Publication History: Portions of this paper have appeared in two publications High Adventure Outdoor Pursuits: Organization and Leadership edited by Joel Meir, Talmage Morash, George Welton — and Proceedings of the 1986 Conference on Outdoor Recreation. This version is from the 1986 proceedings. Citation: Watters, R. (1988). Benefit cost analysis of non-commerical outdoor programs. In J. Cederquist (ed.), Proceedings of the 1986 Conference on Outdoor Recreation. (pp. 145-155). Salt Lake, UT: National Conference on Outdoor Recreation.
Reproduction Information: You are welcome to provide links to this page or to use short quotations and paraphrases in other documents as long as they appropriately reference the source. There is no charge for non-profit organizations to reproduce or publish extensive parts or all of this paper, but please obtain advanced permission from Ron Watters (firstname.lastname@example.org). Photo credits: Ron Watters.
Editor's Note: Since this paper was authored in 1988, the figures included in the "Values of Recreational Activities" tables have become dated. The data in the tables were updated a couple of years later and you find those in this paper. But, in either case, because of inflation, the values nowadays would be considerably higher. The paper also dates itself in the section entitled "Computerizing Records" by referring to LOTUS 1-2-3. LOTUS 1-2-3, a spreadsheet program, was hugely popular in the mid 1980's, but has since been discontinued. Despite these drawbacks, the process of conducting a cost-benefit analysis which is described in the bulk of the paper is still very much current and is still a very useful tool for assessing recreational programs.
Any professional in the outdoor field knows intimately that outdoor recreation programs provide a variety of benefits to its participants, local community, and its sponsoring agency or institution. Obtaining some objective measure of those benefits, however, isn't easy. Evaluation tools available in other fields are not readily adapted to an outdoor recreation setting — and if adaptable, they are often impractical and too time consuming to administer.
In this paper one tool measuring the cost effectiveness of programs — benefit cost analysis — is singled out and a discussion is presented on how it can be specifically and pragmatically applied to able-bodied or disabled outdoor recreation programs.* The type of analysis suggested within is designed for non-commercial programs which are primarily designed to provide a service to their users. Commercial programs which are designed to generate profits will want to utilized other well established methods of evaluating financial viability.
Though benefit cost analyses can become exceedingly complex, a fairly simple form is suggested here. Most of the data needed to conduct this type of analysis is likely already being collected by the program manager. Even if a one does not regularly do a benefit cost analysis, the suggestions within this paper provide information on how to develop a systematic method of collecting and recording data.
The figure by far the most used in relation to program evaluation is the number of total participants involved in all of the various aspects of a program. It is easily obtained by counting numbers on trip sign-up sheets and the numbers of participants attending evening programs or any other offerings of the program. In the hectic pace of running an outdoor program, it is easy to forget to record such data. A good way to keep track of participant figures is to pass around a sheet of paper at weekly staff meetings and have everyone write down the numbers for each of the activities that have occurred since the last staff meeting. It's surprising after a couple of weeks how such information can slip one's mind.
To record participant data, use a spread sheet format. The spread sheet can consist of piece of lined paper with several columns drawn down it. Ledger book paper used for accounting purposes work well or one can also use a computer method to record the information(described later in this paper). Sample spread sheets are shown on the next few pages.
Additional participant information that is often forgotten is the number of individuals using the resource center of the program. The resource center is just one of the important services of the program, and there is no reason that such information ought not be reported in the program's annual report. It is far too time consuming to make counts of the number of people using the resource center each day. An easier method is to count numbers on several random days throughout the year and to determine an average day usage.
Participant Time Involvement Figures
Another useful figure is the amount of time participants spend involved in the activities of the program. On data sheets, which are used to compile all the various participation figures, include a column which indicates the duration of the activity in hours (see Sample Participation Spread Sheet on the next page). For overnight or multi-day trips, figure the total hours from the time leaving to the time returned. Thus, a weekend trip leaving Saturday morning at 8:00 AM and returning Sunday evening at 7:00 PM is 35 hours in duration.
