We present a new adaptive method to calculate the path loss exponent (PLE) for microcell outdoor dynamic environments in the 2.4 GHz Industrial, Scientific, and Medical (ISM) frequency band. The proposed method calculates the PLE during random walks by recording signal strength measurements from Radio Frequency (RF) transceivers and position data with a consumer-grade GPS receiver. The novelty of this work lies in the formulation of signal propagation conditions as a parametric observation model in order to estimate first the PLE and then the distance from the received RF signals using nonlinear least squares. GPS data is used to identify long term fading from the received signal's power and helps to refine the power-distance model. Ray tracing geometries for urban canyon (direct line of sight) and nonurban canyon (obstacles) propagation scenarios are used as the physics of the model (design matrix). Although the method was implemented for a lightweight localization algorithm for the 802.11b/g (Wi-Fi) standard, it can also be applied to other ISM band protocols such as 802.15.4 (Zigbee) and 802.15.1 (Bluetooth).