THE ECONOMICS OF DIVING AND ITS

CONTRIBUTION TO SHARK CONSERVATION IN THE

INDIAN OCEAN

Johanna Sophie Zimmerhackel

MSc Marine Ecosystems and Fisheries Science

BSc Biology

This thesis is presented for the degree of Doctor of Philosophy of

The University of

School of Agriculture and Environment

Discipline of Environmental Economics

2019

Thesis Declaration

THESIS DECLARATION

I, Johanna Sophie Zimmerhackel, certify that:

This thesis has been substantially accomplished during enrolment in the degree.

This thesis does not contain material which has been submitted for the award of any other degree or diploma in my name, in any university or other tertiary institution.

No part of this work will, in the future, be used in a submission in my name, for any other degree or diploma in any university or other tertiary institution without the prior approval of

The University of Western Australia and where applicable, any partner institution responsible for the joint-award of this degree.

This thesis does not contain any material previously published or written by another person, except where due reference has been made in the text and, where relevant, in the declaration that follows.

The work(s) are not in any way a violation or infringement of any copyright, trademark, patent, or other rights whatsoever of any person.

The research involving human data reported in this thesis was assessed and approved by The

University of Western Australia Human Research Ethics Committee. Approval #:

RA/4/1/8170 and RA/4/1/9234.

The following approvals were obtained prior to commencing the relevant work described in this thesis:

- Permit to conduct research in approved by the Economic Planning Unit, Prime

Minister’s Department: UPE 40/200/19/3476

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Thesis Declaration

The work described in this thesis was funded by

- Australian Government Research Training fees offset and a stipend scholarship

- University of Western Australia

- Centre for Excellence in Environmental Decisions – Grant no. CE11ø1ø14

- PEW Charitable Trust

- Shark Conservation Fund

- Global FinPrint Project, funded by the Paul G. Allen Foundation, US – Grant no. 11861

This thesis contains published work and/or work prepared for publication, some of which has been co-authored.

Signature:

Date: 13/11/2019

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A b s t r a c t

ABSTRACT

Tourism based on diving with has grown rapidly over the past decade in many places around the world. At the same time, many shark populations are facing overexploitation from fisheries, prompting the need for more sustainable management and conservation strategies for sharks. This thesis aims to improve decision making about shark conservation strategies in a setting where shark diving tourism and (legal and illegal) shark fisheries co-exist. To achieve this aim, various market and non-market valuation techniques were used to (i) contribute to the understanding of the economic value of sharks and (ii) assess how different shark conservation strategies influence the economic benefits associated with shark diving tourism. This thesis uses four case studies at two sites in the Indian Ocean: the region in Malaysian Borneo and the Republic of the Maldives.

We used surveys with tourists and dive operators to estimate the market values associated with shark diving tourism. Business revenues from shark diving tourism in the Maldives and

Semporna were substantial and diverse. These benefits included direct revenues for a variety of businesses such as dive operators, , , domestic , and shops.

We estimated the direct revenues for local businesses to be USD 51.4 million in the Maldives.

In Semporna, these revenues accounted for USD 9.8 million and USD 16.6 million in 2012 and

2018, respectively. Additionally, shark diving tourism generated tax revenues and provided jobs to local communities. Moreover, the results for the Maldives indicated that the business revenues from shark diving had doubled over the last 24 years and provided the first empirical evidence for increased economic benefits from shark diving tourism at a specific location over a long time period.

We estimated dive tourists’ willingness to pay a daily access fee, using the contingent valuation method with data from 2012 and 2018. Interval regression models revealed a willingness to pay of USD 11.89 and USD 8.28 for a dive tourist with average characteristics in 2012 and 2018,

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A b s t r a c t respectively. Revenues from such a fee could be used to finance programs to generate community support and enforcement of a shark and ray fishing ban in the Semporna region.

We also used cost and contingent behaviour methods to estimate how trip demand, tourists’ welfare and the economic benefits from shark diving are influenced by (a) the implementation of a new shark fishing ban, and (b) the success or failure of long-term management of shark fishing bans. This thesis created for the first time a link between policy changes and the economic benefits from shark diving tourism. In Semporna, we estimated a

47% increase in demand for shark diving tourism between conditions (status quo) and a shark and ray sanctuary scenario. This represents a change in annual business revenues for the local tourism sector from USD 35.1 million under status quo to USD 51.6 million if a shark and ray sanctuary was implemented.

In the Maldives, our results show that increasing shark abundance could raise dive trip demand by 15%. This could result in an increase of dive tourists’ welfare by USD 58 million and raise economic benefits for the dive-tourism industry by over USD 6 million annually. Conversely, we found that dive tourists would respond to scenarios where shark populations decline, where dive tourists observe illegal fishing, or where dive operators lack engagement in shark conservation, with a reduction of up to 56% in their dive trip demand. Compared to the status quo, this decline could cause economic losses of more than USD 24 million annually to the dive tourism industry.

Results of this thesis provide evidence for the importance of a sustainable management of sharks for local tourism businesses. We suggest that national authorities should recognise the various economic benefits that sharks and the effective management of shark populations provide. We furthermore recommend that sufficient revenues generated from shark diving tourism are re-invested into maintaining and recovering shark populations. This involves a focus on the design of appropriate conservation strategies, a well-regulated shark diving industry, the enforcement of regulations and ongoing involvement with fisher-communities.

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Table of contents

TABLE OF CONTENTS

Thesis declaration...... i

Abstract ...... iii

Table of contents ...... v

List of tables ...... x

List of figures ...... xii

List of acronyms ...... xiii

Acknowledgements ...... xiv

Authorship declaration: Co-authored publications ...... xv

Introduction ...... 21

1.1 Background ...... 21

1.1.1 Shark diving tourism ...... 21

1.1.2 Threats and conservation...... 22

1.1.3 The economic value of sharks ...... 24

1.2 Thesis aims and objectives...... 27

1.3 Case studies ...... 28

1.4 Thesis structure ...... 29

1.5 References ...... 30

Shark diving tourism as a financing mechanism for shark conservation strategies in Malaysia ...... 33

2.1 Abstract ...... 34

2.2 Introduction ...... 34

2.3 Methods...... 37

2.3.1 Study site ...... 37

v

Table of contents

2.3.2 Surveys ...... 38

2.3.3 Economic revenues from shark diving ...... 40

2.3.4 Willingness to pay ...... 42

2.4 Results ...... 42

2.4.1 Tourist profile ...... 43

2.4.2 Revenues from shark diving ...... 44

2.4.3 Willingness to pay ...... 45

2.5 Discussion ...... 48

2.6 Conclusion ...... 53

2.7 Acknowledgements ...... 53

2.8 References ...... 53

The past, present and future benefits of shark diving tourism in

Semporna, Malaysia...... 57

3.1 Abstract ...... 58

3.2 Introduction ...... 58

3.3 Methods ...... 60

3.3.1 Study area ...... 60

3.3.2 Surveys ...... 62

3.3.3 Travel cost and contingent behaviour method ...... 63

3.3.4 Welfare measures ...... 65

3.3.5 Willingness to pay user fees...... 66

3.4 Results ...... 67

3.4.1 Descriptive statistics ...... 67

3.4.1.1 Tourist profile ...... 67

3.4.1.2 Ranking of dive attractions ...... 70

3.4.1.3 Dive trip demand ...... 70 vi

Table of contents

3.4.2 Travel cost-contingent behaviour model ...... 71

3.4.3 Welfare measures ...... 73

3.4.4 Willingness to pay user fees ...... 74

3.5 Discussion ...... 75

3.6 Conclusion ...... 78

3.7 Acknowledgements ...... 78

3.8 References ...... 79

Evidence of increased benefits from the shark diving tourism industry in the Maldives ...... 83

4.1 Abstract ...... 84

4.2 Introduction ...... 84

4.3 Methods...... 87

4.3.1 Study site ...... 87

4.3.2 Surveys ...... 89

4.3.2.1 Tourist survey ...... 89

4.3.2.2 Dive operator survey ...... 90

4.3.3 Economic benefits from shark diving ...... 90

4.3.3.1 Direct business revenue ...... 90

4.3.3.2 Business tax revenues ...... 92

4.3.3.3 Salaries ...... 92

4.4 Results ...... 93

4.4.1 Sample characteristics ...... 93

4.4.2 Economic benefits from shark diving ...... 94

4.5 Discussion and conclusions ...... 96

4.6 Acknowledgements ...... 99

4.7 References ...... 100 vii

Table of contents

How shark conservation affects demand for dive tourism in the

Maldives ...... 103

5.1 Abstract ...... 104

5.2 Introduction ...... 104

5.3 Methods ...... 106

5.3.1 Study site ...... 106

5.3.2 Survey ...... 108

5.3.3 Travel cost and contingent behaviour model ...... 110

5.3.4 Welfare measures ...... 112

5.4 Results ...... 113

5.4.1 Descriptive statistics ...... 113

5.4.2 Travel cost model ...... 117

5.4.3 Contingent behaviour model ...... 118

5.4.4 Welfare estimates ...... 120

5.5 Discussion ...... 122

5.6 Conclusions ...... 126

5.7 Acknowledgements ...... 126

5.8 References ...... 127

Discussion and Conclusions ...... 131

6.1 Discussion of research questions ...... 131

6.1.1 What are the economic benefits of the shark diving industry to local

communities? ...... 131

6.1.2 How do the economic benefits of shark diving tourism change over time? .

...... 133

6.1.3 What is the willingness to pay for shark diving, including non-market

values? ...... 135 viii

Table of contents

6.1.4 How is trip demand and the economic benefits from shark diving

influenced by (a) the implementation of a new shark fishing ban and (b) the

success or failure of management of shark fishing bans?...... 137

6.2 Future research directions ...... 139

6.2.1 Cost-Benefit Analysis ...... 139

6.2.2 Economic incentives ...... 140

6.2.3 Value of information ...... 142

6.2.4 Value systems ...... 143

6.3 Conclusion ...... 145

6.4 References ...... 145

APPENDIX I. Dive tourist survey for Chapter 2 ...... 153

APPENDIX II. Dive Operator survey for Chapter 2 ...... 161

APPENDIX III. Dive tourist survey for Chapter 3 ...... 167

APPENDIX IV. Dive operator survey for Chapter 3 ...... 177

APPENDIX V. Market value analysis for Chapter 3 ...... 183

APPENDIX VI. Travel cost and contingent behaviour method for Chapter 3 ...... 189

APPENDIX VII. Dive tourist survey for Chapter 4 and 5 ...... 191

APPENDIX VIII. Dive operator survey for Chapter 4 ...... 205

APPENDIX IX. Market value analysis for Chapter 4 ...... 213

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List of tables

LIST OF TABLES

Table caption Page

Table 2.1: Description of constants and parameters used to estimate revenues generated by the shark diving industry in the Semporna district. 41

Table 2.2: Formulas to calculate the economic value and distribution of revenues from shark diving in the Semporna district (all variables except diver expenditure in USD/year, diver expenditure in USD/trip). 41

Table 2.3: Summary of respondents’ characteristics. 44

Table 2.4: Estimated revenues and income generated by the diving industry in the Semporna district in 2012. 45

Table 2.5: Interval regression results of divers’ WTPENF a daily access fee to enforce a (n = 259). 46

Table 2.6: WTPENF of divers with differing socio-demographic characteristics. 47

Table 3.1: Sample characteristics (n = 431). 69

Table 3.2: Results of the TC-CB model. Measures of the goodness of fit are given as the log-likelihood and the Akaike information criterion (AIC). 72

Table 3.3: Welfare estimates based on the dive trip demand to Semporna in the last 5 years (observed), as well as in the next 5 years under the status quo and the shark and ray sanctuary scenario. 74

Table 3.4: Estimation results of the final contingent valuation model including all significant variables. Measures of the goodness of fit are given as the log- likelihood and the Akaike information criterion (AIC). 75

Table 4.1: Characteristics of survey sample (n=300). 94

Table 4.2: Estimation results of the economic benefits generated from divers and shark divers per year. Benefits are shown for dive businesses only as well as for associated local businesses and all businesses used by dive tourists during their holidays. 95

Table 4.3: Number of employees in dive operations and their annual salaries for Maldivian local and foreign workers. 96

Table 5.1: Description of contingent behaviour scenarios. 109

x

List of tables

Table caption Page

Table 5.2: Demographic characteristics of survey sample. 114

Table 5.3: Estimation results of the TC model. 117

Table 5.4: Estimation results of the CB model. 120

Table 5.5: Welfare estimates for status quo and contingent behaviour scenarios. 121

Table v.i: Variables that are used to estimate the economic benefits of the diving and shark diving industry. 183

Table v.ii: Abbreviations, description and formulas for revenue categories. 184

Table v.iii: Values that are used for the estimation of the economic benefits from the diving and shark diving industry in Semporna. 185

Table v.iv: Business and tax revenues from dive tourists and shark divers in the Semporna region. 186

Table v.v: Number of employees and annual salaries of employees in the dive tourism industry in the Semporna region. 187

Table vi.i: Travel cost model without correction for on-site sampling. 190

Table vi.ii: Travel cost model without correction for on-site sampling (endogenous stratification and zero truncation). 190

Table ix.i: Variables used for the estimation of the socio-economic value of shark diving. 213

Table ix.ii: Formulas used for the estimation of the socio-economic value of shark diving. 214

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List of figures

LIST OF FIGURES

Figure caption Page

Figure 1.1: The Total Economic Value framework with examples for the 25 values of sharks.

Figure 2.1: Study region of Semporna with sample sites. 38

Figure 2.2: Cumulative distribution of WTPENF responses showing the percentage of respondents who were willing to pay the amount specified by each bid range category. 48

Figure 3.1: Map of the Semporna region with sample sites. 61

Figure 3.2: Median number of days that tourists stayed in Semporna in the last five years (observed) and would stay in the next five years under the status quo conditions and the scenario of creating a shark and ray sanctuary. 70

Figure 4.1: (A) Location of the Republic of the Maldives, (B) Central atolls of the Maldives with sample locations. 88

Figure 5.1: Map of the Maldives showing sample locations. 107

Figure 5.2: (A) Box plot showing the variation in the number of dive trips that tourists plan to do in the next five years. (B) Proportion of respondents who would not return to the Maldives (dark grey) and not recommend the Maldives as a shark diving destination (light grey) contingent to the status quo and the 116 seven alternative scenarios.

Figure vi.i: Total travel costs that respondents spent in the last five years (observed) and in the next five years under the two future scenarios (status quo and sanctuary scenario) with (A) outliers and (B) without outliers. 189

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List of acronyms

LIST OF ACRONYMS

CB Contingent behaviour

CV Contingent valuation

CI Confidence interval

EEZ Exclusive economic zone

EVPI Economic value of perfect information

EVSI Economic value of sample information

GDP Gross domestic product

IUU Illegal, unregulated and unreported fishing

MPA Marine protected area

MYR Malaysian ringgit

TC Travel cost

USD US dollar

VoI Value of information

WTP Willingness to pay

xiii

Acknowledgements

ACKNOWLEDGEMENTS

I would like to acknowledge the financial support from the Centre for Excellence in

Environmental Decisions, the PEW Charitable Trust, the Shark Conservation Fund, the Global

FinPrint Project, and the University of Western Australia. This research was supported by an

Australian Government Research Training Program (RTP) Scholarship. Without these contributions this work would not have been possible.

I would like to thank my supervisors Professor David Pannell, Dr. Marit Kragt, Dr. Abbie

Rogers, and Dr. Mark Meekan for all their time and effort during this PhD thesis. Their expertise, advice and teachings are highly appreciated and have greatly contributed to this work.

Thank you to all the collaborating institutions for helping with the logistics of the fieldtrips to the Republic of the Maldives and Malaysia; namely the Marine Research Centre Maldives,

Universiti Teknologi Malaysia, Universiti Teknologi Mara , University Malaysia Sabah,

Sabah Shark Protection Association, Scuba Junkie S.E.A.S., LEAP Spiral and Forever Sabah.

Thank you to the staff teams of the School of Agriculture and Environment and of the Graduate

Research School for their support, especially Deborah Swindells and Jorja Cenin for their outstanding work in the administration and Dr. Michael Burton for all his advice during these years.

Special thanks to my fellow students who have supported and encouraged me with interesting conversations and insights. Your companionship has made this time a wonderful experience.

Last but not least, I would like to thank my family and friends for their support, care and patience, not only during the PhD candidature but in all the years. Your help was essential to this achievement.

xiv

Authorship Declaration

AUTHORSHIP DECLARATION: CO-AUTHORED PUBLICATIONS

This thesis contains work that has been published and prepared for publication.

Chapter 2

Published as:

Vianna G.M.S., Meekan M.G., Rogers A.A., Kragt M.E., Alin J.M., Zimmerhackel J.S.

(2018). Shark diving tourism as a financing mechanism for shark conservation strategies in

Malaysia. Marine Policy 94, 220-226.

https://doi.org/10.1016/j.marpol.2018.05.008

Student contribution: 40%

Co-author signatures and dates:

Gabriel M.S. Vianna 29/04/2019

Mark G. Meekan 08/04/2019

Abbie A. Rogers 08/04/2019

Marit E. Kragt 08/04/2019

James M. Alin 15/04/2019

xv

Authorship Declaration

Chapter 3

Peer-reviewed and re-submitted as:

Zimmerhackel J.S., Kragt M.E., Meekan M.G. (2018). The past, present and future benefits of shark diving tourism in Semporna, Malaysia. In review with Marine Resource Economics

(initial submission date: 07/11/2018)

Student contribution: 70%

Co-author signatures and dates:

Marit E. Kragt 08/04/2019

Mark G. Meekan 08/04/2019

xvi

Authorship Declaration

Chapter 4

Published as:

Zimmerhackel J.S., Kragt M.E., Rogers A.A., Ali K., Meekan M.G. (2018). Evidence of increased economic benefits from shark diving tourism in the Maldives. Marine Policy https://doi.org/10.1016/j.marpol.2018.11.004

Student contribution: 75%

Co-author signatures and dates:

Marit E. Kragt 08/04/2019

Abbie A. Rogers 08/04/2019

Khadeeja Ali 17/04/2019

Mark G. Meekan 08/04/2019

xvii

Authorship Declaration

Chapter 5

Published as:

Zimmerhackel J.S., Rogers A.A., Meekan M.G., Ali K., Pannell D.J., Kragt M.E. (2018).

How shark conservation in the Maldives affects demand for dive tourism. Tourism

Management 69, 263-271. https://doi.org/10.1016/j.tourman.2018.06.009

Student contribution: 70%

Co-author signatures and dates:

Abbie A. Rogers 08/04/2019

Mark G. Meekan 08/04/2019

Khadeeeja Ali 17/04/2019

David J. Pannell 08/04/2019

Marit E. Kragt 08/04/2019

Student signature: 22/04/2019

I, David Pannell certify that the student statements regarding their contribution to each of the works listed above are correct.

Coordinating supervisor signature: 08/04/2019

xviii

xix

C h a p t e r 1

CHAPTER 1: INTRODUCTION

1.1 BACKGROUND

1.1.1 Shark diving tourism

Shark diving tourism is a fast-growing industry, active in 45 countries, offering customers the chance to watch a great variety of species (Cisneros-Montemayor et al. 2013). Although most of the shark diving locations are in tropical locations such as Donsol (), Gladden Split

(Belize), the Maldives, French Polynesia and Galapagos (Ecuador), the global distribution of shark species also allows divers to watch sharks in temperate waters; for example in South

Africa, the Azores (Portugal) and Neptune Island (Australia). In 2013, shark diving attracted nearly 600,000 tourists, which was predicted to increase by a factor of 2.5 over the next 20 years

(Cisneros-Montemayor et al. 2013).

There are different types of shark tourism depending on the nature of the interaction between divers and sharks. Shark diving can, for example, mean that dive operators visit dive sites where tourists have high chances to observe sharks. These operations do not use any specific tools to attract or interact with sharks. Similarly, dive operators offer snorkelling tours with sharks. This is very common for watching whale sharks. However, many other shark dive operations use some sort of provisioning to increase the number of sharks that divers can see. Provisioning includes the use of fish and oil in the water around dive sites, visual baits, as well as the passive or active feeding of sharks (Gallagher et al. 2015). Another type of shark diving use submersible cages from which divers can observe sharks that are swimming by. These cage dives are usually offered to watch potentially dangerous shark species such as white sharks and are often combined with some kind of provisioning.

The fast growth of the shark diving industry has caused conflicts with other industries that target sharks such as shark fisheries. These conflicts usually arise due to the incompatible usage of the same resource where tourists want to see sharks alive while shark fisheries reduce the numbers

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C h a p t e r 1 of sharks in the area (Anderson and Ahmed 1993). As a result, dive operators in several locations have promoted the closure of shark fisheries in the areas surrounding their dive sites or even in the entire country (e.g. Brunnschweiler 2010; Ali and Sinan 2014). Some dive operators engage in shark conservation actions by deterring illegal fishing (Steenbergen 2013; Vianna et al. 2016). For example, in Raja Ampat () all shark fishing has been banned and one dive operator received the rights from the local government to patrol the area around the dive sites and even capture fishers who operate illegally in the region. The dive operator also tackles illegal fishing by providing benefits to local communities e.g. in the form of vocational training, employment, and infrastructure (Steenbergen 2013). In the shark sanctuary of Palau, the presence of local populations and dive operators seem to be enough to deter illegal fishing activities from obvious areas, likely focusing on remote areas to avoid detection (Vianna et al.

2016). As sharks are a main attraction for divers underwater, dive operators will benefit from higher shark abundance and thus from protecting the dive sites from illegal fishing activities.

1.1.2 Threats and conservation

Worldwide, about one quarter of shark species are classified as nearly threatened, endangered or critically endangered under the IUCN (International Union for Conservation of Nature) list of endangered species (Clarke et al 2006, Davidson et al. 2016). The main reason for this is the overexploitation of sharks in fisheries. Sharks are either targeted or caught unintentionally (as bycatch) in fisheries that target more lucrative species such as tuna and billfishes (Dulvy et al.

2008). The most valuable shark product are fins which are in high demand in China where they are the central ingredient in shark fin soup. Clarke et al. (2006) estimated that 26 to 73 million sharks were killed for the shark fin market annually. Global shark catches peaked in 2003 and have since then steadily declined, indicating overexploitation (Davidson et al. 2016). To a much lesser extent, shark products such as the meat, liver, skin, and jaws are also sold (Worm et al.

2013; Dent and Clarke 2015). Shark meat is a relatively poor-quality product but it plays an important role for food security for coastal communities with low incomes in many developing countries e.g. in Sri Lanka and India (Barker and Schluessel 2005).

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C h a p t e r 1

The dire situation of many shark populations is concerning for various reasons. Many shark species play an important role in marine ecosystems as they pose a top-down control on species of lower trophic levels. It has been shown that coral reefs (Sandin et al. 2008) and sea grass beds

(Heithaus, Wirsing, and Dill 2012; Heithaus et al. 2007) where sharks are abundant are more resilient than those with fewer sharks. Maintaining shark populations at a sustainable level would guarantee that ongoing economic revenues can be generated by industries that use sharks

(Cisneros-Montemayor et al. 2013).

However, sharks are recognised as one of the most challenging animals to protect. This is due to their conservative life history traits such as late fertility, few offspring, and slow reproduction cycles which predisposes them to overfishing (Dulvy et al. 2014). Additionally, many shark species display migratory behaviour which means that sharks move across various national jurisdictions (Dulvy et al. 2017). Thus, even if they are protected in one country or region, they may be caught in fisheries when migrating through non-protected areas.

In recent years, extensive advocacy for shark conservation has created increasing awareness of the importance of shark conservation. Although the need for shark conservation measures is widely acknowledged, there are ongoing discussions about the most appropriate strategy

(Davidson 2012; Chapman et al. 2013). These strategies can be classified in two main types.

Target-based policies allow shark fisheries and aim to sustain populations through appropriate management. Policies of this type include fisheries quotas and shark-finning bans. It is estimated that currently only about 9% of the global shark catch is fished sustainably

(Simpfendorfer and Dulvy 2017). These fisheries typically lie in developed countries that have relatively high capacities for fisheries management, monitoring, research and the enforcement of regulations (Chapman et al. 2013).

Alternatively, limit-based policies typically ban shark fisheries entirely. Examples of this approach are no-take marine reserves and shark sanctuaries. Whereas no-take marine reserves are spatial closures of fisheries of all species, shark sanctuaries are spatial closures that prohibit all shark fisheries specifically, and often also the trading of shark products in their Exclusive 23

C h a p t e r 1

Economic Zones (EEZ) (Ward-Paige and Worm 2017). Since the establishment of the first shark sanctuary in Palau in 2009, this policy has gained a lot of traction and today, a total of 15 countries comprising almost 16 million km2 of exclusive economic zones are shark sanctuaries

(Ward-Paige 2017).

As for any policy, the effectiveness of shark conservation strategies depends on the compliance of communities. Deterring illegal fishing, however, is challenging in regions where there is a lack of alternative livelihoods for fishers and a strong economic incentive to catch sharks through the shark fin trade (Jaiteh, Loneragan, and Warren 2017). Moreover, enforcement of regulations is resource intensive and requires substantial funding, something that developing countries often do not have (Kuperan and Sutinen 1998; McDonald et al. 2016). Chapman et al.

(2013) argue that in developing countries where the capacity to enforce regulations is low and catch data at the species level are lacking, a strict ban on all shark products (such as in a shark sanctuary) is easier to control than more nuanced fisheries management regulations. However, finding finance mechanisms for the monitoring and enforcement of the conservation strategies remains crucial for their success.

1.1.3 The economic value of sharks

The economic value of sharks can be described within the Total Economic Value (TEV) framework (Figure 1.1) which captures use and non-use values that sharks provide to humans.

Use values are further divided into direct use values and indirect use values. Direct use values relate to the economic benefit that are directly obtained from the use of sharks. When they are consumptive in nature they stem from the capture and the sale of sharks. But direct use values also can be non-consumptive when tourists pay for the experience to watch them. Indirect use values of sharks generally relate to the human use of a natural resource that has been contributed to by sharks. For example, an indirect value of sharks can be the function of sharks in maintaining a marine ecosystem, which is also used by humans. Indirect values also can be the contribution that sharks have for education and scientific research. Option values represent the

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C h a p t e r 1 expected benefits from keeping future options open by avoiding irreversible changes (e.g., extinction). Non-use values are divided into bequest (or altruism) values that describe the value that people have to preserve sharks for others including future generations, and existence values that represent the value that humans place on knowing that sharks exist, even if they never plan to watch or consume them.

Figure 1.1: The Total Economic Value framework with examples for the values of sharks.

The understanding of the economic value of sharks has gone through major changes. In the past, the focus was mainly on the consumptive use value of sharks from fisheries. Literature shows that the global value of trade in shark products of about USD 40 million in the 1970s increased steadily to a maximum of USD 918 million in 2011 (Dent and Clarke 2015, Dulvy et al, 2017).

Since then, the trade value has followed a downward trend reaching USD 393 million in 2017

(FAO 2019). However, in the last decade, literature has increasingly emphasized the non- consumptive use value of sharks associated with the dive tourism industry. Studies have shown that shark diving tourism generates substantial revenues, not only directly for dive operators who offer shark dives but also for a variety of other businesses where dive tourists spend their money during their holidays (e.g. hotels, restaurants and souvenir shops) (Gallagher et al. 2015). 25

C h a p t e r 1

In 2013, global expenditure from shark diving tourists was USD 314 million (Cisneros-

Montemayor et al. 2013). Although Cisneros-Mentamayor (2013) predicted an increase in revenues from shark diving tourism to USD 780 million over 20 years globally, there have been almost no recurring estimates of the economic revenues at one location. Therefore, there is no empirical evidence of long-term changes in the values.

Additionally, shark diving industries generate tax revenues which enable governments to improve the overall social welfare of local communities (Vianna et al. 2012). Contrary to revenues from shark fisheries, the revenues generated from shark diving tourism are thought to be more sustainable. This is because a caught shark can yield income just once in a fishery, but a shark observed by tourists can generate revenues over its entire life span. Additionally, studies have found the revenues from tourism to be typically much higher than those from fisheries which has created strong economic arguments to close shark fisheries in areas with dive tourism

(Apps, Dimmock, and Huveneers 2018).

Shark diving tourism also contributes to economies by creating employment and income. It is estimated that in 2013, worldwide over 10,000 jobs could be attributed to shark diving tourism

(Cisneros-Montemayor et al. 2013). However, there are concerns about the extent to which this industry benefits local communities. One issue is that the dive tourism industry often employs foreign workers and that locals typically do jobs that are less well-paid. Another concern is that in more isolated locations far from tourist operators, shark fishers do not have access to these alternative sources of livelihood and are adversely affected by shark fishing bans without the option for new income streams (Jaiteh et al. 2016; Jaiteh, Loneragan, and Warren 2017).

Identifying such challenges and quantifying mechanisms to overcome these challenges is important to improve the sustainability of these businesses.

The above examples of economic values generated by sharks all represent the market value of sharks either through consumptive or non-consumptive use. Other values such as indirect use values and non-market values of sharks are nearly absent from the literature. These values of sharks are less tangible and therefore harder to quantify. However, non-market valuation 26

C h a p t e r 1 methods (Champ, Boyle, and Brown 2017) can provide estimates of the values that communities hold for environmental outcomes such as healthy shark populations. As these methods allow the expression of non-market values in monetary terms, they can be included in cost-benefit analyses and may facilitate the integration of community values into policy decisions. Du Preez et al. (2012) used a travel cost model to estimate an annual consumer surplus of almost USD 250,000 for tourists undertaking dives in South Africa. White

(2008) estimated an aggregated willingness to pay of USD 42.4 million per year for white shark dives in the United States and Cesar et al. (2003) estimated a total consumer surplus for watching in the Seychelles of over USD 2 million per year. These studies indicate that the total economic value of sharks could be underestimated if non-market values are ignored.

Although the shark diving industry relies heavily on healthy shark populations, to date there has been no quantification of the effect that the success or failure of shark conservation measures has on the demand for shark diving.

1.2 THESIS AIMS AND OBJECTIVES

The aim of this thesis was to improve the decision-making process on shark conservation strategies in a setting where shark diving tourism and (legal and illegal) shark fisheries co-exist.

In this context, we focused on two objectives. Objective 1 contributes to the understanding of the economic value of sharks and comprises three research questions. Objective 2 assess how shark conservation strategies influence the economic benefits associated with shark diving tourism and involves one research question.

Objective 1) Contribute to the understanding of the economic value of sharks

1.1 What are the economic benefits of the shark diving industry to local economies?

1.2 How does the economic impact of shark diving tourism change over time?

1.3 What is the willingness to pay for shark diving, including non-market values?

27

C h a p t e r 1

Objective 2) Assess how shark conservation strategies influence the economic benefits associated with shark diving tourism.

2.1 How is the trip demand and the economic benefits from shark diving influenced by

(a) the implementation of a new shark fishing ban, and (b) the success and failure of

long-term management of shark fishing bans?

1.3 CASE STUDIES

This work uses case studies in two different locations in the Indian Ocean: The Republic of the

Maldives and the Semporna region in Malaysian Borneo. These study sites provide good examples of the variety of challenges and with regard to shark conservation in the context of shark diving tourism and (legal and illegal) shark fisheries. Both have world famous dive destinations and are renowned for the possibility to watch sharks in their natural habitat.

Sharks are neither attracted nor provisioned with food and there is no cage-diving option for tourism.

The fishery and use of sharks differs at both study sites. In the Maldives, traditional shark fisheries were limited because the local population never used sharks as a food resource.

Instead, fishers used shark liver and skin to maintain their fishing boats (Anderson and Ahmed

1993). In contrast, both shark meat and fins are popular food items for the Malaysian Chinese population. The increasing demand for shark fins in China prompted strong increases in shark fishing at both study sites that resulted in the overexploitation of shark populations.

As a result of the human impact on shark populations, both the Maldives and Malaysia created a

National Plan of Action for sharks. In the Maldives, declining shark catches and declining shark sightings by tourists in the late 1990s prompted the government to implement a series of shark conservation measures and they declared all national waters a shark sanctuary in 2010. There are, however, indications of illegal shark fisheries continuing in Maldivian waters. In Semporna, ongoing legal and illegal shark fisheries have created tensions between the tourism sector and fisheries and the creation of a shark sanctuary in Sabah (the state where Semporna lies) has been

28

C h a p t e r 1 discussed over the last couple of years. In 2018, the government declared the protection of six endangered shark species, although regulations have not yet been enforced.

1.4 THESIS STRUCTURE

This thesis is structured as a series of scientific papers in accordance with postgraduate and research scholarships regulation of the University of Western Australia. Chapters 2, 4 and 5 have been prepared, submitted, and accepted for publication in peer-reviewed journals. Chapter

3 has been submitted and is currently under peer review. All chapters have been slightly modified from the published articles to maintain a consistent format throughout the thesis and each contain an introduction, methods, results, discussion, conclusion and references section.

Each chapter can be read as an independent article or as part of the thesis.

