ESTIMATING TOTAL ECONOMIC VALUE (TEV) OF LABUAN MARINE PARK ESTIMATING TOTAL ECONOMIC VALUE (TEV) OF LABUAN MARINE PARK Assoc. Prof. Dr. Rasid Mail Kamarul Mizal Marzuki Roslinah Mahmud Dayangku Aslinah Abdul Rahim Assoc. Prof. Dr. Rasid Mail Kamarul Mizal Marzuki Roslinah Mahmud Dayangku Aslinah Abdul Rahim
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ESTIMATING TOTAL
ECONOMIC VALUE (TEV) OF
LABUAN MARINE PARK
ESTIMATING TOTAL
ECONOMIC VALUE (TEV) OF
LABUAN MARINE PARK
Assoc. Prof. Dr. Rasid Mail
Kamarul Mizal Marzuki
Roslinah Mahmud
Dayangku Aslinah Abdul Rahim
Assoc. Prof. Dr. Rasid Mail
Kamarul Mizal Marzuki
Roslinah Mahmud
Dayangku Aslinah Abdul Rahim
INTRODUCTION INTRODUCTION
• A major challenge in integrated marine planning is conflict between competing objectives - economic development & environmental protection.
• Economic valuation studies highlight the monetary values of coral reefs and help to reflect the true value of the related environmental attributes.
• The economic benefits generated by the marine environment can be best understood by the concept of total economic value, which sums all different types of values generated by an asset to provide a comprehensive measure of value.
• The total economic value (TEV) concept is an important component of economic valuation. It incorporates the range of environmental benefits offered by natural resources.
STUDY GOALSTUDY GOAL
‘to calculate the economic values of coral reefs
and how this information can be used to
improve planning and management by ensuring
the sustainability of Labuan Marine Park (LMP)’
STUDY OBJECTIVESSTUDY OBJECTIVES
• To explore areas that contribute to economic
value of the Labuan Marine Park;
• To quantitatively estimate the economic and
financial value of recreational activities in the
LMP;
• To estimate the consumers’ willingness to
pay (WTP) for improved coral reef quality at
LMP;
• To use these values to determine the
entrance fee for visiting the reef sites at
LMP; and
• To help enhance scientific and technological
knowledge, educational, social, cultural and
aesthetic values of marine biodiversity.
SCOPE OF STUDYSCOPE OF STUDY
• Identifying a structure and elements for the
assessment of Total Economic Value (TEV)
framework;
• Reviewing existing sources of information to
support the TEV framework including secondary
information and primary data.
• Collecting a baseline and relevant information
through visitor within the assessment framework;
• Analysing the data by calculating/estimating Total
Economic Value based on the combination of
financial and economic value;
• Proposing potential options and strategies for
planning and management of Labuan Marine Park
based on finding from analysis and calculation of
Total Economic Value (TEV).
METHODOLOGYMETHODOLOGY
RESEARCH FRAMEWORK • This study utilized the Total Economic Value (TEV) as a framework this
concept is an important component of economic valuation. • TEV incorporates the range of environmental benefits offered by
natural resources. • Basically, TEV model categorized all the elements under two main
component; use value and non-use value. • The TEV concept applied here is based on the coral reef ecosystem of
Pulau Payar Marine Park, adapted from Spurgeon and Aylward (1992) and Munasinghe and Lutz (1993) as illustrated in the figure 3.0.
METHODOLOGYMETHODOLOGY
RESEARCH FRAMEWORK
METHODOLOGYMETHODOLOGY
RESEARCH VARIABLE
TEV is based on the theory that environmental assets or
resources give rise to a range of economic values. These
values are:
• Direct use value - the contribution an environmental
asset makes directly to current production or
consumption (e.g. fisheries & tourism related)
• Indirect use value - the benefits derived from
functional services that the environment provides to
support current production and consumption (e.g.
biological support to fisheries provided by coral reefs).
• Non-use values include the premium that consumers
are willing to pay to ensure that an asset will always be
available in the future, even if it is currently unused.
METHODOLOGYMETHODOLOGY
COMPONENTS SUB-
COMPONENTS
TYPES OF BENEFIT/COST SOURCE OF DATA VALUATION
TECHNIQUE
Use Value
Direct Uses
Extractive
Capture Fisheries
LKIM
Production/Market
Valuation
Non-Extractive
Tourism/Recreation
Research/Education
(through research grant)
Aesthetic (including coral
mining)
DMPM, Labuan
Corporation, MOTOUR
Empirical Study
(Secondary data on market prices for coral reef)
Benefit Transfer
Approach
Indirect Uses Physical Protection to:
Coastal Protection
Global Life Support
Carbon sequestration
Secondary data based on
empirical study
Secondary data based on
empirical study
Benefit Transfer
Approach
Benefit Transfer
Approach
Non-Use Value Bequest Value Questionnaire
Survey in Labuan Marine
Park & Labuan Jetty
Terminal
WTP
METHODOLOGYMETHODOLOGY
RESEARCH DESIGN
• This research applied a mixed-method approach as
the study aimed to understand efforts that drive the
Labuan Marine Park towards sustainability and
greater competiveness.
RESEARCH INSTRUMENT
• The survey questionnaire is a survey instrument that
sets out a number of questions to elicit the monetary
value of a change in a non-market good.
