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Visitors' Willingness to Pay for an Entrance

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Visitors' Willingness to Pay for an Entrance VISITORS’ WILLINGNESS TO PAY FOR AN ENTRANCE FEE: A CASE STUDY OF MARINE PARKS IN MALAYSIA SITI AZNOR AHMAD BEc (Hons) Universiti Utara Malaysia, Malaysia MA (Economics) University of Leeds, UK Submitted in fulfillment of the requirements for the Degree of Doctor of Philosophy Department of Economics Faculty of Law, Business and Social Science University of Glasgow April, 2009 ii ABSTRACT Marine Parks are established to protect an area of the sea zoned as a sanctuary for the protection of its marine eco-systems, especially coral reefs and its associated fauna and flora, like sea grass beds, mangroves and the sea shores. In Malaysia, there are 6 marine parks to-date. Ironically, the establishment of marine parks also attracts more tourists to the areas. For example, the number of visitors to Payar Marine Park increased tremendously from 3,668 visitors in 1990 to 133,775 visitors in 2002. Environmentalists and scientists have voiced concern that too many tourists have adverse effects on the coral reefs. This study estimates how much visitors are willing to pay for two separate issues; first, to reduce the damages due to crowding effect and second, to reduce the damages due to inland development, of three marine parks in Malaysia; Payar, Redang and Tioman Marine Park. The willingness-to-pay estimates were obtained from the respondents using the Contingent Valuation Method. A total of 650 questionnaires were distributed to the respondents. Then, half of the total respondents were asked to answer the crowding effect issue, and the other half was asked the inland development issue. For the crowding effect issue the respondents were presented with a hypothetical situation in which the park authority wanted to reduce the damage to the corals by limiting the number of visitors to half the number who came in 2000. The reduction in the total number of visitors is to be achieved by imposing an increased entrance fee. For the inland development issue, an increase in the entrance fee is intended for the authority to hire more people to monitor and enforce rules, to treat sewage and to implement coastal zone management and planning. Estimation was done using the double-bounded dichotomous choice method. The willingness to pay (WTP) per person per visit to moderate the environmental impact of inland development is RM23.79, which is lower than the WTP to reduce crowding, RM31.59. In addition, when both data were combined to estimate the differences between the WTP of foreign and local visitors, we found that the WTP of foreign visitors was much higher than the WTP of locals at RM39.11 and RM19.52, respectively. Analyses using the Individual Travel Cost Method gave quite poor results since two thirds of the visitors were first-timers. Therefore, consumer surplus cannot be obtained due to the insignificant result of the respondent’s total spending on the number of trips. However, using the Zonal Travel Cost Method (ZTCM), the average consumer surplus was found to be the same, RM1,000 for each park. The ZTCM was also used to calculate the elasticity of demand. The results for the three marine parks were found not to vary much, ranging between 1.07 and 1.36. iii TABLE OF CONTENTS Content Page Abstract …………………………………………………………………... ii Table of Contents ……………………………………………………....... iii List of Tables …………………………………………………………….. vi List of Figures …………………………………………………………..... viii Acknowledgement ……………………………………………………….. ix Declaration ……………………………………………………………….. x List of Abbreviations …………………………………………………….. xi Chapter 1: Introduction …………………………………………………... 1 1.1 Background ………………………………………………………....... 1 1.2 Marine Parks …………………………………………………………. 5 1.2.1 Marine Parks in Malaysia …………………………………........ 10 1.2.1.1 Payar Marine Park …………………………………........ 14 1.2.1.2 Redang Marine Park ……………………………………. 16 1.2.1.3 Tioman Marine Park ………………………………........ 18 1.3 Damage to Coral Reefs from Human Activity ……………………….. 20 1.4 Research Question ……………………………………………………. 27 Chapter 2: Revealed and Stated Preference Approaches to Environmental Valuation …………………………………................................ 34 2.1 Background …………………………………………………………... 34 2.2 Travel Cost Method ………………………………………………….. 41 2.2.1 Issues in Travel Cost Method …………………………………... 54 2.2.1.1 Type of Cost to be Included …………………………..... 54 2.2.1.2 Multi-Purpose Trips …………………………………..... 57 2.2.1.3 Time and Travel Cost …………………………………... 58 2.2.1.4 The Effect of Substitutes ……………………………...... 61 2.3 Contingent Valuation Method ………………………………………... 62 2.3.1 Property Rights ……………………………………………........ 63 2.3.2 Stages in Practical Application ……………………………........ 67 Stage 1 : Preparation ………………………………………........ 67 Stage 2 : Survey ………………………………………………... 