UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS RECREATIONAL VALUES OF CORAL REEFS AT CU LAO CHAM ISLANDS, VIETNAM MASTER OF ARTS IN DEVELOPMENT ECONOMICS By NGUYEN HUU DANG TRINH Academic Supervisor PHAM KHANH NAM HCM city, January 2014 TIEU LUAN MOI download : skknchat@gmail.com CERTIFICATION ―I certify that the substance of this thesis has not already been submitted for any degree and has not been currently submitted for any other degree. I certify that to the best of my knowledge and help received in preparing this thesis and all used sources have acknowledged in this dissertation‖. NGUYEN HUU DANG TRINH Date: 5th January, 2015 i TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGE Upon completing this thesis, I have received a great deal of encouragement and support from many people. To complete this study, I am really happy to get a big encouragement and support from many people.
First of all, I am very grateful to Dr. Pham Khanh Nam, my academic supervisor for his useful help, support and professional advice. My gratefulness is also extended to all of my lecturers and staff of the Vietnam- Netherlands Program, particularly, Assoc. Nguyen Trong Hoai and Dr.
Pham Khanh Nam for their assistance during the first days when I started this program. During the period of my study, family is a great encouragement that I would like to express my deep thank to them. The last person who I also want to give a big thank is my close friend, Ms Huynh Thi Na. She is a good companion giving me the ideas for my tendency.
Finally, I would like to thank all my friends and other people who have had any help and support for my study but are not above-mentioned. ii TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT This thesis used the travel cost approach to estimate the recreational values of coral reefs at Cham islands, Vietnam. Since the on-site data has addressed some problems such as non-negative integers, zero-truncated, endogenously stratified and over- dispersion, two count models: the Poisson model and negative binomial model have been used in the study. From the econometric results, we can clearly see that the negative binomial models produced better results than the corresponding Poisson models.
It is also indicated that the gross Consumer surplus of total visitors to Cham islands in 2013 is about VND 292.75 billion and the gross WTP of total visitors is about VND 7. Key words: coral reefs, recreational value, total economic value, travel cost method, count model. iii TIEU LUAN MOI download : skknchat@gmail.com CONTENTS CHAPTER 1: INTRODUCTION. Scope of the study.
Structure of the study. 3 CHAPTER 2: LITERATURE REVIEWS. Total economic value of the environmental resources. Environmental valuation methods.
The Travel cost method. The concept of Consumer surplus. The Travel cost method. Problems with the Travel cost method.
Empirical literature review. 15 CHAPTER 3: DATA AND RESEARCH METHODOLOGY. Overview of Hoi An. Brief of forming history of Hoi An.
Evaluation of Tourism resources of Hoi An:. Overview of Cham islands. Biodiversity in Cham islands. Cu Lao Cham marine protected area.
26 iv TIEU LUAN MOI download : skknchat@gmail. Variables and expected signs. Computing total travel cost. 32 CHAPTER 4: RESEARCH RESULTS AND DISCUSSION.
Computation of consumer surplus (CS) estimates. Estimation and suggestion of an entrance fee. 45 CHAPTER 5: CONCLUSION AND RECOMMENDATION. Suggestions for future researches .56 Appendix A: Literature reviews worksheet.
56 Appendix B: Descriptive statistic. 60 Appendix C: Econometric results. 61 Appendix D: Multicollinearity test. 63 Appendix E: Sample profile.
75 v TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 1: Number of environmental valuation methods. 7 Table 2: Definition of variables in the data set. 27 Table 3: Expected sign of the coefficients in the model. 29 Table 4: Means of transportation to Cham islands.
30 Table 5: Distribution of gender and marital status of respondents. 37 Table 6: Distribution of age of respondents. 38 Table 7: Education level of respondents. 38 Table 8: Monthly income of respondents in million VND.
39 Table 9: Number of visitors in a group. 39 Table 10: Number of trips in 5 years. 40 Table 11: Visitor‘s total travel cost (million VND). 40 Table 12: Number of nights travel at Cham islands.
41 Table 13: Empirical results of count models. 42 Table 14: Estimated Consumer surplus. 44 Table 15: WTP the fees to visit Cham islands. 45 Table 16: WTP the fees to visit Cham islands.
46 vi TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 1: Total economic value of environmental assets. 4 Figure 2: Travel cost demand function and Consumer Surplus. 8 Figure 3: Conceptual framework. 15 Figure 4: Cu Lao Cham MPA zoning plan map.
25 Figure 5: Histogram of the number of trips in 5 years to Cham islands. 33 vii TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: INTRODUCTION 1. Problem statements According to Ceasar ed al (2000), coral reefs is one of the most productive, diverse, and attractive ecosystems. Not only plays an important role for marine life, coral reefs also provides a valuable range of benefits for mankind such as: Physical structure services: by reducing the speed and strengthen of the currents and waves, coral reefs protect our coasts; biotic and economic services: many species of fish use coral reefs as their shelter and the places to have babies; biogeochemical services: the existence of coral control the amount of carbon dioxide in the ocean environment… Cu Lao Cham, is a small group of eight islands located, which is 19km offshore from Hoi An city, in the eastern part of Quang Nam Province, central Vietnam.