Chapter 2 addresses objective 1 through estimating market (research question 1.1) and non- market values (research question 1.3) of shark diving tourism in the Semporna region using an economic impact assessment and a contingent valuation survey. Chapter 3 addresses objective 1 and 2 through an economic impact assessment of the shark diving tourism in Semporna

(research question 1.1) and by comparing results with outcomes from Chapter 2 (research question 1.2). This chapter also estimates non-market values generated by this industry using a contingent valuation survey and a combined travel cost and contingent behaviour survey

(research question 1.3). Chapter 3 also examines the economic impact of the implementation of a shark fishing ban (research question 2.1.a). Chapter 4 focuses on objective 1 through estimating market values of the shark diving tourism industry in the Republic of the Maldives

(research question 1.1) and explores how values have changed over time by comparing the results with economic information from an earlier study in 1993 (research question 1.2).

Chapter 5 will address objective 1 and 2 by estimating the effect of the success and failure of long-term management of the shark sanctuary in the Maldives on economic benefits to local businesses (research question 2.1.b) and dive tourists (research question 1.3) using a travel cost and contingent behaviour survey. Finally, in Chapter 6 I draw together the results of the various

29

C h a p t e r 1 studies and discuss their policy implications, shortcomings and potential future research directions.

1.5 REFERENCES

Ali, K & Sinan, H 2014, ‘Shark ban in its infancy: Successes, challenges and lessons learned’, Marine biological association of India, vol. 56, no. 1, pp. 34–40.

Anderson, RC & Ahmed, H 1993, ‘The Shark Fisheries in the Maldives’, Ministry of Fisheries and Agriculture, Republic of the Maldives and Food and Agriculture Organization of the United Nations, p. 51.

Apps, K, Dimmock, K, & Huveneers, C 2018, ‘Turning wildlife experiences into conservation action: Can white shark cage-dive tourism influence conservation behaviour?’, Marine Policy, vol. 88, pp. 108–115.

Barker, MJ & Schluessel, V 2005, ‘Managing global shark fisheries: suggestions for prioritizing management strategies’, Aquatic Conservation: Marine and Freshwater Ecosystems, vol. 15, no. 4, pp. 325–347.

Brunnschweiler, JM 2010, ‘The Shark Marine Reserve: a marine tourism project in Fiji involving local communities’, Journal of , vol. 18, no. 1, pp. 29–42.

Champ, PA, Boyle, KJ, & Brown, TC (eds) 2017, A Primer on Nonmarket Valuation, 2nd ed. 2017 edition. Springer, New York, NY.

Chapman, DD, Frisk, MG, Abercrombie, DL, Safina, C, Gruber, SH, Babcock, EA, Feldheim, KA, Pikitch, EK, Ward-Paige, C, Davis, B, Kessel, S, Heithaus, M, & Worm, B 2013, ‘Give Shark Sanctuaries a Chance’, Science, vol. 339, no. 6121, pp. 757–757.

Cisneros-Montemayor, AM, Barnes-Mauthe, M, Al-Abdulrazzak, D, Navarro-Holm, E, & Sumaila, UR 2013, ‘Global economic value of shark : implications for conservation’, Oryx, vol. 47, no. 3, pp. 381–388.

Clarke, SC, McAllister, MK, Milner‐Gulland, EJ, Kirkwood, GP, Michielsens, CGJ, Agnew, DJ, Pikitch, EK, Nakano, H, & Shivji, MS 2006, ‘Global estimates of shark catches using trade records from commercial markets’, Ecology Letters, vol. 9, no. 10, pp. 1115–1126.

Davidson, LNK 2012, ‘Shark Sanctuaries: Substance or Spin?’, Science, vol. 338, no. 6114, pp. 1538–1539.

Davidson, LNK, Krawchuk, MA, & Dulvy, NK 2016, ‘Why have global shark and ray landings declined: improved management or overfishing?’, Fish and Fisheries, vol. 17, no. 2, pp. 438– 458.

Dent, F & Clarke, S 2015, ‘State of the global market for shark products’, FAO Fisheries and Aquaculture Technical Paper; Rome, , no. 590, p. I,III,IV,VII,VIII,1-159,161-167,169-179,181- 185,187.

Du Preez, M, Dicken, M, & Hosking, SG 2012, ‘The Value of Tiger Shark Diving Within the Marine Protected Area: A Travel Cost Analysis’, South African Journal of Economics, vol. 80, no. 3, pp. 387–399.

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Dulvy, NK, Baum, JK, Clarke, S, Compagno, LJV, Cortés, E, Domingo, A, Fordham, S, Fowler, S, Francis, MP, Gibson, C, Martínez, J, Musick, JA, Soldo, A, Stevens, JD, & Valenti, S 2008, ‘You can swim but you can’t hide: the global status and conservation of oceanic pelagic sharks and rays’, Aquatic Conservation: Marine and Freshwater Ecosystems, vol. 18, no. 5, pp. 459–482.

Dulvy, NK, Fowler, SL, Musick, JA, Cavanagh, RD, Kyne, PM, Harrison, LR, Carlson, JK, Davidson, LN, Fordham, SV, Francis, MP, Pollock, CM, Simpfendorfer, CA, Burgess, GH, Carpenter, KE, Compagno, LJ, Ebert, DA, Gibson, C, Heupel, MR, Livingstone, SR, Sanciangco, JC, Stevens, JD, Valenti, S, & White, WT 2014, ‘Extinction risk and conservation of the world’s sharks and rays’, eLife, vol. 3, p. e00590.

Dulvy, NK, Simpfendorfer, CA, Davidson, LNK, Fordham, SV, Bräutigam, A, Sant, G, & Welch, DJ 2017, ‘Challenges and Priorities in Shark and Ray Conservation’, Current Biology, vol. 27, no. 11, pp. R565–R572.

Food and Agriculture Organization 2019, Fishery commodities global production and trade (online query). Available from: http://www.fao.org/figis/servlet/SQServlet?file=/usr/local/tomcat/8.5.16/figis/webapps/figis/tem p/hqp_5820867750241564115.xml&outtype=html

Gallagher, AJ, Vianna, GMS, Papastamatiou, YP, Macdonald, C, Guttridge, TL, & Hammerschlag, N 2015, ‘Biological effects, conservation potential, and research priorities of shark diving tourism’, Biological Conservation, vol. 184, pp. 365–379.

Heithaus, MR, Frid, A, Wirsing, AJ, Dill, LM, Fourqurean, JW, Burkholder, D, Thomson, J, & Bejder, L 2007, ‘State-dependent risk-taking by green sea turtles mediates top-down effects of tiger shark intimidation in a marine ecosystem’, Journal of Animal Ecology, vol. 76, no. 5, pp. 837–844.

Heithaus, MR, Wirsing, AJ, & Dill, LM 2012, ‘The ecological importance of intact top-predator populations: a synthesis of 15 years of research in a seagrass ecosystem’, Marine and Freshwater Research, vol. 63, no. 11, pp. 1039–1050.

Jaiteh, VF, Lindfield, SJ, Mangubhai, S, Warren, C, Fitzpatrick, B, & Loneragan, NR 2016, ‘Higher Abundance of Marine Predators and Changes in Fishers’ Behavior Following Spatial Protection within the World’s Biggest Shark Fishery’, Marine Conservation and Sustainability, p. 43.

Jaiteh, VF, Loneragan, NR, & Warren, C 2017, ‘The end of shark finning? Impacts of declining catches and fin demand on coastal community livelihoods’, Marine Policy, vol. 82, pp. 224– 233.

Kuperan, K & Sutinen, JG 1998, ‘Blue Water Crime: Deterrence, Legitimacy, and Compliance in Fisheries’, Law & Society Review, vol. 32, no. 2, pp. 309–338.

McDonald, G, Mangin, T, Thomas, LR, & Costello, C 2016, ‘Designing and financing optimal enforcement for small-scale fisheries and dive tourism industries’, Marine Policy, vol. 67, pp. 105–117.

Sandin, SA, Smith, JE, DeMartini, EE, Dinsdale, EA, Donner, SD, Friedlander, AM, Konotchick, T, Malay, M, Maragos, JE, Obura, D, Pantos, O, Paulay, G, Richie, M, Rohwer, F, Schroeder, RE, Walsh, S, Jackson, JBC, Knowlton, N, & Sala, E 2008, ‘Baselines and Degradation of Coral Reefs in the Northern Line Islands’, PLoS ONE, vol. 3, no. 2, p. e1548.

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Simpfendorfer, CA & Dulvy, NK 2017, ‘Bright spots of sustainable shark fishing’, Current Biology, vol. 27, no. 3, pp. R97–R98.

Steenbergen, DJ 2013, ‘The Role of Tourism in Addressing Illegal Fishing: The Case of a Dive Operator in Indonesia’, Contemporary Southeast Asia: A Journal of International and Strategic Affairs, vol. 35, no. 2, pp. 188–214.

Vianna, GMS, Meekan, MG, Pannell, DJ, Marsh, SP, & Meeuwig, JJ 2012, ‘Socio-economic value and community benefits from shark-diving tourism in Palau: A sustainable use of reef shark populations’, Biological Conservation, vol. 145, no. 1, pp. 267–277.

Vianna, GMS, Meekan, MG, Ruppert, JLW, Bornovski, TH, & Meeuwig, JJ 2016, ‘Indicators of fishing mortality on reef-shark populations in the world’s first shark sanctuary: the need for surveillance and enforcement’, Coral Reefs, vol. 35, no. 3, pp. 973–977.

Ward-Paige, CA 2017, ‘A global overview of shark sanctuary regulations and their impact on shark fisheries’, Marine Policy, vol. 82, pp. 87–97.

Ward-Paige, CA & Worm, B 2017, ‘Global evaluation of shark sanctuaries’, Global Environmental Change, vol. 47, pp. 174–189.

Worm, B, Davis, B, Kettemer, L, Ward-Paige, CA, Chapman, D, Heithaus, MR, Kessel, ST, & Gruber, SH 2013, ‘Global catches, exploitation rates, and rebuilding options for sharks’, Marine Policy, vol. 40, pp. 194–204.

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Chapter 2

CHAPTER 2: SHARK DIVING TOURISM AS A FINANCING

MECHANISM FOR SHARK CONSERVATION STRATEGIES IN

MALAYSIA

This paper has been published as:

Vianna G., Meekan M.G., Rogers A.A., Kragt M.E., Alin J.M., Zimmerhackel J.S. (2018).

Shark diving tourism as a financing mechanism for shark conservation strategies in Malaysia.

Marine Policy 94, 220-226. https://doi.org/10.1016/j.marpol.2018.05.008

The candidate's overall contribution to the published paper was approximately 40%, as certified in the Statement of Student Contribution.

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Chapter 2

SHARK DIVING TOURISM AS A FINANCING MECHANISM FOR SHARK

CONSERVATION STRATEGIES IN MALAYSIA

1.6 ABSTRACT

This study estimated the economic value of the shark diving industry in Semporna, the most popular diving destination of Malaysia, by surveying the expenditures of diving tourists and dive operators through the region. A willingness-to-pay survey was also used to estimate the potential of the industry as a financing mechanism for enforcement and management of a hypothetical Marine Protected Area (MPA) to conserve shark populations. The study showed that in 2012, shark diving tourism provided direct revenues in excess of USD 9.8 million to the

Semporna region. These economic benefits had a flow-on effect, generating more than

USD 2 million in direct taxes to the government and USD 1.4 million in salaries to the community. A contingent valuation analysis indicated that implementation of a fee paid by divers could generate over USD 2 million for management and enforcement of the MPA each year. These findings suggest that shark diving is an important contributor to the economy of the

Semporna region that could be used as a mechanism to assist financial resourcing for management and conservation strategies.

1.7 INTRODUCTION

Shark diving is a fast-growing tourism industry that at a global scale has been estimated to engage around 500,000 participants every year (Topelko and Dearden 2005). In 2013, established shark diving operations could be found in approximately 45 countries spread throughout tropical and temperate waters around the world and many generated significant economic benefits to local economies. For example, in Fiji shark diving inputs over

USD 42 million annually to the country's economy, whereas in Palau, , the industry generates around USD 18 million per year, accounting for approximately 8% of the Gross

Domestic Product (Vianna et al. 2011; Vianna et al. 2012). In Australia and French Polynesia, shark diving generates annual revenues of USD 25.5 and 5.4 million per year, respectively,

34

Chapter 2 while at the small archipelago of Fernando de Noronha, Brazil, this activity generates

USD 2.6 million annually (Clua et al. 2011; Huveneers et al. 2017; Pires, Garla, and Carvalho

2016). Worldwide, the most valuable shark diving industry occurs in , where it generates annual revenues of over USD 109 million (Haas, Fedler, and Brooks 2017). The financial benefits of shark diving are distributed across several sectors of the local economy, because tourists spend money on both diving and also on a variety of other goods and services such as accommodation, food and transport. Shark diving tourism also generates income through tax revenues, enabling governments to provide services and infrastructure to communities (Vianna et al. 2011; Vianna et al. 2012).

Many of the sharks on which this tourism industry is based are, however, exposed to an extensive global fishery with an estimated catch of at least 100 million individuals per year

(Worm et al. 2013). Sharks are very susceptible to overexploitation, because they have long generation times and low growth and reproductive rates, which has led to declines of many populations worldwide (Camhi 1998). Reductions in the abundances of sharks pose a threat to the shark diving industry and have major implications for local economies of nations involved in the activity (Anderson and Ahmed 1993; Anderson and Waheed 1999). Moreover, the depletion of shark populations may also have a negative impact on the ecological integrity of marine systems, where sharks have an important regulating role (Burkholder et al. 2013;

Heithaus et al. 2008).

The economic value of shark diving tourism provides a strong incentive for the implementation of management strategies that seek to maintain healthy populations of sharks. Between 2009 and 2017, at least 13 nations and territories around the world banned shark fisheries and/or the trade of shark products within their waters by implementing shark sanctuaries. These sanctuaries are multiple-use marine protected areas (MPAs) that typically impose prohibitions on fisheries that capture sharks as target species or bycatch, while still permitting the operation of other fisheries in the same area (Hoyt 2014). The effectiveness of shark sanctuaries as a management option to conserve populations depends on managers having access to sufficient

35

Chapter 2 funds to implement surveillance and control activities to enforce sanctuary status and the engagement and compliance of local communities in the cessation of targeted fishing (Edgar et al. 2014; Vianna et al. 2016). Despite the importance of enforcement, many of the small island countries that have implemented sanctuaries lack the economic and logistic means to effectively police regulations, a situation exacerbated by the large areas of open sea encompassed by many sanctuaries.

Given that shark diving tourism offers a significant income stream to local economies in many countries, one option to fund the establishment and management of MPAs or other conservation strategies, such as bans on targeted shark fishing, might be to explore options for levies on this type of tourism. This requires, firstly, detailed information about the socio-economic importance of the local shark diving industry and secondly, information on the willingness of tourist participants to fund such levies. Some of the revenues from shark diving-tourism, such as tax revenues, are relatively simple to identify. However, many economic benefits are not measurable in market transactions and must be assessed using non-market valuations. For example, travel cost surveys (Ward and Beal 2000) can be used to estimate to what extent local tourism expenditure relies on the abundance of shark populations and/or the presence of a MPA at a tourist destination. Other non-market valuation methods such as contingent valuation

(Mitchell and Carson 1989) can be used to estimate visitors’ (and non-visitors’) willingness-to- pay (WTP) for the ability to see high abundances of sharks, the presence of a MPA or the imposition of bans on shark fishing. Non-market valuation surveys can also be employed to estimate how much shark divers would potentially be willing to pay to enter MPAs, and can thus reveal what additional financial resources could be generated by the introduction of entrance fees (Pires, Garla, and Carvalho 2016). This is particularly important in developing countries that lack the resources to police and enforce management strategies (Vianna et al.

2016; McDonald et al. 2016).

This study investigates these matters for the marine environments of the Semporna region in

Malaysia, where conflicts between shark fishing and diving tourism have generated initiatives

36

Chapter 2 for management strategies including the proposition of a MPA and a moratorium on shark fishing across the region. The study estimated the market value of shark diving tourism, including direct revenues and taxes generated for both the local communities and government.

Using a WTP survey, the study also estimated the potential revenues that could be generated through user fees from dive tourists to administer conservation strategies.

1.8 METHODS

1.8.1 Study site

Semporna is a district in the southeast of the Malaysian state of Sabah, on the island of Borneo

(Figure 2.1). The district is located on the border of the Coral Triangle and is the most biodiverse area of marine fauna in the world (Arai 2015; Yusoff, Shariff, and Gopinath 2006).

The Semporna region maintains Malaysia's largest dive tourism industry, with its islands (e.g.

Mabul, Pom-Pom, , Mataking and ) and the as popular diving destinations. According to the local diving industry, the main drawcard for divers to visit the area is the island of , which received about 43,900 divers in 2012 (Sabah Parks –

Personal comm.). Around Sipadan, divers have the opportunity to interact with large predatory fishes such as sharks. Common reef shark species such as the white-tip reef (Triaenodon obesus), grey reef (Carcharhinus amblyearhynchos) and scalloped hammerhead (Sphyrna lewini) sharks are regularly sighted around the island. Although less frequent, other species such as the Borneo shark (Carcharhinus borneensis) and the whale shark (Rhincodon typus) can also be observed. The Sipadan Island Park (168 km2) and the Tun Sakaran Marine Park (350 km2) are both largely no-take zones; however, hook and line fishing is allowed in specific zones of the latter park.

37

Chapter 2

Figure 2.1: Study region of Semporna with sample sites.

In Sabah, it has been estimated that approximately 22,000 people rely on fishing activities

(Department of Fisheries Sabah 2018). Local fisheries target mainly reef-associated fish species, but pelagic species of carangids and scombrids are also commonly caught. There are also reports of fishers targeting sharks in the region. Malaysia was ranked as the world's ninth-largest fishery for shark and ray products between 2000 and 2011 but decreasing shark landings indicate a decline in shark populations in the region (Dent and Clarke 2015). This suggests that both legal and illegal fishing activities still put on shark numbers (Worm et al. 2013).

Concerns about the impact of fishing on shark populations in the region have resulted in a proposal to implement a moratorium on shark fishing and a MPA to protect sharks in the district.

1.8.2 Surveys

Three self-administered questionnaires were administered with three samples of respondents in the Semporna district: dive tourist, guides, and operators. These questionnaires were designed to elicit the market and non-market values generated by shark diving tourism in the region. The 38

Chapter 2 survey was conducted between September and October 2012. The questionnaires followed the protocols established by other shark diving industry valuations conducted in Palau and Fiji

(Vianna et al. 2011; Vianna et al. 2012). Questionnaires and a printed explanation of the purpose of the research were handed to tourists and dive guides at the end of their dive trip.

The dive tourist survey collected information about divers’ demographic characteristics, their motivations to visit the destination, their satisfaction with the diving experience, and expenditures while in the region. These expenditures included costs of accommodation, living costs, diving and shark diving (when applicable), domestic transfers, and money spent on other activities (e.g. land tours) while in the region. The questionnaire also included a contingent valuation component, in which divers were asked their maximum WTP for a daily fee to provide funds for enforcement of a hypothetical MPA to protect sharks in the Semporna region

(Section 1.8.4). The full survey can be found in Appendix I.

The dive guide survey was conducted to collect socio-demographic information, as well as characteristics of the shark diving industry, such as dive sites visited, shark sightings, divers’ motivations to visit the region, average number of divers and sharks at sites, and employment information (salaries, length of employment etc.).

The dive operator survey involved interviews with managers of dive businesses based in the town of Semporna, and islands of Mabul, Pom-Pom, and Mataking. These surveys included companies that currently held licenses to dive at Sipadan (12 companies with a daily quota of

120 divers) and dive companies that operated exclusively in other sites of the Semporna region.

The questionnaire for dive operators obtained information about the characteristics of the businesses, including number of tourists taking dive trips, main dive attractions and activities, information about employees and operators’ expectations regarding the dive industry. Detailed information regarding expenditures related to the diving operation and salaries were also collected. The complete survey can be accessed in Appendix II.

39

Chapter 2

1.8.3 Economic revenues from shark diving

The direct economic benefits from shark diving tourism were estimated based on tourists’ expenditure on diving, accommodation, living costs, and local transport. These benefits capture the business revenues brought to the region by the shark diving industry. It is recognised that business revenues do not equate to the total economic benefits from the shark diving industry: shark diving services contribute to a range of market and non-market (consumptive and non- consumptive) values (Just, Hueth, and Schmitz 2005). Nevertheless, revenue provides a useful indicator of the economic importance of the industry and is consistent with other common economic metrics such as GDP.

The analysis of direct economic benefits from shark diving included the revenues of local businesses that benefit directly from the presence of shark divers (i.e. dive operators, hotels, , restaurants, and souvenir shops) as well as the flow-on of revenues to the local community in the form of employee wages. Business tax revenues from the dive operators and associated businesses that provide services for shark divers were also calculated. The analysis also included data that were collected in the tourist survey: the average expenditure of dive tourists in the Semporna district and the percentage of divers who stated that their visit to the region was conditional on the possibility of sharks being sighted. Other key information consisted of the total number of divers visiting the Semporna district in 2012, provided by the

Sabah Parks. The economic variables and formulas for data analyses are shown in Table 2.1 and

Table 2.2. For further details on the methodology, see Vianna et al. (2012).

40

Chapter 2

Table 2.1: Description of constants and parameters used to estimate revenues generated by the shark diving industry in the Semporna district. Variable Description (units) Values Source Total number of divers visiting the D # divers per year 43,898 Sabah Tourism district per year (#/year) Divers expenditure Average expenditure on dive DET 974 Tourist questionnaire per trip activities (USD/trip) #shark divers per Estimated number of shark divers Tourist questionnaire SD 10,096 year visiting the district per year (#/year) SDF Shark diving fraction Proportion of shark divers (SD/D) 0.23 Tourist questionnaire Average salary of employees of Operator W Wages diving industry in the Semporna 3,137 questionnaire district (USD/year) Business tax Operator BT Minimum tax rate contribution 0.2 contribution questionnaire Estimated number of employees in Number of Wood et al. 1997 E the dive industry in the Semporna 2,000 employees district Average days of Average number of days diving in the DD 4 Tourist questionnaire diving Semporna district (days)

Table 2.2: Formulas to calculate the economic value and distribution of revenues from shark diving in the Semporna district. Abbreviation Description Formula Source Business revenues from tourism Local business revenues Tourist LBR D x DET D from divers questionnaire Local business revenues Tourist LBR LBR x SDF SD from shark diving D questionnaire Community benefits from shark diving Direct community income Operators DCI W x E D from diving questionnaire Direct community income Operators DCI W x SDF x E SD from shark diving questionnaire Tax revenues from shark diving Business revenues tax from Operators TR LBR x BT D diving D questionnaire Business revenue tax from Operators TR LBR x BT SD shark diving SD questionnaire Expenditures Accommodation expenses + Diving Tourist LTC Local trip costs expenses + Extra expenses questionnaire Divers’ willingness to pay Potential annual revenues WTP x D x DD x currency rate Tourist REV from daily park fees for ENF questionnaire enforcement * For a detailed explanation of calculations see (Vianna et al. 2012).

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Chapter 2

1.8.4 Willingness to pay

Contingent valuation is a well-established method to determine the WTP of individuals for the provision of non-market environmental goods or services, or for public policies that have not yet been implemented (Hanley, Barbier, and Barbier 2009; Hoyos and Mariel 2010; Portney

1994). This study estimated the WTP of dive tourists for the enforcement of a hypothetical

MPA to protect sharks (here called WTPENF). The contingent valuation question used a payment card, that showed tourists five categories of daily user fees in Malaysian ringgit (MYR) of 0, 1–

15, 16–30, 30–60,>60. The bids were chosen based on local knowledge of dive operators about user fees from surrounding marine reserves. Respondents were asked to select their maximum

WTPENF from the offered bid amounts. The payment card approach allowed us to observe the lower and upper bound of respondent i's WTPENF. The statistical model estimated on contingent valuation data was based on the probability that respondent i's WTPENF lay between the observed interval values; Pr(BL < WTPENFi < BU ∣ X). The highest category (MYR>60) was right censored as a respondent's true WTP can be any value between 61 and infinity;

Pr(WTPENFi > BH ∣ X). An interval regression (intreg) model was estimated in Stata13 software where individual WTPENFi was specified as a linear additive function of individual characteristics Xi and an independently and identically distributed error εi with zero mean.

Aggregate respondents’ WTP for a daily fee for enforcement of a possible future MPA to protect sharks provides information about the potential annual revenues gained from implementing such an entry fee policy (here called REVENF). It was hypothesized that respondents with higher income would have a higher WTP. Other independent variables that were tested included gender, age, nationality, level of dive experience, and the likeliness of a diver returning to the region. Respondents were also asked whether a MPA in the Semporna region would affect the way they would recommend the destination to other divers.

1.9 RESULTS

A total of 356 questionnaires were completed, of which 307 were answered by dive tourists and

33 by dive guides, sampled across 12 dive operators in the region. The survey also collected

42

Chapter 2 information from 16 of the 22 dive operators identified in the region, sampling the town of

Semporna and islands of Mabul, Pom Pom and Mataking.

1.9.1 Tourist profile

Most diving tourists came from Europe (49%), followed by divers from domestic localities

(17%) (Table: 2.). Most divers were relatively young (21–30 years old) males, with a low level of diving experience (5–49 dives), and an annual income between USD 20,000 and 49,999

(Table 2.3). Interviews with divers showed that the principal motivation to visit the area was to engage in general diving activities (37%). A total of 25% of divers came to the Semporna specifically to dive at Sipadan, and 23% of the divers stated that they would not have chosen the region as a destination if there were no sharks to be sighted during the dives. Based on this percentage, it was estimated that about 10,000 divers are visiting Semporna annually mainly to see sharks and were classified as shark divers. Although not the sole motivation for diving in the region, 73% of divers stated that they were interested or very interested in diving with sharks.

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Chapter 2

Table: 2.3 Summary of respondents’ characteristics. Variable N Percentage Age (years old) Mean ± SD 34 ± 9.5 < 21 5 1.8 21 to 30 115 40.5 31 to 40 112 39.5 41 to 50 35 12.3 > 50 17 6.0 Total 284 Annual income (USD) Mean ± SD 57.5 ± 37.4 <20,000 58 21.6 20,000 to 49,999 70 26.0 50,000 to 79,999 67 24.9 80,000 to 119,999 40 14.5 > 120,000 34 12.6 Total 269 Dive experience (number of dives) Mean ± SD 118 ± 147 < 5 13 4.6 5 to 49 142 50.0 50 to 99 60 21.1 100 to 499 48 16.9 > 500 21 7.4 Total 284 Gender Female 129 45.4 Male 155 54.6 Total 284 Region of origin Europe 136 47.9 Asia 100 35.2 Others 48 16.9 Total 284 Likeliness to return to the region Definitely won't return 13 5 Unlikely to return 28 10 May return 102 36 Likely to return 83 30 Definitely will return 55 20 Total 281 Effect of an hypothetical shark sanctuary on recommendation Negative / No effect 61 22.0 Little / Large effect 216 78.0 Total 277

1.9.2 Revenues from shark diving

With 23% of all divers classified as shark divers, the business revenue that could be attributed to shark diving in the region was USD 9.8 million. Benefits also flowed through the provision of 44

Chapter 2 salaries to employees of the diving industry. The average annual salary of employees was

USD 3137. The diving industry in Semporna is responsible for the generation of approximately

2000 jobs (Wood et al. 1997). Assuming that the number of jobs generated in this industry is directly proportional to the number of tourist divers visiting the region, sharks as a non- consumptive tourism resource are responsible for the maintenance of approximately 460 jobs that generate a direct annual income of USD 1.4 million to the local community. Business revenue tax to the government from shark diving totalled USD 1.97 million (Table 2.4).

Table 2.3: Estimated revenues and income generated by the diving industry in the Semporna district in 2012. Code Description Value (USD) Annual local business revenues

LBRD All divers 42,772,849

LBRSD Shark divers 9,837,755 Annual community income

DCID Direct community income from diving 6,274,000

DCISD Direct community income from shark diving 1,443,020 Annual tax revenues

TRD Business revenue tax from diving 8,554,570

TRSD Business revenue taxes from shark diving 1,967,551

1.9.3 Willingness to pay

A range of interval regression models were tested on the data. The final model results (Table 2.4) showed that income, gender, age, likeliness of a diver returning to the region, and likeliness of recommending the region to other divers were statistically significant in explaining respondents’ willingness to pay for a daily fee for enforcement of a possible future MPA (WTPENF). Region of origin and diver experience were not significant predictors of WTPENF and were thus not included in the final model.

The estimated WTPENF for daily park fees of a respondent with all demographic covariates at their reference level (male, <21 years in age, annual income of USD<20,000, would not return to the region) is given by the constant term in Table 2.5, at MYR 84.15 (USD 28.00) per day.

The socio-demographic variables included in the model reflect the differences in WTPENF

45

Chapter 2 between respondents with different characteristics. As shown in Table 5, female respondents were willing to pay MYR 5.1 (USD 1.70) more than male respondents. The older the respondent, the lower was their willingness to pay (as indicated by the negative coefficient). As expected, respondents with higher income were willing to pay more than those with incomes

(USD 20,000–49,999 and USD 80,000–119,999). Respondents who stated that they may return to the region had a lower WTPENF than respondents who stated they would definitely not return.

Finally, respondents who stated that a MPA to protect sharks in the Semporna district would positively affect their recommendation of the destination to other divers were willing to pay

MYR 9.00 (USD 3.00) more per day than respondents who answered it would not, or would negatively, affect their recommendation (Table 2.5).

Table 2.4: Interval regression results of divers’ WTPENF a daily access fee to enforce a shark sanctuary (n = 259). Variable Coefficient Std. err. Constant 84.12 15.58 *** Gender = 1 (male) -5.09 3.09 * Age (years, <21 = reference) 21 to 30 -33.32 13.49 ** 31 to 40 -38.58 13.67 *** 41 to 50 -42.61 14.93 *** > 50 -31.44 14.66 ** Annual income (USD, < 20,000 = ref) 20,000 to 49,999 10.07 4.47 ** 50,000 to 79,999 5.17 4.61 ns 80,000 to 119,999 13.30 5.16 ** > 120,000 4.44 5.83 ns Likeliness to return to the region (1 = ref) Unlikely to return (2) - 27.51 9.22 *** May return (3) - 23.65 8.27 *** Likely to return (4) - 20.40 8.37 ** Definitely will return (5) - 30.08 8.72 *** Effect on recommendation 8.99 3.54 *** ln(σ) 3.11 0.05 *** Log-likelihood - 457.51 Pseudo-R2 0.147 AIC 947.03 Notes: ***, **, * = significant at 1%, 5% and 10% respectively; ns = not significant; R2 calculated against a constant- only model (LL = -536.395) 46

Chapter 2

Table 2.5: WTPENF of divers with differing socio-demographic characteristics

Respondent characteristics WTPENF (MYR) Std. err. 95% CI Sample average 35.73 1.49 (32.81 – 38.64) Female, < 21 years. age, income of 20- 50K, definitely won’t return, no effect on 97.19 16.20 (65.45 – 125.93) recommendation Male, 21-30 years. age, income of 80- 120K, definitely won’t return, 68.00 9.00 (50.37 – 85.64) little/positive effect on recommendation Male, 41-50 years. age, income of 80- 120K, likely to return, little/positive effect 38.32 6.00 (26.57 – 50.07) on recommendation Female, > 50 years. age, income of > 120K, may return, little/positive effect on 42.46 8.64 (25.52 – 59.40) recommendation Male, 31-40 years. age, income of 50-80K, will definitely return, no effect on 15.54 6.26 (3.27 – 27.81) recommendation

Average individual WTPENF estimates were aggregated over the total number of divers per year

(D) and the average number of diving days (A) to obtain the potential annual revenues from a daily park fee, converted to USD using a currency rate of 0.33. Based on the mean WTPENF from respondents, the proposed MPA could generate an estimated annual revenue (REVENF) of

USD 2.1 million (confidence interval: 1.9–2.2 million) from park entry fees. The cumulative distribution of WTPENF responses (Figure 2.2) shows that nearly 20% of respondents were willing to pay more than MYR 60 (USD 20.00), which was the highest bid offered on the payment card. This indicates that annual revenues could potentially be higher than the estimates reported here, as the upper bound of the WTPENF for these individuals is unknown.

Approximately 10% of respondents were not willing to pay a daily user fee to enforce the proposed MPA (Figure 2.2).

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Chapter 2

100

80

60

> bid value range value > bid 40 ENF

20 WTP Percentage of respondents with respondents of Percentage

0 MYR 0 MYR 1-15 MYR 16-30 MYR 31-60 > MYR 60 Bid value ranges

Figure 2.2: Cumulative distribution of WTPENF responses showing the percentage of respondents who were willing to pay the amount specified by each bid range category.

1.10 DISCUSSION

The economic value of shark diving in the Semporna district is substantial, with results from this study suggesting that in 2012, the industry contributed USD 9.8 million (23%) of a total of

USD 43 million in business revenues generated by diving tourism to the region. Additionally, shark diving maintained approximately 460 jobs that generated a direct annual income of

USD 1.4 million to the local community. Expenditure on shark diving also had flow-on effects for the local economy, benefitting businesses that might not be directly involved in the industry.

These figures contrast with the value of the reported shark catch in the same region. In 2012, landings of sharks caught by commercial and traditional fishing gear totalled 462 t, a total annual value of the catch of USD 457,000 (based on an average market value of RM 3/kg)

(Department of Fisheries Sabah 2018), or less than 5% of the value of the revenues generated by shark diving tourism in the region each year. Shark populations are very sensitive to fishing pressure (Worm et al. 2013) and in many popular shark diving destinations, fishing has caused localised depletion of sharks, with reported economic losses for the diving industry (Anderson and Ahmed 1993; Anderson and Waheed 1999; Robbins et al. 2006). The potential loss of revenues associated with a reduction in the abundance of sharks makes a strong argument for the need to carefully manage shark stocks in the region.

