and development of the natural resource. The first-best policy uses price to offset the externalities of crowding and deterioration. This is contrasted with two second-best polices which do not use pricing: unrestricted access and quotas. A condition under which a relaxation of quota level increases efficiency is derived. Under iso-elastic functional forms quotas are less efficient than unrestricted access.