From the number of participants and the duration of the activity, a practical unit of measure — the participant-hour — can be easily derived. The participant-hour (the terms "user-hours" or "visitor-hours" are also utilized) is the time involvement of one participant for one hour.1 It is calculated by taking the number of participants and multiplying it by the duration of the activity. As an example, a group of 5 participants go on an afternoon canoe trip. The trip lasts from 1:00 PM to 5:00 PM (4 hours in duration). The number of participant hours is 5 participants x 4 hours = 20 participant-hours.
All the information discussed on the previous page is compiled and recorded on a "Participation Spread Sheet" as follows:
SAMPLE PARTICIPATION SPREAD SHEET
From the time-involvement figures, the average amount of time a participant spends involved in outdoor program activities can be determined. To do so add up the participant-hours and divide by the total number of participants:
What this figure indicates is the average amount of time individuals are willing to spend involved in outdoor program activities. Most likely, this figure will be much higher than other services provided by the sponsoring agency of institution. The information can be very helpful to an outdoor program director who must justify his program's existence as well as being useful to help pave the way for future funding requests.
If a benefit cost analysis is to be done, then it is helpful to include an additional column in the Participation Spread Sheet which was discussed previously. This column is the number of participant-days. Participant-days can be defined in various ways, but for the purposes of accurate benefit cost analysis, it should be defined as an 8 hour day. It does not include nights.
The 8 hour day can be made up of various combinations, such as 2 people participating in an activity of 4 hours duration, or 4 people participating 2 hours each and so on. As an example, an afternoon canoe trip consisting of 9 people lasts 3 hours. The number of participant-hours is: 9 participants x 3 hours = 27 participant-hours. The number of participant days is: 27 participant-hours/8 hours per day = 3.375 participant-days. Rounding off to the nearest whole number, it becomes 3 participant-days.
When calculating participant-days for overnight trips, do not use participant-hours; instead, simply count the days. Here's an example: On a long weekend, a group of 10 leave Friday night at 6:00 PM and return Monday night at 6:00 PM. From Friday night to Monday night involves three 8-hour days. The number of participant days is: 10 participants x 3 days = 30 participant-days. In this case, the number of total hours is irrelevant as 8-hour days are involved.
The importance of calculating participant-days shortly will become apparent. While participant-hours are good indicators of the relative popularity of individual activities, participant-days are the most useful measurements for calculating benefit cost ratios. A sample spread sheet which includes participant-days is shown below:
SAMPLE PARTICIPATION SPREAD SHEET
Without collecting any additional data, several other figures can be determined, including the number of trips and instructional sessions offered in each activity category, the amount of time involved by participants in each activity and the total number of trips offered.
It is helpful to break down the activity categories into a system similar to the categories shown in "Table of Values of Recreational Activities" later in this chapter. This division between instructional sessions, multi-day trips, etc., makes a benefit cost analysis easier as well as giving more complete information on what aspects of the program are most popular.
A sample "Activity Category Spread Sheet" with all of this information is shown below. The sheet is an example and it is made by adding up the totals of a series of imaginative Participation Spread Sheets.
SAMPLE DATA SHEET — ACTIVITY CATEGORIES SPREAD SHEET
A benefit cost analysis is an interesting evaluation tool that when used for the first time is certain to raise the eyebrows of even the most reserved administrator. Such an analysis helps to establish a dollar amount value of the services provided by the program as well as comparing the cost of the program to the amount of benefits generated. This section will deal with the first step — determining benefits.
Program benefits are based on the value of services provided. In an outdoor program setting, the value of a particular service is the amount of money that an individual is willing to pay for a comparable commercial service.
The table below lists the values of recreational activities popular in outdoor programs. It was prepared by averaging the prices of a large number of guides and commercial outdoor schools throughout the U.S. and Canada.
TABLE OF VALUES OF OUTDOOR RECREATIONAL ACTIVITIES
Unless otherwise indicated, all values below include equipment and are based on 1983 and 1984 figures. In some activities, i.e. sailboarding, the length of the participant day for instruction has been shortened to more closely approximate comparable commercial instruction.