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Chapter 2

Well-developed shark diving industries can be found in many island states that rely on marine tourism as a source of income (Cisneros-Montemayor et al. 2013). The economic value of shark diving in Semporna (USD 9.8 million) is comparable to the value of similar industries in other countries in the Indo-Pacific. For example, in 2010, shark diving in Palau generated

USD 18 million in revenue (Vianna et al. 2012), whereas in Australia, where four regional shark diving industries are well established, this activity generates between USD 1.9 and 11.6 million per industry, with the estimated national value of USD 25 million per year (Huveneers et al.

2017). Similarly, in Fiji, which also offers a variety of shark diving tourism, the industry is valued at USD 42 million per year, with regional industries generating between USD 3.2 and

10.2 million (Vianna et al. 2011). This variation in income among countries partially reflects differences in the scale and popularity of tourism industries but is also a related to the seasonality and type of diving (shore-based, boat-based etc.) and the economic profile of each country. As more standardised valuation studies become available, these data may assist the development of models that could predict the potential of diving tourism to finance the implementation of management and conservation strategies.

Any management strategy that seeks to ensure sustainability of shark populations, which might range from fisheries management to the creation of MPAs or moratoriums on shark fishing, requires that the administering agency (government fisheries department etc.) has sufficient funds to enforce regulations. In the Caribbean, McDonald et al. (2017) have shown that tourist fees generated sufficient funds to finance an enforcement strategy for a MPA that benefited both tourism and artisanal fisheries. This study also suggests that the tourism industry could provide an effective source of funds for this goal. In the Semporna region, the willingness-to-pay survey suggested that divers could generate annual revenues of more than USD 2 million. This might remove a major political/economic barrier to the implementation of management strategies that could sustain the populations of sharks on which diving tourism is dependent.

Future income from shark tourism at Semporna relies on the continued existence of abundant populations of sharks, which at present are threatened by both legal and illegal fishing. The

49

Chapter 2 sustainable exploitation of shark stocks is inherently difficult because these animals have life history traits that make populations highly susceptible to overfishing and population recovery very slow (Worm et al. 2013). This is complicated by the fact that many coastal developing countries where shark tourism occurs have very low enforcement capabilities due to a lack of funds. In this situation, illegal, unreported and unregulated (IUU) fishing is often rampant and has been responsible for depletion of shark populations in many regions around the world

(Worm et al. 2013). This issue is further complicated by the widespread use of destructive fishing practices (such as dynamite fishing), which results in habitat degradation and creates further difficulties for fisheries management in the region.

Captures of sharks in the Semporna region are frequent, but represent only a small fraction of total landings in the area. Although shark fins are traded legally in the region as a valuable product, the value of the shark meat is generally very low. However, sharks are part of a multi- species group of fishes which are the basis of the livelihoods and an important source of protein for subsistence fishers in the region (Almada-Villela 2002). For this reason, the implementation of any conservation measurement such as a ban of shark fishing or landing imposed by a MPA, needs to take into account the potential impacts on the livelihood of local communities and balance conservation needs with mitigation of socioeconomic impacts whenever possible (Ali and Sinan 2014; Jaiteh et al. 2016). Large MPAs designed to protect sharks (e.g., shark sanctuaries) typically ban targeting, retention and landing of sharks, while still permitting exploitation of other fish stocks (Ward-Paige 2017). Due to the multi-species nature of the fishery in the Semporna region, it is unlikely that the creation of a MPA would cause considerable displacement of local artisanal fishers as they would still be able to target other groups of fish. However, it is fundamental that the creation and implementation process of any

MPA in the region involves local communities and ensures that local fishers are not adversely affected. If considered necessary, MPA creation needs to be accompanied by strategies that assure livelihood security and enable livelihood diversification.

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Chapter 2

In the Semporna district, fishers are known to supplement their income by working in the diving industry (Almada-Villela 2002). This suggests that the shark diving industry in the region can be a viable alternative to support the livelihood of at least some of the stakeholders who also benefit from the consumptive use of sharks. This has also been the case in other popular destinations for shark diving. For example, in Fiji, a MPA created to protect sharks has also been effective in improving the livelihood of local communities (Brunnschweiler 2010). This

MPA is supported by the local community, who benefit from revenues of over USD 650,000 annually in direct salaries (e.g., dive guides) and fees paid by diving tourism businesses operating at the shark diving sites (Vianna et al. 2011). Socio-economic analyses at other localities where the shark diving industry is well established suggest that fishers may also gain better livelihoods by supplying tourists with catches of reef fishes than by targeting sharks

(Vianna et al. 2012). Although our study shows the potential direct benefits of shark tourism to local communities, examples where the revenues of the shark diving industry are not retained locally also exist (Haas, Fedler, and Brooks 2017). This highlights the need for mechanisms that support a fair distribution of economic benefits among all stakeholders.

Although the adoption of fees on shark diving could raise concerns that these will have a negative impact on the number of visitors to the region, 90% of the diving tourists were willing to contribute financially to the enforcement of management strategies such as sanctuaries.

Visitors who stated that the implementation of an MPA in Semporna would result in a positive recommendation of the destination to other divers were willing to pay significantly more than those who stated that the MPA would result in a neutral or negative recommendation. However, the analysis also showed that returning visitors were willing to pay significantly less than visitors who were definitely not planning to return to the region. This seems logical, given that return visitors are more likely to incur the costs associated with a daily park fee. Nevertheless, this finding suggests that the implementation of any fee payment scheme must consider potential effects on return rates of individual tourists through further market research or contingent behaviour studies.

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Chapter 2

Willingness-to-pay studies have been widely used to investigate the acceptance and optimal value of hypothetical marine park fees, including shark sanctuaries, and inform decision makers of the financing potential of fee implementation (Haas, Fedler, and Brooks 2017; Peters and

Hawkins 2009). However, to avoid biases, WTP studies need to be carefully designed to present clear and objective explanations of the purpose of the survey, contextualize the destination of the resources and avoid overestimates or unrealistic bids associated with the hypothetical nature of the fee (Peters and Hawkins 2009). This study minimised the potential biases inherent in

WTP studies by providing discrete categories of fee value options (as opposed to open-ended questions) based on fees that already existed for other reserves in the region. Moreover, an explanation of the purpose of the research was given prior to interviews, which provided context for respondents to understand the implications of establishment of the proposed fee (Peters and

Hawkins 2009).

The total number of divers is a key parameter in estimates of the value of a shark diving industry (Vianna et al. 2012; Huveneers et al. 2017; Haas, Fedler, and Brooks 2017). To overcome the absence of reliable official statistics for the region as a whole, the number of divers visiting Sipadan was used as a proxy for the total number of divers visiting the Semporna district in 2012. However, due to the limited number of permits (120) issued per day to visit

Sipadan, the total number of divers (and therefore shark divers) was likely to be higher. For this reason, this study represents an underestimate of the direct value of the shark diving industry in

Semporna. Our estimates focused on the direct and indirect revenues generated by shark diving, which is a labour-intensive industry that relies on several accessory services such as catering, equipment maintenance, transport etc. Although some of the revenues generated by these services may also be considered as part of total economic value of the shark diving industry, the contribution of shark divers to the total value of the services could not be accurately partitioned and for this reason they were not included in our estimates.

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1.11 CONCLUSION

The analysis has shown that the value of the shark diving industry in the Semporna district is high, with socio-economic benefits flowing from the industry to the local community and government through salaries and taxes. The contingent valuation analysis shows that the shark diving industry could assist financial resourcing of management strategies such as the establishment of a MPA to protect sharks through park fees. Besides safeguarding the shark diving industry, the enforcement structure implemented by such management measures could also provide the logistics necessary to improve management of local artisanal and subsistence fisheries through the establishment of landing monitoring and enforcement programs that would otherwise not be financially viable. For this synergy to be possible, local managers and decision-makers need to be particularly careful to develop an integrated management plan that takes into account the considerations of all local stakeholders, while clearly addressing conservation and socio-economic needs.

1.12 ACKNOWLEDGEMENTS

The authors would like to thank Ric, Rohan Perkins and Guido Capezzuoli for logistic support and Isabel Ender for the assistance with data collection. The authors would like to express our thanks to the managers and staff of Scuba Junkie, Borneo Divers, Billabong Scuba, Celebes Beach , Uncle Chang, Seaventures Rig Resort, Sipadan Scuba, Sipadan.com, Borneo Speedy Dive, Sphere Divers, Sipadan Water Village Resort, Global Divers, Big John Scuba, Sipadan Pom-Pom Resort, Singamata Adventures and Reef Resort, Borneo Unlimited Marine Sport and Perfect Diver. The authors would also like to thank Borneo Conservancy, in particular Mr. Daniel Doughty. Thanks also to Sabah Tourism Board and WWF Malaysia for providing data. This work would not be possible without the collaboration of the tourist divers who kindly took their time to answer the questionnaires.

1.13 REFERENCES

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Anderson, RC & Ahmed, H 1993, ‘The Shark Fisheries in the Maldives’, Ministry of Fisheries and Agriculture, Republic of the Maldives and Food and Agriculture Organization of the United Nations, p. 51.

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Cisneros-Montemayor, AM, Barnes-Mauthe, M, Al-Abdulrazzak, D, Navarro-Holm, E, & Sumaila, UR 2013, ‘Global economic value of shark ecotourism: implications for conservation’, Oryx, vol. 47, no. 3, pp. 381–388.

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Dent, F & Clarke, S 2015, ‘State of the global market for shark products’, FAO Fisheries and Aquaculture Technical Paper; Rome, no. 590, p. I,III,IV,VII,VIII,1-159,161-167,169-179,181- 185,187.

Department of Fisheries Sabah 2018, Department of Fisheries Sabah, Department of Fisheries Sabah. Available from: http://www.fishdept.sabah.gov.my/capture.asp.

Edgar, GJ, Stuart-Smith, RD, Willis, TJ, Kininmonth, S, Baker, SC, Banks, S, Barrett, NS, Becerro, MA, Bernard, ATF, Berkhout, J, Buxton, CD, Campbell, SJ, Cooper, AT, Davey, M, Edgar, SC, Försterra, G, Galván, DE, Irigoyen, AJ, Kushner, DJ, Moura, R, Parnell, PE, Shears, NT, Soler, G, Strain, EMA, & Thomson, RJ 2014, ‘Global conservation outcomes depend on marine protected areas with five key features’, Nature, vol. 506, no. 7487, pp. 216–220.

Haas, AR, Fedler, T, & Brooks, EJ 2017, ‘The contemporary economic value of elasmobranchs in The Bahamas: Reaping the rewards of 25 years of stewardship and conservation’, Biological Conservation, vol. 207, pp. 55–63.

Hanley, N, Barbier, EB, & Barbier, E 2009, Pricing Nature: Cost-benefit Analysis and Environmental Policy. Edward Elgar Publishing.

Heithaus, MR, Frid, A, Wirsing, AJ, & Worm, B 2008, ‘Predicting ecological consequences of marine top predator declines’, Trends in Ecology & Evolution, vol. 23, no. 4, pp. 202–210.

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Hoyt, E 2014,‘The role of marine protected areas and sanctuaries’, in, Sharks: conservation, governance and management. Routledge.

Huveneers, C, Meekan, MG, Apps, K, Ferreira, LC, Pannell, D, & Vianna, GMS 2017, ‘The economic value of shark-diving tourism in Australia’, Reviews in Fish Biology and Fisheries, vol. 27, no. 3, pp. 665–680.

Jaiteh, VF, Lindfield, SJ, Mangubhai, S, Warren, C, Fitzpatrick, B, & Loneragan, NR 2016, ‘Higher Abundance of Marine Predators and Changes in Fishers’ Behavior Following Spatial Protection within the World’s Biggest Shark Fishery’, Marine Conservation and Sustainability, p. 43.

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McDonald, G, Mangin, T, Thomas, LR, & Costello, C 2016, ‘Designing and financing optimal enforcement for small-scale fisheries and dive tourism industries’, Marine Policy, vol. 67, pp. 105–117.

Mitchell, RC & Carson, RT 1989, Using Surveys to Value Public Goods: The Contingent Valuation Method. Resources for the Future.

Peters, H & Hawkins, JP 2009, ‘Access to marine parks: A comparative study in willingness to pay’, Ocean & Coastal Management, vol. 52, no. 3, pp. 219–228.

Pires, NM, Garla, RC, & Carvalho, AR 2016, ‘The economic role of sharks in a major ecotourism archipelago in the western South Atlantic’, Marine Policy, vol. 72, pp. 31–39.

Portney, PR 1994, ‘The Contingent Valuation Debate: Why Economists Should Care’, Journal of Economic Perspectives, vol. 8, no. 4, pp. 3–17.

Robbins, WD, Hisano, M, Connolly, SR, & Choat, JH 2006, ‘Ongoing Collapse of Coral-Reef Shark Populations’, Current Biology, vol. 16, no. 23, pp. 2314–2319.

Topelko, KN & Dearden, P 2005, ‘The Shark Watching Industry and its Potential Contribution to Shark Conservation’, Journal of Ecotourism, vol. 4, no. 2, pp. 108–128.

Vianna, GMS, Meekan, MG, Meeuwig, J, Pannell, DJ, & Sykes, H 2011, The socio-economic value of the shark-diving industry in Fiji. Australian Institute of Marine Science, University of Western Australia, Perth, Australia.

Vianna, GMS, Meekan, MG, Pannell, DJ, Marsh, SP, & Meeuwig, JJ 2012, ‘Socio-economic value and community benefits from shark-diving tourism in Palau: A sustainable use of reef shark populations’, Biological Conservation, vol. 145, no. 1, pp. 267–277.

Vianna, GMS, Meekan, MG, Ruppert, JLW, Bornovski, TH, & Meeuwig, JJ 2016, ‘Indicators of fishing mortality on reef-shark populations in the world’s first shark sanctuary: the need for surveillance and enforcement’, Coral Reefs, vol. 35, no. 3, pp. 973–977.

Ward, FA & Beal, D 2000, Valuing Nature with Travel Cost Models. Edward Elgar Publishing. Available from: http://econpapers.repec.org/bookchap/elgeebook/1768.htm. [4 July 2016].

Ward-Paige, CA 2017, ‘A global overview of shark sanctuary regulations and their impact on shark fisheries’, Marine Policy, vol. 82, pp. 87–97.

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Wood, EM, Wood, JD, Georg, FA, Dipper, DJ, & Lane, W 1997, Pulau Sipadan monitoring manual. WWF, Malaysia.

Worm, B, Davis, B, Kettemer, L, Ward-Paige, CA, Chapman, D, Heithaus, MR, Kessel, ST, & Gruber, SH 2013, ‘Global catches, exploitation rates, and rebuilding options for sharks’, Marine Policy, vol. 40, pp. 194–204.

Yusoff, FM, Shariff, M, & Gopinath, N 2006, ‘Diversity of Malaysian aquatic ecosystems and resources’, Aquatic Ecosystem Health & Management, vol. 9, no. 2, pp. 119–135.

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C h a p t e r 3

CHAPTER 3: THE PAST, PRESENT AND FUTURE BENEFITS OF

SHARK DIVING TOURISM IN SEMPORNA, MALAYSIA

This paper has been peer-reviewed as:

Zimmerhackel J.S., Kragt M.E., Meekan M.G. (2018). The past, present and future benefits of shark diving tourism in Semporna, Malaysia. In review with Marine Resource Economics

(initial submission date: 07/11/2018)

The candidate's overall contribution to the published paper was approximately 70%, as certified in the Statement of Student Contribution.

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C h a p t e r 3

THE PAST, PRESENT AND FUTURE BENEFITS OF SHARK DIVING TOURISM

IN SEMPORNA, MALAYSIA

1.14 ABSTRACT

The economic benefits of shark diving tourism has become a strong argument for shark conservation, even though the effect of conservation measures such as shark fishing bans on tourist demand is usually unknown. This study used surveys with dive tourists and dive operators to compare future demand for shark diving in Borneo under current conditions (status quo) and a sanctuary scenario that would ban shark and ray fishing. We found that future demand under the sanctuary scenario would be 47% higher than under the status quo scenario.

We estimate welfare effects in terms of dive tourists’ consumer surplus and community benefits for the local tourism sector under the future scenarios. This translates into an increase of annual business revenues for the local tourism sector from USD 35.1 million to USD 51.6 million under the sanctuary scenario. Dive tourists were also asked for their willingness to pay a daily access fee to finance the sanctuary and found that this fee could generate an annual revenue of

USD 2.4 million. Our results show that implementing a shark and ray sanctuary in Semporna could be a way to ensure continued tourist demand and provides pathways for future economic development.

1.15 INTRODUCTION

Sharks are subject to extensive global fisheries that have caused many populations to decline rapidly (Fields et al., 2018). The demand for shark fins as a component of shark fin soup, particularly in South East Asia, is a key driver of this fishery (Clarke et al., 2007). It is estimated that about 100 million sharks are caught annually (Worm et al., 2013), a third of which consists of species that are at risk of extinction (Fields et al., 2018). Mobulids (the genera that comprises manta and devil rays) are also targeted by fisheries, in this case for their gill rakers, a high value commodity in markets supplying traditional Chinese medicines (O’Malley et al., 2017). Similar

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C h a p t e r 3 to sharks, declining catches suggest overfishing and possibly even local extinction of these species in several sites in South East Asia (Lewis et al., 2015).

There is a widely recognised need for conservation and management strategies to protect populations of sharks and rays from overexploitation (Worm et al., 2013). One strategy involves the creation of sanctuaries where commercial shark (and usually ray) fisheries are prohibited.

Since the implementation of the first shark sanctuary in Palau in 2009, a total of 15 countries or territories have implemented shark sanctuaries comprising about three percent of the total ocean surface (Ward-Paige and Worm, 2017). Many of the countries that have created shark sanctuaries support a tourism sector that focuses on diving with sharks and rays, particularly island nations of the Indo-Pacific (Ward-Paige, 2017). Studies have highlighted the large contributions this tourism can make to local and national economies; which is typically many times the value of fisheries for the same animals (Gallagher et al., 2015; Huveneers et al., 2017;

O’Malley et al., 2013; Vianna et al., 2012). This economic argument underlies the popularity of sanctuaries and the rapid proliferation of this management strategy worldwide.

Although creation of sanctuaries is increasingly common, major challenges remain. One obvious issue is the enforcement of no-take regulations due to a lack of resources (Chapman et al., 2013; Vianna et al., 2016), particularly where sanctuaries might cover many thousands of kilometres of open ocean. User fees have been identified as a potential mechanism to finance the management and enforcement of protected areas (Gelcich et al., 2013; Thur, 2010) and could also be applied for shark sanctuaries (Vianna et al., 2018). Another concern is the displacement by sanctuaries of fishermen that may have relied on sharks for livelihoods. In some localities, tourism has provided fishers with alternative livelihoods (Ali and Sinan, 2014;

Vianna et al., 2012). In other sanctuaries, a lack of alternative sources of income has resulted in engagement in high-risk activities including illegal fishing (Jaiteh et al., 2017). Tourism can sometimes offer a means to overcome this problem, through payment of a user fee for shark diving that compensates former shark fishermen for the loss of fishing rights, as is the case in

Fiji (Brunnschweiler, 2010).

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C h a p t e r 3

Here, we investigate the economic value of the shark and ray dive tourism industry in the

Semporna region of Sabah, Malaysia. The region hosts Sipadan Island, which is a major draw card for shark divers that in 2012 was estimated to generate a revenue of USD 42 million per year to local businesses (Vianna et al., 2018). However, Malaysia is also one of the leading nations in the trade of shark fins and declining catches likely indicate overfishing of populations

(Dent and Clarke, 2015), possibly with dramatic consequences for the dive tourism industry.

Consequently, the Sabah government is considering options for the management of stocks including a potential moratorium on fishing or a shark sanctuary. This study examines how the establishment of a shark sanctuary might affect future recreational demand of dive tourists

(using a combined travel cost-contingent behaviour approach) and subsequently the economic value of shark diving in the region. We also use contingent valuation to estimate dive tourists’ willingness to pay for a ban on shark and ray fishing. Moreover, we compare our results with business revenue and willingness to pay estimates in the Semporna region from 2012 (Vianna et al., 2018).

1.16 METHODS

1.16.1 Study area

The study focused on the Semporna district in the southeast of Sabah, Malaysian Borneo

(Figure 3.1). Semporna hosts Malaysia’s largest dive tourism industry and the main attraction for divers to visit the region is the island of Sipadan. Sipadan lies on the edge of the continental shelf with steep drop-offs around the reef where, divers can observe large pelagic fishes such as white-tip (Triaenodon obesus) and grey (Carcharhinus amblyearhynchos) reef sharks, scalloped hammerhead sharks (Sphyearna lewini) and manta, devil (Mobula spp), and eagle rays

(Aetobatus narinari). In 2004, 168 km² around the island was declared a no-take zone for fisheries and all tourist operators on the island were relocated to the mainland or surrounding islands. Today, there is a limit of 120 diver licenses available per day to visit the island.

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Adjacent to Sipadan, the islands of Mabul, Pom-Pom, Kapalai, Mataking, and Ligitan and the

Tun Sakaran Marine Park are popular diving destinations in Semporna (Figure 3.1).

Figure 3.1: Map of the Semporna region with sample sites.

In addition to tourism, fishing remains an important source of income for many people. In 2006, approximately 42,000 people (1.2% of the population) relied on fishing activities for their livelihoods in Sabah (Teh et al., 2011). Local, small-scale fisheries mostly target medium and large pelagic fishes including sharks (Teh et al., 2011). Mobulids are also captured and sold in local markets in the Semporna region (first author’s observation), although the extent of this fishery is difficult to determine as there are no formal catch records.

In response to a decline in abundance of sharks, in 2017 the Government of Sabah declared six marine parks as shark sanctuaries, including the Tun Sakaran Marine Park and the Sipadan

Island Park in the Semporna region. However, ongoing concerns about the wider impact of fishing on shark and ray populations in the region have resulted in a proposal to ban shark and ray fishing and implement a shark sanctuary in the waters of the entire state of Sabah.

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1.16.2 Surveys

In February 2018, surveys with dive tourists and face-to-face surveys with dive operators were conducted at four tourist sites in the Semporna district (Figure 3.1). The surveys were designed to elicit the market and non-market values generated by shark diving tourism in the region.

Tourist surveys were self-administered by respondents as a digital version on tablets after their dives.

The dive tourist survey (Appendix III) contained four sections. In the first, dive tourists were asked about the principal objective of their current trip and recent history of such as the number of visits they had made to Semporna in the last five years, and the duration of their stay. They were also asked to rank their interest in different dive attractions (high abundances of fishes, sharks and rays, turtles, coral reefs, and macro life) in the Semporna region.

The second section asked tourists about their future plans to make dive trips to Semporna if current conditions would remain the same (the “status quo” scenario). Respondents that stated they would not return to the region received a follow-up question as to why they would not visit the region again. The survey then explained the current protection status of sharks and rays in

Sabah and informed the respondent that the government was considering implementing a shark sanctuary in Sabah. Tourists were asked about whether they think that a shark sanctuary would protect sharks and rays. Subsequently, respondents were presented with a scenario where a shark and ray sanctuary would be established in Sabah. The sanctuary was described as having three hypothetical effects on the shark dive experience for tourists (everything else being equal):

(i) sharks and ray populations increased by 30%, (ii) it was possible to see one additional species of shark and ray, and (iii) sharks and rays could be observed at more dive sites, therefore increasing the number of possible shark dives at different sites by 25%. For both the status quo and the shark sanctuary scenario, tourists were asked to state the total number of trips they would be likely to take to Semporna in the next five years and the number of days they would stay per trip. In a follow-up question, tourists were asked to rank their perceived importance of the different effects (abundance, species diversity and number of shark dives). Finally, we asked

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C h a p t e r 3 divers about their maximum willingness to pay a daily fee to provide funds to support the management of a shark and ray sanctuary (see Section 3.3.5).

Section three elicited information about individuals’ travel costs during the current trip, including expenses on international air fares, domestic travel, accommodation, food and beverages, dive activities, and other things (e.g. and gifts). Those tourists who had bought a travel package were asked to specify items covered by the package and their spending on excluded items. All other respondents were asked for expenditures on each item. In Section four, tourists answered questions about their demographic characteristics such as age, gender and nationality as well as their personal background with shark conservation.

The survey for dive operators (Appendix IV) contained two sections. The first enquired about the current characteristics of (shark) dive operations including main attractions for dive tourists, shark diving sites, and species that could be seen at these sites. The second elicited information about the number of tourists taking dive trips, numbers of local and foreign employees, and expenditures on operational costs, employee wages, and taxes.

1.16.3 Travel cost and contingent behaviour method

The travel cost (TC) method is a revealed-preference approach that is widely used to determine the non-market values related to recreational sites (Ward and Loomis, 1986). This method assumes that the number of trips that different tourists make to a specific recreational site depends on the costs of each visit (in terms of time and money) and the characteristics of the site

(including its environmental quality). The estimated relationship between the number of trips and travel costs can be used to calculate the consumer surplus (CS) of tourists (Fletcher et al.,

1990).

The contingent behaviour (CB) method is a stated preference technique that measures tourists’ trip demand for a recreational site under hypothetical changes in the quality or the price of visiting the site. Following other examples in the literature (e.g. Englin and Cameron, 1996;

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Grijalva et al., 2002; Parsons et al., 2013), we combine TC and CB in our study because the future conditions (i.e. implementing a shark and ray sanctuary) are not yet experienced by tourists.

We estimated the model as a quasi-panel where the three observations for each respondent

(demand in the past five years, future demand under a status quo scenario, and future demand in the sanctuary scenario) were combined. Stata 14.2 (StataCorp, 2015) was used to estimate a combined TC-CB model to calculate demand for dive trips to the Semporna region. The travel costs included the costs required to arrive at the shark dive site (international flights, domestic flights, and ferries; in thousands of USD) and dive trip costs, but not any other costs (e.g. accommodation or souvenirs). Moreover, these costs were only included for the fraction of days that respondents undertook diving activities. This ensures a conservative estimate of the consumer surplus for the shark dive. The model was estimated as:

푦 = 훽 − 훽푝 + 훽푖푛푐 + 훽푠푐 + 훽X +⋯+ 훽푋 (3.1)

Where y is the number of trip days of each individual. The trip days for the past five years were calculated as the product of the number of trips in the past five years and the duration of the current trip (in days) assuming that the past trips had the same duration as the current trip.

Future trip days were estimated as the product of the number of trips and the trip duration under the future scenarios. p is the individual travel cost per dive trip, inc is the annual household income, sc is a variable that represents the three different demand scenarios, and Xn represent other individual characteristics that affect dive trip demand. We expected that lower travel costs and higher income would have a positive influence on dive trip demand. We also expected that dive trip demand would go up in the future sanctuary scenario. Because our count data was shown to have a higher variance than mean (‘overdispersion’), we estimated the model as a negative binomial model (xtnbreg command in STATA) (Hilbe, 2011). We used random effect models to control for unobserved heterogeneity in the panel data.

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On-site sampling has the disadvantage of not taking into account the population of dive tourists who make no trips to Semporna (zero truncation). It is also more likely to sample dive tourists who take more trips or stay longer in the Semporna region (endogenous stratification) (Parsons,

2017). As there is no function to correct for on-site sampling in panel data, we did so by estimating a travel cost model of dive trip demand in the last five years (nbreg command in

STATA) and estimating a model that corrected for zero truncation and endogenous stratification bias (nbstrat command in STATA).We then calculated the CS for each model and generated a correction factor for on-site sampling equal to the ratio between the estimated CS from both models.

1.16.4 Welfare measures

Welfare measures were calculated for three situations: current benefits based on dive trip demand over the past five years; future benefits under a status quo scenario; and future benefits under a shark sanctuary scenario. These measures included annual market values that shark diving tourism brings to the Semporna region as well as tourists’ CS associated with shark diving.

The market values of shark diving were expressed through (i) annual business revenues for dive tourism operators; (ii) business revenues for local businesses (including hotels, restaurants, domestic transport and souvenir shops); and (iii) salaries from employments that could be directly associated with shark diving (see Appendix V for full details of the market value analysis).

The average CS of individual i to dive at a dive site with quality qt was calculated as the inverse of the coefficient of the dive trip price variable ßp in the travel cost model:

푞 푡 푦 (푝 ,푞 ,푋푖)푑푝 푝푐 푖 0 푡 푦 퐶푆푖 = ∫ 푦 (푝 , 푞 , 푋푖)푑푝 = (3.2) 푝0 푖 푦 푡 푦 ß푝

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Where y is the number of trip days, p0 is the market price of a dive trip, and 푝 is the choke price of dive trip demand. We then estimated the difference in CS of each individual between the status quo qSQ and the sanctuary scenario qSANC. Under the assumption that the marginal utility of the trip costs (the price coefficient) does not change when the quality of the shark dive trip changes (Whitehead et al. 2000), we then aggregated dive tourists’ CS by multiplying average individual CS by the total number of dive tourists who visited Semporna each year and the total number of days that tourists went diving in Semporna per year in each of the three situations (observed demand, future demand under SQ, and future demand under SANC). The latter was derived using the incident rate ratio (IRR) for each scenario variables in the negative binomial TC-CB model.

1.16.5 Willingness to pay user fees

We used a contingent valuation method to estimate dive tourists’ willingness to pay a user fee for a shark and ray conservation fund, which would be used to enforce regulations and create alternative livelihoods in the Sabah shark and ray sanctuary. The willingness to pay question was formulated as follows as: “The effective management of a shark and ray fishing ban in

Sabah requires money to enforce regulations and to create alternative livelihoods for local communities. Funds could be collected from tourists in the form of park fees. These would be paid into a shark and ray conservation fund. What is the maximum daily fee that you would be willing to pay if this money was used for a shark and ray conservation fund? Please choose from the options below.” We used a payment card approach that provided options in Malaysian

Ringgit (MYR) (0, 5, 10, 15, 20, 25, 30, 40, 50, 60, >60) to choose from. This identified the lower and the upper bound of the respondents’ WTP. Those respondents who chose MYR >60 were asked to state their maximum WTP in an open-ended question.

The payment card approach and the range in amounts was selected to allow comparison with a previous contingent valuation study in the Semporna region (Vianna et al., 2018). However, we acknowledge that this response format has drawbacks such as anchoring bias and not possessing

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C h a p t e r 3 all conditions of incentive compatibility1 (Boyle, 2017). Finally, we used a follow-up question to enquire about tourists’ opinion regarding the use of a user fee where they could express their preference for enforcement activities, the financial support of local communities or indifference.

We estimated interval regression models (intreg) in STATA 14.2 (StataCorp, 2015). WTP was defined as a linear additive function of individual characteristics and an independently and identically distributed error with zero mean. Characteristics that were tested included age, dive experience, annual net household income, whether the respondent was a member of an animal welfare organisation, had observed shark or ray fishing during their stay, was aware of shark conservation programs, and the main purpose of the trip. Finally, we estimated the potential annual revenues gained from implementing this daily tourist fee by aggregating the WTP of respondents over the total number of dive tourists who visit Semporna per year and the median number of dive days per trip.

1.17 RESULTS

1.17.1 Descriptive statistics

1.17.1.1 Tourist profile

A total of 451 tourist surveys and 11 dive operator interviews were completed. However, we removed 20 responses who exceeded the 97th percentile of total trip costs from data analysis (for more detail see Appendix VI). Diving tourists had an average age of 33 years (± 8.42 SD) and came mainly from Asia (49%) or Europe (40%) (Table 3.1). Slightly over half of the tourists were female, had made on average 89 dives in his/her lifetime, and had an annual net household income of USD 49,176 (± 34,234 SD). If there were no sharks to be seen in Semporna, almost

60% of respondents would return to the region. Alternatively, respondents would go diving with

1 Willingness to pay questions of hypothetical nature are incentive compatible if they hold the following conditions: “(i) the participants care about the outcome; (ii) the authority can enforce payments by voters; (iii) the elicitation involves a yes or no vote on a single project; and (iv) the probability that the proposed project is implemented is weakly monotonically increasing with the proportion of yes votes” (Vossler and Holladay, 2018).

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C h a p t e r 3 sharks and rays (29.57%) or other animals (10.48%) at substitute locations. The median number of days that people spent in the Semporna region was ten days. Respondents went a median of four days diving during which time respondents made a median of 10 dives. Of these, an average of 3.41 (± 6.31) dives were made specifically to see sharks and rays, during which tourists observed on average a total of 5.05 (± 9.88) sharks during their trip to Semporna. On a

Likert scale from not satisfied at all (1) to very satisfied (5), respondents classified their satisfaction with the overall shark diving experience on average as 3.55 (corresponding to a state between neutral and satisfied). About 15% of respondents had observed some sort of shark or ray fishing during their trip. Almost three quarters of respondents believed that the creation of a shark and ray sanctuary in Sabah would have a positive effect on shark and ray populations in the region. (Table 3.1).

