Valuing Beach Quality: An Introduction to the Economics of Beach Use

Transcription

1 International Workshop on Beach EcoWatch Program Willy s Beach Resort, Boracay Island, Philippines May 31-June 2, 2004 Valuing Beach Quality: An Introduction to the Economics of Beach Use Lead Economist The World Bank 1

2 Presentation Outline Introduction Valuing beaches Accounting for value Policy options for conservation and sustainable use Final remarks 2

3 Copacabana Beach in

4 Copacabana Beach Now 4

5 Beach Stress Factors Sewage Cities and coastal constructions Tourist resorts Agricultural run-offs Overuse and congestion 5

6 The Environmental Economist The Welfare Issue Transformation of Physical and Biological Processes Into Economic and Social Processes Public goods Externalities: Intra-generations Inter-generations Information: Asymmetric information: adverse selection and moral hazard 6

7 Valuing Beaches 7

8 Economic Value of Beaches Use Values Direct value Indirect value Option value Fisheries Water transport Genetic resources Tourism and recreation Human habitat Information Shoreline, riverbank stabilization Waste storage and recycling Biodiversity maintenance Provision of migration habitat Nursery/breeding grounds for animals Coral reef maintenance and protection Prevention of saline water intrusion Future direct and indirect values Non-use values Cultural, aesthetic Spiritual, religious Global existence value 8

9 Accounting for Values 9

10 Economic Valuation Methods Methods: Net Present Value Cost-Benefit Analysis Revealed Preferences Ex: Hedonic Prices, Travel costs Stated Preferences Ex: Contingent Valuation, Conjoint Analysis Benefit Transfer Function: Lead to better decisions via: Information gathering and dissemination Facilitate priority setting, and Allow for capture and allocation of benefits via better incentives design 10

11 Valuing Water: Examples Location Study / Method Values (US $) Notes Value of (Surface) Water Given an Improvement in Water Quality Philippines Choe, et al. (1996) / CVM Swim able quality of water = 12.96/HH/year Mean avg income = 204 / month CVM + TCM measures use and non-use values, rivers and sea in Davao. Thailand Tapvong, et al. (1999) / CVM Quality of water that is: Fishable 30.75/person/year Swim able 35.39/person/year Chao Phraya River, Bangkok Metropolitan Area Latvia Ready, et al. (2002) / CVM Swim able quality of water = 6.48/person/year Annualized local cost of the planned sewer system investments = 21.6/person/year; more than the average WTP 11

12 Valuing Beaches: Examples Location Study / Method Values (US $) Notes UK Georgiu et. al. (1998) / CVM Great Yarmouth and Lowestoft (15 22 per resid / year ) Perceived reduction of illness (GY failed EU dir). Later study for tougher standards (32 60 / hh / year) UK Day et. al. (2001) / CVM (9 20 /hh/year) Ayr and Irvine (Scotland) UK Hanley et. al. (forthcoming)/ CB - TC (0.80 / trip or / person, aggregate benefit 2 million / year) Combines revealed and stated preferences Lebanon WB (forthcoming) / Opportunity cost 110 million / year Cost of environmental degradation linked to tourism and recreation. 12

13 Valuing Beaches: Examples Non-use values: New Jersey beaches users = US $ 15.1 / year and for non-users = US $ 9.26 / year; Portuguese Coastal Natural Area US $ 40 to US $ 51 / respondent. Beaches have values even for non-users. 13

14 Valuing Integrated Coastal Zone Management: Examples Jamaica Portland Blight Protected Area: NPV terms over 25 years at 10 % discount rate - incremental costs = US$ 19.2 million, Incremental benefits = US $ 41 million to US $ 53 million depending on the tourism scenario. 14

15 Policy Options for Beach Sustainable Use and Conservation: The Traditional View Regulators Government The Law Beaches Regulatory Standards (CAC) Market-based Instruments Legal Liability 15

16 Policy Options for Beach Sustainable Use and Conservation: New Elements Markets Consumers Beaches Reputation Profit Investors 16

17 Public Disclosure Reduces the information asymmetry: society is better informed about the environmental condition of the beach. Minimizes risks and related costs (e.g. travel costs) as well as adverse selection costs to communities in good beaches. Mitigates public concerns and improves public perception of the beaches. 17

18 Typology and Features of Public Information Disclosure Programs: Type I: Compliance with pollution standards Environmental pollution standards exist Legislative system supports monitoring and compares it with the benchmarks Benchmarks can be easily understood by the general public. Type II: Performance ranking of entities Pollution standards and benchmarks may or may not be legally binding Ranking allows public to compare entities to each other Through public pressure, the comparison may lead to improvement. 18

19 Examples of Public Disclosure Programs Type I: Blue Flag Certification Water transparency and water color Information on environmental conditions Environmental education activities Emergency plan available Type II: Toxics Release Inventory (USA) Type of pollutant and location of polluter Inter-temporal comparison among polluters regardless of benchmark Entities are easily comparable Higher-ranked entities are likely to have better access to capital markets 19

20 Information Mechanisms Public right to know, but even if they know Information can be costly to gather and disseminate, and may be misinterpreted. Perceived water quality versus actual water quality Beach pollution tends to be regressive (as most pollutions) It may be helpful to increase pressure on specific polluters, but It may need to be viewed in the context of a Cost Benefit Analysis. 20

21 Policy Options for Beach Sustainable Use and Conservation: New Elements Civil Society Beaches Participation Information Citizens NGOs 21

22 The New Model: Multiple Agents, Multiple Incentives State Markets Civil Society 22

23 Final Remarks Valuing beaches facilitates priority setting and cost benefit analysis of remediation. While information provision should be part of a policy, it is hardly a solution on its own. In fact, different pollution sources may require different approaches (e.g. sewage from households, coastal degradation) and in different areas. Certain types of marine pollution may even have positive impacts (UK North Umbria example, Jakarta bay example, etc.) As indicated by most cases, success or attempts to achieve it are based on an integrated approach with several actors and objectives. 23

24 Total Economic Value and Economic Valuation Methods 24

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