Recreational values of coral reefs at cu lao cham islands, vietnam

iii ABSTRACT This thesis used the travel cost approach to estimate the recreational values of coral reefs at Cham islands, Vietnam.. Key words: coral reefs, recreational value, total ec

HO CHI MINH CITY VIETNAM

THE HAGUE 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

Vietnam-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

iii

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 7.12 billion

Key words: coral reefs, recreational value, total economic value, travel cost method,

count model

.

iv

CONTENTS

CHAPTER 1: INTRODUCTION 1

1.1 Problem statements 1

1.2 Research objectives 2

1.3 Research questions 2

1.4 Scope of the study 3

1.5 Structure of the study 3

CHAPTER 2: LITERATURE REVIEWS 4

2.1 Total economic value of the environmental resources 4

2.2 Environmental valuation methods 6

2.3 The Travel cost method 8

2.3.1 The concept of Consumer surplus 8

2.3.2 The Travel cost method 9

2.3.3 Theoretical framework 10

2.3.4 Problems with the Travel cost method 12

2.4 Empirical literature review 12

2.5 Conceptual framework 15

CHAPTER 3: DATA AND RESEARCH METHODOLOGY 16

3.1 Overview of Hoi An 16

3.1.1 Brief of forming history of Hoi An 16

3.1.2 Evaluation of Tourism resources of Hoi An: 18

3.2 Overview of Cham islands 19

3.2.1 Biodiversity in Cham islands 20

3.2.2 Cu Lao Cham marine protected area 22

3.3 Data collection 25

3.3.1 Survey design 25

3.3.2 Sample design 26

v

3.3.3 Variables and expected signs 27

3.4 Methodology 29

3.4.1 Computing total travel cost 29

3.4.2 Econometric models 32

CHAPTER 4: RESEARCH RESULTS AND DISCUSSION 37

4.1 Descriptive Statistics 37

4.2 Econometric results 41

4.3 Computation of consumer surplus (CS) estimates 44

4.4 Estimation and suggestion of an entrance fee 45

CHAPTER 5: CONCLUSION AND RECOMMENDATION 48

5.1 Main findings 48

5.2 Policy implications 49

5.3 Research limitations 49

5.4 Suggestions for future researches 50

REFERENCES 51

APPENDIXES 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 63

Appendix F: Questionnaire 75

vi

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

vii

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

1

CHAPTER 1: INTRODUCTION1.1 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-

2

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

1.2 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

1.3 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?

3

- How much is the annual recreational value of the coral reefs at Cham islands?

1.4 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

1.5 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

4

 Habitats

 Endangered species

Total economic value

 Habitats

 Irreversible changes

 Biodiversity

 Conserved habitats

 Ecological functions

 Storm protection

Direct use

value

Indirect use value

Option value

Bequest value

Existence value

Output that can

be consumed

directly

Functional benefits

Future direct an indirect use values

Value of leaving use and non-use values for offspring

Value from knowledge of continued existence

Decreasing ―tangibility‖ of value to individuals

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

2.1 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

5

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 Sometimes, it

can also be understood as personal values associated with consuming directly or indirectly services provided by natural resources Use value is formed from actual use

of environmental assets In fact it includes:

Direct use value of environmental resources is the benefit that people derive from their actual use of environmental resources and can be divided into two types are consumptive use and non-consumptive use For example, the direct use values of coral reefs include consumptive use as fishery and coral mining, and non-consumptive use as scuba diving and recreation

Indirect use value of environmental resources is indirect benefits obtained from ecosystems The indirect use values of coral reefs could be the basic function of the environment that supports indirectly for economic activities of human such

as storm protection, carbon absorption, or food chain, etc

Option value of environmental resources is the values that people obtain from environmental goods and services in the future use although they do not use them currently In case of are creation area, people would be willing to make a payment to preserve the area in order to maintain the option to visit it in the future However, in some cases, the boundary between the option value and non-use value is not clear

Non-use value (also called passive use value or intrinsic value) represents the value

that society assigns to an environmental resource even though they never intended to

6

use it directly Non-use value consists of bequest value, which refers to the benefits arising from the desire to preserve and bequeath to future generations; and existence value, which refer to the value arising from knowing that environmental assets exists