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Table 3.1: Sample characteristics (n = 431) Characteristics Value Average age (years ± SD) 32.89 ± 8.42 Gender (% female) 50.84 Continent (%) Americas 9.52 Asia 48.74 Europe 39.50 Others 2.24 Average annual net household income (USD/year ± SD) 49,176 ± 34,234 Respondents’ reaction to absence of sharks in Semporna (%) Would return to Semporna to dive with other animals 56.99 Would return to Semporna for non-diving activities 1.88 Would go to substitute sites to dive with sharks 29.57 Would go to substitute sites to dive with other animals 10.48 Others 1.08 Average dive experience (# of dives ± SD) 88.86 ± 139.05 Median number of dive days (# of days/trip) 4 Median number of dives (# of dives/trip) 10 Average number of shark dives (# of dives ± SD/trip) 3.41 ± 6.31 Average number of sharks observed (# of sharks ± SD/trip) 5.05 ± 9.88 Average satisfaction (Likert scale from 1 to 5 ± SD) 3.55 ± 2.92 Respondent has observed shark fishing (%) 15.18 Respondent believes in positive effect from sanctuary (%) Yes 72.38 No 5.14 Not sure 22.62 Respondent is member of animal welfare organisation (%) 36.94 Respondent has heard of shark conservation before (%) 54.32

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1.17.1.2 Ranking of dive attractions

Respondents were asked to rank their interest in different dive attractions (high abundances of fishes, sharks and rays, turtles, coral reefs, and macro life) in the Semporna region on a scale from most interested (1) to least interested (5). Sharks and rays were the most desired dive attraction in the Semporna region for 41% of dive tourists. Sharks and rays obtained the highest relative ranking of 2.4 (2.2 - 2.5, 95% CI), followed by high abundance of fishes and turtles, both of which received a relative ranking of 2.94 (2.8 – 3.1, 95% CI). The dive attractions that were least interesting to divers in Semporna were coral reefs and macro life, which obtained relative rankings of 3.3 (3.2 - 3.5, 95% CI) and 3.4 (3.3 – 3.6, 95% CI), respectively.

1.17.1.3 Dive trip demand

Divers spent a median number of ten days at Semporna in the last five years (Figure 3.2). In the future status quo scenario, respondents stated that they would return to Semporna for a median of eight days in the next five years. Under this scenario, a total of 95 tourists (23.9%) stated that they would not return to Semporna in the next five years as they first wanted to visit other places (75%), or because the current trip was too expensive to return (7.4%). Other reasons for not returning included (in the order of importance) pollution, overcrowding, a lack of large marine life, fear of kidnappers, and bad service. When presented with the scenario of improved dive experiences through the creation of a shark and ray sanctuary, the median total number of days that divers would spend in the next five years in Semporna was ten days.

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Figure 3.2: Median number of days that tourists stayed in Semporna in the last five years (observed) and would stay in the next five years under the status quo conditions and the scenario of creating a shark and ray sanctuary.

1.17.2 Travel cost-contingent behaviour model

A likelihood ratio test found significant overdispersion in the data (alpha=652.02, p-value =

0.00). Hence, we estimated a negative binomial model on the combined TC-CB data to explain observed and future travel demand (Table 3.2). As expected, travel costs were negatively correlated with the number of days respondents stayed in Semporna in the five-year period.

However, income did not predict the number of dive trip days and the level of dive experience was significant but trivially small. Unexpectedly, we found that observing shark or ray fishing activities has a positive relationship with the number of trip days in Semporna. We suspect that, rather than observations being a predictor of dive demand, those tourists who stay longer in the region are more likely to have observed shark fishing activities. The combined TC-CB model also shows that tourists whose main objective of the trip to Semporna was diving and those who originated from Asia, had made and planned to stay significantly more days in Semporna in the future than other tourists. Under a future status quo scenario, dive tourists would stay 36.6% less days as indicated by the incident rate ratio of the ‘status quo’ variable. The number of planned trip days to Semporna under the shark sanctuary scenario was not significantly different from the number of trip days dive tourists had made in the last five years. However, a Wald test 71

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(test command in STATA) confirmed that the demand under the sanctuary scenario is 7.16% higher than under the status quo scenario (p-value 0.000).

Table 3.2: Results of the TC-CB model including the incidence rate ratio (IRR) for each variable. Measures of the goodness of fit are given as the log-likelihood and the Akaike information criterion (AIC). Variable Coefficient P-value 95% CI IRR

Constant -0.003 0.976 -0.206 0.213 1.003

Travel costs ('000) -0.568 0.018 -1.036 -0.000 0.999

Income ('000) -0.000 0.710 -0.002 0.002 1.000

Dive experience 0.001 0.001 0.000 0.001 1.000

Observed shark fishing 0.397 0.000 0.198 0.596 1.487

Diver 0.283 0.001 0.114 0.451 1.327

Asia 0.594 0.000 0.441 0.747 1.811

Scenarios

Status quo scenario -0.456 0.000 -0.576 -0.335 0.634

Sanctuary scenario -0.069 0.219 -0.179 0.041 0.933

Log likelihood -4,042

AIC 8,106

Observations 1,074

The shark sanctuary scenario was described as having three major impacts on sharks

(abundance, species diversity and number of shark dives). We asked respondents to rank these impacts in order of importance for their dive experience. An increased abundance of sharks was ranked as the most important by 51% of respondents, followed by an increase in the number of species of sharks and rays that could be observed (ranked most important by 41% of respondents). The opportunity to make more shark dives during a trip was ranked as the most important by only 8% of respondents.

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1.17.3 Welfare measures

The consumer surplus for an average dive tourist in the sample was calculated using the inverse of the coefficient of the travel cost variable (in ‘000) in the combined TC-CB model (Table 3.2).

We estimated a CS of USD 1,762 per person per day. We also estimated a correction factor of

0.905 by comparing the CS of a TC model with and without correction for on-site sampling (see

Appendix VI). As such, the CS while correcting for on-site sampling was USD 1,604 (Table

3.3). The annual CS for the entire population of dive tourists in Semporna (72,575 tourists) over the median days that a tourist was diving in Semporna (4 days) was estimated to be

USD 465,616.962. Under the status quo scenario, dive trip demand was estimated to be 36.6% lower compared to the last five years. Hence, the CS of dive tourists would be USD 1017 per person and day. However, if a shark and ray sanctuary was to be established, the individual CS would be 47% higher than under the status quo scenario which would result in a CS of

USD 1,497 per person and day.

We estimated annual business revenues for local dive businesses (based on dive tourists’ expenditures on dive trips) to be USD 21.5 million. Business revenues for the local tourism industry (based on dive tourists’ expenditures on dive trips, accommodation, domestic transport, food and beverages and souvenirs) was USD 55.3 million per year (Table 3.3). Moreover, shark diving activities are estimated to provide about 769 jobs and USD 2.5 million in annual salaries in the Semporna region (for more details on the results of the market analysis, see Appendix V).

Under the status quo scenario, future business revenue for the dive tourism industry and the local tourism industry would be USD 13.6 and 35.1 million, respectively. Under this scenario, shark diving would provide 488 jobs and USD 1.6 million in salaries to local employees.

However, if there was a shark and ray sanctuary, annual business revenues for dive businesses and local tourism businesses are USD 20 million and USD 51.6 million, respectively (Table

3.3). A shark and ray sanctuary also could increase jobs in this sector to 717 which could provide USD 2.3 million in salaries for employees.

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Table 3.3: Welfare estimates based on the dive trip demand to Semporna in the last 5 years (observed), as well as in the next 5 years under the status quo and the shark and ray sanctuary scenario.

Observed Status quo Sanctuary Scenario

Number of dive trips/year 72,575 46,013 67,712

Individual CS (USD/person and day)b 1,604 1,017 1,497

Aggregated CS (USD/year)b 465,622,826 295,204,872 434,426,097

Business revenue for local tourism 55,302,006 35,061,472 51,596,772 industry from divers (USD/year)

Business revenue for dive tourism 21,487,950 13,623,360 20,048,257 industry from divers (USD/year)

Number of local employees associated 769 488 717 with shark diving (#)

Aggregated salaries for local 2,477,079 1,570,468 2,311,115 employees (USD/year) a 47.16% increase in dive trip demand from status quo scenario b Corrected for on-site sampling

1.17.4 Willingness to pay user fees

Just over 93% of respondents were willing to pay a daily access fee to a sanctuary. Interval regression model (Table 3.4) indicated that the sample mean WTP was MYR 32.07 (95% CI

25.30–38.83) corresponding to USD 8.28 (95% CI 6.53–10.02). The WTP of a respondent with all demographic variables at reference levels (not a supporter of an animal welfare organization, had not previously dived in Sipadan, not from Asia) was MYR 31.65 (USD 8.17) per day. The model found that divers with higher income were willing to pay significantly more for a daily tourist fee. Additionally, those tourists who supported an animal welfare organisation or had already visited Sipadan were willing to pay MYR 7.91 (USD 2.04) and MYR 8.74 (USD 2.26) more for daily tourist fees, respectively. Dive tourists from Asia had a significantly lower WTP for a tourist fee than tourists from other continents. The aggregated revenues for a tourist fee from the sample mean WTP could generate USD 2.4 million per year.

About 38.3% of respondents preferred to use the tourist fee for financial support of local communities, while 37.3% preferred to use the fee to enforce the fishing ban. The remaining

24.4% of respondents showed no preference.

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Table 3.4: Estimation results of the final contingent valuation model including all significant variables. Measures of the goodness of fit are given as the log-likelihood and the Akaike information criterion (AIC). Variable Coefficient P-value 95% CI

Income (‘000) 0.152 0.005 0.046 0.257

NGO 7.906 0.029 0.803 15.010

Asia -17.988 0.000 -25.032 -10.943

Sipadan 8.741 0.015 1.665 15.817

Constant 32.065 0.000 25.298 38.831

Log likelihood -1103

AIC 2218

Observations 358

1.18 DISCUSSION

The economic benefits of shark diving tourism in the Semporna region are mainly driven by the demand of dive tourists. This study compared dive tourists’ trip demand of the last five years, the five years in the future under a status quo scenario (where conditions remain the same), and a scenario where a shark and ray sanctuary is created in Sabah. Under the status quo scenario, we predicted a 45.6% lower future demand compared to the last five years. If shark and ray abundance, species diversity, and the opportunity to do more shark dives would increase (in the sanctuary scenario), we predicted a 47% higher demand compared to the future status quo scenario. These results are supported by the fact that about 40% of dive tourists stated that they would not return to the Semporna region, but instead go diving at substitute sites if there were no sharks and rays in the Semporna region.

We evaluated the economic benefits associated with shark diving tourism under the future sanctuary and status quo scenarios and found a difference in the individual dive tourist’s consumer surplus of USD 587 per day. Hence, our results show that an improved quality of shark dive experience significantly increases the welfare of dive tourists, underlining the importance of maintaining and/or recovering shark populations in the Semporna region in order 75

C h a p t e r 3 to attract tourists and sustain this industry. This is also highlighted by the fact that although diving in Semporna is renowned for a variety of attractions including large schools of fish and macro life, our study identified sharks and rays as the feature of most interest to dive tourists.

This result is consistent with earlier studies where dive tourists ranked sharks as the principal attraction for diving in Semporna (Teh et al., 2018).

Business revenues to local businesses that were generated by dive tourists were estimated to be in the order of USD 55.3 million. This corresponds to 0.02% of Sabah’s total 2016 GDP

(Economic Planning Unit, 2016). In addition to economic benefits through business revenues, we found that shark dive tourism generated considerable benefits to local communities by providing an estimated 769 jobs that generated a total of USD 2.5 million in salaries per year.

Noticeably, this represents about 0.6% of the population of the Semporna district and about

2.2% of the population in Semporna town (Department of statistics Malaysia, 2018). In comparison, in 2012, Vianna et al. (2018) estimated that shark diving tourism generated local business revenues of USD 49 million (inflation adjusted). They also found that shark diving provided 460 jobs that paid USD 1.7 million in annual salaries (inflation adjusted). This confirms an increasing importance of shark diving tourism as a source of revenues and livelihood for locals in the region.

Importantly, our results show that the economic benefits associated with shark diving tourism for local communities change under the future scenarios with and without shark and ray sanctuary. Annual local business revenues in the next five years could increase from

USD 35.1 million under the status quo scenario to USD 51.6 million if a shark and ray sanctuary was established. Similarly, the number of jobs this industry provides could increase from 488 to 717. This is particularly notable because Hampton et al. (2018) found strong interethnic inequalities and vulnerability of local workers in the dive tourism industry on Mabul

Island in Semporna. The two main ethnic groups on (Suluk and Bajau Laut) are refugees from the Philippines and experience uncertainty over permits to stay and work in

Malaysia. This makes these communities reliant on fishing as their main livelihood (Hampton et

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C h a p t e r 3 al., 2018), which has implications for local shark populations and the associated dive tourism industry. The creation of alternative and sustainable livelihoods for these communities is thus of great importance for the management of shark populations in the region.

It is important to note that the sanctuary scenario was described in the context of an improved shark dive experience through a higher shark and ray abundance, species diversity and availability of shark and ray dives. A shark and ray sanctuary, however, is not the only conservation strategy that could result in such improvements. It is possible that different approaches that effectively protect sharks and rays in Semporna could yield similar effects.

Conversely, a sanctuary that fails to improve the shark dive experience for tourists might not result in increased demand or revenues. This is supported by Zimmerhackel et al. (2018), who found that the potential failure of long-term management of a shark sanctuary in the Maldives could cause a steep decline in tourism revenues. Also, we presented the three effects of a sanctuary in one combined scenario. Therefore, it was impossible to test the behaviour of dive tourists towards these effects separately. Future research using discrete choice experiments could give information about the relative importance that dive tourists put on the effects of a sanctuary.

Most dive tourists in Semporna had also visited other sites throughout Sabah. It is therefore likely that the scenarios of change outlined for Semporna might have impacts on demand in these other sites and could (depending on the management and conservation measures) either stimulate or inhibit the growth of tourism.

We found that most dive tourists were willing to pay a dive tourist fee for managing a potential shark sanctuary that could offer a revenue stream of USD 2.4 million per year in the Semporna region alone. This revenue could (at least partly) finance enforcement of new regulations as well as aid the situation of local fishing communities for example through financial compensation for abandoning shark and ray fisheries. This approach has been successful in other places such as

Fiji (Brunnschweiler, 2010) and the Maldives (Ali and Sinan, 2014). Elsewhere in the region, fee schemes cover parts of management and enforcement costs such as in the Sugud Island 77

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Marine Conservation Area in Malaysia and the National Park in the Philippines

(Teh et al., 2008). In the Caribbean, management of the Bonaire Marine Park is entirely funded through tourist fees (Dixon et al., 1993). As user fees raise the costs of the dive trip, they might control demand and ease pressure from overcrowding (Emang et al., 2016; Lück, 2016).

However, Pascoe et al., (2014) found a highly inelastic price elasticity of dive trip demand in

South East Asia (including Malaysia) demonstrating that an entry fee for marine reserves would have only little impact on tourist demand.

1.19 CONCLUSION

Sharks and rays are a key element of the diving experience of tourists in the Semporna region.

The implementation of a shark sanctuary in Sabah could increase the dive trip demand in

Semporna by 47% compared to a without policy scenario. Diving with these animals generates large economic benefits that include improved welfare of dive tourists as well as direct business revenues for dive businesses and local businesses. Moreover, the dive tourism industry provides livelihood to local communities. Thus, increase in demand could increase the associated economic benefits of this dive tourism sector. The management and enforcement of such a sanctuary could, at least partly, be financed by a fee paid by dive tourists. Such fees might also fund a broader management program to aid sustainable development of the dive tourism industry by tackling environmental, social and economic challenges in the Semporna region.

1.20 ACKNOWLEDGEMENTS

The authors would like to thank the Shark Conservation Fund for financial support of this study. Dr Kragt received funding from the Australian Government as an Australian Research Council Discover Early Career Award (DE160101306) while writing this paper. Many thanks to the University of Technology, Malaysia and the Universiti Teknologi Mara Sabah for acting as local counterparts as well as the University Malaysia Sabah for visa-related support. Thank you to the Sabah Shark Protection Association, Scuba Junkie S.E.A.S., LEAP Spiral, and Forever Sabah for logistical support, and to Eric Yu for helping with the data collection. Thank you to two anonymous reviewers, whose comments improved the quality of this paper. Special thanks to all dive tourists who were so kind to complete the survey. We further acknowledge all dive

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C h a p t e r 3 operators that helped with the data collection: Scuba Junkie, Seaventures Dive Resort, Borneo Divers, Uncle Chang, Big John Scuba, Sipadan Dive Centre, Arung Hayat, Mabul Backpackers, Pom Pom Island Dive Resort, Sipadan Mabul Resort, Mabul Water Bungalow Dive Centre, Sipadan Pom-Pom Resort & Tours, Sipadan Water Village Resort, Celebes Beach Resort, and Billabong Scuba.

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Vianna, GMS, Meekan, MG, Rogers, AA, Kragt, ME, Alin, JM, & Zimmerhackel, JS 2018, ‘Shark-diving tourism as a financing mechanism for shark conservation strategies in Malaysia’, Marine Policy, vol. 94, pp. 220–226.

Vianna, GMS, Meekan, MG, Ruppert, JLW, Bornovski, TH, & Meeuwig, JJ 2016, ‘Indicators of fishing mortality on reef-shark populations in the world’s first shark sanctuary: the need for surveillance and enforcement’, Coral Reefs, vol. 35, no. 3, pp. 973–977.

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Zimmerhackel, JS, Rogers, AA, Meekan, MG, Ali, K, Pannell, DJ, & Kragt, ME 2018, ‘How shark conservation in the Maldives affects demand for dive tourism’, Tourism Management, vol. 69, pp. 263–271.

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CHAPTER 4: EVIDENCE OF INCREASED BENEFITS FROM THE

SHARK DIVING TOURISM INDUSTRY IN THE MALDIVES

This paper has been published as:

Johanna S. Zimmerhackel, Abbie A. Rogers, Khadeeja Ali, Mark G. Meekan (2019). Evidence of increased economic benefits from shark diving tourism in the Maldives. Marine Policy 100,

21-26. https://doi.org/10.1016/j.marpol.2018.11.004

The candidate's overall contribution to the published paper was approximately 75%, as certified in the Statement of Student Contribution.

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EVIDENCE OF INCREASED BENEFITS FROM THE SHARK DIVING TOURISM

INDUSTRY IN THE MALDIVES

1.22 ABSTRACT

Shark diving tourism is a fast-growing industry that provides socio-economic benefits to local communities. This study estimated the economic contribution of the shark diving tourism in the

Maldives by using surveys with dive tourists and dive operators. Direct business revenue from shark divers was estimated to be USD 14.4 million. Revenues to local businesses associated with travel expenses of shark divers were estimated to be USD 51.4 million. Further economic benefits from shark diving occurred in form of annual business tax revenues of USD 7.2 million and annual salaries to employees working in the diving industry of USD 4.1 million. These values were compared with the business revenues from shark in 1992 to assess how the shark diving industry has changed over time. The results of this study indicate that the business revenues of this industry have almost doubled (when inflation adjusted) over the last 24 years confirming its economic growth and importance for the Maldives. Effective management of shark dive operations is crucial for maintaining the value and sustainability of this tourism industry to improve ongoing conservation efforts for shark populations.

1.23 INTRODUCTION

Viewing of wildlife is one of the most profitable and fastest-growing sectors within the tourism industry (Krüger 2005; Wearing & Neil 2009). Revenue from this type of tourism is particularly important in developing countries where it can generate substantial income for local communities and contribute towards funding conservation efforts for the associated wildlife.

Although can also have negative impacts on target species (Krüger 2005), it is increasingly acknowledged as a viable alternative to the extractive use of wildlife

(Hittingbottom & Tribe n.d.; Huveneers & Robbins 2014). Within this industry, shark diving is a popular activity and is defined as scuba diving and snorkelling that focuses on viewing sharks in their natural habitat. Worldwide, almost 600,000 people participate in this activity each year

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C h a p t e r 4 and this number is expected to double in the next 20 years (Cisneros-Montemayor et al. 2013).

In many shark diving destinations, such as French Polynesia (Clua et al. 2011), Palau (Vianna et al. 2012), Australia (Huveneers et al. 2017), and the Bahamas (Haas et al. 2017), the industry generates tens of millions of dollars in revenue to local and regional economies. In addition, benefits flow to other sectors of the economy through expenses paid by divers for hotels, transport, and restaurants. Shark-dive tourism creates about 10,000 jobs worldwide (Gallagher

& Hammerschlag 2011) and generates business tax revenues that enable governments to improve the social welfare of communities (Vianna et al. 2012; Vianna et al. 2018).

The growing importance of shark diving to the economies of many nations occurs in a context where overfishing has caused a major decline in the abundance of numerous shark species worldwide (Worm et al. 2013; Camhi 1998). This decline has negative impacts on the resilience of marine ecosystems (Barley et al. 2017; Ruppert et al. 2013), with implications for the livelihoods and food security of coastal communities (Myers et al. 2007). The depletion of shark populations can, moreover, threaten the shark diving industry. In the Maldives, for example, unsustainable shark fishing during the early 1990s resulted in decreasing numbers of sharks at dive sites, which in turn caused a drop in visits by tourists and considerable economic losses to the local dive-tourism industry (Anderson & Ahmed 1993; Anderson & Waheed 1999). In response, the Government of the Maldives announced a nationwide ban on all shark fisheries and exports of shark products and implemented a shark sanctuary in 2010 (Ali & Sinan 2015;

Government of the Maldives 2010).

Today, tourism is the main economic driver of the Maldives and also generates the majority of its employment. Diving and snorkelling are the most popular tourism activities (Maldives

Tourism Survey 2015) and observation of manta rays and sharks is a very important component of the dive tourism industry (Anderson et al. 2011; Cagua et al. 2014). In 1992, shark diving generated approximately USD 2.3 million in direct business revenue, compared to an annual revenue of USD 0.5 million from local shark fisheries (Anderson & Ahmed 1993). This income from tourism is likely to be greater today, because the number of shark divers has increased

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C h a p t e r 4 significantly on a global scale (Cisneros-Montemayor et al. 2013). However, there is a lack of any means to determine the rate of growth of the industry, or to forecast its likely importance in the future, because there are few economic studies that have repeated surveys in the same area over time (however see Haas, Fedler, and Brooks 2017; Zimmerhackel et al. 2018).

This work addresses this issue by estimating the economic contribution of the shark diving industry to the Maldives and comparing these values to results from 1992 (Anderson & Ahmed

1993). In so doing, this study provides some of the first long-term insights on economic trends that can be used to examine the relative importance of the industry through time, and to validate predictions of increasing economic returns based on changes in visitor numbers to the Maldives.

It is important that sanctuary managers have up-to-date information about the socio-economic values of the shark diving industry in the Maldives, as such values have implications for conservation strategies. Accurate and robust figures on revenues are important in a situation where there are growing challenges to sanctuary status and to the conservation of shark populations. For example, there is currently no import ban on shark products in the Maldives, which might offer the potential for a black market trade in souvenirs such as shark jaws caught from local stocks and sold under the cover of imported products. Moreover, some fishers complain that increases in the numbers of sharks due to the sanctuary are creating problems with depredation of their catches and have applied political pressure to remove legal protections

(co-author's observation). There is also likely to be some illegal fishing of sharks occurring in the region (Ward-Paige & Worm 2017), although the scale of this problem has not been quantified. Information on the value of the shark diving industry may provide justification for continued shark conservation.

The objective of this study was to assess the current economic contribution of the shark diving industry in the Maldives. For this purpose, surveys with dive operators and dive tourists were used to estimate the business revenues, direct community income and business taxes that are associated with shark diving. This study contributes to the understanding of the development of the economic contribution of the shark diving tourism by comparing its’ current and historical

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C h a p t e r 4 values. Results of this work can provide data to demonstrate the economic benefits of long-term protection for sharks in the Maldives.

1.24 METHODS

1.24.1 Study site

The Republic of the Maldives lies in the central Indian Ocean and is composed of about 1200 islands distributed in 20 administrative atolls (Figure 4.1). About 200 islands are inhabited and approximately 122 are designated as resort islands; the remainder are nominally uninhabited, although many do in fact have a small number of workers living there. With an Exclusive

Economic Zone of 900,000 km2 and very little land area, the economy of the Maldives relies heavily on their marine resources. Tourism is the main economic sector of the country and made up 24% of gross domestic product in 2015 (Ministry of Tourism 2016). This part of the economy has grown markedly during the last decades as tourist arrivals increased more than fivefold from 23,852 in 1992 to 1,286,135 in 2016 (Ministry of Tourism 2016). About six per cent of the tourist arrivals come to the Maldives with the main purpose of going diving, which means that there were approximately 77,168 dive tourists in 2016. Currently, there are 184 registered dive operators of which the majority offer shark dives (Ministry of Tourism 2016).

The current study focused on dive tourism in five different atolls (Baa, Lhaviyani, Male, North

Ari and South Ari) of the central area in the Maldives (Figure 4.1). These atolls contain almost

90% of dive operators in the country and receive—due to the proximity to the international airport in Male—the vast majority of tourist arrivals.

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Figure 4.1: (A) Location of the Republic of the Maldives, (B) Central atolls of the Maldives with sample locations.

Due to the large area of the Maldives, there are a variety of shark-dive operations throughout the atolls. The shark diving industry in the Maldives is mainly focused on the observation of sharks in their natural habitat and usually does not include shark feeding or the use of bait to attract sharks to a certain dive site. Today, dive operators advertise approximately 164 dive sites where divers can expect to watch sharks. It is, however, important to state that there are also other attractions at many shark dive sites in the Maldives. Distinguishing between dive sites where sharks are present and where sharks are the main attraction is therefore very difficult and depends on the importance that each individual tourist places on seeing sharks during dives. The common sharks that can be seen by divers throughout most atolls are grey reef (Carcharhinus amblyearhynchos), white-tip reef (Triaenodon obesus), and black-tip reef (C. melanopterus) sharks. Tawny nurse sharks (Nebrius ferrugineus) can be found throughout the Maldives but are mostly observed by divers in the Vaavu atoll. A main attraction for visitors is diving or swimming with whale sharks (Rhincodon typus) that occur in the South Ari Marine Protected

Area but can also be found seasonally in the Baa atoll and the more southern Huvadhoo, Faafu

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C h a p t e r 4 and Dhaalu atolls. Pelagic sharks are another attraction, such as schooling hammerhead sharks

(Sphyearna lewini), which can be occasionally observed around the Rasdhoo and Vaavu atolls.

Silver-tip sharks (Carcharhinus albimarginatus) can be found along walls and channels that connect the inner and outer atolls, and in the southern Fuvamulah Island it is possible to dive with tiger sharks (Galeocerdo cuvier) and thresher sharks (Alopias sp.).

1.24.2 Surveys

1.24.2.1 Tourist survey

Questionnaires were developed to document the trip expenses of dive tourists. Prior to data collection, these questionnaires were tested with 12 divers in Western Australia, Australia. In the Maldives, the survey was conducted with 300 dive tourists between September–November

2016, with researchers visiting 19 different dive centres on 13 different islands. Surveys were administered digitally on a tablet or as an equivalent paper-based survey. The questionnaire was divided in four sections. First, dive tourists were asked about their trip purpose and trip characteristics such as length of their stay and the number of dives they made. The second section asked about respondents’ satisfaction with the shark diving experience, which was measured on a Likert scale from 1 (very unsatisfied) to 5 (very satisfied). This section also asked for respondents’ plans to make more shark-dive trips to the Maldives in the future. The third section recorded the travel costs during the current trip including expenses on dive activities, accommodation, food and beverages, domestic travel, and souvenirs and gifts, as well as international air fares. Those respondents who had purchased a travel package were asked to detail expenditures for the package, all items included in the package, and expenditures on items not included in the package. All other respondents were asked for expenditures on each of the items above separately. For ease of response, interviewees were able to state their expenses in their preferred currency, which were later converted to USD based on the currency conversion rate in November 2016. The third section also asked respondents about the duration of their stay

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C h a p t e r 4 and the number of days they had been diving. In section four, respondents answered questions about their demographic characteristics. For the full survey, see Appendix VII.

1.24.2.2 Dive operator survey

The dive operator survey involved audio recorded interviews with managers of the 19 participating dive operators and contained two sections. Section one aimed at understanding the current characteristics of the (shark) dive operations and elicited information regarding the main attractions for dive tourists, shark diving sites they visited, and shark species that could be seen at these sites. The second section enquired about the number of tourists taking dive trips, local and foreign employee numbers, as well as expenditures on operational costs, employee wages, and taxes. The full survey is provided in Appendix VIII.

1.24.3 Economic benefits from shark diving

The direct economic benefits from diving and shark diving tourism in the Maldives were estimated through (i) the direct business revenue; (ii) business tax revenues; and (iii) the revenues to the local community in the form of salaries. Benefits were calculated for all divers and for shark divers only. Shark divers were defined as those divers who stated that they would not return to the Maldives if they could not dive with sharks. Hence, all associated travel costs for these divers, and calculation of associated benefits, can be attributed directly to shark diving tourism.

1.24.3.1 Direct business revenue

First, the revenues that divers generate for the dive business directly (DBRD) were calculated as:

DBRD = DTC × D × DD (4.1)

Where dive travel cost DTC captures expenditure purely on dive activities per day, D reflects the total number of divers visiting the Maldives per year, and DD is the average number of days 90

C h a p t e r 4 that a dive tourist is diving during their trip. Only diving days were included in the estimation to account for the multi-purpose nature of holidays and to avoid the inclusion of any costs that were not directly associated with diving activities. D was estimated as the fraction of total tourist arrivals (sourced from Ministry of Tourism 2016) who stated that the main purpose of their visit was diving times the total number of tourist arrivals. The dive-business revenue from shark divers specifically (DBRSD) is the DBRD times the fraction of dive tourists who said that they would not come back to the Maldives if there were no sharks (labelled SDF):

DBRSD = DBRD × SDF (4.2)

Second, the local business revenue from divers (LBRD) was calculated by multiplying local trip costs per day (LTC) by the number of divers D and dive days DD. LTC included only locally spent costs (diving plus domestic transportation, accommodation, living costs, and gifts and souvenirs) but not international flight costs. Thus, LDBD captures the revenues that accrue to local businesses more generally and includes the diving industry. Local business revenue from shark divers (LBRSD) was then calculated as:

LBRSD = LBRD × SDF = LTC × D × DD × SDF (4.3)

Third, total direct business revenue from divers (TBRD) were estimated through the total trip costs TTC of dive tourists. TTC include all locally spent costs LTC (as above) plus international air fares. The total business revenues from shark divers (TBRSD) is the TBRD times the fraction of shark divers (SDF). These total business revenues will accrue to local and overseas businesses and was calculated as:

TBRSD = TBRD x SDF = TTC × D × DD x SDF (4.4)

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1.24.3.2 Business tax revenues

The tax revenues (TRSD) from the dive operators and associated businesses that provide services for shark divers were estimated by multiplying the business tax rate (BT)2 with the local business revenue from shark divers (LBRSD). Additionally, a green tax of USD 6/day that is paid by all tourists who stay in the Maldives (MIRA - Maldives Inland Revenue Authority

2017) was considered. The green tax obtained from shark divers was based on the number of shark divers visiting the Maldives per year and the average days they were diving. Accordingly,

TRSD was calculated as:

TRSD = DBRS × BT + (6 × D × SDF × DD) (4.5)

1.24.3.3 Salaries

Diving also has flow-on revenues to the local community in the form of employee wages (called here ‘direct community income from diving’; (DCID). This was measured by the estimated number of local and foreign employees that are associated with diving (E) and their average annual wages (W ). The numbers were obtained from the dive operator surveys and extrapolated to all registered dive operators in the Maldives(DO) using:

DCI = E x DO x W + (E x DO x W ) (4.6)

It was assumed that the proportion of jobs that can be associated with shark diving (W S) relative to all jobs in the dive tourism industry is directly proportional to the fraction of shark divers visiting the region because shark dive operations do not differ in staffing from other types of dive operations. According to this assumption, the direct community income from shark diving

(DCISD) is the DCID times the fraction of shark divers (SDF).

2 Correction: The business tax in the Maldives is charged on profits, not on business revenues. Also, the green tax is used for waste management. Therefore, it is not relevant for the economic impact of shark diving tourism. 92

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Our indicators of the economic benefits of shark diving are based on financial flows, similar to the Gross Domestic Product measure used for whole economies. However, they do not equate to the total economic benefits from the shark diving industry, for which the consumer surplus for the full range of use and non-use values (Hanley et al. 2009) and producer surplus (profits) would need to be estimated, not just revenues. Also, sharks play an important role in marine ecosystems and most probably contribute to a number of ecosystem services that are not assessed here. All formulas and variables used in this analysis are provided in Appendix V.

1.25 RESULTS

1.25.1 Sample characteristics

We collected 300 complete dive tourist surveys for data analysis (Table 4.1). About 40% of respondents were female. The majority (84%) of respondents originated from Europe and the majority (74%) had come to the Maldives mainly for diving purposes. About a third of all participants (87) were classified as shark divers on the basis that they stated that they would not return to the Maldives if there were no sharks to be seen. Respondents were, on average, satisfied with their shark diving experience in the Maldives (rating of 3.62 out of 5). We further collected information about average daily expenditure on diving activities; expenditure on local business goods and services such as hotels, restaurants, and domestic transport and souvenir shops; and on total trip costs (including all expenditures on local businesses and international air fares).

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Table 4.1: Characteristics of survey sample (n=300).

