Tuesday, July 3, 2012

Freakonomics on Private Operation of Public Parks

Freakonomics had a nice article on the private park operations contracts recently issued to keep some California State Parks open.  In general, the author is open to the idea:
The substitution of corporate and community control for state management alarms some Californians who fear diminished accessibility amid higher fees and reduced operations. Only time will tell if those fears are justified.
But the nature of the agreements and the plans of the new park managers suggest the California experiment may produce some winning results.
The state had been losing money on these parks. What if a private firm could find enough efficiencies and enjoy sufficiently lower labor costs to keep the parks running, keep fees from climbing, and still kick back a share of revenues to the state? What if innovating philanthropists who know their backyard parks like the backs of their hands develop new amenities that attract happy park-goers and additional revenues? And what if the benefit of natural resource amenities to locals—residents, hoteliers, restaurateurs, and retailers, are sufficiently great to keep parks open and protected by municipalities and local coalitions.
In particular, I cheered at this:
The experiment upon which the state is set to embark will provide an opportunity to compare the relative efficacy of resource management provided by central government control, private ownership, and local cooperation.
I welcome this comparison.  In fact, I long for it.  I wrote in the comments:
I was one of four private companies that bid on these parks. One thing that is often lost in all this is that there are over 1000 very similar public parks already under management in a USFS service program that dates back over 30 years. Three of the four bidders for the CA parks, and the winning bidder, came from this program. 
I applaud your observation that a natural experiment seems to exist here. But the odd part, for me, is that such an experiment has existed for decades, and no one wants to follow up. Here in AZ, AZ state parks has 35-ish parks under its management and our company has 35-ish federal parks under private management. Many are next door to each other. But it turned out to be virtually impossible to get the faculty at Arizona State who was preparing recommendations on private management, or the press, or the agency itself to actually do the comparison. Everyone wants to hypothesize on the results based on their faith or lack thereof in private enterprise, no one wants to do a direct comparison. 
This frustrated me since I knew we managed the parks at half the cost, and had better customer service (camparizona.com ranks public campgrounds. In the survey taken a year or so ago our company had 3 of the top 5 public campgrounds under our management, and the state parks agency had zero) 
I tried to do one direct comparison on my own: http://parkprivatization.com/2012/01/case-study-private-vs-public-park-operations/. It would be awesome if someone in academia were to take this on. Those interested should contact me at my park blog: http://www.parkppp.com. 
By the way, it is incorrect to talk about loss of control to private operators. All of our contracts are highly structured with hundreds of pages of standards and restrictions. We cannot add a new service, modify or add structures or facilities, change fees, or most anything else without seeking approval from the parks agency. The agency still establishes the character and services and facilities of the park – we just provide the customer service and cleaning much less expensively. 
These contracts are almost always structured as concession agreements, meaning the private operator gets paid just with gate fees from the customer, not with appropriations. If customers hate the park or the service, no revenues. I get asked all the time, “won’t you just stop cleaning the bathrooms so you can make more money.” I answer, “Sure, same way that McDonalds and Marriott and Nordstroms make most of their money by not cleaning their bathrooms.”


  1. McDonalds has lots of Black, Hispanic and Native American clients.

    Of the National Park Service, the Forest Service, BLM, and California State Parks and Beaches, none have more than a few minority visitors.

    I just personally surveyed a couple dozen in the West and found 4 Blacks among 4000 visitors, all at the Grand Canyon.

    Privatization of them all might not increase the numbers of minority visitors, but the sale proceeds would at least be distributed equitably to them, one supposes.

  2. What is the price of tea in China these days?

  3. Optimist seems to be implying that privatization has nothing to do with racial diversity in CA and federal parks. We'll see. What is certain is that privatization does not burden folks who have no interest in parks. As it is now, our minority Americans are owed their share of the sale price at auction and entitled to be free of the costs of maintaining those White country clubs.

  4. The off budget work the the Foundation did was work that should have been done be civil servants. I saw one report maybe a month's work for me to do. I bet the used $100 K of that save the parks funds to do that report. That is how you say you are doing the job for free, while the public pays through the nose.