Are visitors, biodiversity or timber production better for nature conservation? Findings from an econometric analysis of the management costs of protected areas in Serbia

Protected areas (PAs) are designed to provide a wide range of ecosystem services (ES) and to conserve biodiversity, alongside cultural values. Understanding the production processes within PAs is crucial to decipher the relationships between different ES, including primary (timber) production and the provision of public goods, and to assess their degree of 'jointness'. This article models PA management as a joint production activity involving multiple outputs, including biodiversity, recreation, and timber production. Using panel data on management costs from 57 PAs in Serbia (representing 82% of the country's protected area), we estimate a variable cost function, that accounts for potential endogeneity due to unobserved PA-specific heterogeneity. Our results show that increasing species richness and extending strict protection zones leads to additional management costs, but with different elasticities. A 10% increase in species richness outside strict zones increases costs by 4.9%, while within strict zones the increase is 5.77%. Timber production shows diseconomies of scale, suggesting that large-scale timber operations should be limited. Marginal cost estimates show that managing one additional species costs €11.80, one additional visitor costs €0.41 and one additional cubic metre of timber costs €44.43. We find no evidence of jointness between timber production and recreation, but there is competition between timber production and biodiversity. Conversely, biodiversity and recreation show complementarity in terms of protection costs. These findings are consistent with the Serbian PA management approach, which uses a land-sparing principle by spatially separating activities. This zoning strategy facilitates coexistence, allowing biodiversity to support local tourism and benefit from recreational activities.