Existence value can be defined as the benefit people derive from knowing that

a resource exists, despite the fact that they have never used the resource in the future For example, in order to protect the endangered species, people are willing to make a payment for protection regardless of the fact they cannot see these species in practice

Bequest value is derived from the benefits that people obtain from knowing that

a resource will be available for future generations For example, people are concerned about the global warming issue and would be willing to pay to diminish the impact of it, despite the fact that the damages are expected to take place in the distant future

2.2 Environmental valuation methods

In the environmental economics literature, there are several different valuation methods of estimating the economic values of an environmental resource These valuation methods are generally categorized into stated preference approaches (Ahmed et al, 2007; Seenprachawong, 2003; Nam and Son, 2001) and revealed preference approaches (Ahmed et al, 2007; Ceasar and Beukering, 2004; Chea et al., 2012; Seenprachawong, 2003; Wang et al., 2004; Nam and Son, 2001) The stated preference methods are direct methods which use surveys to elicit information from individuals about costs and benefits of an environmental resource On the other hand, the revealed preference method is a market based indirect method as it values non-market goods and services indirectly by observing individual‘s behavior in actual or simulated markets

7

The most popular method of the stated preference approaches is the Continent Valuation Method (CVM) It has been used more than the other one – Choice Experiment Method The main purpose which CVM wants to obtain is to form a hypothetical market situation for non-maket resources However, this situation is realistic also because it makes us feel easy to communicate to people about the contingent market to get their reaction to this hypothetical market We could evaluate economics benefits related to the provision of these resources thank to this information For valuing bequest, existence and option values of environmental resources, CVM is the only available method

Travel Cost Method (TCM) and Hedonic Pricing Method (HPM) are two well-known methods of indirect valuation Using travel costs as a representative for the price of visiting outdoor recreational sites is a part of TCM (Ceasar, 2000; Spurgeon, 1992;

and consumption expenditure It is noticed that TCM cannot estimate non-use values.Otherwise, through multiple regressions, the HPM help us analyze the total value of a good into the value of its several attributes And we could understand that Hedonic price is an latent price and the method which the value of the attribute is capitalized into the total value of the good

Table 1: Number of environmental valuation methods

Revealed Preference

Travel Cost Method Hedonic Pricing Method Producer/Consumer Surplus Factor of Production

Defensive Expenditure

Stated Preference

Choice Experiment Contingent Valuation

8

2.3 The Travel cost method

According to the previous part, revealed preference and stated preference methods are two categories of non-market valuation technique Nevertheless, the revealed preference technique is more interested in since it is the major purpose of this work Therefore, the concepts and theories related to the revealed preference technique will

be necessary reviews

2.3.1 The concept of Consumer surplus

One of the key concepts of the travel cost method which we should study carefully is consumer surplus (CS) It demonstrates how much a visitor values a trip to a recreational site Sohngen et al (1999) state that the consumer surplus is the value added above travel cost that visitors get by taking a trip to recreation site each season

To illustrate the concept of the CS, consider Figure 2

Figure 2: Travel cost demand function and Consumer Surplus

From the Figure 2, At0t1 represents the area named – consumer surplus The CS can be calculated by integrated the travel cost demand function between the actual travel cost

From equation (1), CS can be derived by taking the integral value of the demand function i.e

2.3.2 The Travel cost method

In a letter to the U.S Department of the Interior‗s National Park Service, the first time that Hoteling (1947) proposed the travel cost approach Although this approach has been used for outdoor recreation in the United State and Canada, it is the most well-known and valuable method of evaluating outdoor recreation benefits of natural resources such as water and forests

10

The travel cost method is a non-market valuation that is used for measuring visitor benefits from travel to a recreation site The travel expenditure including travel costs, entry fees, onsite expenditures are used as a proxy for price When this price is high, the number of trips taken by individuals will be low By measuring how the price impacts on visitation, a demand function for a site can be estimated And this demand function is used to get consumer surplus result or recreational benefits attached with the site The method has become widely used to valuating recreation benefit of environmental resources

