The Value of Diving and

the Impacts of Coral Bleaching in Palau

 

Tom Graham, Noah Idechong, Kristin Sherwood

Palau Conservation Society, PO Box 1811, Koror, Palau 96940

 

Abstract

 

Dive tourism is the most important industry in Palau, Micronesia.  Two hundred visiting scuba divers and snorkelers (together called “divers”) were interviewed in 1997 and 2000.  Contingent valuation questions, using a hypothetical permit fee as a proxy for net value, were used to estimate the net value to divers of their dive experiences.  The average willingness-to-pay (WTP) for a dive permit was US$34 among scuba divers and US$26 among snorkelers.  With 50,000 divers visiting Palau each year, these figures suggest an industry consumer surplus of about $1.6 million.  WTP statements were not very responsive to various contingency scenarios.  For example, 70% of the year-2000 respondents would not have been willing to pay more if the reefs of Palau were in better condition.  Fifty eight percent of the year-2000 respondents claimed knowledge of the coral bleaching event of 1998-1999 and 52% noticed its effects in Palau.  Among those that noticed, 42% said it had a “slightly negative” impact on their experience, 29% said the impact was “very negative,” and 16% said it had “no impact.”  The impact was significantly greater for return visitors than for first-time visitors.  The effects of the bleaching event appeared to also be reflected in comparisons of satisfaction scores between 1997 and 2000.  Average scores for the attributes “beauty/condition of corals,” the “number/diversity/appeal of fishes,” and “value of the dive experience” were significantly lower in 2000 than in 1997.  These and other findings are useful for policymaking, such as determining permit fee levels that would optimize the share of net value transferred from the consumers to the producers, the people of Palau.

 

1.  Introduction

 

The Republic of Palau in western Micronesia is a country of about 20,000 people.  Tourism is the most important economic sector, contributing about X percent of the country’s gross domestic product [ref].[1]  The visitation rate has, in recent years, been about 50,000 tourists per year, having increased rapidly in the last 20 years from only about X in 1980.  The main tourism markets are Japan, the USA, and in only the last five years, Taiwan.  About half of Palau’s tourists visit with the primary purpose of scuba diving.  Most of the remainder can be considered “general interest” tourists, but virtually all of them engage in marine recreational activities, including snorkeling, motorboat touring, kayaking, and fishing.  An area in the southern part of the country’s main archipelago, known as the “Rock Islands” or “southern lagoon,” is the focus of marine tourist activity (see map in Figure 1).  The Rock Islands themselves, numbering about X, are uplifted karstic limestone islands scattered through the shallow southern lagoon.  The configuration of islands in some places produces maze-like and very protected systems of marine waterways,


[Figure X.  Map of Palau]

 


including “marine lakes” that communicate with the lagoon only through narrow fissures.  With their protected waters, numerous narrow fringing and patch coral reefs, and secluded beaches, the Rock Islands are the main attraction for non-scuba diving tourists, as well as the most popular recreation area for residents and an important fishing ground for local fishermen.  The southern lagoon is about 500 km2 in size and is bounded on most sides by a barrier reef, on which most scuba diving takes place.  A single stretch of this reef of about X km in length, dominated by virtually vertical outside walls, attracts as much as 75 percent of the scuba diving activity in Palau.  Some of the dive sites along that stretch of reef are world-renowned and contribute to Palau’s reputation as one of the world’s leading scuba dive destinations.  For example, [ratings from Rodale’s…].

 

This paper reports on the results of a study initiated in 1997.  Through interviews with a number of local tour operators, dive guides, and visiting divers,[2] the objectives were to describe visitation and activity patterns, to assess visitor satisfaction, to identify changes in the marine environment—particularly at dive sites, and to identify problems and issues in the dive industry.