(Editor's Note: More recent tables are found in the paper: "Cost Benefit Analysis of Recreation Programs for the Disabled")
TABLE OF VALUES OF RECREATIONAL ACTIVITIES*
It may be necessary to adapt or change the "values" in the table so it more closely represents the actual commercial rates in the geographical location of one's program. In some locations the value of commercial services may be higher or lower than the averages listed on the table. With this information and with figures from the Activity Categories Spread Sheet, the dollar amount of benefits for each category can be calculated:
Bruce Mason, in a paper that he has prepared on benefit cost analysis, goes a step further to obtain a final dollar value of benefits provided by the University of Oregon Outdoor Program. He takes the total benefits of trips and adds to it the benefits of evening programs and other non-trip "events." Mason assesses a value of $1 per participant per event, based on the typical University of Oregon charge for movies and similar events. 2
A program may generate other benefits which should be added the total benefits obtain from the above calculations. Disabled programs, for instance, spend a considerable amount of time fund raising. Total income derived from fun raising activities is a benefit of the program and is added to the total benefit figure.
Other forms of income also can be added, including advertising revenues generated from program newsletters, sales of T-shirts, revenues produced from used equipment sales, revenues from renting equipment, etc. However, one caution is advised: make sure that benefits are not counted twice. For an example, consider the situation where a number of the trips organized by a program produce income. If the participant-hour and participant-day figures from those same trips have been included in the totals posted on the activity categories spread sheet (which is used to calculate benefits), then the income from those trips should not be added to the total benefit figure. Doing so, has the effect of counting benefits twice.
For those university programs which provide instructors for academic classes, another benefit may be included. The state university system usually places a dollar value on the number of student credits generated by academic departments. If outdoor program personnel are teaching classes and generating credits for the university, it is providing a direct benefit which can be measured in dollars and such additional benefits should be included in the total figure. However, as has been cautioned previously, make sure these same classes have not also been included in the totals on the category activity spread sheets, otherwise, class benefits are counted twice.
The second part of conducting a benefit cost analysis is determining costs of the program. Costs can be broken down into two categories: 1) costs to the sponsoring agency or institution; 2) costs to the participants. Cost to the sponsoring agency is easy. This figure is the total sum budget of the program — the cost of personnel, equipment, supplies, etc. If a benefit cost analysis is being made on the sponsoring agency or institution's investment, this is all the information one needs to do the analysis and one can skip the next few paragraphs continuing with the next section, Benefit Cost Analysis.)
The second category of costs is the amount of money invested by participants. To calculate costs to participants, review each activity category. For each activity category, determine the average amount of money which is expended per day on a trip. Include any cost that would be normally included in the commercial prices.
For instance, in the case of a raft trip the cost figure should include the cost of the gas to do the shuttle since shuttles are typically included in the overall fee of a commercial guide company. The cost of meals while on the river and the rental of boats and group equipment would also be included in this cost figure since these are also normally a part of a guide's charges. Do not include, however, the cost of driving to the river. Most guide companies require clients to pick up their own transportation expenses until reaching a pre-arranged rendezvous place near the river.
Include any other fees the program may assess such as a $5.00 fee per person for a day instructional session in cross-country skiing. Figure the average daily cost per participant in each of the activity categories. Take the average cost per participant and multiply it times the number of participant-days to arrive at the total cost of that particular category. Add up all of the category costs to arrive at total costs to participants.
Benefit Cost Analysis
The benefit cost analysis is now easy to calculate from the information obtained from following the procedures in the last two sections. The analysis can be done from one or all of three perspectives:
1. The first is from the perspective of the sponsoring agency or institution's investment. How much return does the outdoor program provide per university funding invested?
2. The second is from the perspective of the participants. What is the dollar amount of benefits they receive per dollar invested?
3. And the third perspective is the total over-all return per dollar invested by both participants and the sponsoring entity.
All three benefit cost ratios can be determined, but probably the most useful to show the efficiency of the program from an administrator's standpoint is the first one.