Cu Lao Cham Marine Protected Area was established in December 2005 with the support from the Danish Government and recognized as World Biosphere Reserve by UNESCO in 2009. Cu Lao Cham is famous by wonderful coral reefs that bring many benefits such as fish habitat, beach protection, fishery and recreation. In recent years, the local economy that is supported by tourism to coral reefs has been greatly improved. However, the threat to coral reefs is also accompanied by tourism growth.
According to Department of Commerce and Tourism of Hoi An, the number of tourists visiting Cu Lao Cham surpassed 190,000 in 2013, and to transport those visitors required about 13,000 turns of high-speed canoe, equivalent to 480.000 liters of gasoline consumed and exhausted directly into the sea. In addition, the coral reefs are also destroyed by tourism activities such as swimming, diving, scuba and garbage of visitors as well as residents. Therefore, the local government needs to keep the balance between tourism development and coral reefs conservation. There were some researches showing relation between tourism development and coral reefs conservation at Bolinao Philippine (Ahmed et al, 2007), Great Barrier Reef- 1 TIEU LUAN MOI download : skknchat@gmail.com Australia (Carr and Mendelsohn, 2003), or Hon Mun MPA – Vietnam (Nam et al, 2005)… Ahmed et al.
(2007) showed that making sure healthy coral reefs can create potential revenues for a sustained period of time. Carr and Mendelsohn (2003) emphasized the importance of conservation policies to protect coral reef systems when these resources were worth from USD 18 to 40 billion for Australia. In Vietnam, the study of Nam et al. (2005) concluded that a management of coral reefs could provide higher benefits than a ―no management‖ scenario.
Among the benefits to local economy as well as threats to coral reefs from tourism, there is a need for research on estimating the recreational value of coral reefs at Cu Lao Cham islands so that policy- makers could figure out the damage if the coral reefs disappear. And in order to avoid that worst case happen, the conservation policies to protect coral reefs at Cu Lao Cham islands need to be warranted and should be supported. Valuation all economic benefits provided by the coral reefs is very difficult because they have a wide range of value uses and most economic values associated with the coral reefs must be estimated using non-market methods. Therefore, this study just focuses on measuring the recreational value of coral reefs at Cu Lao Cham islands by using travel cost approach.
Research objectives The goals of this study are to measure the annual recreational value of the coral reefs at Cu Lao Cham islands for the purpose of improving the awareness of local communities and governments in exploitation and protection of coral reefs ecosystem. Research questions The study tries to address the following questions: - What are the key determinants of recreational demand for the coral reefs at Cham islands? 2 TIEU LUAN MOI download : skknchat@gmail.com - How much is the annual recreational value of the coral reefs at Cham islands? 1. Scope of the study This study limits itself to the estimation of the recreational value of the Cham islands. Other values such as the value of commercial fishing or the value of seaport are not taken into consideration.
Granted that the value of the Cham islands lies beyond recreation, it demands much more time and financial resources to carry out a study which will capture the other benefits of the islands. These time and material resources could not have been incorporated into the framework of this study. Therefore, a broader study will be well suited to capture all these values. It is also worth noting that the study is anchored on information obtained from onsite visitors from April to August 2013.
This therefore means that results might be different if information is obtained in different time periods such as December or winter periods which are off-periods for visitors. Structure of the study The following section of this thesis is organized as follows. Chapter 2 discusses the literature review of the total economic value and the travel cost model. Chapter 3 presents the data and methodology research.
Chapter 4 describes the results obtained from count data models and discussion and Chapter 5 is conclusion. 3 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 2: LITERATURE REVIEWS This chapter presents four main parts. First of all, it introduces the definition of total economic value of the environmental resources. Secondly, it presents the theoretical generations of environmental valuation methods.
Thirdly, it focuses on the travel cost method. Finally, it summarizes existing empirical researches. Total economic value of the environmental resources The total economic value of an ecosystem is given by the sum of all the goods and services it provides (Ceasar, 2000). An overview, the economists distinguish between two categories of economic value related to an environmental resource: use values and non-use values (Ceasar, 2000; Munasinghe, 1992; Spurgeon, 1992; Philcox, 2007).
Total economic value = Use values + Non-use values Figure 1: Total economic value of environmental assets Total economic value Use value Non-Use value Direct use Indirect Option Bequest Existence value use value value value value Output that can Functional Future direct an Value of leaving Value from be consumed benefits indirect use use and non-use knowledge of directly values values for offspring continued existence Food Ecological Biodiversity Habitats Habitats Biomass functions Conserved Irreversible Endangered Storm protection changes Recreation habitats species Health 4 Decreasing ―tangibility‖ of value to individuals TIEU LUAN Source: MOI Munasinghe download : skknchat@gmail.com (1992) Use values are separated into direct use values, indirect use values, and option values. Non-use values come from both bequest values and from existence use values. Figure 1 presents the subdivision of the total economic value. Use value is the benefits derived from the use of resources in practice.