 

After completing a set of interviews in 1997, two events occurred that might have substantially impacted Palau’s tourism industry.  In late 1997, many Asian economies virtually collapsed.  At about the same time, the first effects of the 1997-1998 El Niño-southern oscillation (ENSO) event were being felt in the form of a drought.  By late 1998, the climate and oceans had swung from El Niño to La Niña conditions, with elevated sea levels that impacted lowland agriculture, and more dramatically, elevated sea surface temperatures that resulted in, or contributed to, the bleaching of a large number of hard and soft corals on Palau’s reefs.  [summary impacts from Yim’s report]  By early 1999 most affected corals had either recovered or died.

 

In mid-2000, the 1997 survey of visiting divers was repeated, but with the added objectives of assessing the value of diving to divers (translating satisfaction to value) and assessing the impacts of the coral bleaching event on satisfaction and value.

 

2.  Visitation patterns

 

Figure X shows the number of tourists visiting Palau each year from 1980 through 1999, by nationality.  It can be seen that the especially rapid increase in visitation from 1994 through 1997 and the subsequent rapid decline were mostly due to dramatic changes in the Taiwanese market segment.  The boom was coincident with the establishment in 1994 of direct flights between Taiwan and Palau, and the downturn was coincident with the Asian financial crisis.  Although Taiwan weathered the crisis relatively unscathed, the weakening of other Asian currencies made Asian vacation destinations such as Indonesia and Thailand more appealing relative to Palau, with its US currency.  Interestingly, visitation from Japan, the economy of which was strongly impacted by the financial crisis, remained fairly steady through this period, suggesting that Palau’s share of Japan’s tourist market is a relatively “high-end” segment and relatively invulnerable to volatility in the Japanese economy.  Because of the dramatic impacts of the Asian financial crisis on visitation to Palau, it is difficult to determine if and to what extent the coral


Figure X.  Annual visitation of tourists to Palau


 


bleaching event had an impact on visitation.  Any such impacts would have first been felt in 1999, and indeed, the drop from 1998 to 1999 was greater than the previous year’s drop.  Most of the drop was in the Taiwanese market.  There was no change in visitation by Japanese, a 16 percent decrease in visitation from the US, and a 26 percent decrease in visitation from “other” nations, including Europe and other Asian countries.  Like the Taiwanese segment, the drops for all other nationalities (or lack of increases) were probably due at least in part to alternative vacation destinations in Asia becoming inexpensive relative to Palau.  However, anecdotal information from dive operators that cater to US and European visitors suggest that the bleaching event also had an impact, if not a great one.  These operators received numerous inquiries from prospective customers about the impacts of the bleaching event on the condition of the reefs and the quality of diving.  A couple of the visiting divers interviewed in this study said that had they known about the effects of the bleaching event, they would not have visited.  In the end, it appears that visitation in 1999 was substantially, if not dramatically, negatively impacted by the coral bleaching event.  A reasonable conclusion is that the number of tourists in 1999 was probably as much as five percent and possibly as much as ten percent lower than it would have been had there been no coral bleaching event.

 

3.  The value of diving

 

Like coral reefs in general, and particularly those located near the Indo-Pacific center of marine biodiversity, the coral reefs of Palau provide value—both to local residents and to the world—through many uses and services, including food production, recreation, and biodiversity.  Another source of value that is especially important in Palau’s case is tourism, as Palau’s coral reefs are clearly the foundation of the country’s tourism industry, which is the mainstay of Palau’s economy.  The tourism value of Palau’s reefs is geographically very heterogeneous, with relatively small areas attracting large proportions of total tourism activity.

 

The net economic value of a resource, industry, or enterprise can be defined as the sum of producer surplus and consumer surplus.  Producer surplus is the net value that accrues to the producers (essentially profits, if purely a private sector enterprise).  In the case of Palau’s tourism industry, the producers are the business participants in Palau’s tourism industry.  In addition, the people of Palau can be considered producers, since they own the natural resources (e.g., coral reefs) that support the industry—they too have invested capital in the industry.  Consumer surplus is the net value that accrues to the consumers—in this case, visiting divers.  The net value to visitors of the act of diving in Palau is the total value enjoyed, net of the costs of diving (e.g., dive tour costs).  Like business profits, this net value can be positive or negative.  Unlike business profits, there are no explicit financial transactions that reveal per-capita consumer surplus, and it can only be estimated indirectly and generally with considerable unreliability.  It is also difficult to separate the benefits and costs of the diving experience from those of an entire vacation trip to Palau.

