The Recreational Benefits of Coral Reefs: 1 A Case Study of Pulau Payar Marine Park, Kedah, Malaysia Yeo, B.H.2 Abstract Coral reefs are increasingly recognized as valuable assets in terms of supporting local economies, maintaining national heritage and conserving global biodiversity. Nevertheless, coral reefs are under pressure from a number of threats. In response, resources are being committed to address and minimize the impacts of these pressures on the reefs. Economic valuation studies highlight the monetary values of coral reefs and help to reflect the true value of the related environmental attributes. In so doing they provide important information about sustainable resource use and management. A case study based on Pulau Payar Marine Park, Kedah, Malaysia, estimated the recreational benefits of the coral reefs at that location. It involved a contingent valuation (CV) study using both face-to-face interviews and self-administrative questionnaires. The willingness to pay (WTP) to access the marine park of visitors to marine park was elicited. In practice, the respondents were asked whether or not they would visit the marine park if an entry fee were charged and what their WTP would be in terms of an entry fee. The study found that 91 per cent of respondents would accept an entrance fee. The average WTP was estimated at RM$16.00 (US$4.20). In terms of the tourist numbers recorded during the year of the study, this estimate reflects a potential recreational value of the reefs in the park in the order of RM$1.48 million (US$390,000) per year. This estimate provides an important indication as to the value of recreational benefits from the coral reefs in Pulau Payar Marine Park. Introduction on exploring win-win situations that balance the conservation of natural resources with their Protected areas are increasingly recognized for the potential to generate economic benefits. myriad of benefits that they provide. In marine Nevertheless, the increasing global tourism parks, coral reef ecosystems harbor diverse marine demand for natural area experiences (ecotourism), resources, such as colorful reef fishes and accompanied by increasing natural resource invertebrate and algal species. The uniqueness of scarcity, pose new challenges in terms of coral reef ecosystems makes them a prime management and policy issues. attraction for recreation and nature-based tourism. Coral reefs also perform significant The system of marine parks in Malaysia was ecological functions, such as providing nursery established in 1989 in recognition of the potential grounds for fish, protecting coastlines, and benefits of marine resource protection. However, storing carbon. in order to effectively manage marine parks and provide assured protection, adequate financial In view of these important values of protected resources are needed to enhance institutional areas, it is crucial to strike a balance between strengths and human capacity, provide proper economic development and environmental infrastructure and maintain facilities. With protection. Fortunately, there is growing emphasis pressing social and economic priorities, Govern- 1Study undertaken as partial fulfilment of the MSc. course in Environmental and Resource Economics (September 1998), University College London, U.K. Support from the Department of Fisheries, and funding from the World Wide Fund for Nature (WWF) Malaysia are gratefully acknowledged. 2 World Wide Fund for Nature (WWF) Malaysia 49, Jalan SS23/15, Taman SEA, Petaling Jaya, 47301, Selangor, Malaysia. WorldFish Center | Economic Valuation and Policy Priorities for Sustainable Management of Coral Reefs The Recreational Benefits of Coral Reefs: 108 A Case Study of Pulau Payar Marine Park, Kedah, Malaysia 109 ment funds for nature conservation are limited. Economic valuation In view of this, options to complement existing Government funding of marine park management Economic values refer to how much a particular need to be explored. good or service is worth to people, and is reflected in their willingness to pay (WTP) a monetary In the past, decisions on natural resource use and price. In the context of this paper, the economic management have been based on traditional benefits of marine parks are “priced” by attaching economic theory, in which only market costs and monetary values to their attributes. This differs benefits are considered. Under this system, from conventional practice whereby natural natural resources are deemed as free and not resources are considered to be free. Such economic accounted for in decision-making processes. valuation contributes towards informed decision- Valuation of non-marketed goods, in this case, making by helping reflect the true value of the protected areas, can help provide a step towards natural resource, while also raising awareness of better-informed decision-making. This requires the importance of the resource. evaluating natural resources in monetary terms. The total economic value (TEV) concept is an The main objective of this paper is to present the important component of economic valuation. It results and lessons learned from an economic incorporates the range of environmental benefits valuation case study of Pulau Payar Marine Park offered by natural resources. The TEV concept has that used the contingent valuation method been presented by a number of authors (Pearce (CVM). The study concentrated on the values of and Turner 1990; Aylward and Barbier 1992; coral reefs in terms of recreational benefits. In this Munasinghe and Lutz 1993). Munasinghe and paper, the concept of economic valuation is Lutz (1993) present an overview of the concept presented, followed by a brief description of the by providing a table of use and non-use benefits. study site and the methodological framework. The empirical results are then discussed and The TEV concept applied here is based on the policy implications explored before conclusions coral reef ecosystem of Pulau Payar Marine Park, are drawn. The results provide preliminary adapted from Spurgeon and Aylward (1992) and findings supporting policy research focusing on Munasinghe and Lutz (1993) and illustrated in the development of effective pricing strategies. the figure below. Total Economic Value Use values* Non-use values Direct uses Indirect uses Existence values Extractive: Biological support to: Endangered species Capture fisheries Fisheries Charismatic species Turtles Threatened reef habitat Sea birds Cherished “reefscapes” Non-extractive: Physical protection to: Tourism Ecosystems Recreation Landforms Research Navigation Education Coastal extension Aesthetic Global life support: Calcium store Carbon store Decreasing “tangibility” of value to individuals * Use values also include option values that reflect a premium or discount on direct and indirect use values in the presence of uncertainty. Source: Adapted from Spurgeon et. al. (1992) and Munasinghe and Lutz (1993). Figure 1. Total economic value concept applied to Pulau Payar Marine Park WorldFish Center | Economic Valuation and Policy Priorities for Sustainable Management of Coral Reefs The Recreational Benefits of Coral Reefs: 108 A Case Study of Pulau Payar Marine Park, Kedah, Malaysia 109 Use values can be divided into direct use values preserve a resource for future use instead of using and indirect use values. it at the present time. For example, coral reefs may have yet-to-be-discovered important medicinal Direct use values depend directly on resources for properties and ecological functions. The option outputs and services. Direct use values are further of preserving these resources could potentially be divided into extractive and non-extractive uses. In critical to – and thus have huge value to – human this case, extractive use values include benefits life in the future. Existence value is derived from from capture fisheries. While, under national the knowledge that a particular natural resource legislation, no fishing is permitted within two or endangered animal is preserved. For example, nautical miles of the marine park, capture an individual may never see coral reef fish, but fisheries are included here, as fishers are able to may derive satisfaction from the knowledge that catch fish by casting their nets just outside this coral reef fish exist. Bequest value is derived from radius and schools of fish often move outside the the desire to pass on value to future generations. coral area. All three of these values are intangible and difficult to value. Nevertheless, the concept of TEV Non-extractive direct use values include benefits as discussed above is important for illuminating from recreation and ecotourism, research and the benefits that can be derived and that can help education. The value of ecotourism and recreation in decision-making. is partly reflected in the revenue they generate. However, the extra benefit from tourism in terms Study site of consumer surplus (CS) – the difference between what people would have been willing to The Pulau Payar Marine Park includes four small pay for the experience and what they did pay – is islands, of which Pulau Payar is the largest and not reflected. In an example, Hundloe (1990) the main tourist area. These islands and found that people were willing to pay AU$5 surrounding waters constitute one of the few million above and beyond what they already pay coral reef areas found off the west coast of for reef activities on Australia’s Great Barrier Reef.3 Peninsular Malaysia that is established for tourists. In other words the CS was