Respondents’ characteristics Value Gender (% female) 40 Age (mean years ± SD a) 42 (± 11) Annual net household income (mean USD ± SD) 87,617 (± 44,838) Origin of respondents (% of respondents)

Europe 84 Asia 10 Others 6 Average trip days (TD) (mean # of days) 11.9 Average days of diving (DD) (mean # of days) 6.6 Average dive experience (mean # of dives ± SD) 172 (± 34) Diving was the main purpose of the trip (%) 74 Shark diver fraction (SDF) (%) 33.2 Average satisfaction with shark diving experience b 3.62 (± 0.94) Dive trip costs (DTC) (mean USD/person day and 95% CI c) 85 (75 – 95) Local travel costs (LTC) (mean USD/person day and 95% CI) 304 (268 – 340) Total travel costs (TTC) (mean USD/person day and 95% CI) 396 (347 – 445) a SD = Standard Deviation; b based on a Likert scale from 1 = very unsatisfied to 5 = very satisfied; c CI = Confidence Interval

1.25.2 Economic benefits from shark diving

Using the results from our survey, the dive business revenue (DBRSD) generated by shark divers was over USD 14 million per year (Table 4.). Benefits from shark diving also flow on to other businesses. Shark divers spent more than USD 51 million per year on local businesses that include diving, accommodation, food and beverages, domestic transportation, and gifts and souvenirs. The total business revenue from shark divers who visited the Maldives (TBRSD) was estimated to be almost USD 60 million per year. The dive operator survey revealed a tax rate of

12%. Together with the payment of the daily green tax by divers, shark diving was estimated to generate a tax revenue of USD 7.18 million per year.

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Table 4.2: Estimation results of the economic benefits generated from divers and shark divers per year. Benefits are shown for dive businesses only as well as for associated local businesses and all businesses used by dive tourists during their holidays. Value Revenues 95% CI (USD/year) Business revenues Dive business revenues DBRD 43,291,304 (38,198,210 – 48,384,399) from divers Dive business revenues DBRSD 14,372,713 (12,681,710 – 16,063,702) from shark divers Local business revenues LBRD 154,830,076 (129,873,912 – 179,276,930) from divers Local business revenues LBRSD 51,403,585 (43,118,098 – 59,519,986) from shark divers Total business revenues TBRD 180,295,315 (165,339,385 – 193,351,406) from divers Total business revenues TBRSD 59,858,045 (54,872,595 – 65,272,721) from shark divers Tax revenues

TRD Tax revenues from diving 21,635,466 (20,605,631 – 22,475,096) Tax revenues from shark TRSD 7,182,975 (6,676,995 – 7,297,749) diving

Benefits from shark diving further flow on to the community through the provision of salaries to employees of the diving industry. The dive operator survey revealed that the dive industry in the

Maldives generated approximately 1,304 jobs including 720 local and 584 foreign workers

(Table 4.). Local and foreign workers had mean annual salaries of USD 8,544 and USD 10,464, respectively. Therefore, local annual salaries lie just below foreign annual salaries. The total direct income from diving received by Maldives locals and foreigners was approximately

USD 12.4 million. Accordingly, the direct income of all employees who work with shark diving operations was USD 4.1 million (about USD 2 million each for local and foreign employees)

(Table 4.3).

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Table 4.3: Number of employees in dive operations and their annual salaries for Maldivian local and foreign workers.

Salaries Locals Foreigners Total

Number of employees in dive E 720 584 1,304 operations (#)

Average annual salary 푊 8,544 10,464 9,504 (USD/year)

Direct income from diving DCID 6,152,268 6,110,256 12,393,216 (USD/year)

Direct income from shark DCISD 2,042,553 2,028,605 4,114,548 diving (USD/year)

1.26 DISCUSSION AND CONCLUSIONS

This study found that shark divers in the Maldives contributed about USD 14.4 million to the local economy in 2016. In 1992, Anderson and Ahmed (Anderson & Ahmed 1993) estimated the annual economic value of shark diving in this location to be USD 2.4 million, a value corresponding to USD 7.9 million in 2016 (when taking into account inflation according to the

Consumer Price Index). Although differences in methodologies mean that our estimate was not precisely comparable to the 1992 value, this does indicate that the annual direct revenues from shark diving have almost doubled between the early 1990s and 2016. This major increase can be partly explained by tourist arrivals that have increased five-fold since 1992 (Ministry of

Tourism 2016). The average price of dive trips, however, stayed within a similar range at

USD 30 (US D99 when inflation adjusted) per day in the early 1990s (Anderson & Ahmed

1993) to an average of USD 85 per day in 2016. However, there was a large discrepancy between the growth rate of the business revenues of shark diving and tourist arrivals, which might be explained by a change in focus of the tourism industry in the Maldives towards luxury resorts rather a niche market of diving and snorkelling as key activities.

In addition to the growth of the shark dive tourism sector, there also has been a shift in the importance of target species. The principal example in this context is whale shark diving, an

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C h a p t e r 4 activity that was nearly non-existent in the early 1990s, but was estimated to generate business revenues of up to USD 9.4 million in the Maldives in 2013 (Cagua et al. 2014). Although mindful of methodological differences between the present study and earlier work, this confirms that whale shark diving makes up a significant part of the overall business revenues from shark diving in the Maldives. Other species that have been targeted by the dive tourism industry since

1992 include tiger and thresher sharks, which can be observed in the southern-most atolls. These species may have been included as a target species as a result of a spread of the tourism industry in the south of the Maldives over recent decades, coupled with the designation of an additional

56 “resort islands” since 1992 (Ministry of Tourism 2016). However, it should be noted that although the number of resorts has increased substantially, many divers in the Maldives choose live-aboard vessels rather than resort-based diving. Due to logistics, these divers only constituted about 10% of our sample size, but were more likely to be more focused on shark diving. If this is the case, then this bias in the sample towards resort-based diving may have resulted in an underestimate of the value of shark diving in the Maldives.

Shark diving also contributed about USD 51.4 million to a variety of national business sectors, including dive tourism, hotels, restaurants, transport, and souvenir shops. This represents about two per cent of the total expenditures on local businesses by international tourists in the

Maldives and 1.4% of national GDP (Worldbank 2017). It could be argued that not all travel costs of these dive tourists are used solely for shark diving, because they also spend money on other goods and services during their trip. However, shark divers were classified as those tourists who would not return to the Maldives if there were no sharks to be seen. In this situation, any estimated revenues would be lost to the Maldives if there were no sharks or shark diving industry.

The contribution of shark diving activities to the Maldivian economy exceeds estimates from studies in other locations that used similar survey designs and analyses. In Fiji, shark diving inputs approximately USD 42 million annually to the economy (Vianna et al. 2011), whereas in the Bahamas, local dive expenditures totalled USD 49 million (Haas et al. 2017). In Palau, the

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C h a p t e r 4 shark diving industry generates around USD 17 million per year (Vianna et al. 2012). The greater business revenues from shark diving in the Maldives relative to these other locations can be explained by the high numbers of shark-dive tourists that visit the Maldives annually

(approximately 25,600 shark divers), which exceeded visitor numbers in Fiji, the Bahamas, and

Palau (between 8,600 and 19,200 shark dive tourists per year). However, it is important to bear in mind that shark diving industries worldwide are expected to have increased substantially in tourist participation in recent years (Cisneros-Montemayor et al. 2013), so these differences in relative values might also reflect the time lags among studies.

Shark diving in the Maldives maintains approximately 239 jobs that generate a direct annual income of USD 2 million to the local community. Jobs include dive guides as well as staff for boat operations, office work, and equipment maintenance. However, Maldivian locals only represent about 55% of all employees who work for the dive-tourism sector and often involve lower-tier jobs such as equipment maintenance and boat operations (Shakeela & Cooper 2009).

As a result, the average annual salary of locals was lower than that of foreign employees as well as of the national average of USD 9,518 per year. To close this gap between local and foreign employees, the government or the tourism sector could invest in education and training programs to upskill and attract more qualified locals to working in the industry. However, the community benefits from shark diving are diverse, with divers using a range of other goods and services such as hotels, restaurants, and souvenir shops during their trip, thus also generating jobs across other business sectors. Employees in tourism-related businesses also purchase goods and services with their salaries and therefore contribute to a wider range of business sectors.

These multiplier effects were not considered by our study.

The generation of employment also has important implications for former shark fishermen who lost their livelihood when shark fishing was banned. After the implementation of the shark sanctuary, about one third of the former shark fishers changed their fishing gear and now supply the tourism market with reef fish, and about two per cent began working directly for the tourism sector (Ali K., unpublished data), although this was a shift in employment that had already

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C h a p t e r 4 begun prior to this date (Anderson & Waheed 2001). This suggests that the tourism industry provided alternative to support the livelihoods of at least some former shark fishers. However, in order to provide a comprehensive picture, further studies are required that focus on the impact of the shark sanctuary on the livelihoods of shark fishers (particularly in those communities where there are few alternative livelihoods available).

The growth of the shark diving tourism industry in the Maldives in the last 24 years underlines the value of sharks to the national economy and may be attributed to past efforts to protect sharks in national waters. At the same time, this highlights the need for ongoing efforts to sustainably manage the sector. For example, there have been concerns that visitors exceed the carrying capacity of tourism operations that focus on whale sharks, with negative impacts on both whale sharks and tourist satisfaction with the shark diving experience (Cagua et al. 2014).

The success of long-term management and conservation efforts in shark sanctuaries, especially in developing countries, depends largely on the availability of funds. The diverse economic and community benefits of shark diving in the Maldives provides a means by which these goals might be funded. Nevertheless, Bhat et al. (2013) found a strong discrepancy between the revenues that are generated by nature-based tourism and the government's expenditures on nature conservation in the Maldives. It is advisable for national authorities to recognise the economic benefits of effective management of the shark sanctuary in the Maldives, and to ensure sufficient revenues generated from shark diving tourism are re-invested into maintaining shark populations. This will require an emphasis on enforcement of the sanctuary, a well- regulated shark diving industry and ongoing fisher-community involvement.

1.27 ACKNOWLEDGEMENTS

This work is a contribution of the Global FinPrint Project, funded by the Pau G. Allen Philanthropies, US – Grant no. 11861. The authors would like to thank support from the PEW Charitable Trust, US and the Australian Research Council Centre of Excellence for Environmental Decisions - Grant no. CE11ø1ø14. The first author received scholarships from the Australian Government's Research Training Program (RTP), the University of Western

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Australia, and the Australian Institute of Marine Science. Dr Kragt received funding from the Australian Research Council Career Fellow (DE160101306) while writing this paper. Thank you to the managers and staff of all supporting dive operators and resorts: Dive Club Maldives, Dive Plus Ukulhas, Diverland Embudu, Euro-Divers, Holiday Resort Kandooma, Kuredu Island Resort & Spa, Luxury Yacht Maldives, Meeru Island Resort & Spa, Ocean Junkies, Olhuveli Beach & Spa, Prodivers Kuredu, Rasdhoo Dive Centre, Reethi Beach Resort, Sea Explorer, Serene Ocean, Sun Diving Maldives, and Vilamendhoo Island Resort & Spa. Special thanks to the dive tourists who kindly took the time to complete the survey.

1.28 REFERENCES

Ali, K & Sinan, H 2015, National plan of action for the conservation and management of sharks in the Maldives. Ministry of Fisheries and Agriculture, Maldives. Available from: http://mrc.gov.mv/assets/Uploads/Sharks-Plan-Maldives.pdf.

Anderson, RC, Adam, MS, Kitchen-Wheeler, A-M, & Stevens, G 2011, ‘Extent and Economic Value of Manta Ray Watching in Maldives’, Tourism in Marine Environments, vol. 7, no. 1, pp. 15–27.

Anderson, RC & Ahmed, H 1993, ‘The Shark Fisheries in the Maldives’, Ministry of Fisheries and Agriculture, Republic of the Maldives and Food and Agriculture Organization of the United Nations, p. 51.

Anderson, RC & Waheed, A 2001, ‘The economics of shark and ray watching in the Maldives’, Newsletter of IUCN Specialist Group. Available from: http://www.mrc.gov.mv/assets/Uploads/2001-The-Economics-of-Shark-and-Ray-watching-in- the-Maldives.pdf.

Anderson, RC & Waheed, Z 1999, ‘Management of shark fisheries in the Maldives’, FAO Fisheries Technical Paper (FAO). Available from: http://agris.fao.org/agris- search/search.do?recordID=XF2000390499. [28 April 2016].

Barley, SC, Meekan, MG, & Meeuwig, JJ 2017, ‘Species diversity, abundance, biomass, size and trophic structure of fish on coral reefs in relation to shark abundance’, Marine Ecology Progress Series, vol. 565, pp. 163–179.

Bhat, MG, Bhatta, R, & Shumais, M 2013, ‘Sustainable funding policies for environmental protection: the case of Maldivian atolls’, Environmental Economics and Policy Studies, vol. 16, no. 1, pp. 45–67.

Cagua, EF, Collins, N, Hancock, J, & Rees, R 2014, ‘Whale shark economics: a valuation of wildlife tourism in South Ari Atoll, Maldives’, PeerJ, vol. 2, p. e515.

Cisneros-Montemayor, AM, Barnes-Mauthe, M, Al-Abdulrazzak, D, Navarro-Holm, E, & Sumaila, UR 2013, ‘Global economic value of shark ecotourism: implications for conservation’, Oryx, vol. 47, no. 3, pp. 381–388.

Clua, E, Buray, N, Legendre, P, Mourier, J, & Planes, S 2011, ‘Business partner or simple catch? The economic value of the sicklefin lemon shark in French Polynesia’, Marine and Freshwater Research, vol. 62, no. 6, pp. 764–770.

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Gallagher, AJ & Hammerschlag, N 2011, ‘Global shark currency: the distribution, frequency, and economic value of shark ecotourism’, Current Issues in Tourism, vol. 14, no. 8, pp. 797– 812.

Government of the Maldives 2010, The President’s Office - Government to impose ban on trade and export of sharks and shark products. Available from: http://www.presidencymaldives.gov.mv/Index.aspx?lid=11&dcid=998. [25 November 2015].

Haas, AR, Fedler, T, & Brooks, EJ 2017, ‘The contemporary economic value of elasmobranchs in The Bahamas: Reaping the rewards of 25 years of stewardship and conservation’, Biological Conservation, vol. 207, pp. 55–63.

Hanley, N, Barbier, EB, & Barbier, E 2009, Pricing Nature: Cost-benefit Analysis and Environmental Policy. Edward Elgar Publishing.

Hittingbottom, K & Tribe, A n.d.,‘Contributions of wildlife tourism to conservation’, in, K. Hittingbottom (ed.) Wildlife Tourism: Impacts, Management and Planning. Common Ground Publishing, CRC for Sustainable Tourism, Gold Coast, QLD.

Huveneers, C, Meekan, MG, Apps, K, Ferreira, LC, Pannell, D, & Vianna, GMS 2017, ‘The economic value of shark diving tourism in Australia’, Reviews in Fish Biology and Fisheries, vol. 27, no. 3, pp. 665–680.

Huveneers, C & Robbins, WD 2014,‘Species at the intersection’, in, Sharks: Conservation, Governance and Management. Routledge.

Krüger, O 2005, ‘The role of ecotourism in conservation: panacea or Pandora’s box?’, Biodiversity & Conservation, vol. 14, no. 3, pp. 579–600.

Ministry of Tourism 2016, Tourism Yearbook 2016. Ministry of Tourism, Maldives. Available from: http://www.tourism.gov.mv/downloads/2014dec/tourism%20year%20book%202014.pdf. [25 November 2015].

MIRA - Maldives Inland Revenue Authority n.d. Available from: https://www.mira.gov.mv/GreenTax.aspx. [11 December 2017].

Myers, RA, Baum, JK, Shepherd, TD, Powers, SP, & Peterson, CH 2007, ‘Cascading Effects of the Loss of Apex Predatory Sharks from a Coastal Ocean’, Science, vol. 315, no. 5820, pp. 1846–1850.

Ruppert, JLW, Travers, MJ, Smith, LL, Fortin, M-J, & Meekan, MG 2013, ‘Caught in the Middle: Combined Impacts of Shark Removal and Coral Loss on the Fish Communities of Coral Reefs’, PLOS ONE, vol. 8, no. 9, p. e74648.

Shakeela, A & Cooper, C 2009, ‘Human Resource Issues in a Small Island Setting The Case of the Maldivian Tourism Industry’, Tourism Recreation Research, vol. 34, no. 1, pp. 67–78.

Vianna, GMS, Meekan, MG, Meeuwig, J, Pannell, DJ, & Sykes, H 2011, The socio-economic value of the shark diving industry in Fiji. Australian Institute of Marine Science, University of Western Australia, Perth, Australia.

Vianna, GMS, Meekan, MG, Pannell, DJ, Marsh, SP, & Meeuwig, JJ 2012, ‘Socio-economic value and community benefits from shark diving tourism in Palau: A sustainable use of reef shark populations’, Biological Conservation, vol. 145, no. 1, pp. 267–277.

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Vianna, GMS, Meekan, MG, Rogers, AA, Kragt, ME, Alin, JM, & Zimmerhackel, JS 2018, ‘Shark diving tourism as a financing mechanism for shark conservation strategies in Malaysia’, Marine Policy, vol. 94, pp. 220–226.

Ward-Paige, CA & Worm, B 2017, ‘Global evaluation of shark sanctuaries’, Global Environmental Change, vol. 47, pp. 174–189.

Wearing, S & Neil, J 2009, Ecotourism: Impacts, Potentials and Possibilities? Routledge.

Worldbank 2017, The Worldbank Maldives Data, The Worldbank. Available from: https://data.worldbank.org/country/maldives. [7 May 2017].

Zimmerhackel, JS, Rogers, AA, Meekan, MG, Ali, K, Pannell, DJ, & Kragt, ME 2018, ‘How shark conservation in the Maldives affects demand for dive tourism’, Tourism Management, vol. 69, pp. 263–271.

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CHAPTER 5: HOW SHARK CONSERVATION AFFECTS DEMAND

FOR DIVE TOURISM IN THE MALDIVES

This paper has been published as:

Zimmerhackel J.S., Rogers A.A., Meekan M.G., Ali K., David J. Pannell, Kragt M.E. (2018).

How shark conservation in the Maldives affects demand for dive tourism. Tourism Management

69, 263-271. https://doi.org/10.1016/j.tourman.2018.06.009

The candidate's overall contribution to the published paper was approximately 70%, as certified in the Statement of Student Contribution.

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HOW SHARK CONSERVATION AFFECTS DEMAND FOR DIVE TOURISM IN

THE MALDIVES

1.29 ABSTRACT

Shark diving tourism provides important economic benefits to the Maldives. We examine the link between shark conservation actions and economic returns from diving tourism. A combined travel cost and contingent behaviour approach is used to estimate the dive trip demand under different management scenarios. Our results show that increasing shark populations could increase dive-trip demand by 15%, raising dive tourists’ welfare by USD 58 million annually.

This could result in annual economic benefits for the dive-tourism industry of >USD 6 million.

Conversely, in scenarios where shark populations decline, where dive tourists observe illegal fishing, or if dive operators lack engagement in shark conservation, dive trip demand could decrease by up to 56%. This decline causes economic losses of more than USD 24 million annually to the dive tourism industry. These results highlight the dependence of the shark diving industry on the creation and enforcement of appropriate management regimes for shark conservation.

1.30 INTRODUCTION

Ecotourism to watch wildlife is a fast-growing industry worldwide and offers a variety of benefits for those involved. For tourists, these include recreational and educational values such as a sense of well-being and improved environmental awareness (Ballantyne, Packer, & Falk,

2011; Curtin, 2009). For local communities, wildlife tourism supports the economy by providing jobs and income (Tisdell & Wilson, 2003). Within the wildlife tourism sector, shark diving has increasingly gained popularity and is now attracting over 500,000 tourists to shark dive sites in approximately 45 countries around the world (Cisneros-Montemayor, Barnes-

Mauthe, Al-Abdulrazzak, Navarro-Holm, & Rashid Sumaila, 2013). The benefits for local economies from this industry are substantial (Gallagher & Hammerschlag, 2011). For example, in Palau, shark diving generates USD18 million in annual business revenue for the national

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C h a p t e r 5 economy (Vianna, Meekan, Pannell, Marsh, & Meeuwig, 2012), while in Australia it generates up to USD25.5 million per year (Huveneers et al., 2017). Typically, the economic returns of these diving tourism industries are many times greater than fisheries that target the same species

(Anderson & Ahmed, 1993, p. 51; Gallagher et al., 2015; Topelko & Dearden, 2005).

The economic returns of shark diving to a country will depend, in part, on the degree of satisfaction that the experience provides to tourists. In welfare economics, this satisfaction (or

‘welfare’) is expressed as the ‘consumer surplus’ (Ward & Loomis, 1986). In the case of shark diving tourism, visitors' satisfaction will depend on the quality of the shark diving operation and the condition of shark populations. For example, in the Maldives, decreasing numbers of sharks at dive sites as a result of fishing caused dive operators to abandon or reduce visits to popular shark diving sites due to lowered tourist demand. This caused considerable economic losses to the dive-tourism industry (Anderson & Waheed, 1999).

As this example shows, changes in the quality of the shark diving experience and thus recreational benefits for tourists have implications for the number of trips that dive tourists will plan to make to a particular site. To date, no study has attempted to quantify the type of changes

(positive or negative) in the environment or management strategies that might cause tourist demand to alter or the impact that this might have on the economics of the shark diving industry. Such studies, which typically involve a combined travel cost and contingent behaviour approach, are commonplace in other contexts, for example in recreation in forest (Simões,

Barata, & Cruz, 2013; Starbuck, Berrens, & McKee, 2006) and lake environments (Jeon &

Herriges, 2010; Richardson & Loomis, 2004) and in the recreational fishing industry (Layman,

Boyce, & Criddle, 1996; Prayaga, Rolfe, & Stoeckl, 2010). Some combined travel cost and contingent behaviour studies have also examined broader aspects of tourism in coral reef environments. Bhat (2003) showed that improvement of coral reef quality in the Florida Keys could increase the trip demand of tourists that visit the area (including dive tourists) by 43–80%.

Conversely, Kragt, Roebeling, and Ruijs (2009) found that a decline in coral reef and fish

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C h a p t e r 5 diversity in the could cause a decrease in dive and trip demand by

80% resulting in major economic losses to the tourism industry.

Given that shark diving is a fast-growing tourism industry that is recognised as providing important economic and social benefits, a change in trip demand due to management strategies that fail or succeed to achieve conservation goals (thereby influencing tourist satisfaction) could have important implications for local communities. Here, we quantify the impacts of both negative and positive scenarios on the economic contribution of the shark diving industry. We hypothesize that improving the quality of the shark-dive experience through increased shark populations, an absence of illegal fishing activities, and engagement in shark conservation actions by dive operators will enhance the demand for trips by dive tourists, and will thereby generate economic benefits. Conversely, we predict that a decline in shark abundance, the presence of illegal fishing during dive trips, and a lack of engagement by dive operators in actions to improve fishers’ compliance will reduce trip demand by dive tourists, with negative effects on tourism numbers and economic losses for the dive tourism sector and local tourism generally.

1.31 METHODS

1.31.1 Study site

The Republic of the Maldives is a small island nation in the central Indian Ocean (Figure 5.1).

The country is composed of about 1200 islands of which 200 are inhabited, around 122 are assigned as resort islands, and the remainder are uninhabited.

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Figure 5.1: Map of the Maldives showing sample locations.

The Maldives provide an excellent case study because tourism dominates the nation's economy and accounted for 27% of the gross domestic product in 2014. Diving and snorkelling are the most popular activities of tourists in the Maldives (Statistics and Research Section, Ministry of

Tourism Republic of Maldives 2017) with 184 dive schools registered in the country (Dive

Schools - Ministry of Tourism 2016). Watching marine mega fauna such as rays and sharks is an essential element of the diving tourism industry (Anderson, Shiham Adam, Kitchen-Wheeler,

& Stevens, 2011; Cagua, Collins, Hancock, & Rees, 2014). In 1991, shark diving in the

Maldives generated about USD2.3 million in direct annual business revenue, compared to a revenue of USD 0.5 million per year from the reef shark fishery (Anderson & Ahmed, 1993, p. 51). Anderson and Ahmed (1993, p. 51) estimated that the value of a living grey reef shark may be one hundred times higher than when it's dead as a fisheries resource. These numbers are likely to be much higher today, as in 2013 an estimated 78,000 tourists accounted for

USD 9.4 million direct expenditures solely for tourism focused on whale sharks in the South Ari

Atoll (Cagua et al., 2014).

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In 2010, a shark sanctuary was implemented in the Maldives when the declining status of shark fisheries and concerns over decreased shark sightings from divers encouraged the government to announce a total ban on shark fisheries in its waters (Ali & Sinan, 2015). Today, shark populations are recovering in most, but not all, atolls (Sattar, Wood, Ushan, & Ali, 2013). An overall increased shark abundance indicates that the implementation of the shark sanctuary is achieving its intended objectives to some extent. Nevertheless, the Maldives are facing a number of challenges that could disturb the effectiveness of the ban. Occasionally, scuba divers have complained about observing illegal shark fishing activities during their dive trips (Ali &

Sinan, 2014). These claims are further strengthened by the sale of shark jaws and teeth in most souvenir shops (first author's observation). The lack of an import ban allows shop sellers to claim that souvenir articles were imported, whereas there are indications that jaws and teeth have been extracted from local shark populations in at least some cases (fourth author's observation). Reef fishermen, in turn, complain about growing shark populations that depredate on their catch (Ali & Sinan, 2014). This drives some fishermen to kill sharks (fourth author's observation).

Many dive operators in the Maldives engage in some sort of shark conservation action. Some resorts host marine biologists who create awareness and teach best practices during dive operations (Cagua et al., 2014). The long-term citizen science programme “Shark Watch” is conducted by dive guides who monitor their shark sightings and help to assess population trends in the area (Sattar et al., 2013). Some resorts report illegal fishing activities to authorities and refuse to buy fish from fishermen that have landed sharks (first author's observation).

1.31.2 Survey

We designed a tourist survey to estimate how the quality of the shark diving experience influences the trip demand of dive tourists in the Maldives and subsequent economic returns to the local economy. Prior to data collection, surveys were tested in a pilot study with 12 experienced divers in Western Australia. For data collection in the Maldives, all 184 registered

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C h a p t e r 5 dive operators in the study area were contacted by phone and email and asked for permission to conduct surveys with their clients. For logistic reasons, a subsample of 19 different dive operators (seven on resort islands, 11 on local islands, and one on a dive cruise boat) who agreed to collaborate were included in the study. From September to November 2016, surveys were conducted with dive tourists on 13 different islands and six different administrative atolls in the Maldives (North Male, South Male, North Ari, South Ari, Lhaviyani, and Baa—Table

5.1). We considered this sample to be representative of dive operators in the Maldives, given that these central atolls receive approximately 95% of tourist arrivals. Once on site, dive tourists were personally approached in the dive centres and provided with a brief overview of the project. They were asked if they were willing to participate and were given a digital survey on an electronic tablet or an equivalent paper-based survey.

Each survey consisted of five sections that first asked about the dive tourist's purpose for visiting the Maldives and the importance that sharks played in their decision to visit, and second, their satisfaction with the shark diving experience. The third section asked about respondents' future plans to visit the Maldives in the next ten years under the status quo scenario and seven alternative scenarios (Table 5.1).

Table 5.1: Description of contingent behaviour scenarios. Expected change Scenario Description in trip demand Status quo Status quo No change Dive tourists do not observe illegal shark fishing Fishing absent Positive activities or trade in shark products Dive tourists observe illegal shark fishing Fishing present Negative activities or trade in shark products Abundance Shark abundance increases Positive increase Abundance Shark abundance decreases Negative decrease Shark absent There are no sharks Negative Conservation Dive operator engages in actions against illegal Positive present fishing Conservation Dive operator does not engage in actions against Negative absent illegal fishing 109

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These alternative scenarios were of a qualitative nature and were as follows: (i) fishing absent: respondents would not observe illegal fishing activities or trade in shark products, (ii) fishing present: respondents would observe illegal fishing activities or trade in shark products, (iii) abundance increase: the number of sharks would increase, (iv) abundance decrease: the number of sharks would decrease, (v) sharks absent: there would be no sharks, (vi) conservation present: a dive operator would take actions against illegal fishing activities, and (vii) conservation absent: a dive operator would not take actions against illegal fishing activities. Participants were provided with examples of different actions that dive operators could engage in to reduce illegal fishing. Those actions were: patrol dive sites during dive operations, help fishermen financially through employment or compensation schemes, support fishermen socially through educational programs or infrastructure, and integrate fishermen in the management of sanctuaries by mediating between fishermen and other stakeholders. For each scenario, participants were asked how many times they expected to visit the Maldives, and whether or not they would recommend the Maldives as a shark diving destination. They were reminded to consider their budget when answering the first questions, because each future trip would be associated with certain travel costs.

The fourth section in the survey asked about the travel costs during the current trip including expenses on dive activities, accommodation, food and beverages, international and domestic travel. Section five asked about respondents’ demographic characteristics, namely their gender, age, nationality, and combined annual household income. Finally, participants had the opportunity to comment on the survey design and content. The complete survey is provided in

Appendix VII.

1.31.3 Travel cost and contingent behaviour model

The travel cost (TC) method is a revealed-preference technique that is commonly used to evaluate the economic value associated with recreational sites (Ward & Loomis, 1986). It is based on the idea that different tourists bear different costs (time and travel expenses) to attend a

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C h a p t e r 5 recreation site and that the number of trips made to the site is likely to depend on their costs or attending. The link between the number of trips and the travel costs defines the demand curve for the particular recreation site (Fletcher, Adamowicz, & Graham-Tomasi, 1990). The estimated demand curve can then be used to measure consumer surplus; a rigorous measure of the benefits to users of that recreation site (Ward & Loomis, 1986).

The contingent behaviour (CB) method uses tourists’ stated preferences for visits to a recreational site contingent on hypothetical changes in the price or quality of that site. The underlying utility function is then able to be estimated based on an assumption that an individual i tends to maximize the utility from consumption of a good or service and is described as

U =V + ε (5.1) where U is the overall utility, V the observed utility and Ɛ the unobserved utility. TC and CB methods have been successfully combined by a number of studies (e.g. Englin & Cameron,

1996; Grijalva, Berrens, Bohara, & Douglass Shaw, 2002) and the combined approach is suitable for our study because the conditions upon which tourists might change their behaviour are not currently observed (i.e. are hypothetical) or at least cannot be controlled (Grijalva et al.,

2002).

To measure the change in dive-trip demand under different shark-dive qualities, we first estimated current tourism demand (number of visits made to the Maldives in the last five years) and the recreational value of dive trips at current conditions with a TC model. We then use the

CB model to estimate future demand (measured as the number of planned visits for the next ten years) and recreational value at changed shark-dive qualities under the seven hypothetical scenarios. To estimate the welfare effects, we compare the planned visits under the future status quo scenario with the planned visits under the alternative future scenarios. This is preferred over using the current number of visits to reduce estimation bias in favour of current conditions

(Kragt et al., 2009; Simões et al., 2013).

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In order to avoid overestimation of the consumer surplus that is associated with diving trips, we only included the travel costs (in thousand USD) that tourists incur purely for their shark dive experience (namely international flights, domestic flights and ferries, and dive trip costs).

The software R (R Development Core Team, 2008) was used for the statistical analysis of the

TC model and the Stata 14.2 (StataCorp, 2015) was used to for the CB model. We analysed the data using Poisson and negative binomial models which are suitable for count data and are commonly used in studies of recreational values (Haab & McConnell, 2002). The Poisson regression is used when data show equidispersion, which describes a data distribution where the mean and the variance are equal (Bhat, 2003). However, trip demand data often do not follow this distribution and have a higher variance than the mean. This is called overdispersion (Hilbe,

2011, pp. 836–839). Negative binomial models are more flexible with the treatment of equidispersion of the dependent variable and can deal with overdispersion (Loomis, 2002). The demand for dive trips to the Maldives is estimated by:

DT = β −βp+βinc+βX +⋯+βX (5.2) where DT is the expected number of dive trips, p is the travel cost per dive trip, inc is the annual household income, and Xn represent other individual characteristics. Economic theory suggests that respondents should make fewer visits to the Maldives as travel costs increase or annual income decreases.

1.31.4 Welfare measures

Welfare effects are presented as a monetary value by estimating the consumer surplus (CS) associated with dive trips to the Maldives. CS for an individual dive tourist is the difference between the actual price paid for a dive trip to the Maldives and the highest amount that the tourist is willing to pay for the trip (derived from the travel cost model). Average individual CS is calculated as the inverse of the coefficient of the dive trip price variable. The CS that individual dive tourist i derives from diving at a site of quality qt is estimated by:

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q t y (p ,q ,Xi)dp pc i 0 t y CSi = ∫ y (p ,q ,Xi)dp = (5.3) p0 i y t y ßp

where y is the number of dive trips, βp is the coefficient of the dive trip price variable, p0 is the market price of a dive trip, and is the choke price at which the demand for dive trips in the

Maldives at quality qt becomes zero. Assuming that the marginal utility of the trip costs

(represented by the price coefficient) does not change when the quality of the shark dive trip changes from the status quo qSQ to the CB scenarios qCB, the change in the consumer surplus of individual I is estimated by (Whitehead, Haab, & Huang, 2000):

q SQ qCB pc pc ∆ CSi = ∫p0 yi(py,qSQ,Xi)dpy − ∫p0 yi(py,qCB,Xi)dpy (5.4)

where p and p are the choke prices of dive trip demand at the status quo and changed qualities respectively. Total CS is estimated by multiplying average individual CS by the total number of dive tourists that currently visit the Maldives per year or the total number of predicted visits under different management scenarios. The annual income for the diving industry is the product of the number of annual dive visitors, the average price these visitors pay per day for diving activities, the average number of dive days they are making, and the average number of dive trips per year depending on the current and changed qualities. Similarly, the annual income for the local tourism industry can be estimated by multiplying the number of annual dive visitors with the average daily expenditure by these visitors on local goods and services, the average number of days they are staying in the Maldives, and the average number of trips per year.