70 Stage 3 : Calculation ………………………………………........ 71 Stage 4 : Estimation …………………………………………..... 74 Stage 5 : Aggregation and/or Disaggregation ………………….. 75 Stage 6 : Appraisal ……………………………………………... 77 2.3.3 Validity Test …………………………………………………….. 78 2.3.4 Biases in Contingent Valuation Method ………………………... 80 2.3.4.1 Strategic Bias ………………………………………........ 81 2.3.4.2 Information Effect (Bias) ……………………………….. 84 2.3.4.3 Part-Whole Bias ……………………………………........ 84 2.3.4.4 Interviewer Bias ……………………………………........ 86 2.3.4.5 Payment Vehicle Bias …………………………………... 86 2.3.4.6 Starting Point Bias …………………………………........ 87 iv 2.4 Choice Modelling …………………………………………………….. 90 2.5 Combining Revealed and Stated Preference Techniques …………….. 92 2.6 Conclusions …………………………………………………………... 93 Chapter 3: Past Studies Using the Travel Cost Method and Contingent Valuation Method in Developing Countries ………………….. 99 3.1 Introduction …………………………………………………………... 99 3.2 Past Studies …………………………………………………………... 100 3.3 Conclusions …………………………………………………………... 117 Chapter 4: Empirical Study of Marine Parks in Malaysia: Objectives and Methodology ………………………………………………….. 121 4.1 Objective ……………………………………………………………... 121 4.2 Methodology ………………………………………………………..... 122 4.2.1 Sample Size …………………………………………………….. 122 4.2.2 Survey Design and Data Collection …………………………..... 123 4.2.3 Method ………………………………………………………..... 134 4.2.3.1 Travel Cost Method …………………………………..... 134 4.2.3.1.1 Zonal Travel Cost Method …………………… 135 4.2.3.1.2 Individual Travel Cost Method ……………..... 143 4.2.3.2 Contingent Valuation Method ………………………….. 146 4.2.3.2.1 Single-Bounded Dichotomous Choice Model... 147 4.2.3.2.2 Double-Bounded Dichotomous Choice Model.. 150 Chapter 5: Descriptive Analysis …………………………………………. 155 5.1 Socio Economic Characteristics of Respondents …………………….. 155 5.1.1 Profiles of Respondents for Payar, Tioman and Redang ………. 155 5.1.2 Activity of Interest at Each Park ……………………………….. 158 5.2 Perception on Attributes ……………………………………………… 161 5.3 Trip Frequency ……………………………………………………….. 165 5.4 Bid Responses by Issues and by Locality ……………………………. 168 5.5 Discussions …………………………………………………………… 173 5.5.1 Profiles of Respondents for Payar, Tioman and Redang ………. 173 5.5.2 Activity of Interest ……………………………………………... 175 5.5.3 Perception on Attributes ……………………………………….. 176 Chapter 6: Econometric Analysis ………………………………………... 178 6.1 Results of Travel Cost Method Study ………………………………... 178 6.2 Results of Contingent Valuation Method Study ……………………... 190 6.2.1 Crowding in Marine Parks in Malaysia ……………………….. 192 6.2.2 Inland Development Issue in Marine Parks in Malaysia ……… 197 6.2.3 Foreign and Local Visitors to All Parks ………………………. 201 6.3 Discussions ………………………………………………………….. 209 Chapter 7: Conclusions and Recommendations ………………………….. 214 7.1 Conclusions …………………………………………………………... 214 7.2 Recommendations ……………………………………………………. 219 v Bibliography ……………………………………………………………… 226 Appendix Appendix 1: List of National Parks in Malaysia and summary of the attractions in the parks Appendix 2: Map of Marine Parks in Malaysia Appendix 3a: Questionnaire for Inland Development Issue Appendix 3b: Questionnaire for Crowding Issue Appendix 4: LIMDEP Program for Double-bounded CVM vi LIST OF TABLES Content Page 1.1 Top Ten Destinations Within Asia and the Pacific ………………………... 2 1.2 Number of Visitors to Payar Marine Park Center, 1990 – 2002 …………... 15 1.3 Number of Visitors to Redang Marine Park Center, 1990 – 2002 ………… 18 1.4 Number of Visitors to Tioman Marine Park Center, 1991 – 2002 ………... 20 1.5 Number of Visitors to Payar, Redang and Tioman Marine Parks, 1990 – 2002 ………………………………………………………………………. 29 1.6 Collections from Entrance Fee in Three Marine Parks in Malaysia, 1999 – 2003 ……………………………………………………………………….. 32 2.1 Disparities between WTP and WTA ………………………………………. 64 3.1 Valuations of Environmental Goods in Malaysia and South-East Asia …... 101 4.1 Sample Size for a Given Levels of Precision in CVM Surveys …………… 110 4.2 Number of Trips Made to Each Parks ……………………………………... 136 4.3.a Multiple Destinations for City Parks …………………………………….. 139 4.3.b Multiple Destinations for Regional Parks ……………………………….. 139 5.1 Respondents Characteristics of Each Park ………………………………… 156 5.2 Respondents’ Age, Education and Occupation by Origin ………………… 157 5.3 Respondents’ Activities Interest in Each Park …………………………….. 159 5.4 Perceptions of Respondents on Attributes of Each Park …………………... 162 5.5 Perceptions of Respondents on Attributes by Gender …………………….. 163 5.6 Perceptions of Respondents on Attributes by Origin ……………………… 164 5.7 Perception of Respondents on Crowds by Origin …………………………. 165 5.8 Perception of Respondents on Crowds by Park …………………………… 165 5.9 Number of Trips Taken Previously by Respondents to Each Park ………... 166 5.10 “Yes” Response to the First and Second Bid for Crowding Issue ……….
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