104
Int. J. Global Environmental Issues, Vol. 3, No. 1, 2003
Economic valuation of coral reefs at Phi Phi Islands,
Thailand
Udomsak Seenprachawong
The School of Development Economics,
National Institute of Development Administration (NIDA),
Seri Thai Road, Bangkapi, Bangkok 10240, Thailand
Fax: (662) 375-8842
E-mail: udomsak.s@nida.nida.ac.th
Abstract: This paper provides an economic valuation of the coral reefs at Phi
Phi Islands, Thailand. It used both the travel cost method and contingent
valuation method to estimate the benefits of tourism on Phi Phi’s coral reefs.
The study found that the reefs studied could generate large economic returns
through leisure pursuits and that tourists were willing to pay for conservation
measures. It suggests a number of levies and charges that could help remove
tourist pressure from the reefs and help pay for their conservation.
Keywords: Contingent valuation; coral reef; travel cost; willingness to pay.
Reference to this paper should be made as follows: Seenprachawong, U.
(2003) ‘Economic valuation of coral reefs at Phi Phi Islands, Thailand’, Int. J.
Global Environmental Issues, Vol. 3, No. 1, pp.104-114.
Biographical notes: Udomsak Seenprachawong is associate professor at the
School of Development Economics, Thailand. He received his PhD in Business
Administration (Economics) from the University of Memphis, USA. His
research works focus on economic valuation of natural resources.
1
Introduction
Economic valuation is one of the tools we can use to assign quantitative values to the
goods and services provided by environmental resources. The decision as to what to use a
given environmental resource for and ultimately whether current rates of resource loss are
excessive, can only be made if these gains and losses are properly analysed and
evaluated. Economists use techniques, such as the contingent valuation method which
uses surveys to estimate the surplus benefits to consumers and the travel cost method
which studies the willingness of tourists to pay to visit areas. For example, two of the
most important wetland areas in the UK are the Norfolk Broads in East Anglia and the
blanket peat bogs of the Scottish Flow Country. Both areas have been subjected to
economic valuation studies to assess the merits of retaining wetland areas versus
permitting them to be converted to alternative uses. In the case of the Broads, Bateman
et al. undertook a contingent valuation study to determine the willingness to pay to
conserve these recreational benefits via the proposed protection strategy [1]. Hanley and
Craig conducted a valuation of alternative uses of peat bog in Northern Scotland’s Flow
Country [2]. The area has been subjected to conversion through tree planting. The
contingent valuation survey in this case was aimed at assessing regional residents’
willingness to pay for conserving the area. The two UK studies demonstrate the
Copyright © 2003 Inderscience Enterprises Ltd.
Economic valuation of coral reefs at Phi Phi Islands, Thailand
105
possibility of using the contingent valuation as a tool for valuing wetland benefits,
especially where these are difficult to quantify using other techniques. This paper
attempts to apply economic valuation to quantify the recreational benefits of coral reefs
and proposes a level of payment for these services. Economic valuation can be a
powerful tool to assist in the wise use and management of coral reefs in the Andaman Sea
of Thailand. The goal is to achieve a sustainable coastal tourism development, which
means using, conserving and enhancing the community’s resources so that the ecological
processes, on which life depends, are maintained and quality of life for both present and
future generations is increased [3].