1.32 RESULTS

1.32.1 Descriptive statistics

A total of 341 dive tourists were approached by the researchers and asked to participate in the survey. Of these tourists, 307 agreed to participate (90% response rate). Seven respondents did not give information about their income, travel costs, or future plans to visit the Maldives, 113

C h a p t e r 5 which resulted in 300 valid surveys (95% confidence level, 5.65 confidence interval) for data analysis. Characteristics of the sample are provided in Table 5.2 Approximately 60% of respondents were men and 40% women, which is typical of the gender ratio of divers worldwide, two thirds of whom are male (PADI, 2016). The average age of participants was 42 years. Respondents from Europe originated mainly from Germany, Great Britain and

Switzerland, whereas respondents from Asia mostly originated from China. About six percent of respondents came from other locations. The average respondent had a mean net annual household income of USD 87,617. The average per person trip expenditure was USD 3,937.

Dive tourists stayed on average 11.9 days in the Maldives, spent 6.6 days diving, and went for

13 dives.

Table 5.2: Demographic characteristics of survey sample. Respondents' characteristics (n = 300)a Value Age (mean years± SD) 42 (±11) Annual net household income (mean USD ± SD) 87,617 (±44,838) Diving was the main purpose of the trip (diver, % of respondents) 74 Gender (% female) 40 Knows about shark sanctuary (knowledge, % of respondents) 34 Origin of respondents (% of respondents) Europe 84 Asia 10

Others 6

Accommodation type (% of respondents) Resort 85 Other 15 Has observed illegal shark fishing or trade (observed, % of 13 respondents) Satisfaction with shark dive experience (Likert scale 1 = very 3.62 (±0.94) unsatisfied to 5 = very satisfied± SD) Has visited other shark diving sites (substitutes, % of respondents) 49 Stayed in accommodation with shark diving spot close by (shark dive 72.3 spot, % of respondents) Travel cost per person trip (mean USD± SD) 3,937 (±2,197) a Variable names used in model are indicated in italic.

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Most respondents (74%) visited the Maldives with the primary purpose of diving. Seeing sharks was the main reason for their trip for 5% and very important for 24% of respondents. Forty respondents had observed shark fishing, the trade in shark products, or both while in the

Maldives. Dive tourists rated their satisfaction with the current shark diving experiences in the

Maldives on a Likert scale from one (very unsatisfied) to five (very satisfied). The average satisfaction of dive tourists was 3.62. One third of dive tourists were aware that the Maldives are a shark sanctuary and about 19% of all respondents stated that this knowledge influenced their decision to choose the Maldives as their diving destination. Half of the respondents had visited other shark diving destinations, mostly Egypt, Australia, Indonesia, and . About 35% of respondents rated the Maldives as a better shark dive experience, 27% as a worse shark dive experience, and 38% stated that the shark dive experience in the Maldives was about the same as at other sites. About 72% of respondents chose accommodation where a shark diving spot was accessible in the direct vicinity.

Although 40% of participants were visiting the Maldives for the first time, repeat visitors had come to the Maldives on average 2.3 (±2.34) times during the last five years. Almost two thirds

(58%) of the sample came to the Maldives because it was recommended to them by friends, family or over the internet. We asked participants about their future visits contingent on different scenarios in the next ten years. However, results below are presented for a five year period to make results between the observed number of visits and hypothetical behaviour more comparable. Figure 5.2 (A) shows the median number of trips that participants plan to make in the next five years under status quo conditions and under the changed conditions presented in the contingent behaviour scenarios. Figure 5.2 (B) illustrates the percentage of respondents that would not return to the Maldives and that would not recommend the Maldives as a shark diving destination contingent on the status quo and the seven alternative scenarios presented.

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Figure 5.3: (A) Box plot showing the variation in the number of dive trips that tourists plan to do in the next five years. (B) Proportion of respondents who would not return to the Maldives (dark grey) and not recommend the Maldives as a shark diving destination (light grey) contingent to the status quo and the seven alternative scenarios.

Assuming that all conditions stayed the same, participants planned to make an average of 1.63

(±1.36) trips in the next five years, about 25% said that they would not recommend the

Maldives as a shark diving destination, and 6.2% said that they would not visit the Maldives again in this time period. When presented with the CB scenarios, 87% of the respondents changed the number of trips that they were planning to make to the Maldives in the next five years. If shark abundance was to increase or dive operators engaged in actions against illegal fishing, respondents would make1.88 or 1.74 trips, respectively. Under these conditions, only

9.5% and 6.4% of respondents would not recommend the Maldives as a shark diving destination and only 4.2% and 5.9% would not return to the Maldives for shark diving. Conversely, if tourists were to observe illegal fishing activities during their holidays, about 51.1% of 116

C h a p t e r 5 respondents would not return to the Maldives and of those who would, they would plan only

0.71 trips for the next five years. Additionally, about 82.7% would not recommend the Maldives as a shark diving destination. Similarly, if there were fewer sharks, no sharks, or if the dive operator did not engage in actions against illegal fishing, respondents reduced their number of planned trips to an average of 1.16, 0.81, or 0.94 trips, respectively.

1.32.2 Travel cost model

There was significant overdispersion (dispersion = 1.697, p-value = 0.0014) in the data, confirming that the negative binomial model had a better fit than the Poisson model. Likelihood ratio and Hausman tests showed that a panel data, random effects model that took into account the error correlation between a respondent's answers was superior to a fixed-effects model with pooled data. The variables for gender, shark diver, origin, and overall satisfaction were not significant at the 90% confidence level and were omitted from the model. The estimation results of the best fit model are shown in Table 5.3.

Table 5.3: Estimation results of the TC model.

Variable Coefficient P-value Std. Error Intercept 0.458 0.165 0.330 Travel Cost −1.338 0.010 0.001 Diver 0.474 0.000 0.124 Income 0.061 0.110 0.038 Knowledge −0.171 0.035 0.081 Observed 0.144 0.014 0.059 Resort 0.462 0.008 0.173 Substitution −0.162 0.063 0.087 Log likelihood −543.4 AIC 1,104.8 BIC 1,138.2

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The estimated TC coefficient was negative as expected and was significantly correlated with the number of dive trips that respondents made in the last five years, indicating that those who paid higher prices made fewer trips (Table 5.3). Respondents who came to the Maldives with the primary purpose of diving made more trips than those divers who had another main purpose of the trip. The income variable was not significant in explaining dive trip demand. Surprisingly, respondents who knew that the Maldives are a shark sanctuary were likely to make less dive trips to the Maldives than those who were not aware of this status. Another unexpected result was that the dive trip demand was positively correlated with respondents having observed any kind of illegal shark fishing activities or trade in shark products. This may represent an endogenous relationship where divers who have visited the Maldives more often are more likely to have observed illegal activities. Respondents who stayed on resort islands were likely to make more trips to the Maldives, compared with those who stayed in guesthouses on local islands or on live-aboard vessels. The negative and significant coefficient on the substitution variable indicates that those respondents who travel to other shark diving sites around the world make less dive trips to the Maldives.

1.32.3 Contingent behaviour model

Table 5.4 presents the results of the contingent behaviour model that fitted our data best. A likelihood ratio test confirmed significant overdispersion (chi2 = 1564.58, p-value = 0.000) in the data and suggested that the negative binomial model was preferred over the Poisson model.

Results of a Hausman test supported the use of a random effects over a fixed effects model

(chi2 = 0.82, p-value = 0.997), in line with previous CB studies that applied negative binomial models (Hanley, Bell, & Alvarez-Farizo, 2003; Kragt et al., 2009; Kosenius & Horne, 2016).

The variables for observation, resort, diver, origin, and substitute sites were not significant at the

90% confidence level and were not included in the final model.

The estimated TC coefficient was negative and significant as expected. This indicates that those who paid higher prices planned to make fewer trips in the next five years. The income variable

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C h a p t e r 5 was found to be insignificant in determining dive trip demand. Respondents who knew that the

Maldives were a shark sanctuary were likely to make more dive trips to the Maldives in the next five years than those who were not aware of this fact. The overall satisfaction of the shark dive experience in the Maldives was also positively correlated with the number of trips that tourists plan to do in the next five years. Tourists who stayed in accommodations with a shark dive site nearby were likely to make fewer dive trips in the next five years than those for whom shark dives were further away.

The model showed that most of the alternative future scenarios had a significant influence on dive trip demand. The coefficient of the scenario representing an increase in shark abundance was significant and positive, indicating that respondents would make more trips to the Maldives if shark abundance was higher. Fewer trips would be made if illegal fishing activities were observed, if there were fewer or no sharks, or if the dive operator would not engage in actions against illegal shark fishing, as indicated by the significant negative coefficients. The coefficients on the scenarios ‘no illegal fishing observed’ and ‘dive operators engage in actions against illegal shark fishing’ were not significant, suggesting that there was no predicted effect of these two scenarios on future visits, compared to the status quo situation.

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Table 5.4: Estimation results of the CB model. Variable Coefficient P-value Std. Error Constant 15.903 0.941 7.536 Travel Cost −0.978 0.046 0.489 Income 0.041 0.264 0.037 Knowledge 0.424 0.000 0.099 Satisfaction 0.090 0.066 0.049 Shark dive spot −0.254 0.017 0.107 Scenarios Fishing absent 0.005 0.910 0.045 Fishing present −0.821 0.000 0.058 Abundance increase 0.147 0.001 0.044 Abundance decrease −0.337 0.000 0.050 Shark absent −0.698 0.000 0.056 Conservation present 0.070 0.114 0.045 Conservation absent −0.544 0.000 0.053

Log likelihood −4,029.4 AIC 8,088.9 BIC 8,175.6

1.32.4 Welfare estimates

Consumer Surplus estimates and changes in income from shark diving for the diving industry under the alternative scenarios are shown in Table 5.5. The average CS per dive tourist per day was calculated using the estimated coefficient on TC of −1.338 from the TC model (Table 5.3).

The average CS per person per day was USD 747. This estimate can be used to calculate the total welfare that tourists receive from diving in the Maldives. We calculated a conservative estimate using the average number of days spent diving (6.6 – Section 1.32.1), rather than the average length of stay in the Maldives (11.9 – Section 1.32.1). In 2015, the Maldives recorded a total of 1,286,138 tourist arrivals (Tourism Yearbook 2016), of which 6% (77,168 dive visits) came with the main purpose of diving (Tourist survey 2016). Multiplying individual daily CS

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Table 5.5: Welfare estimates for status quo and contingent behaviour scenarios a Status Fishing Abundance Abundance Shark Conservation quo present increase decrease absent absent

Difference in dive trip demand from status - 56.25 +15.47 - 29.01 - 50.55 - 42.13 quo (%)

Aggregate CS for dive tourists (million 380.45 166.45 439.32 270.07 188.13 220.18 USD/year)

Income for diving industry (million 43.29 18.94 49.99 30.73 21.41 25.05 USD/year)

Income for local tourism industry 154.83 67.74 178.79 109.91 76.56 89.61 (million USD/year) a Scenarios “fishing absent” and “conservation present” are not shown because these scenarios do not have a significant effect on future trips.

The annual income from shark diving for the diving industry was estimated as the product of the average daily dive trip cost, the average number of dive days per tourist, and the total number of dive trips that tourists made per year. At an average price of USD 85 per dive day, an average number of 6.6 dive days per trip, and a total of 77,168 dive visits per year, the annual income for the diving industry in the Maldives was approximately USD 43.29 million. We also estimated income for the broader local tourism industry (including hotels, transfer, restaurants and souvenir shops) by using the same formula and including all local travel costs with domestic flights and ferries, accommodation, food and beverages, diving trips, and souvenirs.

With an average of USD 304 that tourists spent on local businesses per day, the annual income from diving for the tourism industry in the Maldives was estimated to be approximately

USD 154.83 million.

When tourists were presented with the alternative future scenarios, the demand for dive trips changed (Table 5.5). The largest change in trip demand occurred when respondents were presented with a scenario where they observed illegal shark fishing activities during their stay.

Under this scenario, total dive visits per year decreased by 56.3%. If the shark abundance

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29% less, or 50.6% less frequently to the Maldives, respectively. Respondents also stated that they would make 42.1% fewer dive trips if dive operators did not engage in any actions against illegal shark fishing.

Applying the change in dive trip demand to our welfare estimates, we estimated that under the worst case scenario (when tourists observed illegal shark fishing), the annual CS of dive tourists in the Maldives could decrease to USD 166.45 million per year (Table 5.5), representing a welfare loss to dive tourists of USD 214 million compared to the status quo. The change in demand under this scenario would cause a decline in expenditure on diving trips in the

Maldives, in turn resulting in an income reduction to the diving industry of approximately

USD 24.35 million per year, to USD 18.94 million. A scenario of increased shark abundance improved the average CS of dive tourists. Under these circumstances, average CS could increase by USD 58.86 million per year to USD 439.32 million. The increased demand for dive trips under this scenario, moreover, could result in an extra USD 6.7 million income for the dive-tourism industry and could benefit the local tourism industry with an extra

USD 23.96 million.

1.33 DISCUSSION

Our study investigated how a change in the quality of dive trip experience affected the welfare of divers and the economic benefits of the dive tourism sector. We evaluated how potential changes in shark abundance, the presence of illegal fishing activities, and dive operators engaging in actions against illegal shark fishing influenced tourists’ demand for dive trips to the

Maldives.

Our study suggests that increasing shark abundance can increase dive trip demand by 15% and increase the CS of dive tourists to over USD 439 million compared to the status quo situation of

USD 380 million. Moreover, higher shark abundance can generate economic gains of over

USD 6 million for the local dive tourism industry and of almost USD 24 million for the broader

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Shumais, 2013) who found a total annual CS of dive tourists of approximately

USD 380 million.

Our results showed a substantial decrease in demand for dive trips if divers were to observe illegal fishing activities or the trade in shark products, a decline in shark populations, or if the dive tourism industry failed to engage in actions against illegal shark fishing. Our results further suggested that the drop in trip demand under these conditions can cause considerable economic losses not only to the dive tourism industry, but also for the broader local tourism sector. The highest impact on dive trip demand occurred when divers observed illegal fishing activities.

Such a scenario could lead to a 56% decline in trip demand and lowered the CS of dive tourists in the Maldives by USD 214 million per year compared to the status quo. We estimated that annual income for the dive tourism industry would be reduced by USD 24 million when divers observed illegal fishing activities. Declining shark abundance and a lack of dive operator engagement in actions against illegal fishing also had a significant negative impact on dive trip demand, with resulting welfare effects on dive tourists and on the tourism sector in the

Maldives. This result is consistent with a study of the satisfaction of shark dive tourists in

Mexico, where the environmental commitment of boat crew and the abundance of sharks were among the most important factors influencing satisfaction of shark divers with the tourism experience (Ziegler, Dearden, & Rollins, 2012).

About half of the participants of our study had also visited other shark-dive destinations throughout the world. It therefore seems reasonable to suggest that the behaviour of respondents will be indicative of results for many other shark-dive locations. Given that many shark sanctuaries sustain extensive shark diving industries that generate high revenues across a variety of sectors and governments (e.g. Gallagher & Hammerschlag, 2011; Gallagher et al., 2015;

Topelko & Dearden, 2005; Vianna et al., 2012), our results have implications for the management of other shark sanctuaries that are susceptible to illegal shark fishing activities and declining shark abundance.

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The scenarios in our surveys only changed one factor at a time, whereas it is very likely that the presence of illegal fishing activities or a lack of conservation efforts from dive operators would occur together, combining conditions that would result in an even lower demand for dive trips by tourists. Likewise, the absence of illegal shark fishing activities and dive operators engaging in actions against illegal shark fishing may also occur simultaneously, suggesting the potential for synergistic positive effects that might result in our study underestimating the impacts of these factors.

Our results reflect the trip demand from a sample of divers who were already visiting in the

Maldives and therefore had already experienced the quality of shark diving there. It is possible that divers who had not yet visited the area may have a different (higher) trip demand, even under scenarios with negative management outcomes, because they have not experienced the current conditions as a reference point. Forty percent of our sample were first-time visitors, so there is high potential for more new visitors with a higher trip demand to come to the region.

However, respondents also changed their stated behaviour in recommending the Maldives as a shark diving destination to friends, family or in internet reviews contingent on the different scenarios. In this context it is important to note that “word-of-mouth” reports and reviews on the internet are the most important sources of information for tourists selecting the Maldives as a destination (Ministry of Tourism, 2016). Our results indicated that, for example, 74% of divers would recommend the Maldives for shark diving given no change in conditions, whereas 94% of divers would recommend the Maldives if dive operators were to engage in actions against illegal shark fishing. Conversely, only 14% of divers would recommend the Maldives if there were no sharks. As approximately 58% of respondents came to the Maldives because it was recommended to them by other divers, it is likely that the number of first time visitors would also decrease if the quality of the shark dive experience deteriorated. Correspondingly, the number of first-time visitors would probably increase if the quality of the shark-dive experience improved.

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The long-term success of shark fishing bans -especially in developing countries-depends on the provision of alternative sources of income to local communities. The Maldives have tackled this issue with a series of compensation schemes that recompensed fishers for their loss in fishing rights for sharks and to enable them to find alternative sources of income (Ali & Sinan, 2014).

There are indications that livelihoods of former shark fishermen have diversified, but also that their income has decreased since the implementation of the shark sanctuaries (Ali, unpublished data). Other places manage this challenge by collecting user fees from dive tourists that are given to local communities which seems to be a reasonable strategy as scuba divers have shown to be willing to pay user fees (e.g. Brunnschweiler, 2010; Haas, Fedler, & Brooks, 2017; Vianna et al., 2018). The tourism industry itself in these places has become a major supplier of jobs

(Vianna et al., 2012).

Our results are based on a survey of a large part of the Maldives. Shark populations, illegal fishing activities, and positive or negative dive operator behaviours are probably not equally distributed throughout the country. Under negative scenarios, it is possible that divers would not return to a specific area in the Maldives but still would come back to another part of the country, switch to another dive operator, and/or return to see other attractions. If divers find other substitutes (in terms of other attractions or locations) within the Maldives, the welfare effects presented here might be overestimated. However, given the number of factors above, we are confident that our estimates are more likely to be at the lower bound of welfare effects.

We did not find a significant change in dive trip demand when dive operators are engaged in actions against illegal shark fishing or when dive tourists did not observe illegal fishing activities during their holidays. This might be explained by the fact that these scenarios were too close to the status quo situation of most respondents. Dive operators’ cooperation with this research (surveys were collected at their business locations) may indicate a degree of engagement in conservation actions. Also, about 87% of respondents had never observed illegal shark fishing activities or the trade in shark products in the Maldives.

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1.34 CONCLUSIONS

Our results suggest that increasing abundance of sharks can raise demand for dive trips significantly and generate economic gains for both dive and local tourism industries.

Conversely, reduced abundance, the presence of illegal fishing, or if dive operators do not engage in conservation actions against illegal fishing can result in a substantial reduction in the demand for dive trips and economic losses not only to the dive industry, but also to the broader local tourism market. Our results have implications for the management of shark populations in locations where shark diving tourism is an important contributor to local economies, which includes many small island nations throughout the Indo-Pacific. Our work shows that the perceptions of tourists undertaking shark diving are very important to the future of the industry.

Poor compliance with regulations and dive operators who appear unconcerned about illegal fishing activities can have major impacts on the economics of the industry via the word-of- mouth recommendation of the location as a destination for shark diving. In contrast, operators that appear to be engaged in supporting compliance and management strategies may gain future business via the same mechanism. Our results also imply that promotion by shark diving operators of conservation goals may further increase demand.

1.35 ACKNOWLEDGEMENTS

The authors would like to acknowledge the Global Finprint project, the PEW Charitable Trust, the Australian Institute of Marine Science, and the Australian Research Council's Centre of Excellence for Environmental Decisions for providing funds for this study. Thank you to the Australian Government's Research Training Program (RTP), the University of Western Australia for supporting the first author with scholarships. We would like to thank the managers and staff of all supporting dive operators and resorts: Dive Club Maldives, Dive Plus Ukulhas, Diverland Embudu, Euro-Divers, Holiday Inn Resort Kandooma, Kuredu Island Resort & Spa, Luxury Yacht Maldives, Meeru Island Resort & Spa, Ocean Junkies, Olhuveli Beach & Spa, Prodivers Kuredu, Rasdhoo Dive Centre, Reethi Beach Resort, Sea Explorer, Serene Ocean, Sun Diving Maldives, and Vilamendhoo Island Resort & Spa. We thank Michael Burton for his help with the data analysis. Finally, we would like to thank the dive tourists who kindly spared their time to complete the survey.

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CHAPTER 6: DISCUSSION AND CONCLUSIONS

This thesis aimed to improve the decision-making process for shark conservation strategies in a setting where shark diving tourism and shark fisheries (legal and illegal) co-existed. In this context, we: (i) contributed to an understanding of the economic value of sharks and (ii) assessed how conservation strategies for sharks influenced the economic benefits associated with shark diving tourism. In the following sections, I will present the key findings, discuss their significance and policy implications, and identify limitations and research gaps for each research question. Moreover, I will remark on the potential for research in the field of environmental economics to make further contributions to strategies for the conservation and management of shark populations.

1.37 DISCUSSION OF RESEARCH QUESTIONS

1.37.1 What are the economic benefits of the shark diving industry to local communities?

Shark diving tourism in the Maldives and Semporna generates substantial and diverse economic benefits. These benefits encompass direct revenues not only for dive tourism operators, but also for a variety of other businesses such as hotels, restaurants, domestic transport and souvenir shops. We estimated the direct revenues for local businesses from shark diving tourism to be

USD 51.4 million in the Maldives, which constitutes approximately 1.4% of the national GDP

(Worldbank 2017; Zimmerhackel et al. 2019). In Semporna, we estimated local business revenues from shark diving to be USD 9.8 million in 2012 and USD 16.6 million in 2018

(Vianna et al. 2018; Chapter 3). These figures are much higher than the value of shark fisheries, which in Semporna, for example, was less than 5% of the value of the revenues generated by shark diving tourism (Department of Fisheries Sabah 2018). Additionally, shark diving tourism provides jobs to local communities and generates tax revenues that could potentially be used to provide local communities with infrastructure or for marine resource management.

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The dependence of the tourism sector on healthy populations of sharks becomes evident when tourists state that they would not visit a particular place (and therefore not spend their money) without sharks being present. The substantial economic value of shark diving tourism has become a strong argument for shark conservation in many places that sustain both shark diving and shark fishery industries (Gallagher et al. 2015). In particular, the designation of large-scale shark sanctuaries (1000s km) that ban shark fisheries in entire exclusive economic zones has been widely promoted (Ward-Paige & Worm 2017). In the Maldives, the economic importance of sharks to the tourism sector was key to the establishment of the Maldives shark sanctuary in

2010 (Ali & Sinan 2014) and in Semporna, information on the revenues generated by shark diving tourism are crucial in the current discussion about shark conservation strategies in the region.

In both the Maldives and Semporna, shark diving tourism directly provides jobs to local communities. However, in both study sites I faced challenges estimating the extent to which the benefits of shark diving tourism flows on to local communities. In the Maldives, locals only represent about 55% of all employees who work for the dive-tourism sector and had a lower average annual salary than foreign employees. This gap could be closed by the government and/or the tourism sector by investing in education and training programs to upskill and attract more qualified locals to work in the industry. In Sabah, the government has established a youth education program that trains locals as dive masters and dive instructors (Daldeniz & Hampton

2013). Here, we found that the majority of employees (91%) in the sector were locals from

Malaysia. However, not all locals in Semporna have access to employment in the diving industry. There are strong inequalities in Semporna, especially among refugee groups who make up about half of the local population but do not hold permits to stay and work in Malaysia

(Hampton et al. 2018). With few other options for employment available to them, these groups often turn to illegal fishing, using destructive fishing practices that result in habitat degradation.

This provides further challenges for fisheries management and has implications for the local tourism industry.

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Management strategies such as shark sanctuaries also can have socio-economic impacts on local shark fishers as they lose their livelihood as a consequence of the fishing ban (Jaiteh et al.

2016). The creation of alternative and sustainable livelihoods for fishing communities is of great importance for the management of shark populations. This is particularly critical in communities with limited options for education and livelihoods other than fishing (Jaiteh et al.

2016). One way to compensate fishers is through the use of tourist user fees that offer former shark fishers alternatives through job creation and/or financial support (Brunnschweiler et al.

2010). The government of the Maldives attempted to offset the economic disadvantage of former shark fishers that was caused by the implementation of the shark sanctuary through a series of compensation schemes (Ali & Sinan 2014). One of these programs offered shark fishers to buy back their shark fishing gear so that they could invest in a new business. About one third of the former shark fishers changed their fishing gear and now supply the tourism market with reef fish (Ali, K., unpublished data). However, the shift of former shark fishers to other target species, combined with a growth in demand for seafood from increasing tourist numbers, could cause unsustainable pressure on reef fisheries (Sattar et al. 2014). More research on the indirect effects and interactions within the socio-ecological system in shark sanctuaries are needed to diminish impacts of shark fishing bans on the livelihoods of fishers and reduce overharvesting of marine resources.

1.37.2 How do the economic benefits of shark diving tourism change over time?

Shark diving tourism is described as a fast growing tourism sector. Cisneros-Montemayor et al.

(2013) estimated a median annual increase in tourist arrivals at shark diving sites of 27% in the last 20 years and predicted a 2.5 fold increase in the revenues of global shark diving tourism in the next 20 years. However, this figure has not yet been validated by empirical studies. Here, we examine the growth of the industry at two study sites. In the Maldives, we compared the revenues generated from the shark diving tourism industry in 1992 (Anderson & Ahmed 1993) with our data from 2016. In Semporna, we compared the revenues between data from 2012 and

2018.

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Although differences in methodologies among studies mean that our estimates are not directly comparable with earlier work, we observed growth in the shark diving tourism industries at both study sites. Our results from Semporna suggest that the economic importance of the shark diving industry to the local economy has increased by roughly 14% in real terms since 2012.

Similarly, our results in the Maldives indicate that the annual direct revenues from shark diving have almost doubled in real terms in the 24 years between studies; a magnitude that matches predictions from Cisneros-Montemayor et al. (2013).

Also, the shark diving tourism sector in the Maldives experienced a shift in the importance of target species. The principal example in this context is whale shark diving in the South Ari

Atoll. This activity was nearly non-existent in the early 1990s but today comprises a substantial part of the total business revenues from shark diving. Although the South Ari Atoll was not a new dive site for tourists, it has only recently been established as a site where whale sharks could be viewed. It therefore represents an example of how quickly and unpredictably a shark diving site can generate substantial revenues.

The growth of the shark diving tourism industry in Semporna and in the Maldives highlights the long-term importance of sharks to these economies. In the Maldives, this growth may be attributed to the nationwide protection of sharks. In Semporna, the main shark diving site

(Sipadan Island) is a no-take reserve (Musa 2002). Shark fisheries at locations outside marine reserves are, however, allowed. As there are concerns over the impact of legal and illegal fishing activities on shark populations at the study sites, further management measures to avoid the overexploitation of sharks in these areas is crucial for ongoing profitability of these industries.

Additionally, the growth of shark diving underlines the need for the industry to be sustainably managed. For example, there have been concerns that visitor numbers at whale shark tours in the Maldives are already beyond their carrying capacity, with negative impacts on both whale sharks and tourist satisfaction with the shark diving experience (Cagua et al. 2014). In fact, it has been shown that shark diving tourism can have negative effects on shark populations mainly 134

C h a p t e r 6 through a variety of sub-lethal impacts (Gallagher et al. 2015). Sub-lethal effects include physical injuries caused, for example, by a shark bumping in to a shark cage, when sharks are touched by divers, or when their eyes are repeatedly flashed by divers’ cameras. Also, provisioning might affect the natural feeding behaviour and habitat use of sharks (Brooks et al.

2011; Gallagher et al. 2015; Quiros 2007; Speed et al. 2008).

As these effects probably increase with growing visitor numbers, some dive sites have limited their visitor numbers, including the main shark diving location at our study site in Semporna

(e.g. Vianna et al. 2018; Brunnschweiler 2010). Also, the use and enforcement of a code of conduct for dive tourism operators and dive tourists has been suggested (Quiros 2007; Richards et al. 2015). More studies on the carrying capacity of crowded dive sites and mechanisms to guarantee animal welfare while providing ongoing economic benefits and tourist satisfaction at places such as the whale shark sites in the Maldives could help to overcome such challenges.

1.37.3 What is the willingness to pay for shark diving, including non-market values?

Decisions regarding the management of sharks can be improved if decision makers are well- informed about the total economic value of the resource. Whereas market values can be estimated by examining current market prices for sharks (such as the financial revenues from shark diving tourism described above), other environmental and recreational non-market values are usually more difficult to assess and are therefore less often quantified. This thesis estimated different aspects of the non-market value of sharks at the two study sites.

In Semporna, we used a contingent valuation survey of 451 dive tourists to estimate the willingness to pay for a daily user fee for establishing a shark sanctuary in the state of Sabah.

Results showed a WTP of USD 11.89 in 2012 (Vianna et al. 2018) and USD 8.28 in 2018

(Chapter 3). Aggregated over all dive tourists, this fee could generate USD 2 million (based on

2012 data) to 2.4 million (based on 2018 data) per year, which could be used to establish monitoring and enforcement programs as well as to support local artisanal and subsistence fisheries. Nearly all shark diving activities in the state of Sabah take place around Sipadan

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Island, but dive tourists would pay the fee to dive in the entire state of Sabah. Therefore, tourists were willing to pay the fee not only to see sharks, but also to know that sharks would be protected in the state. Hence, this value represents both the non-consumptive use value as well as the non-use value from dive tourists. Moreover, the payment also maintains the option of dive tourists to dive with sharks in the future, therefore reflecting their option value.

We also estimated the non-market values associated with non-consumptive uses of sharks using a contingent behaviour survey. Here, we estimated the consumer surplus of dive tourists under different scenarios that represented different qualities of their shark diving experience. In

Semporna, we found a difference in consumer surplus of USD 265.6 million between the status quo and a scenario in which a shark sanctuary could increase the abundance and the diversity of sharks that divers could observe as well as the number of shark divers they could make. In the

Maldives, a scenario of higher shark abundance during dives increased the consumer surplus of divers by USD 59 million per year, compared to the status quo. Our results confirm that increased sightings of sharks significantly increases the welfare of dive tourists, highlighting the importance of maintaining and/or recovering shark populations in shark diving destinations in order to attract tourists and sustain this industry.

Although this thesis improved the understanding of the economic value of sharks by estimating the described market and non-market values, it did not quantify the total economic value of sharks. For example, I did not estimate the indirect use values of sharks. This gap is particularly important because sharks have been proven to play an important ecological role in marine ecosystems such as coral reefs (Sandin et al. 2008) and seagrass beds (Heithaus et al. 2012) and thereby provide a range of services that have not been quantified. Given the extensive coastlines and marine-dependant industries of our study sites, the economic value of indirect uses of sharks is likely to be substantial. Furthermore, this study investigated the values of a particular section of society (dive tourists) who probably have different values for sharks than do other groups. The inclusion of existence values of people who do not visit shark diving sites in non-

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1.37.4 How is trip demand and the economic benefits from shark diving influenced by (a) the implementation of a new shark fishing ban and (b) the success or failure of management of shark fishing bans?

The economic benefits of shark diving tourism are mainly driven by the demand of dive tourists.

This is crucial where policy changes influence the quality of the shark diving experience, the recreational benefits for tourists, and thus the number of trips that dive tourists plan to make to a particular site. We quantified these changes in two settings: in Semporna, we compared the dive trip demand under a status quo scenario (where no shark and ray fishing ban is present) with a scenario where a shark and ray sanctuary was created (Chapter 3). In the Maldives, we estimated the change in demand of dive tourists depending on the success and the failure of long-term management of the existing shark sanctuary (Zimmerhackel et al. 2018).

Results of our travel cost-contingent behaviour model shows that dive trip demand under the shark sanctuary scenario in Semporna could increase by 47% compared to trip demand under the status quo scenario. This increase in demand could raise the annual financial revenues for the local tourism industry (including dive tourism) from USD 35.1 million (under status quo) to

USD 51.6 million.

Note that we described the sanctuary scenario as improving the shark diving experience through potentially higher abundances and diversity of sharks and rays, and through greater availability of shark and ray dives. Therefore, our estimated increase in demand is based on the success of the shark and ray sanctuary. Since a sanctuary is not the only conservation strategy that could yield such improvements, it is likely that other effective shark and ray management strategies in

Semporna could result in similar effects. This is relevant because the government of Semporna is currently discussing potential shark conservation strategies (Geraldine 2018).