 

This study focused on measuring consumer surplus, with only minor attention paid to producer surplus.  Given that consumer surplus is the portion of total net value that leaves Palau, it might not be clear why it is important to measure.  First, it is likely to be a useful predictor of producer surplus.  If average visitor satisfaction or per-visitor net value have been found to decrease, it is likely that producer surplus has also decreased, either through a reduction in total visitation or through a decrease in the price that producers are able to charge.  Second, insofar as maximizing or optimizing producer surplus is an implied policy of Palau, consumer surplus provides useful information.  Average per-capita consumer surplus, and particularly the distribution of per-capita consumer surplus among all consumers, provides information about how to maximize the transfer of surplus from consumers to producers.  An increase in price, for example (either by industry or the public, such as through taxes or fees) could lead to either greater or smaller producer surplus, depending on the degree to which the total rate of visitation is impacted.  The people, through the levying of appropriate taxes on either the industry or the visitors can manipulate the total surplus, its distribution between producers and consumers, and among producers, its distribution between the industry and the public.

 

3.1  Producer surplus

 

No attempt was made to rigorously assess producer surplus in Palau’s dive industry.  However, in order to provide….[rough numbers on industry size and activity…]

 

3.2  Consumer surplus

 

In order to gauge the net value to visitors of their dive experience in Palau, the year-2000 respondents were asked how much they would be willing to pay for permission to dive in Palau.  The hypothetical permit would allow a visitor to dive for the duration of a visit to Palau.  A respondent’s willingness to pay for such a permit was elicited by first asking whether the respondent would be willing to pay $100.  The question was then repeated with the price raised or lowered, depending on the first response, until the highest willingness-to-pay was revealed.  The mean response for scuba divers was $34 and for snorkelers, $26, as shown in Table X.

Table X.  Willingness to pay for permission to dive in Palau (US$/visit)

 

Scuba divers

Snorkelers

All divers

mean

34

26

32

median

20

30

20

standard deviation

39

9

35

minimum

0

10

0

maximum

300

50

300

 

 

Although there was a difference of $8 between the mean responses of scuba divers and snorkelers, there was a high degree of variation among the responses of the scuba divers.  The difference between the two groups was consequently not statistically significant.  In fact, no attributes of the respondents were found to be significantly related to willingness-to-pay.  For example, in a general linear model with willingness-to-pay as the dependent variable, none of the factors or variables nationality, scuba v. snorkel, previous diving experience, age, or number of previous visits to Palau were found to be significant.

 

If it is assumed that these willingness-to-pay (WTP) responses do indeed reflect the net value enjoyed by the respondents,[3] then the product of the mean response and the annual number of visiting divers is equal to annual consumer surplus.  With about 25,000 scuba divers and 25,000 snorkelers visiting each year (and assuming a significant difference in WTP between the two groups), the total consumer surplus would be $850,000 for scuba divers and $650,000 for snorkelers, for a total of $1.5 million per year.[4]

 

The willingness-to-pay responses can be used to construct demand schedules for diving in Palau.  These schedules can be used to predict the impact of a given price, or permit fee, on visitation, on total fee revenues, on consumer surplus, and on producer surplus.  Such analysis can help optimize the fee level in terms of a given tourism policy, such as Palau’s policy to “attract high-return, low impact, quality travelers…” (PVA, 1999) and to keep the total visitation rate relatively low.  These analyses are not presented here, but one important difference between the responses of snorkelers and those of scuba divers is noted.  The demand curve for snorkelers was remarkably flat, indicating high elasticity—that is, that small increases in the fee would result in large decreases in visitation (or, to the extent that other activities are available, a shift to non-marine-based activities).  The curve for scuba divers was steeper, indicating that unlike the snorkeler population, at least a portion of the scuba diving population would be willing to pay quite high fees— among these respondents, as much as $300 per visit.

