Welfare Incidence of Subsidized Recreation Services in Finland

The paper addresses the question who benefits from public funding of recreation areas. Employing a survey data set that includes both users and nonusers of state-owned recreation and conservation areas in Finland, we derive measures of the income elasticity of willingness to pay for recreation services. Our elasticity estimates indicate that public provision of these services seems to benefit more those with lower incomes. We also estimate potential welfare effects for two seperate income groups (lower-/higher-than-median income) in alternative cases in which a free acceptable to a median voter would be implemented for the use of recreation areas. The efficiency and welfare losses have ambiguous impacts on the high and low-income groups, with the impacts depending on the actual level of the fee implemented. Finally, we discuss whether public funding of recreation services can be justified and what the optimal policies might be for implementing user fees.

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Journal Article
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Scandinavian Forest Economics: Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics
2004, Number 40
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