The benefit cost (B/C) ratio is:
B/C Ratio = Total Benefits / Total Costs
As an example, let's say the total benefits of the program are $55,000 and the total cost to the university is $40,000, the benefit cost ratio is: $55,000/$40,000 = 1.38.
The Value of a Benefit Cost Analysis
What the benefit cost ratio indicates is the amount of return for dollar invested. In the above example, every dollar invested by the sponsoring agency in the outdoor program returns $1.38 in benefits. The Corps of Engineers uses a benefit cost analysis in determining the value of public works projects. If the B/C ratio is over 1.0, the project is considered prudent use of public funds. A project with a B/C ratio of 2.0 is considered to be an exceptionally profitable venture.
Another way of describing the results of a benefit cost analysis is to subtract costs from benefits (B-C). In the example in the previous section, $40,000 is subtracted from $55,000. Thus, program provides $15,000 of total benefits above what the agency has invested. Such a treatment of benefit cost figures is roughly analogous to the concepts of gross and net profit so important to the survival of business endeavors in the private sector.
In the example, $55,000 can be compared to the gross profit and $15,000 to the net profit of a commercial enterprise. Besides providing agency supervisors with cost efficiency information, the process of comparing benefits and costs also provides an outdoor program director with information which can be used to compare the financial performance of the program from the year to year.
Like commercial enterprises one can expect benefit cost ratios to vary from year to year. Large reductions in the ratio may signify changes within the program which are financially disruptive. The changes, however, must be compared with the results of other evaluative tools.
The addition of a new activity, such as skiing for disable participants, may be quite costly and only provide benefits for a limited number of participants, but, on the flip side, it may generate a wealth of positive publicity for the agency and provide an extremely high quality experience for those who take part.
Much of the routine work can be taken out of keeping records by using a computer. For the type of participant record keeping described in this chapter, a spread sheet software program, such as LOTUS 1-2-3, is the most useful. With such programs as LOTUS 1-2-3 a master data sheet can be designed using the same format as shown in the sample spread sheets described earlier in the chapter.
For a guide, a sample LOTUS 1-2-3 sheet is found on the next page. This sample sheet may have more information than the typical outdoor program data sheet, but it is included to show the various options available. Since it involves records from a disabled program, the sample includes extra columns for numbers of disabled participants, able-bodied (AB) volunteers, and volunteer hours a volunteer spent in the program.
It also includes a column for able-bodied supporters who are individuals attending the various fund raising activities and other events who support the program but do not actually volunteer their services.
The code in the last column is a handy item and it is suggested that all master sheets have one. By choosing a code for each activity, i.e. rock climbing instruction(RCI), cross-country ski instruction(XCI) or swimming(SWM),etc., all the entries on the master data sheet can easily be sorted by the software into categories. The computer then will provide totals of all columns for each activity category and up-to-date numbers are available at any given time. Setting up a master data sheet similar to the sample sheet also is convenient for providing data in ready form for a benefit cost analysis.
1A discussion of the various units of measure used by public land agencies and particularly the Forest Service in relation to wilderness research is found in Wilderness Management by George H. Stanley, et al, (U.S. Forest Service/Superintendent of Documents Publication #1365, 1978), pp. 287-310.
Early original work on benefit cost analysis of non-commercial university outdoor programs was done by H. Hilbert and Dr. John Merriam, an economics professor at Idaho State University in the early 70's. Benefit cost analyses were conducted on the ISU program, but no papers other than the results of the analysis were published.
Those readers who wish to delve deeper into the field, may wish to consult Recreation Economic Decisions: Comparing Benefits and Costs by Richard G. Walsh and published by Venture Publishing, Inc., 1986. Though Walsh's book is not for the layman, delving deeply into the complexities of supply-demand curves, it is an important and valuable work in the field. The method of conducting a benefit cost analysis within this paper is different than that of Walsh's which utilizes the concept of consumer surplus but the basic principles are the same.
*It should be noted that this is an early systematic attempt to apply benefit cost analysis to non commercial outdoor recreation programs. Though, the methodology and tools suggested within need further research and development, it does, nevertheless, provide program managers with the necessary practical information to undertake a fiscal evaluation of their operation.