THE ECONOMICS OF SHARK DIVING TOURISM 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 Western Australia
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 Malaysia 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 sharks 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 Semporna 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, hotels, restaurants, domestic transport, and souvenir 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 travel 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 current 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
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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 shark sanctuary (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
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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 Sabah, 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.
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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
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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 (Philippines), 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 (Indonesia) 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 tiger shark 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 whale shark 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 solutions 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 Reef Marine Reserve: a marine tourism project in Fiji involving local communities’, Journal of Sustainable Tourism, 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 ecotourism: 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 Aliwal Shoal 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, Micronesia, 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 the Bahamas, 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, Kapalai, Mataking and Ligitan) and the Tun Sakaran Marine Park as popular diving destinations. According to the local diving industry, the main drawcard for divers to visit the area is the island of Sipadan, 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 pressure 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.
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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, resorts, 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.
43
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). 47 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. 48 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. 50 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. 51 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. 52 Chapter 2 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 Resort, 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 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. 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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. 55 Chapter 2 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. 56 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. 57 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 58 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). 59 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. 60 C h a p t e r 3 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. 61 C h a p t e r 3 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 vacations 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 62 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. souvenirs 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; 63 C h a p t e r 3 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 − 훽 푝 + 훽 푖푛푐 + 훽 푠푐 + 훽 X +⋯+ 훽 푋 (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. 64 C h a p t e r 3 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 65 C h a p t e r 3