 

3.3  Diver satisfaction

 

Two hundred visiting divers (100 in each of 1997 and 2000) were asked to rate on a five-point scale their satisfaction with a variety of attributes associated with their diving experience in Palau.  In Figure X is the mean score for each attribute, along with an indication of the 95-percent confidence interval associated with the mean.

 

Figure X.  Mean satisfaction scores



There were numerous factors that may have influenced these scores.  Factors for which effects could be tested included year, primary activity (scuba versus snorkel), nationality, whether the diver was a first-time or return visitor, previous diving experience (expressed as the number of other countries in which the respondent had dived), the number of previous visits to Palau, and the age of the respondent.  To test for these effects for each scored attribute, a general linear model was applied that incorporated these four factors and three variables.  Table X summarizes the results, indicating for each attribute the factors and effects that were statistically significant and in which direction was the effect.

 


Table X.  Summary of satisfaction score effects

Satisfaction attribute

factors

quantitative variables

year

 

(2000)

primary activity

(snorkel)

nationality

return visitor?

(yes)

previous experience

no. Palau visits

age

overall dive experience

 

 

*

 

+

 

-

value

-

 

*

 

 

 

 

corals/reef

-

 

*

 

 

-

 

corals/reef (damage)

-

 

*

-

 

 

 

fishes

-

 

*

-

+

-

 

sharks

-

-

*

 

+

-

 

manta rays (00)

n/a

-

*

 

 

 

 

congestion (00)

n/a

 

*

 

 

 

 

dive locations (97)

n/a

 

 

 

 

 

 

dive guides (97)

n/a

 

 

 

 

 

 

boat crew and services (97)

n/a

 

 

 

 

 

 

instruction (97)

n/a

 

 

 

 

 

 

underwater photography (97)

n/a

 

 

 

 

 

 

rental equipment (97)

n/a

 

 

 

+

 

-

·         a blank cell indicates no significant effect.  Any of the symbols -, +, or * indicates a significant effect (at a 95% confidence level).  The notation “n/a” in the year column indicates that the attribute was not rated in both years.

·         For all factors and variables except nationality, the direction of the effect is indicated by “-“ or “+,” and for the factors, the basis of the direction is given in parentheses in the column heading.  For example, year and number of Palau visits had significant effects on corals/reef.  Scores were lower in 2000 than in 1997 and scores decreased with increasing number of Palau visits.

 

 

Of the fourteen attributes that were scored, only six were scored in both 1997 and 2000.  Of those, all but one had significant differences between the 1997 scores and the 2000 scores (after adjusting for the effects of the other six factors and variables that were included in the models).  These differences are illustrated in Figure X.  All five attributes, including …., had significantly lower mean scores in 2000 than in 1997.  Interestingly, however, the one attribute with no difference was overall dive experience, which was intended to be an attribute that collectively described all other attributes associated with the dive experience.  It is not clear why the scores for overall dive experience did not parallel the scores of some or all of the other five attributes.  It suggests that those five attributes did not, in fact, collectively “capture” overall dive experience—that is, that they collectively made up only a relatively minor portion of the overall dive experience.  Alternatively, it is possible that the respondents misinterpreted the intent of the attribute, overall dive experience.  For example, they may have instead tended to score their overall vacation experience.

 

Figure X.  Differences in satisfaction between 1997 and 2000


 

 

 


Notwithstanding the lack of a difference in overall dive experience between 1997 and 2000, there were large differences in mean scores between the two years for the other five attributes, particularly corals/reef, satisfaction of which was solicited through two different questions, the first of which asked about the reef in terms of its “health” and the second in terms of its “beauty/appeal.”  The difference in mean scores between 1997 and 2000 for the first corals/reef attribute was 1.2 points on a five-point scale, and for the second, 0.7 points.  The likelihood of these changes being related to the coral bleaching event will be discussed in Section X, along with an assessment of the impacts of the bleaching event not just on satisfaction, but on value, as well.