Coastal tourism in Thailand has remained largely unplanned for many reasons. Drawn
by the profits to be made, developers of resorts have ignored the negative environmental
consequences and government authorities have often been too slow to react to the rapid
rate of development. The deterioration of the beach and waters near the shoreline was
already a serious problem by the mid 1970s [4]. Other impacts include the destruction of
the natural environment and features (e.g., the natural tree cover was removed, wetlands
were filled in or converted into open sewers and the sea and beach were polluted by
poorly treated wastewater. Coral reefs were removed or destroyed by recreational
activities and wastewater discharge) [5]. This is of particular concern for the coral reefs at
Phi Phi Islands in the Andaman Sea of Thailand. Located about 45 km east of Phuket, Phi
Phi is composed of four main islands, these include Phi Phi Don and Phi Phi Lae, part of
the Had Nopparat Thara-Phi Phi Islands Marine National Park. The Phi Phi area is of
great environmental significance as it marks the boundary between two of the region’s
major oceans, the Pacific and the Indian and includes extensive coral reefs and mangrove
forest – home to a wide variety of marine and terrestrial – flora and fauna. Phi Phi offers
the tourist amazing recreational possibilities, including a wide range of diving
opportunities and exquisite beaches. Over the past few years, the islands have grown into
one of the busiest tourist destinations in Thailand. In 1998, over 150,000 tourists visited
the islands, 85% of them were from overseas. Sadly, this has led to degradation of the
reefs as marine traffic and other destructive activities have increased along with the
tourist trade. Phi Phi Islands have high values, coming from both the use values
(e.g. recreational and tourism) and non-use values (e.g. genetic resources and future
uses). Phi Phi is used as an important reference site for conducting coral reef valuations
elsewhere [6] since it is a well-known site with relatively easy access and good
opportunities for collecting reliable data. At present, there is no such study available for
Thailand and such a valuation has implications for management at Phi Phi, as well as
other sites at risk. Phi Phi Islands are representative of many coastal areas in Thailand
with potentially rich coral reefs in need of improved management so that economic and
other benefits can be restored and enhanced. The focus of this study is the valuation of
coral reefs and how this information can be used to improve planning for coral reef
management in Thailand. Such plans require budgeting and support from the
government, but often lack economic justification to help decision-makers appreciate
what they are supporting. In this regard, there is a need to raise awareness among local
and national government decision-makers of the value of coral reefs and what would be
lost if they were destroyed or not properly managed for long-term sustainability. This
information helps justify investments in the management and protection of coral reefs. In
addition, there are social costs associated with the conservation of coral reefs that should
be paid by those benefiting. This is in keeping with the ‘user pays principle’. Benefit
106
U. Seenprachawong
capture instruments can be an effective way of aligning social costs with private costs and
can provide sustained revenue to finance management activities to protect and restore
coral reefs. The objective of this study is:
1
to estimate the benefits of tourism on the Phi Phi Islands
2
to determine a user fee for visiting the reef sites at Phi Phi Islands.
2
Economic valuation of coral reefs
An analysis of the economic values of coral reefs can be derived from a valuation of their
various functions [7]. The mapping between the functions and the types of values is
presented in Table 1. Note that the non-use values also include known and unknown
future values of direct and indirect uses, often referred to as quasi-option and bequest
values. Together, these values can be taken to calculate the total economic value (TEV)
of coral reefs.
Table 1
Types of values corresponding to different functions of coral reefs
Types of Values
Functions
Direct use value (extractive)
•
•
•
•
•
•
•
•
•
Direct use value (non-extractive)
Indirect use values
Non-use values
Food/other resources (fishery)
Construction material
Pharmaceuticals and other industrial chemicals
Tourism and recreation
Education and scientific interest
Biological support
Coastal protection
Genetic resources
Known and unknown future uses of the functions above
Cartier and Ruitenbeek [8] have raised two issues regarding recreation and tourism
valuation. The first is that the recreation and tourism direct use value attributable to a
coral reef is usually estimated by accounting for the tourism revenue generated by a
particular coral reef holiday destination. From a utility perspective, these values ignore
the consumer surplus (the additional satisfaction gained by tourists visiting reef sites in
excess of payment for transport and accommodation) generated by the leisure experience
and, as a result, underestimate the value of it. From a production perspective, gross
tourism revenue ignores the labour and capital costs of supplying the services, as well as
the costs associated with the environmental impacts of tourism. The second problem with
using tourism revenue relates to the packaging of a vacation destination’s attributes.
