Incentives key to improving park service

vBozeman Daily Chronicle
August 4, 1999

By Richard Stroup

The special corner of God's country called Yellowstone National Park is constantly in the news ‹ and the news is often bad. We learn that there are too many visitors, too many elk, too many crumbling roads, and not enough money. On July 25 the sorry state of the park hit the front page of the New York Times. Yellowstone Park Superintendent Michael Finley told the Times reporter, "As the park continues to deteriorate, the service level continues to decline."

Seeing these stories year after year, some people blame "incompetent bureaucrats." However, my years as chief economist of the Interior Department gave me a different perspective.

Before going to Washington in the 1980s, I had criticized many decisions made in the Interior Department. I still criticize them, but I was forced to analyze the reasons more carefully. In almost every case, high-level leaders of government bureaus and agencies are smart, extremely hard-working, and tightly focused on their missions. They are among "the best and the brightest" in their fields. Yet bad results, like those we see in Yellowstone are frequent.

Why? The answer lies in the signals they receive and the incentives they face. Consider the problem of deteriorating services. To reduce costs, Michael Finley closed the popular Norris Campground in 1996. Ironically, visitors were paying fees that more than paid to keep it open ‹ but the money went mostly to the U.S. Treasury, not to the park. The costs came out of Yellowstone's budget, but the park didn't receive the revenue. While the decision to close down a money-making campground to save money seems perverse, it was logical, given where the fees went.

There is another possible reason why the campground was closed, too. Analysts call it "the Washington Monument strategy."

Every bureaucracy in Washington (and Helena) plays this game in some form, usually during the early stage of the budget cycle. A bureau submits a budget to Congress, usually with a large increase built into it. The bureau threatens that if the budget is cut, important services will have to be dropped. In past years, the threat has been to cut back on the hours of service at the Washington Monument. The goal was to cause a public uproar so that Congress would be persuaded to keep the budget high. 

The Washington Monument strategy is effective because of the way budgets are allocated. However, if popular parks were self-sufficient ‹ that is, if they had to rely on visitor fees for their budgets, and if they could keep those fees ‹ management would not make such counterproductive decisions. Research has shown that most visitors would be happy to pay more if they knew the money stayed in the park. Visitors would find themselves more welcome, and any future cuts in services would be chosen with an eye to losing the fewest visitors (and their fees).

Another problem at Yellowstone, under investigation by the National Research Council, is the large elk population that has apparently been destroying aspen, willow, and streamside shrubs in the park. "Prior to 1967," the New York Times stated, "the Park Service culled herds of bison and elk, shooting or slaughtering thousands of them." The purpose was to avoid overgrazing. "After a public outcry, the policy changed."

The managers had the right policy before 1967. But public outcry led to the romantic idea of "natural regulation" (no human management). Most of the voters who demanded the change knew little about its ecologically devastating effects. 

The solution is to make park management less political ‹ more like private organizations, which can act independently of opinion polls when necessary. One way would be to create trusts to manage key portions of the park. While the details of this proposal are more complicated than I have room for here, the idea is that Congress would decide the goal of each trust and then appoint a board of directors, similar to the board of an art museum, to carry it out. Each director would be a recognized expert and, in fact, a zealot committed to the goal. The board, like a museum board, would have to live within the budget it could raise from visitor fees and elsewhere, and would not depend on the political process for the budget.

These two changes in park management, the move to self-sufficiency and specialized management focused on narrow congressionally-specified goals, would change the signals and incentives that now distort decisions. They could solve most of the problems that have plagued Yellowstone for so many years.

Richard Stroup is a professor of economics at Montana State University and a senior associate of PERC (the Political Economy Research Center) in Bozeman.

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