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Conversely, if a shark sanctuary fails to meet its conservation goals and the quality of the shark diving experience is affected, this might result in decreased demand or revenues. Adequate long-term management of shark sanctuaries are needed to achieve their socio-economic and ecological goals. We quantified by how much the success and the failure of the long-term management of the shark sanctuary influenced tourists’ demand for dive trips to the Maldives as well as their likelihood to recommend to visit the Maldives to others. The performance of the sanctuary was described in seven hypothetical scenarios that they could encounter during their holidays: Increased abundance of sharks, decreased abundance of sharks, no sharks, the presence and absence of illegal fishing activities, and the engagement (or not) of dive operators in conservation actions that could reduce illegal fishing activities.

We found that increasing shark abundance in the Maldives can increase dive-trip demand by

15% and increase financial revenues for the local dive tourism industry by almost

USD 24 million. Also, there was an increase in dive tourists recommending to others that they should visit the Maldives. Conversely, if shark populations were to decrease or if there were no sharks, dive tourist demand could decrease by 29% and 51%, respectively. If divers were to observe illegal shark fishing activities, their demand could decrease by 56%. Under these scenarios, we found a decrease in recommendations to visit the Maldives. In recent years, illegal fishing activities have been reported by the media at both study sites (Maldives Independent

2016; Maldives Times 2018; Riley et al. 2009; Yusa 2018) as well as in other sanctuaries such as Palau (Urbina 2016; Vianna et al. 2016) and the Galapagos (Bale 2017; Carr et al. 2013).

Such events can affect shark populations (Tickler et al. 2019) and the reputation of a shark diving destination with substantial economic flow-on impacts on the tourism industry. We also predicted considerable reduction in the demand for dive trips if the dive tourism industry did not engage in conservation actions to reduce illegal shark fishing. Such social programs have been shown to be effective in decreasing this practice in other localities where shark diving is a such as Fiji and Indonesia (Brunnschweiler 2010; Steenbergen 2013). In fact, there is evidence that the presence of the tourist industry alone might be effective in reducing illegal shark fishing, as in Palau areas where the industry was present had large populations of 138

C h a p t e r 6 sharks, whereas areas remote from centres of population and tourism had few sharks and displayed evidence of high amounts of illegal fishing activity (discarded nets, sightings of vessels) (Vianna et al. 2016).

Our case studies used travel cost and contingent behaviour models of single sites. However, we found that shark diving is an activity of dive tourists who often visit many shark diving sites around the world. For example, about half of the dive tourists in the Maldives had visited other shark diving destinations (Zimmerhackel et al. 2018) and 29% of dive tourists in Semporna stated that they would visit another shark diving location if they could not see sharks in

Semporna (Chapter 3). Given our predicted change in demand depending on the quality of the shark diving experience, the success and or failure of shark management at particular shark diving sites would likely affect the demand for substitute sites. Therefore, the extension of our studies to multiple-site models such as random utility maximization models (Parsons 2017) could improve our understanding of the preferences of shark divers and the impacts their choices have on local economies.

1.38 FUTURE RESEARCH DIRECTIONS

Research gaps and recommendations on future research that are directly related to the results of this thesis are discussed above. Additionally, I would like to extend this discussion to the broader field of environmental economics. This is not intended to be an exhaustive list of future research. Rather, it aims to highlight that there are various economic concepts and methods that could significantly contribute to the conservation and management of sharks that to date have been explored to a very limited extent.

1.38.1 Cost-Benefit Analysis

Studies that estimate the economic value of natural resources such as sharks ultimately provide information for policy decisions. One common tool to assess the feasibility of different policies is a cost-benefit analysis. This is an approach to evaluate policy choices based on the framework

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C h a p t e r 6 that each action has costs and benefits and that a certain action is desirable when the discounted benefits exceed the discounted costs over a relevant time frame. When assessing various alternative and incompatible decisions, the opportunity costs of each decision option has to be taken into consideration. The optimal decision is the one that maximises the discounted net benefits (benefits minus costs). The quality of a cost-benefit analysis depends on the accuracy and completeness of the value estimates for the change to the condition of shark populations.

This stresses the importance of valuation studies on sharks that draw the most complete picture possible. As noted earlier (Section 6.1.3), there is a lack of understanding of indirect use values and non-use values of sharks. Additionally, decisions need to take into consideration the complex interactions between numerous economic, social and ecological factors. Cost-benefit analyses have great potential to integrate these factors and advance the understanding of pros and cons of specific management actions. Despite the wide application of approaches based on a cost-benefit analysis framework in environmental sciences including fisheries management (e.g.

Changeux et al. 2001; Macher et al. 2008) and marine reserves (Hunt 2013; Rees et al. 2013;

Sala et al. 2013), to our knowledge cost-benefit analysis has not been used to aid management decisions about sharks. Cost-benefit analyses could help compare policies such as shark sanctuaries and fishing quotas at a given location and support decision making processes specific to the combination of circumstances at any location.

1.38.2 Economic incentives

The reasons for the overexploitation of sharks can be explained by cultural and economic incentives. For example, shark fins are the key ingredient of a traditional Chinese soup that is served on special occasions such as weddings and banquets. Therefore, consumers have an incentive to consume shark fins as a symbol of wealth and status. With the strong economic growth of the middle classes first in Hong Kong in the 1960s and then in China in the 1990s, more people could afford such luxury goods which resulted in a strong increase in demand for shark fins (Clarke et al. 2007). As shark fins fetch much higher prices than shark meat, fishers are incentivized to maximize their profits by storing only fins on their vessels (Edwards 2006).

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This led to finning, a practice where fishers cut off the fins of sharks and discard the bodies with the result that many more sharks were harvested than when they were landed with the fins attached. Furthermore, the migratory behaviour of some sharks incentivised fishers to catch sharks while they were inside their national waters before they moved to other places where they were targeted by the fishing fleets of other countries (Dulvy et al. 2008). Similarly, open- access to stocks on the high seas favours a race for resources and therefore the overexploitation of sharks (Dulvy et al. 2017), including species that are highly sought after in the tourism industry (such as hammerhead sharks Sphyearna lewini). Moreover, capacity-enhancing subsidies incentivise fishers to keep on fishing for sharks even where these fisheries are no longer profitable (Barker & Schluessel 2005). For example, the Sri Lankan government subsidises fuel for fisheries, making it economically viable for fishers to travel to distant grounds (Sumaila et al. 2008). This may drive illegal shark fishing events in the Maldives

(Maldives Times 2018). Similarly, fishers in India receive subsidies to transform trawlers into tuna long-liners that can travel further and have been caught fishing illegally for sharks in the

British Indian Ocean Territory in the central Indian Ocean (Tickler et al. 2019).

In the same way that these drivers have resulted in the overexploitation of sharks, incentive- based policies can be used to effect changes in human behaviour that favour sustainable shark management. Although the need for such policies has been highlighted by several studies (e.g.

Barker & Schluessel 2005; Edwards 2006; Shivji et al. 2005; Topelko & Dearden 2005), there has been almost no research on appropriate policies to tackle perverse incentives that trigger the overfishing of sharks (but see Gilman et al. 2008; Grimes 2018). Therefore, there is a need for more research on targeted economic incentives (such as subsidies for fisheries management instead of capacity enhancement) to reverse the causes of overexploited shark stocks and contribute to a more sustainable management of sharks.

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1.38.3 Value of information

The quality of conservation and management plans of sharks improves with the availability and accuracy of relevant information. However, given that funds for managing the environment are limited, the money spent on gathering new information reduces the resources for other activities

(Hansen & Jones 2008). Also, the time that is required for data collection can delay important conservation actions (Grantham et al. 2009). This is particularly critical where threatening actions (such as overfishing) rapidly impact shark populations. Consequently, there is a trade- off between investing in direct management actions and obtaining new information to improve future management outcomes. Moreover, not all information might contribute equally towards sound management decisions. It is thus useful to know which information would be the most valuable to management. Being able to answer questions like how much and what kind of information maximizes the effectiveness of a management strategy can be evaluated using

‘value of information’ (VoI) analysis.

VoI analysis is a subset of decision analysis and is based on the comparison of outcomes of different actions to achieve a specific goal. Each outcome is influenced by uncertainties that can vary depending on the condition of the systems, the model parameters or even the model itself.

VoI analysis identifies the maximum amount of resources that would be worth spending to gain an expected value of perfect information (EVPI) by comparing the change in management performance under uncertainty and certainty (Maxwell et al. 2015). As perfect information in the real world is rarely available, VoI analysis usually estimates the expected value of sample information (EVSI), which represents the expected improvement in management performance if certain additional information is obtained. The cost of EVPI can be used to indicate the upper bound of what should be spent on information collection, because imperfect information should not cost more than perfect information. Hence, managers can make an informed decision about how much to allocate on gaining specific information to improve management outcomes.

VoI analysis has rarely been used in the context of applied marine ecology and marine resource management. However, its great potential to improve outcomes is increasingly acknowledged in

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C h a p t e r 6 the literature and is starting to find applications in fisheries management and marine spatial planning (Canessa et al. 2015; Costello et al. 2010; Hansen & Jones 2008). To our knowledge,

VoI analysis has never been used to improve management plans for sharks. As the management of shark species is notoriously troubled with uncertainties, this technique could have a wide range of applications. For example, it could help prioritizing research on biological processes such as life history traits and migration routes, exploitation rates such as species-specific landing data, and the effectiveness of management measures such as shark sanctuaries and marine reserves. VoI analysis can also help to make trade-offs between investments in research, monitoring, and enforcement to maximise conservation outcomes for sharks.

1.38.4 Value systems

The integration of social and ecological aspects of environmental challenges is needed to address urgent sustainability issues such as the overexploitation of shark populations. However, there appears to be a mismatch in communication between disciplines that are concerned with environmental management and conservation (Farber et al. 2002). An underlying philosophical disagreement about the value of nature is one central issue that seems to inhibit a successful integration of knowledge from these different disciplines.

An anthropocentric value system puts humans at the centre of nature and the environment interacts with society. It assumes that the main purpose of the relationship between humans and natural ecosystems is to provide human welfare, which includes the effects on welfare of ecological sustainability and distributional fairness (Farber et al. 20002). Hence, nature has an instrumental value. In this context, values arise from the trade-offs between environmental conditions and their relative contributions towards the main goal and the relative values are used as indicators for decision making in environmental management. This anthropocentric worldview is widely applied in environmental and resource economics.

In contrast, disciplines such as ecology and conservation biology often adapt an ecocentric philosophy that sees humans as part of the ecosystem (Leopold 1933). Here, the central goal

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Leopold (1949) describes this philosophy as something being “right when it tends to preserve the integrity, stability and beauty of the biotic community. It is wrong when it tends otherwise.”

Hence, ecocentrism implies that natural resources have values independent of the values humans attach to them, and irrespective of the welfare to humans – also called intrinsic values

(O’Neill 1992). Importantly, these different philosophies are not only represented in academia, but in the worldviews of society. For example, Dunlap et al. (2000) used the New Ecological

Paradigm scale to measure the environmental concern of Washington state residents and found that 33.9% of respondents strongly agreed or agreed with the statement “Humans were meant to rule over the rest of nature” while 57.9% strongly disagreed or disagreed with it. Research also has shown that people can hold both instrumental and intrinsic values (Winter & Lockwood

2004).

Both philosophies, anthropocentrism and ecocentrism, have contributed to a more sustainable use of sharks. For example, economists have created strong economic arguments for shark conservation due to the various revenues and benefits they generate (e.g. Cisneros-Montemayor et al. 2013; Vianna et al. 2012). Conversely, studies with an underlying ecocentric philosophy have shaped ethical arguments for conservation, such as the banning of the practice of finning due to animal cruelty (Jefferies 2012) as well as the importance of protecting sharks due to their key role in maintaining marine ecosystems (Myers et al. 2007).

Multidisciplinary research on value systems that includes ecologists, economists, social scientists, and other disciplines could shift the current framework towards a more inclusive discussion that considers the representation of different philosophies in disciplines and in societies. Recently, the use of relational values has been proposed as a framework that potentially could bridge the argument of instrumental versus intrinsic value of nature (Klain et al. 2017). Relational values represent a person’s relationship with nature and are “associated with living a good life as well as reflection about how preferences and societal choices relate to notions of justice, reciprocity, care and virtue” (Klain et al. 2017). Skubel et al. (2019) explored

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Although it remains unclear what the ideal framework for the value for nature is, I want to stress the importance of advancing a constructive discussion through multidisciplinary work.

Outcomes can improve the communication between environmental scientists and decision makers and lead to a more sustainable management not only of sharks but of the environment in general.

1.39 CONCLUSION

Market and non-market values of sharks in the Maldives and the Semporna region are substantial and generate benefits for a variety of tourism businesses and dive tourists. The strong growth of the shark diving tourism demonstrates the important role that this industry can play for the economic development of countries. Moreover, changes to policies that improve the quality of the shark diving experience can significantly increase dive trip demand of tourists and the associated market and non-market values. Conversely, if policies cause a decrease in the quality of shark diving, demand and economic benefits also significantly reduce. Therefore, sustainable management and conservation strategies for these animals help to maintain the economic benefits provided by sharks. In a setting where legal and illegal fishing activities are present, this requires the enforcement of regulations and ongoing involvement of fisher- communities in decision-making processes that can be partly funded by tourism user fees.

1.40 REFERENCES

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APPENDIX I. DIVE TOURIST SURVEY FOR CHAPTER 2

Survey of tourists taking dive trips in Semporna

Through this questionnaire the term Semporna region refers to the area that includes (but is not limited to) Semporna town, the islands of Sipadan, Mabul, Mataking, Kapalai, Tun Sakaran (marine park) and surrounding dive sites.

Section A. Reason for coming to the Semporna region

A.1 Is this your first trip to the Semporna region? Yes No

If Yes skip to Question A.3, if No please answer Question A.2 and then A.3.

A.2 How many times have you come to the Semporna region previously? …………….

A.3 How long have you been in this area so far on this visit? ………………… Days

A.4 What will be the total duration of your stay in the Semporna region on this visit? ……………….Days Not decided

A.5 For what main activity did you come on this trip to the Semporna region? (Please tick one box only)

For general dive activities Mainly to dive at specific sites (please, indicate site(s)): Sipadan Mabul Kapalai Mataking Other (please specify): …………………………………. Mainly to dive with sharks Mainly for macro diving (looking for little animals among the corals) Dive activities and sight-seeing Sight-seeing (general tourism) Other (please specify): ………………………………….

A.6. Where are/were you based while diving in the area? ……………………….. (island/ town)

Section B. General dive trip information

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B.1 BEFORE you came on this trip to the Semporna region, what was the level of importance of each of the following localities and activities in your decision to visit the area? (Tick a number: 1 = not important at all, 2 = a little bit important, 3 = quite important, 4 = important, 5 = very important, DK = don’t know/not sure)

Possible sights and activities 1 2 3 4 5 DK Localities: a. Sipadan b. Mabul c. Kapalai d. Tun Sakaran Marine Park e. Other (please specify) ……………. Sights: f. See macro life (little animals among the corals) g. See big schools of pelagic fish – e.g. barracudas/jacks h. See megafauna: turtles/rays/dolphins and whales i. Swim in close proximity to sharks j. See a large number of sharks k. Other (please specify) ……………

B.2 Can you indicate how satisfied you were with the activities and sights you have experienced on the dives? Only score for those activities/sights that were scored 3 or higher in question B.1. (1 = not satisfied; 2 = barely satisfied, 3 = quite satisfied, 4 = satisfied, 5 = very satisfied, DK = don’t know/not sure)

Possible sights and activities 1 2 3 4 5 DK Localities: a. Sipadan b. Mabul c. Kapalai d. Tun Sakaran Marine Park e. Other (please specify) ……………… Sights: f. See macro life (little animals among the corals) g. See big schools of pelagic fish – e.g. barracudas/jacks h. See megafauna: turtles/rays/dolphins and whales i. Swim in close proximity to sharks j. See a large number of sharks k. Other (please specify) ……………

Section C. Questions about your expenditure while in the Semporna region

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To estimate the benefit to the local economy from diving we need to have an estimate of your expenditure while in Semporna region (including the islands). Please, indicate below the currency ($) that you will use for you estimates: Please, tick one box only.

USD (preferably) RM EURO AUD Other (please specify):

C.1 Did you purchase a dive trip package for this trip to Semporna region? Yes No

If No: Skip to Question C.4 If Yes: Please answer Question C.2 and C.3

C.2 Can you estimate the total cost of the package? Yes $ ………………… (currency: USD, RM, EURO, AUD) No

C.2.1 What was included in the package? (Please add details if option is included) a. International flights - From …..………… To …..……....…. return Domestic flights- From …..………… To …..……....…. return Other domestic transfers (sea and land) in Malaysia- 1) From …………...… To ………....… return 2) From ……...... … To ……....…… return 3) From ...…....…….... To …...... …….. return b. Accommodation Accom. name Location (island/town) Number of nights Room type (double/sing)

c. General dive trips– How many days? ……… d. How many dives per day? ……… e. Trips to Sipadan- How many days? ……… (Extra charge? ………..$) f. Food and beverages other than when on dive trips: Breakfast Lunch Dinner g. Other (please specify) ……………………………………………………………………….

C.3 Could you please estimate how much more money in total, additional to the cost of the package, you have spent (or will spend) on this visit to Semporna region (e.g. on accommodation, food, beverages, entertainment, tourism activities, souvenirs).

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$ ……………….. in total Now go to Section D.

Please answer the following questions (C.6 to C.9) if you did not purchase a package trip to Semporna region. Otherwise go to Section D.

C.4 What are you paying on average for accommodation while in this area?

………………….. $ per day or ...... $ total for one person for two people other: ….....

C.5 What are you paying on average for food, beverages and other living costs (not including accommodation) while in this area?

………………….. $ per day or ...... $ total

C.6 Please estimate what you will pay in total for trips while in Semporna region

- for all dive boat trips ……………… $ total

C.6.1 If possible, could you indicate the percentage of this total amount paid for:

- for general dive trips ………….. %

- for dive trips with shark watching as a major expectation of the dive ………….. %

C.7 Please estimate what you will pay in total for other tourist-related activities while you are in Semporna region (e.g. souvenirs, non-dive activities, entertainment. Do not include accommodation).

………………… $ total

Section D. Overall opinion about the shark diving experience in the Semporna region

D.1 How many dive boat trips are you planning to do in total on this visit to Semporna? ………………….. (number)

D.2 While in the Semporna region, did you go diving specifically to see sharks (shark diving)? Yes No

If No: Skip to Question D.5 If Yes: Please answer Questions D.3 to D.12

D.3 Where did you go shark diving? ………………………………………………

D.3.1 Did you go to this area specifically to dive with sharks? Yes No

D.4 How many trips are you planning to do in total specifically to dive with sharks while in the Semporna region? ……………………… (number) 156

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D.5 Would you still come to this the Semporna region if there were no sharks to be sighted during the dives? Yes No

D.6 Please rate how you feel overall about your diving experience in the Semporna region, with specific regard to the shark diving criteria below. (1 = poor, 2 = below average, 3 = average, 4 = good, 5 = excellent, DK = don’t know/not sure, NA = not applicable to me)

Criteria 1 2 3 4 5 DK NA

a. Numbers of sharks seen

b. Number of shark species seen c. Quality of the interaction with sharks (e.g. time watching sharks, proximity to sharks)

d. Overall satisfaction with the shark dive experience

D.7 Overall, how would you describe your interest in shark diving? Please tick one box only.  Negative towards shark diving  Not interested in shark diving  A little interested in shark diving  Interested in shark diving  Very interested in shark diving  Don’t know/not sure

D.8 How likely are you to make another visit to this area? Please tick one box only.  I won’t make another visit  I’m unlikely to make another visit  I may make another visit  I’m likely to make another visit  I’m definitely planning to make another visit

D.8.1 If you answered that you are “likely” or “planning” to make another visit, could you tell us what is your main motivation to return to the Semporna region?

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D.9 The government, dive industry and NGOs are currently undertaking discussions about the implementation of a Shark Sanctuary that intends to prohibit shark fishing in the Semporna region. What is your opinion about the proposed sanctuary? Please tick one box only.  Against  Not supportive  Indifferent about it  Supportive  Very supportive

D.10 How would knowing that the Semporna region is a shark sanctuary influence your decision to come back?  Negative influence  No influence  A little influence  A lot of influence

D.11 When visiting the proposed Shark Sanctuary, how much would you be willing to pay daily for a fee, collected by the authorities, to provide funds to enforce the sanctuary?  None  Up to 15 RM  16 to 30 RM  31 to 60 RM  More than 60 RM

D.12 When visiting the proposed Shark Sanctuary how much would you be willing to pay daily for a fee, collected by the authorities, to generate jobs for the local shark fishers who might lose income with the establishment of the proposed Shark Sanctuary?  None  Up to 15 RM  16 to 30 RM  31 to 60 RM  More than 60 RM

D.13 Would a shark sanctuary in the Semporna region affect the way you recommended this destination to other divers?  Negative effect  No effect  Little effect  Large effect

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E.1 Please indicate your gender. Male Female

E.2 What is your age?  Less than 21 years old  Between 21 and 30 years old  Between 31 and 40 years old  Between 41 and 50 years old  More than 50 years old

E.3 What is your nationality?

E.4 What is your diving experience? Please tick one box only.  Less than 5 dives  Between 5 and 49 dives  Between 50 and 99 dives  Between 100 and 499 dives  500 dives or more

E.5 Could you please give us an estimate of your annual income (in USD)? Please tick one box only.  Less than USD20,000/year  Between USD20,000 and USD49,999/year  Between USD50,000 and USD79,999/year  Between USD80,000 and USD119,999/year  USD120,000/year or more

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APPENDIX II. DIVE OPERATOR SURVEY FOR CHAPTER 2

Survey of dive operators in Semporna (day trips)

Section A. Activities of the dive boat operation

We would like to get some information about the dive trips offered by your business, and the numbers of tourists taking these dive trips. 2009 2010 2011 A.1 How many total day trips did your operation make in each year? A.2 How many divers on average did you take in each year? A.3 How many day trips focused on diving with sharks did your operation make in each year? A.4 How many divers did you take specifically to see sharks in each year?

A.5 What are the most popular dives offered on day trips? (1 = not popular on day trips, 2 = a little popular on day trips, 3 = popular on day trips, 4 = very popular on day trips, 5 = most popular on day trips, DK = don’t know/not sure)

Possible activities 1 2 3 4 5 DK a. Soft-coral dives b. Hard-coral dives c. Wreck dives d. Macro dives e. Shark watching as a major component of the dives f. Large pelagic other than sharks g. Cave dives h. Other (please specify) …………………………………………………… i. Other (please specify) ……………………………………………………

A.6 Do you advertise dives or trips specifically to see sharks? Yes No

If No: Skip to Question A.9 If Yes: Please answer the remaining questions in this Section A

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A.7 What are the most common dive sites that you visit specifically to see sharks and how often do visit these sites? Sites Frequency of visit % of shark Species No. of sights sharks/dive a. b. c. d. e.

A.8 In your opinion, what is the main species responsible for attracting tourists to the Semporna region? ……………………….

A.9 Can you identify what are the localities and activities that the divers consider to be most important when visiting the Semporna region? (Tick a number: 1 = not important at all, 2 = a little bit important, 3 = quite important, 4 = important, 5 = very important, DK = don’t know/not sure)

Possible sights and activities 1 2 3 4 5 DK Localities: a. Sipadan b. Mabul c. Kapalai d. Tun Sakaran Marine Park e. Other (please specify) Sights: f. See macro life (little animals among the corals) g. See big schools of pelagic fish – e.g. barracudas/jacks h. See megafauna: turtles/rays/dolphins and whales i. Swim in close proximity to sharks j. See a large number of sharks k. Other (please specify) ……………………

A.10 What is the price structure for the day trips offered by your operation? A.10.1 Flat rate (USD/ RM) ……………………………… (per day) A.10.2 Additional charges (USD/ RM) ………………... for ………………………….

(USD/ RM) ………………... for ………………………….

(USD/ RM) ………………... for ………………………….

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Section B. Details on Package Tours

B.1 Does your business offer dives as part of package tours/dive packages? Yes No % of tourists Dive package % of tourists

If No: Skip to Section C If Yes: Please answer the remaining questions in this Section B.

B.2 What is the percentage of the packages organized by: Semporna companies ………….. % overseas companies ……………… %

B.3 Can you tell me about the package you offer? Cost (USD/ Days Dives/day Accom.(single/ twin/ Meals Other RM) triple room) 1. 2. 3.

B.4 Can you estimate the percentage of the package costs allocated to various components? Package Dive Accommodation Meals All Other activities 1. 2. 3.

B.5. What percentage of the tourists diving with your company purchase dive/tourist packages?

B.6 We would like to have an estimate of the number or percentage of tourists who have taken packages with you over the past years?

2009 2010 2011 B.7 How many tourists on average took Package 1 in each time period? B.8 How many tourists on average took Package 2 in each time period? B.9 How many tourists on average took Package 3 in each time period?

Section C: Expenses of the dive boat operation

C.1 For how long have you been operating dive boat tours in Semporna? ………………………………….. (years/ months)

C.2 Can you estimate the capital investment of your dive boat operation?

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Appendix II

Capital items Value (USD/RM) a. Boat (s) b. Dive gear c. Other equipment (e.g. radio, GPS, kit, etc.) d. On-shore infrastructure e. Dive shop (if owned) f. Other (please specify) g. Total

C.3 How many boats are operated by your business? ………………….. (number)

C.4 What is the maximum number of tourists/day you can take on dive trips (for all your boats)?

Maximum capacity for all boats is …………….. tourists with ……………… crew

C.5 Can you estimate at what percentage capacity your business worked on average over the last years? (e.g. at 60 % of capacity)

2009 2010 2011 Capacity worked (%)

C.6 How many people are employed by your dive boat operation?

Type of employees Number of Average Average people salary salary (USD/RM) (USD/RM) Season (Apr- Off season Oct) (Nov-Mar) a. Semporna locals an resident hired as permanent staff b. Semporna locals an resident hired as casual staff c. Non-residents hired as permanent staff d. Non-residents hired as casual staff

164

Appendix II

C.7 Can you estimate the percentage of your income that is spent on running and maintenance costs?

Running costs Percent of overall income

a. Fuel

b. Wages/salaries of hired labour

c. Catering

d. Boat/equipment maintenance e. Governmental licenses/fees

f. Levy or return to community

g. Dive shop rent (if not owned) h. Other (please specify)

i. Profit

Check total percentage * [* Check to see how close the total percentage is to 100% -it should be less than 100% to allow for profit]

C.8 Can you estimate the percentage of the revenues generated by your company that is reinvested in the country? ...... %

Section D. Expectations for and perceptions of business

D.1 Do you think that shark feeding (or shark attraction) should be permitted in Semporna?

Yes No Unsure

D.1.1 Please give a reason for your answer

………………………………………………………………………………………………

D.1.2 If you answered “yes”, under what conditions or regulations (if any) do you think shark feeding should be permitted?

………………………………………………………………………………………………

D.2 In your opinion, what would be the impact of the creation of a Shark Sanctuary and banning of shark fishing in Semporna for the tourism industry in the area?

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Appendix II

(1 = negative effect on tourism, 2 = no effect on tourism, 3 = increased tourist numbers by up to 10%, 4 = increased tourist numbers by between 10 and 25%, 5 = increased tourist numbers by more than 25%, DK = don’t know/not sure)

1 2 3 4 5 DK

D.3 In your opinion, what would be the impact of the creation of a Shark Sanctuary with banning of shark fishing in Semporna for the local community?

(1 = negative effect on local community, 2 = no effect on local community, 3 = increased economic benefits by up to 10%, 4 = increased economic benefits by between 10 and 25%, 5 = increased economic benefits by more than 25%, DK = don’t know/not sure)

1 2 3 4 5 DK

D.4 How much would your business be willing contribute for a fee collected by the authorities to contribute to enforcement of the Shark Sanctuary? None Up to 15 RM per diver 16 to 30 RM per diver 31 to 60 RM per diver More than 60 RM per diver

D.5 Do you have any concerns or comments on the dive tourism in Semporna at the moment?

166

Appendix III

APPENDIX III. DIVE TOURIST SURVEY FOR CHAPTER 3

Sabah Tourists – Online Survey

Are you 18 years old or older?  Yes  No

Are you a Malaysian resident?  Yes  No

Are you visiting Sabah for a holiday?  Yes  No

SECTION 1

1. This section will ask you about your current holidays in Sabah. We are particularly interested in your diving activities.

2. What is the main activity that you were planning to do on this holiday? (Please choose one)  Relaxing  Diving  Snorkelling  Culture and sightseeing  Land-based activities such as jungle tours  Other (please specify) ......

3. How many times have you been to Sabah for diving purposes in the last 5 years (including this holiday)?

......

4. How many days do you stay in Sabah on this holiday in total? Please provide your best estimate if you are not sure yet ......

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5. How many days did (or will) you go diving in total during this holiday? Please provide your best estimate if you are not yet sure ......

6. How many dives did (or will) you make in total during this holiday? ......

7. Which places did (or will) you go diving during your holidays in Sabah? (Tick everything that applies)  Kapalai  Mabul  Mataking  Pom Pom Island  Sipadan  Tun Sakaran Marine Park  Others (please specify) ......

8. There are different things that attract people to come diving in Sabah. Thinking of what you were interested in seeing on your current dive trip, please order the below attractions from most interested (1) to least interested (6) by dragging the items up or down (top = 1, bottom = 6)

...... High fish diversity and abundance ...... Sharks and rays ...... Macro life (small critters like sea horses or slugs) ...... Coral reefs ...... Sea turtles ...... Others (please specify)

9. Out of the ${Q86/ChoiceTextEntryValue} dives you do during this holiday, how many dives did you make (or expect to make) in total specifically to see sharks or rays during this holiday?

......

10. How many sharks have you seen in total during this dive holiday in Sabah? (Please provide your best estimate)

......

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11. How satisfied were you with the shark and ray diving experience, with regard to the following four criteria: Not satisfied Not Very Neutral Satisfied at all satisfied satisfied Number of sharks and rays      seen Number of different species of sharks and rays      seen Quality of the encounter (e.g. time spent with them,      closeness to the animal) Overall satisfaction with the shark and ray dive      experience

12. If for some reason you could not go diving with sharks and rays in Sabah, what would you do instead?  Go diving with sharks and/or rays elsewhere  Go diving to see other animals elsewhere  Go diving to see other animals in Sabah  Go for a non-diving holiday in Sabah  Go for a non-diving holiday elsewhere  Stay home

SECTION 2 In this section, we want to understand how often you plan to visit Sabah in the future and what you would do if shark and ray diving conditions changed in Sabah. Please think about your future plans to visit Sabah for diving purposes

13. How many dive holidays are you planning to make to Sabah in the next 5 years under current conditions? Remember that each visit is associated with certain travel costs and that you might also want to visit other places

......

[If answer is 0]

14. Please tell us why you would not return to Sabah in the next 5 years  The trip is too expensive  I never visit one place twice  The current trip was disappointing because (please specify) ......  Others (please specify) ......

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Currently, sharks and rays are protected within the national parks, but can be fished in all other areas in Sabah. Sharks are mainly fished for their fins that are served in shark-fin soup. Manta and devil rays are mainly fished for their gill rakers which are sold as a powder that is believed to have healing characteristics.

Since sharks and rays are increasingly endangered in Sabah, the Malaysian government considers implementing a fishing ban on shark and ray species, and to reduce the sale and consumption of shark and ray products in the Sabah region.

15. Do you think a fishing ban will protect sharks and rays in Sabah?  Yes, I think a fishing ban will protect sharks and rays in Sabah  No, I do not think a fishing ban will protect sharks and rays in Sabah  I am not sure, I need more information

16. Have you ever observed shark/ray fishing or the trade in shark/ray products during a trip to Sabah?  Yes  No  Not sure

Next, we will present you a hypothetical scenario that affects your diving experience. Please treat the scenario as if it was a real situation and assume that nothing else will change in Sabah than those conditions presented to you.

SCENARIO Please imagine that Sabah would ban all shark and ray fishing in its waters. This will have an effect on your dive experience in Sabah in 3 ways: 1) Shark and ray populations would increase by 30% (for example, you would see 13 instead of 10 sharks and rays per dive) 2) You would see 1 more species of sharks and rays than under current conditions 3) You would start seeing shark and rays at more dive sites. This increases the number of shark dives you can make by up to 25% (for example, if you currently make 4 shark and ray dives that would increase to 5)

18. You said earlier that you plan to visit Sabah ${Q4.2/ChoiceGroup/SelectedChoices} times in the next five years under current conditions, and that you currently dive for ${Q55/ChoiceTextEntryValue} days during this holiday. Under the scenario, how many times would you return to Sabah in the next 5 years and how many days would you go diving during these holidays?

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Appendix III

SCENARIO

With shark and ray protection

Number of dive holidays in the next 5 years

Number of days you go diving per dive holiday

19. We described 3 different potential effects that a shark and ray protection could have on your diving experience in Sabah. Please rank these potential effects in the order of importance they have for you from the most important (1) to the least important (3) by dragging the items up or down

...... Higher numbers of shark and ray populations ...... See more shark and ray species ...... Make more shark and ray dives

20. The effective management of a shark and ray fishing ban in Sabah requires money to enforce the regulations and to create alternative livelihoods for local communities. Funds could be collected from tourists in the form of park fees. These would be paid into a shark and ray conservation fund. What is the maximum daily national park fee you would be willing to pay if this money was used for a shark and ray conservation fund? Please choose from the options below  MYR 0  MYR 5  MYR 10  MYR 15  MYR 20  MYR 25  MYR 30  MYR 40  MYR 50  MYR 60  More than MYR 60 (please specify) ......