When a coral reef is just a single attraction in the total package, the tourism revenue
cannot be said to be solely attributable to the reef. Yet, the more important the reef
attraction is in the vacation experience package, the higher the proportion of tourist
revenue that can be attributed to the reef. In any case, the basic problems of using gross
revenue and ignoring associated costs persist. Table 2 presents recreational and tourism
valuations of various coral reef ecosystems [9]. It can be seen that most studies focusing
on coral reef recreation/tourism estimate consumer surplus by using a travel cost method
(TCM) or a contingent valuation method (CVM). Hundloe [10] employed both the CVM
Economic valuation of coral reefs at Phi Phi Islands, Thailand
107
and the TCM. Hundloe applied the travel cost method to the data supplied by respondents
who had visited coral sites. The result was an estimate of A $105.6 million per year. This
figures does not pertain to the value of coral sites per se, but rather it is consumer surplus
– taking into account all attributes of the Reef Region – according to people who visited
coral sites as part of their visit. The next step was to calculate the consumer surplus of
visits to coral sites, with all other attributes excluded. The contingent valuation method
was used to estimate the value of coral sites. The value derived by this approach differs
from the values derived by the travel cost method as only the coral sites are evaluated and
not the entire Reef region as in the travel cost method. The consumer surplus resulting
from visits to coral sites was estimated to be A $6 million per year.
Table 2
Recreational and tourism valuations
Approach
Ecosystem and Original
(U = Utility,
Study
P = Production)
Valuation Results
P
Recreation value, Great
Productivity change: gross recreation value A$769
Barrier Reef
(1996), includes A$647 for commercial tourism and
Driml (1999)
A$123 for recreational fishing and boating; based on
volume and price data for hotel stays and reef trips, and
survey data for private recreational boat use.
Measuring the Value of
the Great Barrier Reef
Hundloe, T. (1990)
U
TCM: A$106 million/year consumer surplus; based on
travel costs to coral sites by both domestic and
international tourists, and includes all attributes of the
‘Reef Region’.
CVM: A$6 million per year or over A$8 per adult;
based on a survey of visitors to reef sites only, thereby
excluding all other attributes of the Great Barrier Reef
‘Reef Region’.
Dive Value, Bonaire
Marine Park
Dixon et al. (1993)
U, P
CVM: $27.40 average WTP for a consumer surplus of
$325,000; based on 18,700 divers in 1992 paying a
$10/diver/year fee. Productivity change: gross tourist
revenue of $23.2 million (1991).
Dive Value, Bonaire
Marine Park
Pendleton (1995)
U, P
Productivity Change: Net Tourism Revenue $7.9 to
$8.8 million (1991); based on ownership and profit
data. TCM: $19.2 million consumer surplus. Park
NPV: $74.21 million local benefits; $179.7 million
consumer surplus; based on a 20 year period, 10%
discount rate.
John Pennekamp/Key
Largo, Florida
Leeworthy (1991)
U
TCM: $285 to $426/person/day consumer surplus;
based on a survey of some 350 park users in 1990; nine
models were estimated; final estimate range taken from
the two models which best fit the data.
Tourism Valuation,
Indonesian Coral Reefs
Cesar (1996)
P
Productivity Change: NPV of tourism loss/km2 of reef
$3,000- $436,000 (from poison fishing); $3,000$482,000 (blast fishing or coral mining); $192,000
(sedimentation); based on assumptions regarding the
rate of reef degradation associated with each practice.
Vacation Value,
Galapagos National
Park, Ecuador Edwards
(1991)
U
Hedonic Demand Analysis: $312/day/person in 1986;
based on a non-linear regression using cost, duration,
and itinerary data from travel brochures; as well as cost
and duration survey data.
108
3
U. Seenprachawong
Methodology
This study combined TCM and CVM to estimate coral reef benefit from the Phi Phi
Islands. It first used a TCM to estimate the consumer surplus for both domestic and
international tourists to the Phi Phi Islands. For this, travel cost data was collected from
visitors who had enjoyed leisure pursuits at the coral sites (such as diving, snorkelling
and fishing). However, the estimated value from the TCM may include all attributes of
the Phi Phi Islands, valued by those who have come to view coral as part of their total
vacation package. To isolate the consumer surplus associated with visits to the coral sites,
with all other attributes removed, a CVM study was conducted that focused on both
domestic and international tourists who only visited the reef sites. In addition, the CVM
study was used to estimate the non-use values (option, existence and bequest values) of
coral reefs at Phi Phi from domestic non-users.
