Stephen F. Austin State University SFA ScholarWorks Electronic Theses and Dissertations 12-2020 An Economic Analysis of Using Retired Vessels to Create Artificial Reefs in Costa Rica Josué González Stephen F. Austin State University, [email protected] Follow this and additional works at: https://scholarworks.sfasu.edu/etds Part of the Advertising and Promotion Management Commons, Agricultural and Resource Economics Commons, Biodiversity Commons, Growth and Development Commons, Marine Biology Commons, Public Economics Commons, and the Tourism and Travel Commons Tell us how this article helped you. Repository Citation González, Josué, "An Economic Analysis of Using Retired Vessels to Create Artificial Reefs in Costa Rica" (2020). Electronic Theses and Dissertations. 349. https://scholarworks.sfasu.edu/etds/349 This Thesis is brought to you for free and open access by SFA ScholarWorks. It has been accepted for inclusion in Electronic Theses and Dissertations by an authorized administrator of SFA ScholarWorks. For more information, please contact [email protected]. An Economic Analysis of Using Retired Vessels to Create Artificial Reefs in Costa Rica Creative Commons License This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License. This thesis is available at SFA ScholarWorks: https://scholarworks.sfasu.edu/etds/349 AN ECONOMIC ANALYSIS OF USING RETIRED VESSELS TO CREATE ARTIFICIAL REEFS IN COSTA RICA By JOSUÉ GONZÁLEZ, Bachelor of Science Presented to the Faculty of the Graduate School of Stephen F. Austin State University In Partial Fulfillment Of the Requirements For the Degree of Master of Science STEPHEN F. AUSTIN STATE UNIVERSITY December 2020 AN ECONOMIC ANALYSIS OF USING RETIRED VESSELS TO CREATE ARTIFICIAL REEFS IN COSTA RICA By JOSUÉ GONZÁLEZ, Bachelor of Science APPROVED: Dr. Gary Kronrad, Committee Chair Dr. Pat Stephens Williams, Committee Member Dr. Daniel Scognamillo, Committee Member Pauline M. Sampson, Ph.D. Dean of Research and Graduate Studies ABSTRACT The Republic of Costa Rica is a Central American country with only 0.03% of the world’s landmass, but 5% of the world’s biodiversity, making it a leading ecotourism destination. Ecotourism is one of the main sources of revenue for the country, but the degradation of coastal reefs has resulted in a significant loss of financial income for developing areas. As a result, many of these areas are searching for methods to revert the degradation of coral reefs. Artificial reefs play an important ecological role in marine ecosystems due to their complexity and size. They help in the development of communities of fish, corals, and other aquatic fauna, as well as positively influencing the economy of the surrounding communities by bringing in revenue. Not only will the creation of artificial reefs assist Costa Rica’s conservation efforts by creating habitat for corals and game fish, but also it will improve its economic development by creating more jobs and potentially increasing the number of tourists visiting the country each year. The goal of this study was to calculate the number of anglers and/or scuba divers that need to visit Costa Rica in order to break-even on the costs of creating an artificial reef by sinking retired naval vessels, approximately $8.6 million. The analysis assumed that all funding to convert the costs of developing the artificial reef would come from the 13% sales tax revenue paid by i the additional anglers and scuba divers. The high and low seasons, high and low amenity costs, payback period, interest rates and the installment payment or capital recovery formula are several of the variables that were used to obtain the calculations in this study. Results show that, depending on the length of stay, the sales tax revenue collected from an additional 287 to 452 anglers or 303 to 476 scuba divers each year for 20 years during the high season would pay, with interest, for the creation of the reef. To pay for it in one year, Costa Rica would need 4,488 to 7,067 additional anglers or 4,742 to 7,443 scuba divers in a single year. To pay for the cost with interest for the creation of the reef with taxes collected during the low season, and depending on the length of stay, the country would need 1,475 to 2,458 additional anglers or 1,503 to 2,505 additional scuba divers each year for 20 years. If Costa Rica wanted to pay for it in one year during the low season, they would need to attract between 23,076 to 38,460 additional anglers or 23,515 to 39,192 additional scuba divers in a single year. These results show that the creation of an artificial reef using a retired vessel has great potential in Costa Rica when comparing the results to the 283,790 anglers that visited Costa Rica in 2008. ii ACKNOWLEDGEMENTS I would like to thank my family and friends for their continued support throughout this lengthy process. I give my most sincere thanks to my parents, Patricio and Ángeles González, who have completely supported me throughout my entire academic career with motivational words and prayers. I owe my academic success to their dedication, hard work, sleepless nights, and love. I am very blessed to have them as my parents. I would also like to thank Dr. Gary Kronrad for giving me the opportunity to pursue a master’s degree in forestry and helping me throughout the whole process. Additionally, I would like to thank Dr. Pat Stephens–Williams and Dr. Daniel Scognamillo for assisting me in the composition of this thesis. Lastly, I want to give my many thanks to Lindsey McIntyre for extensively helping me with editing this entire thesis. iii TABLE OF CONTENTS ABSTRACT ........................................................................................................... i ACKNOWLEDGEMENTS .................................................................................... iii TABLE OF CONTENTS .......................................................................................iv LIST OF FIGURES ...............................................................................................ix LIST OF TABLES ................................................................................................ x INTRODUCTION .................................................................................................. 1 GOAL ................................................................................................................... 5 LITERATURE REVIEW ........................................................................................ 6 Ecotourism in Costa Rica ................................................................................ 6 Conservation of Sea Turtles in Tortuguero National Park ............................... 9 Economic Impact of Tourism in Developing Countries .................................. 13 Economic and Social Impacts of Costa Rica’s Ecotourism Boom ................. 14 Ecosystem Services ...................................................................................... 16 Natural Coral Reef Status .............................................................................. 20 The History of Artificial Reefs ........................................................................ 21 iv The Ecosystem of an Artificial Reef .................................................................... 22 Artificial Reefs and their Environmental Benefits ........................................... 23 Artificial Reefs and their Economic Benefits .................................................. 24 Artificial Reefs as Recreational Scuba Diving Resources .............................. 25 The Texas Parks and Wildlife Department .................................................... 27 Ships as Artificial Reefs ................................................................................. 28 Preference of Vessels as Artificial Reefs ....................................................... 30 Artificial Reefs in Florida ................................................................................ 31 USNS General Hoyt S. Vandenberg (T-AGM-10) .......................................... 32 USS Oriskany (CV-34) .................................................................................. 33 USS Spiegel Grove (LSD-32) ........................................................................ 34 Coral Reef Status in Costa Rica .................................................................... 35 The Caribbean Coast .................................................................................... 35 The Pacific Coast .......................................................................................... 37 Policy Making in Costa Rica .......................................................................... 40 Artificial Reef Projects in Costa Rica ............................................................. 41 The Curu Artificial Reef Project ..................................................................... 42 v The Grupo ICE Artificial Reef Project ............................................................ 42 Condo Fish: The Playa Hermosa Artificial Reef Project ................................ 43 The Paquera Students Artificial Reef Project................................................. 43 The 1984 Nicoya Used – Tire Artificial Reef Project ...................................... 43 The Economic Benefits of Sport Fishing in Costa Rica ................................. 44 Artificial Reef Implementation Process .........................................................