• Questionnaire for this research has been designed to
• Labuan has attracted a total of some 832,000 visitors or tourists from domestic and
international during the 2011 financial year (this amount given by Labuan Corporation,
2012).
• Total revenues in services sector including tourism – RM 1,718,000.00 to Labuan GDP
which is the consumer surplus for Labuan. This study used 10% per year (RM171,
800) as a basis in estimating the contribution percentage of Labuan Marin Park
towards the total contribution of tourism industries for the whole Labuan islands.
METHODOLOGYMETHODOLOGY
DATA COLLECTION
COMPONENT OF TEV TAMAN LAUT LABUAN
3. Research and Education Cost (-)
Data: Jabatan Taman Laut Malaysia (Perbelanjaan 2012) – RM158,500 (2012)
4. Value of Aesthetics
* Elements of Value of Aesthetics : confined to coral reef, reef fish values including dead coral
* Estimations: normal average density of coral reef fish population inside the Labuan Marine Park
20,000kg per kilometer square* the sea zone in the protected area (ocean area of Kuraman island only - 4km2)*
minimum average market price for reef fishes RM30/kg
dead coral will be used in coral mining value
Source: David Lee, online newspaper Sabah, Sunday 9 august 2009 – Sabah Case of mining coral
RM300 per tan * 40 000 tan per acre (estimation only half from offshore Kuraman got dead coral for mining)* 2.6
acre
METHODOLOGYMETHODOLOGY
DATA COLLECTION
COMPONENT OF TEV TAMAN LAUT LABUAN
5. Value of Coastal Protection
Using : Benefit Transfer method
for an estimated 0.1 km2 only of coral coverage in Labuan Marine parks* the average value of
coastal protection provided by reefs was at USD 210, 000 per km2 of reef per year.
Source : Economic value of coral reefs in Solomon Islands:
Case-study findings from coral trade and non-coral trade communities: Albert, J.A.1, Trinidad,
A.2, Cabral, R. and Boso, D.1 (2010)
The total economic value (TEV) indicates that coral reefs was estimated at SBD $1.2 to $4.3
million (US $100,000 to $420,000) per km² reef per year in direct, indirect (through coastal
protection) and non-use value.
METHODOLOGYMETHODOLOGY
DATA COLLECTION
COMPONENT OF TEV TAMAN LAUT LABUAN
6. Value of Carbon Sequestration
Using : Benefit Transfer method
Considering the benefit of carbon sequestrated by coral reef which is valued
at USD 2,700 (RM8,498.25) per hectare per year (Emerton & Kekulandala,
2003). – Source Study on Pulau Payar Marine Park.
Estimation of width of coral coverage (10 km per square)* RM8,498.25
* Estimated that 1 km per square of coral reef will capture carbon up to 10 km
per square)
METHODOLOGYMETHODOLOGY
DATA COLLECTION
COMPONENT OF TEV TAMAN LAUT LABUAN
7. Value of Bequest value
Definition : peoples‘ willingness to pay to retain or improve an environmental
amenity or to prevent its loss.
On average, the overall willingness to pay, meant to conserve for future
generations or equates the future value of the current system, was
RM416,000 (this amount is only based on number of estimated visitors (5%
from the total of visitor to Labuan 2011) and the willingness to pay of
respondents). This study only uses the result of willingness to pay of RM10.00
in general.
5% from the total of visitor to Labuan 2011* RM10.00
METHODOLOGYMETHODOLOGY
ANALYSIS & SYNTHESIS
The tool used to analyze the data is SPSS 18 and applied descriptive
analysis in presenting the information.
TEV Mathematical Model
For the TEV, this study employed TEV mathematical model that concentrate
on the cost and benefit analysis which took in account the gross benefits,
cost, discount rate and number of years that significantly explained the
areas of study. The mathematical equation can be seen as follows:
METHODOLOGYMETHODOLOGY
TEV Mathematical Model Suppose we want to value the gross economic benefits arising from the use of a natural resource, such as a coral reef. By discounting all future values to the present, using an appropriate discount rate, we would obtain what is known as the Present Value (NPV) of the resource.
NPV = net present value
B =gross annual economic benefits, over n years, at a discount rate of i
i= discount rate
C = cost per year
n = number of years that we are interested
METHODOLOGYMETHODOLOGY
VALUATION TECHNIQUES
NO. VALUATION
TECHNIQUES
DESCRIPTION
1. Production Approach • Estimated the value of each variables obtained from an ecosystem by subtracting all costs associated with the production of goods (or services) using market prices from the total revenue obtained.
2. Benefit Transfer
Approach
• An application to a set of data developed for addressing one particular environmental or natural resource valuation question to another context.
• This approach used to determine values by estimating values of non-market natural resources and services. manner based on the similar geographic area.
3. Willingness to Pay • Contingent valuation method (CVM) is a survey method using questionnaire-based approach that is deliberated to estimate the economic value of non-market goods.
• Willingness to Pay (WTP) is one of the most important concepts in CVM. WTP is the maximum quantity consumers are ready to pay for a good or service.
STUDY FINDINGSSTUDY FINDINGS
DEMOGRAPHIC BACKGROUND Socio-demographic
Characteristic Respondent (%)
Gender Male 60.0 Female 40.0 Age 20 – 29 years old 20.0 30 – 39 years old 40.0
40– 49 years old 20.0 >50 years old 20.0
Nationality Malaysia 80.0 Other countries 20.0 Education Level