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An Example of Economic Valuation Using a Stated Preference Technique: An Application to Dive Tourism in Bonaire

George R. Parsons University of Delaware March 9, 2004


Purpose, Method, and Application 

Purpose: Value changes in the coral reef environment to scuba divers in the Bonaire Marine Park

Method of Analysis: Willingness-to-Pay (“conjoint”) mail survey of divers having purchased a tag in the past year

Application: Damage assessment, sustainable financing, and benefit-cost analysis.


Outline      

Background on Bonaire Steps in the Analysis Discuss Field Trip The Survey Valuation Estimates Applications   

Valuing the environment for damage assessment Funding the marine park Benefit-cost analysis


Bonaire in the Caribbean 

Click to edit Master text styles

 Second level  Third level  Fourth level  Fifth level


Bonaire

Part of the Netherlands Click to edit Master text styles Antilles

 Second level Third level  Fourth level  Fifth level

 Economy focused on (dive) tourism  About 28,000 divers per year


Bonaire Marine Park  Marine Park encircles the island  Managed by STINAPA Bonaire  Established in 1979  Actively managed since 1991  First marine park to be completely self-financing


Steps in the Analysis       

Define resource to value Design survey Visit Bonaire – pretest survey, visit park officials, develop sampling strategy Mail survey Compile survey data Analyze results Apply


The Survey    

Introductory questions Trip questions Willingness to pay (conjoint) questions Demographic questions Comments: Pre-tested, 5-10 minutes long, 2 mailings and 1 reminder, 75% response rate (211/280), inexpensive


Sample Demographics (n = 211) Mean Individual Characteristics Male divers

57.0%

Age (years)

44.6

Number of years diving

10.3

Number of lifetime dives

114

Household income

$101,800

Number of lifetime trips to Bonaire

2.08

Mean Trip Characteristics Per-person trip cost

$1,736

Length of trip (nights)

7.87

Primary purpose of trip was diving

92.3%

Number of dives on last trip to Bonaire

13.6


Conjoint Question Prelude Now we are going to ask you three hypothetical questions. Each has the same format. Suppose that prior to your most recent trip to Bonaire you were offered two dive vacations: one to Bonaire and another to a similar Caribbean Island. Assume that the cost of each vacation, excluding the dive tag, was the same as the cost of your recent Bonaire trip. Suppose that the two destinations varied only by dive tag price, average coral cover, diversity of fish and coral species, and average visibility. If the characteristics of each island varied as shown below ‌


Options Site Attribute Bonaire

Other Island

Dive Tag Price

$100

$0

Coral Cover

40%

5%

250 fish 60 corals

50 fish 10 corals

25 Surveys Contained: $25, $500 Species Diversity

Neither

Stay Home Or Take Some Other Dive or Non-dive Vacation

50 Surveys Contained: $50, $100, $150, $200, $250 Visibility 100 ft 20ft

‌.. which option would you have chosen? (check one)  Bonaire  Other Island  Neither


Options Site Attribute

Dive Tag Price Coral Cover

Bonaire Species Diversity

Bonaire

Other Island

$100

$0

40%

Poor

250 fish 60 corals

$100

$0

40%

5%100 ft

Visibility

Neither

5%

Medium Stay HomeGood 50 fish 10 corals

$0

20%

Would Not Choose Either of These Two

20ft

$0

30%

250 fish

50 fish

125 fish

225 fish

100ft

20ft

50ft

75ft

….. which option would you choose? (check one)  Bonaire  Other Island  Neither – Stay Home


Conjoint Results: High-quality option Choice vs. Price for "High-Quality Option" Question

% of Divers

100 75 50 25 0 0

100

200 300 Price ($) Bonaire Other

400

500 Neither


Conjoint Results:

Moderate-quality option

Choice vs. Price for "Moderate-Quality Option" Question

% of Divers

100 75 50 25 0 0

100 Bonaire

200 300 Price ($) Other

400

500 Neither


Conjoint Results:

Poor-quality option

Choice vs. Price for "Poor-Quality Option" Question

% of Divers

100 75 50 25 0 0

100

200 300 Price ($) Bonaire

Other

400

500 Neither


Valuation Results Mean Loss Per Person for a Decline in Reef Quality at Bonaire

Falling to This Level:

Basic Model

Good

$29.23

Moderate

$127.55

Poor

$178.62


Valuation Results continued Aggregate losses in annual and present value terms using Model 2

Falling to This Level:

Annual Aggregate

PV (r=.03)

Good

$0.8 million

$27.0 million

Moderate

$3.8 million

$125.0 million

Poor

$5.2 million

$173.4 million


Applications

Damage Assessment    

Simulate model to mimic damages from an actual spill or pollution event Approximate as closely as possible Often involve transfers and use of more than one study Incomplete values


Applications continued ……

Sustainable Financing   

Is a higher dive tag price feasible for raising park revenue? What are the implications of a higher price? Use the results to

derive revenues at different price levels

show the implications for dive tourism

show the implications for local economy


Applications continued ……

Benefit-Cost Analysis   

Marine park Controlling land-based pollution Other preservation practices


an example of economic valuation using a stated preference technique: an application to dive tour...