TCM is based on the idea that, although the actual value of the recreational
experience does not have a price tag, the costs incurred by individuals in travelling to the
site are an indication of their willingness to pay for the experience and can be used as
surrogate prices. From this and other data, it is possible to estimate the area’s consumer
surplus - a measure of its value to users as a recreational resource. The survey approach
collected information about visitors’ trips, as well as their age, income, sex and other
socio-economic factors. 850 questionnaires were distributed; 630 domestic visitors and
128 international visitors returned completed forms.
CVM is a technique that allows the value of environmental goods and services to be
estimated by asking people directly, usually by means of a survey questionnaire, their
willingness to pay (WTP) for a change in the availability of such environmental goods
and services. The individual maximum WTP for an environmental change is assumed to
be the value the individual attaches to such a change. The method covers both use and
non-use values, which none of the other methods do. Yet the application of the method is
not easy and is fraught with many potential biases even when best practices are followed.
This study followed main guidelines suggested by a blue-ribbon panel [11] in conducting
a CVM exercise. A pilot interview was done in order to check that the questions were
clear enough to the respondents. For the main survey, 400 domestic visitors and 128
international visitors were interviewed face-to-face [12]. The interviewers were asked to
mix their questionnaires in order to ensure that the bid level offered to successive
respondents was chosen randomly. The people questioned were given information
about the current conservation situation in Phi Phi. They were told that the reef at
Phi Phi Islands is about one quarter degraded and that if nothing is done, scientists
estimate that it will become 40% degraded in about 20 years. The elicitation format
chosen in this study was the dichotomous choice format. This means that respondents
were asked whether they were willing or not to pay a pre-determined contribution amount
to a trust fund in order to help restore the coral reefs of Phi Phi from their current level of
75% coral abundance to 100% coral abundance. The amount payable to the trust fund
ranged from 50 Baht ($1.25) to 2,000 Baht ($50) a year for domestic tourists and from
US$1 to US$50 a year for international visitors. The amount suggested was varied
randomly among respondents to reduce the possibility of people’s answers being biased
by the question itself.
Economic valuation of coral reefs at Phi Phi Islands, Thailand
4
109
Empirical results
Table 3 shows coral reef benefits based on the TCM. The survey found that the total
benefits of the recreational services offered by Phi Phi were about 69.9 million Baht
(US$1.75 million) a year for domestic visitors and 8,146.4 million Baht (US$203.66
million) a year for international visitors. Adding these two numbers up gives a figure of
8,216.4 million Baht (US$205.41 million) a year for the total recreational benefit Phi Phi
provides. Therefore, the value of Phi Phi is about 249,720 Baht (US$6,243) per ha per
year (the reef area at Phi Phi is approximately 32,900 ha). Loss of the site usually means
loss of all future recreational opportunities, not just the current annual value. The entire
future stream of annual recreational values must therefore be included. Economic theory
suggests this stream of benefits, because they would occur in the future, should be
discounted to make them comparable with the present. Assuming the real value of the
recreational value of 8,216.4 million Baht (US$205.41 million) a year remains the same
over 30 years and using a real interest rate of 5%, the present value of Phi Phi’s
recreational benefits is 126,280 million Baht (US$3,157 million). It is apparent from this
analysis that the local and national government in Thailand can justify larger annual
budget allocations for the management of coral reefs.
Table 3
Coral reef benefits based on the travel cost method
Sample size
Domestic (n=630)
CS per visit
Number of visitors
(1998)
Total benefits
3,403.55 Baht (US$85)
20,540
69.9 million Baht
(US$1.75 million)
International (n=128)
59,760 Baht (US$1,494)
136,277
8,146.4 million Baht
(US$203.66 million)
Note: US$1 = 40 Baht
Table 4 shows coral reef benefits based on the CVM. The valued derived by this method
differs from the values previously present, as only the coral sites were evaluated and not
the entire Phi Phi Islands as in the travel cost measures. It was found that the mean
maximum willingness to pay for domestic visitors was 287 Baht (US$7.17) per visit. For
international visitors the figure was 286 Baht (US$7.15) per visit. From this it was
calculated that the total value of Phi Phi’s coral reefs were 5.89 million Baht (US$ .147
million) a year for domestic visitors and 49.6 million Baht (US$1.24 million) a year for
international visitors. This study also used CVM to calculate the mean willingness to pay
of domestic vicarious users (people who value the reef without visiting it) – 634 Baht
(US$15.85) per person – and from this the total value (use and non-use) of the reefs. This
was estimated to be 19,840 million Baht (US$496 million) a year. Therefore, the benefit
values (use and non-use) of Phi Phi’s coral reefs were estimated to be 19,895 million
Baht (US$497.38) million) a year, averaging 604,720 Baht (US$15,118) per ha per year.