There are two types of travel cost method, individual travel cost method (ITCM) and zonal travel cost method (ZTCM) The ITCM uses the number of trips per year of a visitor as dependent variable This approach creates a problem when the visitors cannot make more than one trip to the zone per year The solution is using the dependent variable in the number of individual trips in certain period of time instead

of a year Whereas, ZTCM can solve this problem by using the visitation rate of a zone as dependent variable

2.3.3 Theoretical framework

The underlying theory of TCM is associated with the demand function of the household production model Households maximize utility subject to two constraints, household income and time available With the public goods and services, the visitor

to a recreational site is a consumer of two goods or services (i.e recreational goods and services (denoted as ri) and all other private or marketed goods and services (denoted as xi), who is affected by budgetary and time constraints (see Sarker and Surry, 1998)

Let‘s assume xi and ri to represent a vector of private goods and a vector of recreational goods or services, respectively Let again the prices of these two set of goods be px and pr, respectively The representative consumer can therefore spend

11

visitor‘s income (denoted as Yi) on the purchase of these two set of goods Hence, the budget constraint of the visitor is given as

Y i = wT w = p x x i + p r r i (4)

Yi is the income level of the individual consumer i, w is the hourly wage rate and Tw

is the total number of hours worked The visitor faces a time constraint as he must decide on how much time to spend on work and leisure (recreation) The time constraint can be stated as

T is the total time of the consumer and Tl is time devoted to leisure (recreation) Note that the quality of recreational sites is a key determinant of the visitor‘s choice of the site to visit If we denote the quality yardsticks of a recreational site as qj, then the utility function of the representative recreation consumer can be written as

12

crucial in computing the CS per trip since it coefficients can be obtained econometrically

2.3.4 Problems with the Travel cost method

The method is based on real data which can be considered the strength of the approach However, the assumption that the recreational value of a site depending on travel costs could be an oversimplification of reality Some of the main limitations of the TCM are discussed below

First is the treatment of multiple site visitors One of the major assumptions of the travel cost methodology is that only one site is visited per trip (Haspel and Johnson, 1982) However, most of visitors tend to travel multiple destinations in one journey That implies the full cost of the trip is not an implicit price for the specific recreation site

Second is the treatment of time The TCM only use the total amount of money spent

to visit a site to estimate an individual‗s willingness to pay while a time cost representing the opportunity cost of working should be included to get a good measuring However, there is no clear solution for the time-cost problem Nowadays, several authors use a certain percentage of wage rates to provide an estimate of the opportunity cost of time

2.4 Empirical literature review

The travel cost method (TCM) is used in the thesis to estimate the value of recreation

of coral reefs at Cham islands TCM is proposed the first time in 1949 when Harold Hotelling replied to US National Park Service on approach of estimating the economic values of National Parks His idea was that tourists must spend the travel expenses if they visit a National park Because visitors come from various locations, their travel

Cesar and Beukering (2004) used the SCEEM model to evaluate the economic and recreational valuation of Hawaiian reefs The study estimated the annual net benefits derived from the coral reefs of Hawaii about $360 million and the overall asset value

of the state‘s 1660 km2 of potential reef area about $10 billion They also indicated that the involvement of Hawaiian‘s residents with coral reefs is very high and they have the willingness to pay higher than the visitors In this study, Cesar and Beukering showed that there would be a reasonable and united management of decision makers for Hawaiian reefs if they understood more clearly about the reef role

Carr and Mendelsohn (2003) used the polynomial model and log-linear model to estimate the value of coral reefs at the Great Barrier Reef, Australia By using 607 observations at Great Barrier Reef - Australia (September -December 2000), the research estimated the annual recreational benefits of the reef range from USD 700 million to 1.6 billion per year And here is one of the most substantially supported areas by international funds; it should be warranted to supply the big recreational values

Ahmed et al (2007) evaluated the recreational valuation and conservation benefits of coral reefs at Bolinao, Philippines by using Travel Cost and Contingent Valuation methods The consumer surplus value is estimated at USD 4.7 million per year in

14

Bolinao by using Travel Cost Method The WTP value is estimated at USD 33,696.9 per year by using Contingent valuation method From this paper, we can see that preservation of natural resources and the environment may not be an immediate priority although they understood the importance of coral reefs at Bolinao However, they also make efforts to invest their conservation and management, initially, on education

