Um, this is a toughie. I have to say I camped at various festivals from around age 16 and its really not safe. So agreeing with Skribble on this one.
No matter how sensible dd thinks she is, the minute she starts drinking(and lets face it, the likelyhood is that she will) she's already in trouble. Thats assuming no-ones going to offer her drugs as well. Even if her intentions are good, she's still a kid and even slightly tipsy kids do really stupid things, especially when getting pressured by other kids (who are often equally good intentioned, but you fire off each other at that age - which is why my best mates parents always thought I was the 'bad influence' and why my parents thought it was her)
I did stuff at festivals that my parents would be mortified at even now, although at the time I didn't think it was such a big deal. Looking back I wasn't emotionally mature enough to handle myself - I thought I was in control when I wasn't.
I do think 'just' 16, and in exam time is pushing it, and yes, she'll be mega-gutted. You know her best though. Do you really think she'll be sensible or is she kidding herself as well as trying to convince you?
Are her friends the type to stick in a group, or splinter off if they get a 'better' offer so to speak? Are the girls going to back her up if she's being pressured by the bf?
On the other side of the coin, I did have some friends who were super-sensible and stayed that way whatever situation they were put in, even at such a young age. And, much as I've put a real 'downer' on the idea, a lot of kids will just have a great time and not do anything really idiotic, or find themselves in a bad situation. Lets face it, they'll do what they want to even if they don't go to a festival, they just won't get such a great opportunity to get away with it.
If you do think you'll let her go, make it clear that this is a trust exercise - you are trusting her to behave and not get into a situation where she allows herself to be vunerable. Explain what that might be, if you think she doesnt 'get' what your worried about. Try and make her see it from your point of view (hmm, easier said than done!) - I was super selfish at 16 and never understood why my folks worried. Let her know for sure that if that this doesnt happen, then future events are out of the question.
I'm not offering my opinion as a parent (but will be soon) - Im just speaking as someone who recalls quite well what I got up to as a teenager. I don't know if my comments will help you or worry you even more - good luck with your decision.