110
U. Seenprachawong
Table 4
Coral reef benefits based on the contingent valuation method
Users
WTP per visit
Number of
visitors (1998)
Total benefits
5
Domestic
(n=400)
International
(n=128)
287 Baht
(US$7.17)
20,540
286 Baht
(US$7.15)
136,277
5.89 million Baht 49.6 million Baht
(US$ .147 million) (US$1.24 million)
Non-users
Domestic
(n=200)
WTP per person
Size of labour
force (1998)
Total benefits
634 Baht
(US$15.85)
31.3 million
19,840 million Baht
(US$496 million)
Discussion and policy implications
5.1 Options for Phi Phi
Is continued expansion of dive tourism (with its associated economic benefits)
compatible with ecosystem protection? The data presented from Phi Phi indicates that it
may rapidly be approaching a point whereby increased dive tourism results in measurable
degradation of the marine environment. The beauty of the Phi Phi Islands has made them
world-famous. But fame and easy access has its price: hundreds of visitors land on Phi
Phi’s shores every day, crowding this tiny island oasis. A number of private tour
operators have been running boat tours to the islands for tourists, for whom snorkelling
and fish-feeding have become popular activities. This increased use of the area has
resulted in demands for improved facilities to serve the tourists. The consensus with
regard to Phi Phi is that the rapid growth in tourist numbers, together with the
infrastructure established to service their needs, have produced a severe reduction in the
quality of the islands’ ecosystem. Reefs are being stressed by over-fishing, tourist
activities and the release of sewage and sediment into shallow Phang-nga Bay [13]. Phi
Phi, however, remains popular and provides an example of the concept of recreational
succession. This concept was first proposed by Stankey [14] when he described the
gradual deterioration of a camping site as it became increasingly popular with visitors.
The overall result of recreational succession is a gradual ‘creeping’ of development of
facilities and infrastructure and a gradual loss of ‘wilderness’ and environmental quality.
Many now consider Phi Phi to be nothing more than a ‘sacrifice area’ – a location where
the tourist masses can be channelled to concentrate their negative effects, thereby
reducing the pressure on other islands in the Andaman Sea of Thailand [15]. Of great
interest to the Park authority is to capture at least a portion of consumers’ surplus to pay
for the necessary management and potential enhancement of coral reefs. In other words,
economic instruments can be used to align private costs with social costs, such that the
users feel the true costs associated with using the resource. One example is the use of
higher entry fees to facilities during peak-use times in an attempt to more evenly
distribute the volume of visitors. Permits that are auctioned to commercial tourist
operators can restrict the number of operators. Another example is use of a regulation
combined with an economic disincentive, such as imposing fines for littering, taking
undersized fish, or other inappropriate behaviour. Discounts on access fees to a marine
park could be provided if groups undertook a clean-up project, or assisted with research
Economic valuation of coral reefs at Phi Phi Islands, Thailand
111
during their visits. Given the increasing financial pressure under which many of these
public management agencies find themselves, taking the opportunity to utilise economic
techniques to generate additional funds and accomplish management objectives, may be
worthwhile. The environmental and economic gains from limiting and regulating access
to nature tourism destinations is clearly illustrated in a study by Tosi [16] of the
Monteverde Cloud Forest Biological Preserve in Costa Rica. The Preserve has generated
a surplus each year since 1988. Tourism has supported management of the reserve,
financed substantial capital improvements, met the costs of a sophisticated environmental
educational program and provided annual contributions to an endowment fund. When
using economic instruments to capture the net benefit values of Phi Phi, there are two
general options to consider: whether to directly target the producers or the consumers. If
the tourists (as consumers) are to be charged, instruments could be applied to those
activities that physically use the environment, such as offshore water sports (specifically
including snorkelling boats and dive operations), swimming and beach activities.