 

 

3.4  The relationship between satisfaction and value

 

The relationships between willingness-to-pay-to-dive and the scores for various attributes of the diving experience, as summarized in Section X, were examined.  Remarkably, none of the rated attributes, including overall dive experience, congestion, corals/reef, fishes, sharks, manta rays, or even value had a significant relationship with willingness-to-pay (F=1.13, p=0.39).  The lack of any relationships—especially with overall dive experience and value—suggests that willingness-to-pay-to-dive, as measured here, may not be a very accurate or useful measure of diver satisfaction or value.

 

[It may be that the use of a hypothetical permit fee as a proxy for net value was excessively confounding.  For example, the stated willingness-to-pay values may have reflected the respondents’ appreciation of permit systems more than they did diver satisfaction and net value enjoyed.]

 

The year-2000 visiting divers were also asked if and how their willingness-to-pay-to-dive would change under various hypothetical conditions of the attributes they had already rated.  For each of the attributes, two yes-no questions were asked.  For the attribute corals/reef, for example, they were asked whether or not they would be willing to pay more if the condition of the corals/reef were better than it actually was, and whether they would not be willing to pay as much as previously stated if the condition of the corals/reef were worse than it actually was.  Table X summarizes the results for each of six of the previously rated attributes.  The figure following the table illustrates the general relationship between WTP and the quality of a given attribute that is implied from each of the combinations of yes-no responses.

 

Table X.  Willingness-to-pay as a function of the quality of dive attributes

 

willing to pay more for better?

not willing to pay as much for worse?

Attribute

no

no

yes

no

no

yes

yes

yes

congestion

51

8

33

8

corals/reef

43

23

27

7

fishes

44

27

22

7

sharks

52

15

28

5

mantas

48

21

14

16

overall dive experience

 

32

 

40

 

18

 

10

 


 

 


In general, the number of no-no responses appears to have been remarkably high.  Even in the case of overall dive experience, which, not surprisingly, had the lower percentage of no-no responses, fully 32 percent of respondents indicated that their WTP would not change with either increases or decreases in the quality of their overall dive experience (no-no responses).  And only 10 percent of respondents said that their WTP would change under both increases and decreases in the quality of their overall dive experience (yes-yes responses), actually less than the number of such responses for manta rays.

 

Another set of questions was used to quantify the responsiveness of the divers’ WTP under each of various hypothetical scenarios (for each attribute, the respondents were asked to state their WTP under each of the five points on the five-point scale, which ranged from “very poor” to “excellent”).  Only a few respondents were able to provide thorough quantitative responses, so it was difficult to reach any conclusions.  However, after applying a number of simplifying assumptions, including one that the relationship between WTP and the quality of each attribute (treating the five-point scale as integral data) was linear, some somewhat speculative relationships can be seen.  First, there were no apparent differences among the six attributes in the slopes of WTP-on-attribute-quality.  Second, there was a high degree of variation among respondents—remember, for example, that virtually half the respondents claimed that their WTP would not change under any hypothetical changes in any of the attributes but overall dive experience.  Finally, the average slopes appeared to be roughly $3 per point, meaning that the average WTP would increase $3 for every increase of one point in attribute quality, or $12 across the entire five-point scale.  If this relationship is applied to the difference between 1997 and 2000 of 1.2 points in the attribute corals/reef, it would imply a difference of almost $4 in per-capita net value, or a loss of about 10 percent.  It should be remembered, however, that there was no difference between 1997 and 2000 in overall dive experience, which is somewhat at odds with the relationship between WTP and the quality of corals/reef.  In short, it is not entirely clear that WTP in 1997 (which was not measured) was less than in 2000.