Anderson (2010) used the travel cost method to estimate the demand for ice climbing

in Hyalite Canyon, Montana, one of the premier ice climbing venues in North America He also indicated that land using for ice climbing have brought a big benefits for economy, specific with Hyalite, these benefits could be computed about 76$ per person per trip and 480$ per year for average individuals The paper gave good information that climbers were really willing to pay for the ice access This created good signs for manager who wanted to add more fees to preserve and develop this area

In the study carried out in 2007, Fleming and Cook used TCM method to estimate the recreational value of Lake McKenzie, Australia This method helped them to indicate the recreational value of Lake McKenzie ranging from USD13.7 million to USD 31.8 million per annum, or from USD 104.30 to USD 242.84 per traveler per visit However, authors told that this is not the total economic of it because scientific, medical, ecological values have not been attached

In Vietnam, Nam and Son (2001) used TCM to build the demand curve for visiting Hon Mun Marine Protected Area and the annual recreational value of Hon Mun MPA

is estimated at USD 17.9 million by using zonal TCM, and USD 8.7 million by using individual TCM

15

2.5 Conceptual framework

Travel cost factor is made up of trip‘s expense, opportunity cost of time and other costs Gender, marital status, education level, age, income, etc made up socioeconomic factors And the travel cost, substitute sites and socioeconomic factors impact on the zonal visitation rate (in ZTCM) or individual visit in period (in ITCM)

Figure 3: Conceptual framework

16

CHAPTER 3: DATA AND RESEARCH METHODOLOGY

This chapter included four sections: First and second section presented the overview

of Hoi An city and Cham islands, respectively Third section will describe data collection The last section will discuss the methodology

3.1 Overview of Hoi An

3.1.1 Brief of forming history of Hoi An

The Hoi An Town has a long history of forming and developing According to previous research documents, before the 2ndCentury AD, the Sa Huynh people had gather here as a fairly crowded residential population and formed a primitive trading port with trading operations with the outside world including the Chinese in the North, the South India region in the South and other neighboring countries

Hoi An commercial port is not the oldest or largest one compared to others of its kind

in Vietnam and the world Its flourishing period only lasted for approximately 2 centuries, but during the process of cultural exchange and integration, Hoi An had formed a distinctive color, combining both common features of Vietnamese ancient trading port town with uniqueness expressing through its own customs and architectural sculptures

Beside the ancient architectural complex, Hoi An Ancient Town still preserves the diversified intangible cultural heritages with numerous of attractive forms They are the traditional craft villages, the food culture values, the cultural festivals, the specific values of Hoi An people‘s communications and behaviors, especially the lifestyle which had combined the profound features of Asian culture with the openness of Western culture

Hoi An City (located in Quang Nam Province) has a total area of 61 km2, accounting for 0.58% of the natural area of Quang Nam Province In which 74.53% is the

17

mainland with an area of 45.35 km2, the rest are islands Nearly the entire island is rocky mountain and forest which still remains intact Hoi An is home to 80,000 inhabitants with 9 wards, 4 communes in which 1 of them is an island commune

Hoi An is stretched in 8km on the coast, overlooking the Cham Islands, which is the favorable condition to establish and develop fantastic eco tourism sites On the contrary, this terrain makes the town vulnerable to the annual floods and storms

The nature also favors Hoi An with abundant of natural resources The Hoi An sea has

a seafood fishery with plenty of well-known shrimps and fish The island has swallow‘s nest, a special food and super medicine which used to be a rare dish served

in the royal court‘s banquets Dozens of valuable forest products and medicine are found in the Cham Islands‘ forest The alluvial soil along the river is suitable for many crops

Recognized as a world cultural heritage by UNESCO on December 4th 1999,Hoi An together with My Son Sanctuary of Danang and Hue has formed a nation-wide renowned tourist cluster The biggest characteristics of Hoi An Ancient Town Heritage are the ―living monuments‖ which means in these old house there are still many generations of indigenous people living in there And in the heart of HoiAn people, each carved pattern, each nostalgia tile roof covered with moss is a sacred memory that many generations had always cherished, preserved and descended to their children as precious treasures