However, such activities are dispersed among the many individual operators providing
different services and are geographically spread throughout the Islands. The most obvious
complementary service utilised by all tourists at Phi Phi is the accommodation sector.
Therefore, a charge levied on the use of accommodation would effectively target this
consumer group and at the same time facilitate the administration and enforcement of the
charge.
Another option is an annual user fee or resource use charge that would focus on
producers, namely fishermen and water-sport operators. However, there are notable
problems with setting the fee at an appropriate amount and enforcing the use of the
resource, for example, ensuring that only those licensed have access to the resource and
monitoring to ensure that licensees’ usage does not rise above specified levels [17]. The
ability to collect fees attached to the licensed use of Phi Phi requires that the exclusion of
non-licensed users is enforceable. Without an effective ability to control access to the
resource, licensed users would be reluctant to pay the associated fee because their
exclusive rights to the resource could not be upheld. Furthermore, user fees increase the
accountability of the management authorities in the delivery of effective management.
Although arguably a benefit of the mechanism, this is likely to put pressure on
management to implement a limited set of short-term services for the users, which may
be at the expense of longer-term goals. In addition, physical approaches for mitigating the
‘trampling effects’ at Phi Phi can be implemented. In a number of situations, physical
structures have been successfully used to control tourists while at sea. Finally, improved
management might include increasing spatial and dispersion of tourists. For example,
Medio [18] showed how educating divers in advance on the fragility of coral reefs led to
significant reductions in damage per diver at an Egyptian diving resort. Dixon et al. [19]
reported similar findings from the Bonaire Marine Park, suggesting that it may be
possible to double the estimated present usage level of 200,000 dives per year with
improved management and more effective diver education.
5.2 Policy implications and recommendations
The focus of this study is the valuation of coral reefs and how this information can be
used to improve planning for coral reef management in Thailand. Phi Phi can generate
large economic values through recreation. The consumer surplus associated with visits to
112
U. Seenprachawong
Phi Phi represents an annual value of 8,216.4 million Baht (US$205.41 million). It is
apparent from this analysis that the local and national levels of government in Thailand
can justify larger annual budget allocations for the management of coastal resources. At
present, the economic benefits from coastal resource management in Phi Phi are mostly
accrued to local residents and businesses. The most prominent local uses of Phi Phi are
activities associated with the tourism sector, including offshore water sports, swimming
and beach activities, as well as the broader spectrum of tourism services indirectly
dependent on the marine environment. These values represent the extent of the marinederived production contributions at risk of being lost if conservation efforts prove
inadequate. This study utilised the CVM to estimate the utility values associated with
coral reef biodiversity at Phi Phi. At the sample means, a consumer’s willingness to pay
towards increasing biodiversity was estimated at 287 Baht (US$7.18) per visit.
A benefit capture instrument should be implemented in order to target the tourist
consumer surplus. The CVM analysis shows that the visitors to Phi Phi are willing to pay
as high as 287 Baht (US$7.18) per visit. This study recommends that the basic entrance
fee to Phi Phi be increased to 40 Baht (US$1) per person per visit. That is, twice as much
as the current rate of 20 Baht (US$ 0.50) per person. This should help increase the
revenue to the Park authority. Supplementary user charges should also be levied when
visitors receive additional services from the variety of recreational sites at Phi Phi. It
would seem reasonable for the Park to impose charges for tourists visiting certain special
and environmentally vulnerable recreational sites. For example, after having charged the
basic entrance fee of 40 Baht (US$1), the Park could impose an extra fee of 150 Baht
(US$3.75) per person per visit if the visitor chose to visit the coral reef at Maya Bay. This
user charge would help raise additional revenue for the Park by transferring surpluses
from high-end consumers to gains, while leaving the low-income visitors unaffected. At
the same time, charging an additional fee for particular reef sites would assist in reducing
the number of visitors. This additional fee could be more expensive during periods when
the marine environment is more sensitive to disturbance, thus providing an incentive for
tourists to visit at other times. Both these measures could help relieve the negative
pressure on the delicate marine environment. Local participation in managing these
special and fragile recreational sites should be engendered, resulting in these user charges
becoming a channel whereby revenue is distributed to the local economy. As tourism
generates additional income to the local people, it will provide an incentive for the local
community to help protect the Park, as they will see that preserving nature is conducive
to attracting more visitors, therefore increasing their income. The Park may also consider
adopting other provisions related to the distribution aspect of the entrance fee. For
instance, school children or university students who visit the Park as part of their school
activities should be exempted from the entrance fee. In addition, discounts on the Park
entrance fee could be provided if groups undertake a clean-up project, or assist with
research during their visits.