 

 

3.5  The relationship between value and the condition of the reef

 

The coral bleaching event had dramatic impacts on the amount, types, and distribution of hard and soft corals living on Palau’s reefs [details…].

 

In general, areas popular for scuba diving were hit harder than areas popular for snorkeling.  As an indication of what visiting divers encountered before and after the bleaching event, we can consider the case of Ngerumekaol, a dive site along the southwest portion of the barrier reef that includes both the steep outer face of the reef and a partial channel cutting through the reef that features more gradually sloping relief.  Coral surveys in 1992 and in 1999 indicated that live hard coral cover in the area decreased from about 50 percent to about 25 percent during that time, and virtually all of that decrease can be attributed to the 1998 bleaching event.  If we consider Ngerumekaol to be a typical dive site, then the relationship between percent live coral cover and quality of corals/reef, as rated by visiting divers for Palau as a whole, can be illustrated as in Figure X.  The slope of mean-satisfaction-score-on-percent-live-coral-cover was about 0.05, meaning that for every decrease of 10 percent in live coral cover, there was a half-point drop in satisfaction with corals/reef.  Applying the (somewhat uncertain) relationship between WTP and corals/reef of $3 per point, then the slope of WTP-on-percent-live-coral-cover was about $0.15/percent, indicating a drop in WTP of $1.50 for every 10 percent decrease in live coral cover.  This relationship is of course relevant not just to the impacts of coral bleaching, but to degradation of the reef from any cause, including diving itself.  It should be emphasized that these data were purely observational and that no cause-and-effect relationships can be directly deduced from them, and further, that the assumptions used in these last couple of steps were so simplifying that the results should be treated as being little more than illustrative.



Figure X.  Satisfaction as a function of live coral cover

 

 

 


5.  The impacts of the bleaching event on diver satisfaction and value

 

The dramatic bio-physical impacts of the coral bleaching event are obvious candidates for the cause of the differences in satisfaction scores between 1997 and 2000 for the attribute corals/reef (and perhaps fishes, sharks, and value, as well) described in Section 3.3.  To provide more direct evidence of any cause-and-effect relationship between those impacts and diver satisfaction, the year-2000 respondents were asked a series of questions about their knowledge and notice of the coral bleaching event (no mention of the bleaching event was made until all the previously discussed questions were answered).  The results are summarized in Table X.

 

Table X.  Knowledge and notice of coral bleaching

 

Know corals are living?

Familiar with the effect of corals being bleached and killed?

Know that much of Palau’s corals recently killed by bleaching event?

Notice any effects of that bleaching and killing event?

yes (%)

95

81

59

53

unsure (%)

4

3

6

9

no (%)

1

16

35

38

no. of cases

98

99

99

99

 

 

Ninety-five percent of respondents claimed knowledge that corals are living organisms.  Eighty-one percent said they were familiar with the effect of corals being bleached and sometimes subsequently dying.  Fifty-nine percent knew about the bleaching event in Palau and virtually all of those noticed the effects.


There were a few factors that had significant effects on the responses for some of these questions, including nationality, scuba-versus-snorkel, and return-versus-first-time-visitor.  For example, significantly greater proportions of both scuba divers and return visitors were familiar with the effect of coral bleaching and knew about the recent bleaching event in Palau.  However, there were no significant differences between these groups regarding the last question—whether or not the effects of the bleaching event were noticed.

 

The 59 respondents who knew about or noticed the bleaching event were asked how such knowledge or notice affected their diving experience.  The results are shown in Table X.

 

Table X.  Impact of the bleaching event on overall dive experience

Degree of impact

Percent of responses

improved it

2

no impact

27

slightly negative

42

very negative

29

ruined it

0

Total

100

·         n=59—only those that had knowledge or noticed it.

 

 

Seventy-one percent of the respondents described the impact as either “slightly” or “very” negative.  Although only 29 percent cited either no impact or an improvement, that percentage would be 58 if the entire original sample is accounted for—that is, if the 41 percent of all respondents that did not know about or notice the effects of the bleaching are included under the “no impact” category.

