National parks around the world have long-permitted private companies to operate within in their boundaries, whether it be to run gift shops or rental concessions. However, as national parks confront challenges related to limited funding, mismanagement and the threat of budget cuts, in some cases national and state authorities are looking to the private sector to take on more of a managerial role.
Under the right circumstances, public-private partnerships (PPPs) have been utilized as a means to tap into private sector expertise and capital. When done right, private operators can take on a public park that is losing money for the government and convert it into an economically productive asset, generating cash for the government in the form of rent payments while still serving the public.
Governments in emerging markets have experienced real success with national park PPPs. In the United States, national park PPPs have underscored the benefit of financial self-sufficiency, with parks operated on a concession basis remaining open despite federal budget cuts that forced others to close.
National parks in developing countries house some of the planet’s most undervalued natural assets and responsible commercialization offers a way to capture their significant economic value. PPPs have offered a powerful policy tool for improving the economic sustainability of parks, enhancing the quality of services, efficiently leveraging investment in conservation and contributing to the core function of protecting biodiversity.
Under a typical concession contract for a national park, the concessionaire will sign a contract allowing it to run the park for profit, and then pay the public entity rent in the form of a percentage of fee revenues. For many concession contracts, the private company pays all the expenses associated with operating and maintaining the park and is allowed to keep the customer fees paid at the gate as revenue. Public authorities retain an immense amount of control over the appearance and service level at a privatized facility, and generally have procedures in place for terminating contracts where private companies under-perform on the established standards.