Finally, the concept of adopting a discriminatory pricing scheme, where local and
foreign visitors are charged different user fees, was considered as a means to increase the
total revenue for the Park. The rationale for charging foreigners a higher entrance fee is
first, foreigners do not pay income tax or business tax to the local government and
second, foreigners tend to have a higher WTP for park visitation. However, this study
found that, in fact, international visitors do not have a higher WTP than domestic visitors.
In addition, imposing a higher entrance fee for foreigners could create an unnecessary
psychological barrier for foreign tourists and could negatively affect the image of
Economic valuation of coral reefs at Phi Phi Islands, Thailand
113
Thailand’s tourism industry. For this reason, this study recommends that foreign and
local visitors be charged the same user fee. The Park could instead adopt other strategies
to transfer the surplus from foreigners to economic gains and conservation, namely,
institution of a voluntary hotel room fee of 40 Baht (US$1) per bed-night, as
recommended by Gustavson [20]. The fee should be voluntary to reduce opposition from
local hoteliers and increase the initial political acceptability of the program. Attaching the
fee to a hotel room is justified on two counts. Firstly, the benefits from the marine waters
at Phi Phi are enjoyed almost exclusively by foreign tourists. Secondly, the current openaccess management of Phi Phi means that substantial transaction costs would be
associated with instituting property rights effectively and enforcing efficient pricing of
the resource [21]. Key in the recommendation is the adequate provision of information to
hotel guests regarding management activities within the Phi Phi Marine National Park
and the conservation benefits of the marine environment. Given that the fee would be
voluntary, the provision of information (for example, through information boards,
pamphlets and so on) would be necessary to ensure that guests made informed payment
decisions. It would also be advisable that guests were notified of the fee, provided
information regarding the Park and asked about their willingness to contribute at the time
of check-in. Critical issues remain to be explored further before the recommended policy
for benefit value capture can be fully realised. These include policy procedures and the
process for implementation, including information sharing and consultation. The
administrative organisation for implementation and enforcement will also require
investigation. This stage is best conducted as a subsequent process under the responsible
management authority, the Phi Phi Islands Committee.
Acknowledgements
The research underlying this paper was funded by the Economy and Environment
Program for Southeast Asia (EEPSEA). The author is indebted to H. Jack Ruitenbeek for
his contributions at various stages of the research process. He would also like to thank the
participants of the Environmental Economics Unit Seminar at Gothenburg University,
Sweden, October, 2001, for their helpful comments.
References and Notes
1
2
3
4
5
Bateman, I.J., Langford, I.H. and Graham, A. (1995) ‘a survey of non-users’ willingness to
pay to prevent saline flooding in the Norfork Broads’, CSERGE Working Paper GEC 95-11,
Centre for Social and Economic Research on the Global Environment, School of
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Hanley, N. and Craig, S. (1991) ‘Wilderness development decisions and the Krutilla-Fisher
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Some other potential sites for conducting coral reef valuations are Surin Island and Similan
Island. However, it would be relatively expensive data from these two islands. Moreover, the
actual flow of visitors throughout the year is comparatively low since the islands are not easily
accessible to tourists. It takes approximately four to six hours from Phuket to these sites by
boat, while the boat ride from Krabi to Phi Phi Islands takes only one hour.
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There is one lesson to be learnt from this study that may be relevant to future research.
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that a very large number of observations are required to identify a distribution of resource
values with any degree of accuracy. An alternative questioning strategy introduces a follow-up
dichotomous choice question, such that if a respondent indicates a willingness to pay the firstoffered amount, the new threshold will be approximately double the first. If the respondent is
unwilling to pay the first-offered amount, the second threshold is reduced to about half the
original amount. This questioning strategy is also call a double-bounded referendum approach.
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