21. Do you have a preference of how the park fee would be used?  Yes, I prefer it to be used for the enforcement of the shark and ray fishing ban  Yes, I prefer it to be used for local communities  No, I have no preference

SECTION 3 This section will ask you about your expenditure for this holiday. We need this information to estimate the benefit from shark and ray tourism to the economy of Sabah.

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Appendix III

22. Did you purchase a dive- or travel package (as in did you book several services such as accommodation, diving and food together) or did you book all items separately?  I booked a travel package  Go to question 23  I booked everything separately  Go to question 26

23. Could you estimate the total cost of the trip package? Please indicate the currency and how many people are included in the costs

Package costs Currency

Number of Value USD MYR EUR CNY people

Trip    

package

24. What was included in the package? (Please tick all options that apply)  Air flights  Domestic transport  Accommodation  Dive trips  Food and beverages other than when on dive trips  Other (please specify) ......

25. Please estimate how much money you have spent (or will spend) on this visit to Sabah— additional to the cost of the package. Please indicate how many people are included and the currency for each of the costs

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Appendix III

Costs not included in the Currency package Number of Value USD MYR EUR CNY people International air     flights Ferries and     inland flights

Accommodation    

Food and     beverages

Dive activities    

Others (land- based activities,    

souvenirs, etc.)

26. Please estimate how much money you have spent (or will spend) in total on this visit to Sabah. Please indicate the currency and how many people are included for each of the costs

Trip costs Currency Number of Value USD MYR EUR CNY people International air     flights Ferries and     inland flights

Accommodation    

Food and     beverages

Dive activities    

Others (land- based activities,    

souvenirs, etc.)

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Appendix III

SECTION 4 Finally, we have a few questions about you to make sure we have a good sample of respondents.

27. Please indicate your gender  Male  Female  Prefer not to say

28. What is your age?  Between 18-24 years old  Between 25-34 years old  Between 35-44 years old  Between 45-54 years old  More than 55 years old

29. What is your nationality? ......

30. How many dives have you made in your lifetime?  Less than 5 dives  Between 5-49 dives  Between 50-99 dives  Between 100-499 dives  500 dives or more

31. Are you a member or a supporter of an animal welfare organization?  Yes  No  Not sure

32. Have you heard of any shark/ray conservation programs before?  Yes  No

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Appendix III

33. Please think about your total annual household net income (income before taxes, from all sources, for the whole household). In what income category does your annual net household income fall?  Less than USD 20,000/year  Between USD 20,000 - 50,000 /year  Between USD 50,001 - 80,000 /year  Between USD 80,001 - 120,000 /year  More than USD 120,000/year

34. Would you like to receive a copy of the publication that will be written about this study?  Yes, please send it to my email address ......  No, thank you

35. Would you be willing to be contacted by the research team if we have any follow-up questions on this topic?  Yes, please use my email address as given above  Yes, my email address is ......  No, thank you

36. If you have any other questions or concerns about this survey that have not yet been addressed, please write them down below ......

37. Would you like to participate in the draw to win one of three travel guides about Borneo? If so, please indicate your e-mail address to contact you (it won't be used for any other purpose)  Yes, my e-mail address is: ......  No, thank you

175

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Appendix IV

APPENDIX IV. DIVE OPERATOR SURVEY FOR CHAPTER 3

Dive operator survey - Semporna

Interviewee details

Owner of the company Location Foreign Local Island or town Name of the company  

First of all, I would like to ask you some questions about your work place and the dive boat operation of this company.

1. What is your position in this company?

 Dive guide/ Master/ Instructor  Administration  Marine Biologist  Others ......

2. For how long has this company been operating dive boat tours in Sabah in total?

 Years ......  Months ......

3. What is the maximum number of people that this company can hold in dive operations per day – over all boats?

......

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Appendix IV

4. What was the average working capacity of the company during the previous year (in percent of the maximum number of people it can hold)?

0 10 20 30 40 50 60 70 80 90 100

Average working capacity during low season

Average working capacity during high season

5. Please define low and high season for a typical year.

 High Season ......  Low Season ......

6. Which of the following dive attractions are the most important draw cards for dive tourists in

Sabah? Please rank the following attractions from 1 (most important) to 5 (least important).

...... Coral reef dives ...... Wreck dives ...... Sharks ...... Rays ...... Macro life ...... Others

7. Does this company advertise dives or dive trips specifically to see sharks?

 Yes  No

8. Out of a hundred dives, how many dives does this company arrange specifically to see sharks?

0 10 20 30 40 50 60 70 80 90 100

Percentage of shark dives

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Appendix IV

9. What dive sites does this company visit most often to specifically dive with sharks and which shark species can be seen at these sites?

Dive site Shark species Name Name Site 1 Site 2 Site 3 Site 4 Site 5 Site 6

In this part of the survey, I would like to ask you some questions about the service and running costs of this company. This information will be used to estimate the socio-economic value of sharks for the dive tourist industry in the Maldives.

10. How many local and foreign people are employed by this company and what is their average salary?

Malaysian locals Non-residents Average salary Average salary Number of Number of (USD/MYR) per (USD/MYR) per employees employees month month Dive instructor Dive Master Skipper Equipment

Maintenance Office work Others

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Appendix IV

11. What is the price for a single dive or a dive day trip?

Costs per single dive Costs per day trip MYR USD MYR USD Flat rate Extra: Equipment Extra: Extra: Night dives Others

12. How many dives has a typical dive day trip?

......

13. Does your business offer dives as part of package tours/dive packages?

 Yes  No

14. What percentage of the tourists diving with your company purchase dive packages?

 Percent ......

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Appendix IV

15. Could you give me the following details of the dive package(s) you offer?

Cost Details % who buy Number Number USD MYR Accommodation Meals this of days of dives package Package 1 Package 2 Package 3 Package 4 Package 5

16. Could you estimate the percentage of the companies’ revenue from dive operations that is spent on operating costs, wages, licenses and other running costs?

Companies' revenues Percentage Operating costs (e.g. fuel, boat, equipment and rent) Wages of hired labour Governmental licenses/ fees Others

That’s it! Thank you very much for participating in this survey. Your answers are really helpful and your time is much appreciated.

17. Would you like to receive the publication that will result from this research project, and/or would you be willing to participate in future follow-ups of this research?

 Yes, I would like to receive the publication  Yes, I am available for possible future questions  Name and E-mail address ......  No, thanks

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Appendix IV

18. Do you have any other concerns or comments about the shark diving tourism in the

Maldives that we have not yet discussed?

......

19. Do you have any other comments on this survey?

......

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Appendix V

APPENDIX V. MARKET VALUE ANALYSIS FOR CHAPTER 3

Table v.i: Variables that are used to estimate the economic benefits of the diving and shark diving industry.

Abbreviation Description Source

D Total number of divers that visit Semporna per Ministry of Tourism Malaysia, year Key Performance Indicators 2016, Dive tourist survey SDF Fraction of divers that are shark divers (would go Dive tourist survey diving with sharks elsewhere if they couldn’t dive with sharks and rays in Semporna) TD Median number of days per trip Dive tourist survey

DD Median number of days diving Dive tourist survey

TTC Average total travel costs (local travel costs plus Dive tourist survey international airfares) per person and day LTC Average expenses on domestic transportation, Dive tourist survey accommodation, dive activities, food and beverages, and extras per person and day DTC Average costs spent on dive activities per person Dive tourist survey and day BT Minimum tax rate contribution Dive operator survey, https://tradingeconomics.com/m alaysia/corporate-tax-rate, worldbank database SEF Daily entrance fee for the Sipadan Island Park Dive operator survey

SPL Annual number of Sipadan Park licenses Dive operator survey

E Number of employees in the dive tourism industry Dive operator survey

DO Total number of dive operators in Semporna WWF Malaysia

SL Average salary of employees Dive operator survey

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Appendix V

Table v.ii: Abbreviations, description and formulas for revenue categories

Abbreviation Description Formula

Business revenues

TBRD Total business revenues from D x TTC x DD divers

TBRSD Total business revenues from TBRD x SDF shark divers

LBRD Local business revenues from D x LTC X DD divers

LBRSD Local business revenues from LBRD x SDF shark divers

DBRD Dive business revenues from D x DTC x DD divers

DBRSD Dive business revenues from BRDD x SDF shark divers

Tax revenues

BRTD Business revenues tax from LBRD x BT + (SEF * SPL) diving

BRTSD Business revenue tax from BRTD x SDF shark diving

Salaries

SLD Salaries from diving industry SD= Eforeignx DO x SLforeign+(Elocalx DO x SLlocal)

SLSD Salaries from shark diving SD x SDF industry

184

Appendix V

Table v.iii: Values that are used for the estimation of the economic benefits from the diving and shark diving industry in Semporna

Abbreviation Description Values Units

D(Sipadan) Number of divers in Sipadan 44,140 No./Year

D(Semporna) Number of divers in Semporna 72,575 No./Year

SDP Shark divers/D 29.98 %

W Average salary of employees of diving 314 USD/month industry

BT Minimum tax rate contribution 22 %

SEF Daily entrance fee for the Sipadan 10 USD/person and Island Park day

E Estimated number of employees in the 1,252 Employees dive industry

TD Median number of trip days 10 Days

DD Median number of days diving 4 Days

TTC Total travel costs include local travel 247.28 (225.65 – USD/person and costs plus international airfares 269.02) day (95% CI)

LTC Expenses on domestic transportation, 190.50 (173.07 – USD/person and accommodation, diving, food and 207.94) day (95% CI) beverages, and extras

DTC Diving expenses 74.02 (66.67 – USD/person and 81.37) day (95% CI)

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Appendix V

Table v.iv: Business and tax revenues from dive tourists and shark divers in the Semporna region.

Business revenues (USD/year) Value 95% CI

Total business revenues from TBRD 71,785,197 65,506,024 78,096,303 divers

Total business revenues from shark TBRSD 21,521,202 19,638,706 23,413,271 divers

Local business revenues from LBRD 55,302,006 50,242,090 60,364,825 divers

Local business revenues from LBRSD 16,579,541 15,062,579 18,097,374 shark divers

Dive business revenues from DBRD 21,487,950 19,354,251 23,621,649 divers

Dive business revenues from shark DBRSD 6,442,087 6,442,087 6,442,087 divers

Business tax revenues (USD/year)

BRTD Business tax revenues from diving 12,055,837 10,952,776 13,159,532

Business tax revenues from shark BRTSD 3,614,340 3,283,642 3,945,228 diving

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Appendix V

Table v.v: Number of employees and annual salaries of employees in the dive tourism industry in the Semporna region.

Locals Foreigners Total

Number of Average annual Number of Average annual Number of Average annual Position employees salary (USD) employees salary (USD) employees salary (USD)

Dive instructor 230 6,902 98 8,362 328 7,632

Dive Master 246 3,338 8 3,097 254 3,218

Skipper 385 2,795 66 2,896 451 2,846

Maintenance 131 2,757 0 N/A 131 2,757

Administration 279 2,917 16 2,942 295 2,929

Others 1,066 3,221 41 N/A 1,107 3,221

Total 2,337 3,655 230 4,324 2,567 3,767

Total revenues from salaries 8,541,652 992,897 9,668,648 (USD)

Total revenues from salaries from 2,477,079 287,940 2,803,908 shark diving (USD)

187

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Appendix VI

APPENDIX VI. TRAVEL COST AND CONTINGENT BEHAVIOUR

METHOD FOR CHAPTER 3

Definition of outliers

We analysed the data for outliers to prevent a bias in the responses for the hypothetical scenarios. Outlier were assumed to state that they will stay over long periods of time as well as have high travel costs. In order to identify such respondents, we calculated the product of daily individual travel costs with the number of travel days of respondents under the observed condition as well as in the stated future trips under the status quo and the sanctuary scenario.

This resulted in total travel costs over a five years period under the three situations. We defined outliers as those respondents who exceeded the 97th percentile of the observed condition. The distribution of individual travel costs under the three situations with (A) and without (B) outliers are shown in Figure vi.i.

(A) (B)

Figure vi.i: Total travel costs that respondents spent in the last five years (observed) and in the next five years under the two future scenarios (status quo and sanctuary scenario) with (A) outliers and (B) without outliers.

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Appendix VI

Correction for on-site sampling

Table vi.i: Travel cost model without correction for on-site sampling. Variable Coefficient P-value 95% Confidence Interval Constant 3.042 0.000 2.806 3.278 Travel costs ('000) -2.475 0.000 -3.139 -1.811 Income ('000) -0.007 0.000 -0.010 -0.004 Dive experience 0.002 0.000 0.001 0.002 Asia -0.016 0.885 -0.230 0.198 Diver 0.089 0.452 -0.142 0.319 Observed shark fishing 1.688 0.000 1.387 1.988 Log likelihood -1402.066

AIC 2820.132

Observations 358

Table vi.ii: Travel cost model without correction for on-site sampling (endogenous stratification and zero truncation). Variable Coefficient P-value 95% Confidence Interval Constant 1.265 0.000 0.562 1.967 Travel costs ('000) -2.737 0.000 -3.450 -2.023 Income ('000) -0.008 0.000 -0.011 -0.004 Dive experience 0.002 0.000 0.001 0.003 Asia 0.000 1.000 -0.226 0.226 Diver 0.087 0.479 -0.155 0.330 Observed shark fishing 1.721 0.000 1.407 2.036 Log likelihood -1379.651

AIC 2775.303

Observations 358

Correction factor = CSnbstrat/CSnbreg = (-1/-2.475) / (-1/-2.737) = 0.9045

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Appendix VII

APPENDIX VII. DIVE TOURIST SURVEY FOR CHAPTER 4 AND 5

Dive tourist survey

A) In this section, we would like to know something about your purpose to visit the Maldives.

Question 1

Is this the first time that you have dived in the Maldives? If not, please indicate how many times

you have visited the Maldives for diving. Tick one box

 Yes, this is the first time  No, I have been here ...... times (including this trip)

Question 2

Did you come to the Maldives because someone recommended it to you (e.g. friends, family or

reviews on the internet)? Tick one box

 Yes, mostly because of a recommendation  Yes, but also because of other reasons  No, a recommendation was not the reason

Question 3

For what main activity did you come on this trip? Tick one box

 Beach holidays  Diving  Snorkelling  Sightseeing  Other (please specify) ......

Question 4

How important was seeing sharks to you to come on this trip? Tick one box

 Not important at all  A little bit important  Important  Very important  The most important

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Question 5

How interested were you in seeing any of the following attractions during your current dive trip?

Very Uninterested Neutral Interested Very uninterested interested Manta rays High fish abundance Sharks Caves Coral reefs Others (please specify)

......

Question 6

Before you came on this trip, did you know that the Maldives have banned shark fishing by creating a shark sanctuary? Tick one box

 Yes  No  Go to section B  Not sure

Question 7

How did knowing that the Maldives are closed to shark fishing influence your decision of the

Maldives as a holiday destination? Tick one box

 It did not influence my decision at all  It influenced my decision a little bit  It was important for my decision  It was the most important reason for my decision

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Appendix VII

B) In this section, we would like to know how satisfied you are with your visit to the Maldives.

Question 8

If you have dived with sharks in the Maldives, how satisfied were you with the diving experience, with regard to the four shark watching criteria below.

Very Very Dissatisfied Neutral Satisfied dissatisfied satisfied 1. Number of sharks

seen 2. Number of shark

species seen 3. Quality of the interaction with sharks (e.g. time watching sharks, proximity to sharks) 4. Overall satisfaction with the shark dive experience

Question 9

Have you visited any other shark diving areas in the world?

 Yes. Location(s): ......

 No  Not sure Go to section C

Question 10

How did the shark diving experience in the Maldives compare on average with your experience(s) at other sites? Tick one box

 Dives in the Maldives were a better shark watching experience  Dives in the Maldives were about the same shark watching experience  Dives in the Maldives were a worse shark watching experience

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Appendix VII

C) The next questions are about your plans to visit the Maldives in the future.

Question 11

How many times do you plan to visit the Maldives in the next 10 years? (Remember that each visit is associated with certain travel costs.) Tick one box

 0 times  1 to 5 times  6 to 10 times  More than 10 times

Question 12

Within this margin of times that you stated you plan to visit the Maldives. What is your best guess of number of visits you plan to do? Remember this number as you will need it in questions 14, 15 and 17

...... Times

Question 13

Would you recommend the Maldives as a shark diving destination (e.g. to friends, family or over the internet)?

 Yes  No

Information

Sharks were fished traditionally in the Maldives for many decades. With the implementation of the shark sanctuary in 2010, shark fishing was banned and fishers gave up the rights to fish for sharks. We are interested in your plans to dive in the Maldives if there would be illegal shark

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Question 14

You said earlier that you plan to visit the Maldives a certain number of times (question 12).

Imagine that you observed shark fishing (e.g. a fisher catching sharks on a boat or on the beach) or trade in shark products (e.g. shark meat, fins or souvenir articles like teeth or jaws) during your current trip. How would that: a) Change the number of visits that you are planning to make to the Maldives in the next 10 years? b) Influence whether or not you recommend the Maldives as a shark diving destination (e.g. to friends, family or over the internet)?

a) Number of visits b) Would you recommend the you would plan in the Maldives as shark diving next 10 years destination Yes No Example: 5 ✔ If you would not see any shark fishing or trade in shark products If you would see shark fishing

or trade in shark products

Question 15

You said earlier that you plan to visit the Maldives a certain number of times (question 12).

Imagine that the number of sharks that you see would change in future visits to the Maldives.

How would that: a) Change the number of visits that you are planning to make to the Maldives in the next 10 years? b) Influence whether or not you recommend the Maldives as a shark diving destination?

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Appendix VII

a) Number of visits you b) Would you recommend the would plan in the next Maldives as shark diving 10 years destination Yes No If the number of sharks

increased If the number of sharks

decreased If there were no sharks at

all

Question 16

Dive operators can engage in several social and ecological initiatives to reduce illegal shark fishing. How important do you consider the following actions of a dive operator?

Very Very Unimportant Neutral Important unimportant important Monitor and control

protected areas Help to improve the economic situation of fishers (e.g. by employing them or by paying compensation fees) Help to improve the social situation of fishers (e.g. by investing in educational programs and infrastructure) Integrate fishers in the management of protected areas (e.g. by mediating between fishers and other stakeholders)

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Question 17

You said earlier that you would visit the Maldives a certain number of times (question 12).

Imagine that the dive operator you chose take actions to reduce illegal fishing or not. How would that: a) Change the number of visits you would do with that specific dive operator in the next 10 years? b) Influence whether or not you would recommend that specific dive operator to others?

a) Number of visits you b) Would you would do with this dive recommend this dive operator in the next 10 years operator Yes No If the dive operator would engage in actions against illegal fishing If the dive operator would not engage in actions against illegal fishing

Question 18

Now thinking about your current trip or previous trips to the Maldives. Have you ever observed any shark fishing activities, trade in shark products or other occurrences related to shark fisheries in the Maldives? Tick all that apply

 Shark fishing activities (e.g. shark being landed on a boat or a beach)  Trade in shark products (e.g. shark meat, fins, teeth or jaws)  Other (please specify) ......  No, I have never observed any shark fishing or trading in the Maldives.  Go to section D

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Question 19

If you observed any shark fisheries, trade in shark products or other occurrences related to shark fishing in the Maldives, please give details of your observation(s).

What did you see? Where did you see When did you see this? this? Observation 1:

Observation 2:

Observation 3:

Observation 4:

D) To estimate the benefit from shark tourism (and dive tourism) to the Maldives economy we would like to have an estimate of your expenditure for this trip to the Maldives.

Question 20

How long have you been in the Maldives so far on this visit? ...... Days

Question 21

What will be the total duration of your stay in the Maldives on this visit?

 ...... Days  Not decided, but my best guess is: ...... Days

Question 22

Did you purchase a dive trip package for this trip to the Maldives?

 Yes  Answer Questions 23 to 26  No  Go to Question 27

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Question 23

Can you estimate the total cost of the package?

Cost ...... Currency......

Question 24

How many people are included in this package? ...... People

Question 25

What was included in the package? (Please tick all options included in the package and add details if option is included in the package) Included Item Details in package Air flights Number of nights: Accommodation Number of rooms: Number of days: Dive trips Number of dives per day: Food and beverages Others (specify)

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Question 26

Could you please estimate how much more money in total (additional to the cost of the package) you have spent (or will spend) on this visit to the Maldives

Items outside your package Cost for additional items outside your package Cost Currency International air flights Ferries and inland flights Accommodation Food and beverages Entertainment Non-dive activities Additional dives Souvenirs Others (please specify) ......

 If you purchased a package trip, go to section E

Question 27

What are you paying on average for accommodation while in the Maldives?

Accommodation Cost Currency In total or Per day

Question 28

What are you paying on average for food, beverages and other living costs (not including accommodation) while in the Maldives?

Food and beverages Cost Currency In total or Per day

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Appendix VII

Question 29

Please estimate what you payed (or will pay) in total for dive trips while in the Maldives

Dive trips Cost Currency In total

Question 30

Please estimate what you paid in total for air flights to the Maldives

Air flights Cost Currency In total

Question 31

Please estimate what you will pay in total for other tourist-related activities while you are in the

Maldives (e.g. for souvenirs, non-dive activities and entertainment. Do not include accommodation)

Cost for additional items outside your package Cost Currency Total costs or Entertainment Non-dive activities Souvenirs Ferries and inland flights Others (please specify) ......

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E) Finally, we have a few questions about you to make sure we have a good sample of respondents.

Question 32

Please indicate your gender

 Male  Female

Question 33

What is your age?

 Between 18 and 24 years old  Between 25 and 34 years old  Between 35 and 44 years old  Between 45 and 54 years old  More than 55 years old

Question 34

What is your nationality? ......

Question 35

In what income category does your annual combined income fall (please consider the income from all sources for the whole household before taxes)? (For currency conversions, see page 14)

Tick one box

 Less than US$ 20,000/year  Between US$ 20,000 and US$ 49,999/year  Between US$ 50,000 and US$ 79,999/year  Between US$ 80,000 and US$ 119,999/year  US$ 120,000 or more

Question 36

What is your diving experience? Tick one box

 Less than 5 dives  Between 5 and 49 dives  Between 50 and 99 dives  Between 100 and 499 dives  500 dives or more

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Appendix VII

That’s it! Thank you very much for participating in this survey. Your answers are really helpful and your time is much appreciated.

Would you be interested in staying informed about this project, and/or would you be willing to participate in future follow-ups of this research?

O Yes, I would like to be updated on the progress of the research project

O Yes, I am available for possible future questions of this research project

O No thanks

If yes, please indicate your name and e-mail address

Name ...... E-mail ......

Do you have any other concerns or comments about the shark diving tourism in the Maldives that we have not yet discussed?

......

Do you have any comments on this survey?

......

Currency conversions (September 2016)

1.00 Australian Dollar = USD 0.76

1.00 British Pound = USD 1.30

1.00 Chinese Yuan = USD 0.15

1.00 Euro = USD 1.12

1.00 Indian Rupee = USD 0.015

1.00 Japanese Yen = USD 0.01

1.00 Russian Ruble = USD 0.015

For any other currencies or help with the conversion, please ask one of our team members.

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Appendix VIII

APPENDIX VIII. DIVE OPERATOR SURVEY FOR CHAPTER 4

Dive operator survey

Date (dd/mm/yy) ..../ ..../ .... Company ...... Foreign / Local

Atoll ...... Island ...... Interviewer Initials ......

Before we start, I just want to assure you that all information collected is strictly confidential

and no names of people or companies will be published or shared with others. You are free to

withdraw from this survey and ask questions at any time during this interview. First of all, I

would like to ask you some questions about your work place and the dive boat operations of this

company.

A) Activities of the dive boat operation

1. What is your position in this company? O General Manager O Dive guide/ Master/ Instructor O Administration O Others ......

2. For how long has this company been operating dive boat tours in the Maldives in total?

...... years ...... months

3. Are you or is this company a member of any tourism association in the Maldives?

Yes / No

O Live-aboard Association Maldives (LAM) O Tourism Employee Association Maldives (TEAM) O Maldives Association of Tourism Industry (MATI) O Divers Association Maldives (DAM) O Others ...... 4. How many people are employed by this company (including all facilities e.g. dive boat operations, souvenir shops, bar/ restaurants, resorts/ guesthouses) and what is their average salary?

205 Appendix VIII

Facility Type of employees Number of Average salary people (USD/MVR) per week / month / year Total OR a. Maldives locals b. Non-residents Dive boat operation a. Maldives locals b. Non-residents Bar/ a. Maldives locals b. Non-residents Resort/ Guesthouse a. Maldives locals b. Non-residents Others a. Maldives locals b. Non-residents

5. What is the maximum number of people that this company can hold in dive operations per day – over all boats? ...... People/day

6. What was the average working capacity of the company during the previous season (in percent of the maximum number of people it can hold)? ...... %

7. Does this company advertise dives or dive trips (e.g. on the internet or with flyers) specifically to see sharks? Yes / No

8. In your opinion, which diving activities attract most tourists to the Maldives? Please rank the following attractions from 1 (attracts the most) to 5 (attracts the least).

Possible activities Ranking Possible activities Ranking

a. Coral reef dives f. Manta rays dives

c. Wreck dives g. Cave dives

e. Shark watching h. Others

9. What dive sites does this company visit most often to specifically dive with sharks?

Site 1 Site 3

Site 2 Site 4

206 Appendix VIII

10. In your opinion, which shark species are most likely to attract tourists to the Maldives?

......

Thank you that was the first part. Now, I would like to ask you about your companies’ attitude

towards shark fishing and the shark sanctuary of the Maldives.

B) Dive tourism and the shark sanctuary

11. Did you know that the Maldives have been declared a shark sanctuary?

Yes / No

Explanation: In 2010, the Ministry of Fisheries and Agriculture (MoFA) announced an

indefinite total ban on all types of shark fishing in the whole Maldivian waters (MoFA Iu’laan:

30- D2/29/2010 /32). Additionally in 2011, the Ministry of Housing and Environment (MoHE)

announced a ban on capture, keeping, trade and harming of sharks under the Environment

Protection and Preservation Act (EPPA).

12. Have you ever observed shark fishing activities during your dive operations, or around the

resort? Yes / No

12.a. [Only ask if ‘yes’] Are they usually foreign vessels or local fishing vessels who you have

seen fishing for sharks? Local / Foreign / Both equally

207 Appendix VIII

12.b. [Only ask if ‘yes’] How often do you see shark fishing activities during your dive operations, or around the resort?

O I used to see it but not anymore O I didn’t use to see that but now I do O I observed it approximately ...... times during my entire career (.... years of career) O Frequency ...... times a month / year

13. Do you take any action after you observe shark fishing activities or the trade with shark products? This can be anything at all. I am interested in how you react.

O I ignore it O I tell my colleagues about it O I complain to the fishermen/ salesman about it O I report it to the police or authorities in charge O I create evidence of the incident (e.g. pictures, videos or notes of details) O Others ......

14. If you have you ever reported any illegal (shark) fishing activity or illegal trade in shark products to the authorities? What were your reasons for doing so?

O I reported it to the police or authorities in charge because ......

O I used to report these incidences but gave up on it because ...... O Others ......

15. If you have you never reported any illegal (shark) fishing activity or illegal trade in shark products to the authorities? What were your reasons for not doing so?

O I wanted to report it but didn’t know how to do it O I don’t think that reporting illegal fishing would make a difference O Others ......

16. Is this company involved in any social initiatives that are associated with shark conservation

(e.g. organize or participate in educational programmes or invest in communal infrastructure)?

O Training of local people from the Maldives:

Activity Yes/No Comments

208 Appendix VIII

Dive guide/ Master/ Instructor

Boating

Administration

Seller

Others O Other educational programmes O Investment in communal infrastructure O Others ......

17. Does this company support any research project or scientific programs (other than the present one)? Yes / No

O Sharks count O Whale shark project O Coral reef restoration O Manta ray project O Marine turtle project O Others ......

18. Have you heard of the shark trust fund of the Maldives? Yes / No

Explanation: In 2010, MoFA opened a Shark Trust Fund and asked the tourism industry to contribute for the fund to compensate and facilitate alternative income generating ways for shark fishermen.

19. Has this company participated in a compensation scheme (such as the shark trust fund) of shark fishermen after the establishment of the shark sanctuary? Yes / No

Name of the programme ......

209 Appendix VIII

20. What are your reasons for engaging in any of the initiatives that improve shark conservation

(e.g. participation in research projects, social programmes, compensation scheme, reporting illegal fishing activities)?

O Financial reasons ...... O Moral reasons ...... O Ecological reasons ...... O Political reasons ...... O Others ......

In this last part of the survey, I would like to ask you some questions about the service and running costs of this company. This information will be used to estimate the socio-economic value of sharks for the dive tourist industry in the Maldives.

21. What hinders you in engaging in any of the initiatives that improve shark conservation (e.g. participation in research projects, social programmes, compensation scheme, reporting illegal fishing activities)?

O Financial reasons ...... O Moral reasons ...... O Ecological reasons ...... O Political reasons ...... O Others ......

210 Appendix VIII

22. What reasons would motivate you to engage in more activities that support shark conservation in the Maldives? Please rank the following 7 reasons in their importance for your motivation from 1 (most important) to 7 (least important).

Incentives Rank Comments

If that would bring me more revenues

If the relationship to authorities and the community improved

If that would make the marine environment/ shark populations healthier

If more dive operators were doing the same/ if I was part of a collaboration between dive operators

If there was more illegal fishing present

If shark populations were reducing

If that would create more jobs

C) Diving Expenses

23. How many dives does this company make on a usual day trip? ...... dives

24. What is the price for a day trip that your company charges per day?

Flat rate: (USD/MVR) ...... per day

25. Additional charges (e.g. equipment, nitrox, night dives):

(USD/MVR) ...... per day

(USD/MVR) ...... per day

26. Does your business offer dives as part of package tours/dive packages? Yes / No

27. What percentage of the tourists diving with your company purchase dive packages? ...... %

28. Could you give me the following details of the dive package(s) you offer?

211 Appendix VIII

Package Cost Days Dives/ Accom.(single/ Meals Number of (USD/MVR) day twin/triple room) included people or %

1.

2.

3.

29. Could you estimate the percentage of the companies’ revenue from dive operations that is spent on (1) operating costs, (2) wages, (3) licenses and other running costs?

Running costs Percent of total revenue

Operating costs (e.g. fuel, boat, equipment and rent)

Wages/salaries of hired labour

Governmental licenses/fees

Others:

That’s it! Thank you very much for participating in this survey. Your answers are really helpful and your time is much appreciated.

D) Follow-up and Comments

30. Would you be interested in staying informed about this project, and/or would you be willing to participate in future follow-ups of this research?

O Yes, I would like to be updated on the progress of the research project O Yes, I am available for possible future questions of this research project O No thanks

30.a. If yes, please indicate your name and e-mail address

Name ...... E-mail ......

31. Do you have any other concerns or comments about the shark diving tourism in the

Maldives that we have not yet discussed? …......

32. Do you have any other comments on this survey that I didn’t ask you about?

...... 212 Appendix IX

APPENDIX IX. MARKET VALUE ANALYSIS FOR CHAPTER 4

Table ix.i: Variables used for the estimation of the socio-economic value of shark diving

Variables Description Data source

Number of Number of dive tourists visiting the Ministry of Tourism, D divers per year Maldives per year 2016 (a), (b)

Total number of tourists visiting the Ministry of Tourism, TA Tourist arrivals Maldives per year 2016 (b)

Fraction of dive tourist arrivals that Shark diver SDF would not return to the Maldives if Tourist survey fraction there were no sharks

TD Trip days Average number of trip days Tourist survey

DD Diving days Average number of diving days Tourist survey

DTC Dive trip costs Expenses from tourists on diving Tourist survey

Expenses from tourists on domestic Local travel LTC transportation, accommodation, diving, Tourist survey costs food and beverages, and extras

Total travel Total travel expenses (include local TTC Tourist survey costs travel costs plus international air fares)

Business tax BT Business tax rate Dive operator survey rate

Number of Number of employees that work in the E Dive operator survey employees dive industry

Average salary of employees that work W Wages Dive operator survey in the diving industry

Ministry of Tourism, DO Dive operators Number of registered dive operators 2016 (c)

213 Appendix IX

Table ix.ii: Formulas used for the estimation of the socio-economic value of shark diving

Code Description Formula

DBRD Dive business revenues from divers DTC x D x DD

DBRSD Dive business revenues from shark divers DBRD x SDF

LBRD Local business revenues from divers LTC x D x DD

LBRSD Local business revenues from shark divers BRD x SDF

TBRD Total business revenues from divers TTC x D x DD

TBRSD Total business revenues from shark divers TBRD x SDF

TRSD Business tax revenues from shark diving DBRSD x BT + (6 x D x SDF x DD)

DCI = Direct community income as salaries from DCI E x DO x W + D diving (E x DO x W )

Direct community income as salaries from DCI DCI x SDF SD shark diving D

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