 

 

6.  Conclusions

 

The responses of divers’ regarding their knowledge and notice of the impacts of coral bleaching, along with the changes in satisfaction scores between 1997 and 2000, show that visiting divers clearly discerned differences in the condition of the reef, and further, that those differences were reflected in expressions of their satisfaction.  However, there was somewhat contradictory evidence regarding to what degree diver satisfaction with the condition of the reef was related to overall satisfaction and value.  The responses in Table X suggest that there is a moderately strong link between the condition of the reef and overall diver satisfaction.  The satisfaction scores discussed in Section 3.3, however, showed that scores for the attribute corals/reef did not translate into any difference in scores for overall dive experience.  Even lacking a strong link there, however, 57 percent of respondents stated that their net value (expressed as WTP) was dependent on the condition of the corals and reef.

 

The coral bleaching event resulted in detectable but apparently minor impacts on the net value of diving in Palau.  The visitation rate in 1999 was probably five or as much as ten percent less than it would have been without the bleaching event, with proportional impacts on both consumer surplus and producer surplus.  Per-visitor net value appears to have also been impacted, but apparently by no more than ten percent.  The two effects together, therefore, may have caused negative impacts to total producer surplus of as much as ten percent and to total consumer surplus as much as 20 percent.

 

This study looked at impacts only one year after the bleaching event.  No analysis was made of possible future impacts.  Processes that will be important in the next decade or two include the gradual breakdown of the physical structure of the reef as dead corals gradually erode and collapse, and the recovery of coral community through fragmentation and recruitment of new coral colonies.  Of course there is also the question of whether and how often similar events will occur in the future.

 

Tourism is clearly very valuable to the Palauan economy, and much of that value can be traced to the coral reefs that support the tourism industry.  However, unlike other values derived from coral reefs, including food production and biodiversity, tourism is not necessarily—at least in Palau's case—dependent on healthy reefs.  The industry could probably shift with little problem from reliance on marine-based activities to reliance on activities that are less dependent on healthy reefs, such as golf and gambling.  In other words, although there are tens of thousands of people that currently visit Palau every year because of its healthy coral reefs, there are hundreds of thousands of others that would visit Palau even lacking those qualities.  This course is not being suggested as good policy for Palau, it is mentioned only to emphasize that the tourism value of Palau’s coral reefs, and perhaps coral reefs in general, should not be overestimated.  If it is worth investing in the future of coral reefs, the values that justify such intervention might lie in other areas more than in tourism.

 

[Because the bleaching event provided an opportunity to examine the relationship between reef condition and diver satisfaction, the findings of this study are also useful for applying information about the impacts of diving itself--that is, for managing diving and dive sites, such as trying to optimize visitation and dive rates.]



[1] Inputs of foreign aid, especially from the US through the Compact of Free Association negotiated between the two countries upon Palau’s independence in 1994, are equally or more important than tourism, but tourism is clearly the most important industry in the private sector.

[2] The term “diver” refers here to both scuba divers and snorkelers, and since virtually all tourists to Palau do one or the other, virtually all are “divers.”

[3] In fact, this is quite a large leap, as there are undoubtedly some important biases in the approach.  Among them: 1) respondents may be reluctant to reveal their entire net value, because of a risk of losing it (e.g., through levying of permit fees); 2) the responses may reflect the respondents’ opinions about permits and government intervention more than their net enjoyment; 3) the approach tends to preclude the possibility of respondents’ expressing net values that are less than zero.

[4] While the permit was treated as a hypothetical device in the survey, the local government with jurisdiction over most of the Rock Islands/southern lagoon area, Koror State, does, in fact, charge $15 per visiting diver per month.  The fee, therefore, results in the transfer of $750,000 per year, or half of the otherwise available consumer surplus, to the people of Koror.  For the sake of simplicity, however, in the remainder of this paper these values will be treated as if there were no such fee, and that entire willingness-to-pay, as measured here, is taken home by the visitors.