The Hoi An people themselves are the real owners of the Ancient Town which made it became as famous as today They live by the past, wallow themselves in the past, and finally rise by this beautiful past This is the favorable conditions for Hoi An to accelerate the process of economic restructuring and shifting the focus to tourism

18

3.1.2 Evaluation of Tourism resources of Hoi An:

The attractiveness of Hoi An is more than just about 1,300 monuments which had been recognized and ranked by the States, with a complex of ancient architecture that

is preserved almost intact It‘s also about the UNESCO-recognized world cultural tangible and intangible cultural heritages, the lively and ideally model of ―living museum‖ Besides, Hoi An has a myriad of valuable potentials, which are endowed by nature as well as created by Hoi An people for centuries

And not only that, a traditional craft village, a countryside feature, a small bridge, a white sand sea, a friendly lifestyle… all of them have contributed to create a charming Hoi An

The traditional key economic strengths of Hoi An were small-scaled handicrafts industry, agriculture and fishery However, after Hoi An became world cultural heritage and the amount of tourist increased, numerous of local household had switched to tourism business Hoi An has become the streets of tourists‘ service with many galleries, clothing & garment shops, souvenir stores, bars, restaurants, hotels are always ready to serve tourists While it might be the right choice, many people concern that this might cause changes to the old house due to private ownerships A lot of business households want to renovate their house in modern design which will ruin the monuments Meanwhile, the government doesn‘t have the needed fund to restore all the monuments in the ancient town to protect and prevent the downgrade of them

Another strong point of Hoi An is the ―folk games‖ The ―Hoi An Ancient Town Night‖ program has brought back the activities of the early 20th Century In that night, there was no electric light, but glowing lantern instead There was no bike, the streets were only for pedestrians Everyone was playing ―Bai Choi‖ (a folk card playing game), sung ―Ho Khoan‖ (a classical traditional music), watched and listened to

19

―Tuong‖ (Vietnamese opera), dropped the flower garlands and colored lanterns onto Hoai River, played Chinese Chess, drew calligraphy… Walking in the streets, everyone was a performer as well as a spectator Now, the ―Hoi An Ancient Town Night‖ has become not only an indispensable activity to Hoi An people but also a fascinating program for visitors as well

It would be a huge shortcoming not to mention a new type of tourism of Hoi An, it is the premium resort tourism Hoi An‘s advantages are a long coastline of 8km with many beautiful beaches and the offshore Cham Islands including of dozens of small islands Around the islands with the depth of 1 – 20m under the crystal clear blue ocean water is the colorful coral reefs, the home to many rare marine species Cham Islands, which are rated as a rich and diverse tourism resource, with humanities resource and a health environment, meet all the conditions to develop into a premium resort tourism site The Cham islands are also a well-known natural landscape of Hoi

An, which will provide invaluable support to the old town in the promotion of tourism, increasing the amount of visitors and their length of stay

In general, these forms of tourism resources of Hoi An, especially the special and unique cultural tourism is a strong point that not many places have

3.2 Overview of Cham islands

Cu Lao Cham Marine Protected Area – Cu Lao Cham MPA is located at 15o52‘ to

16o00‘ North and 108o24‘ to 108o34‘ East, a commune of the island named Tan Hiep commune, 18 km away from the city of Hoi An to the East Coast Cham islands constitute a group of 8 islands with a total area of 15 km2 Hon Lao Island is the largest island with the circle shape at the high 500 m and also the only occupied one There are lots of precious plants and rare animals here Tan Hiep Commune has 4 villages with the population of 2,400 and most of them live focusing at Lang and Huong beaches Income of the people here is, for the most part, from the aquatic

20

resources mining operations, accounting for 74% of the total income Tourism and service activities have just been expanded and developed in recent years

Cham islands are one of the most famous destinations in Hoi An that you should visit

It takes about 3 hours to come to Cham islands by normal boat, and only 20 minutes

by speed boat We can visit and swim on lovely beaches: Bai Bim, Bai Ong, Bai Chong…

According to many researches, people came and lived here in the seventeenth century and they also established the business relationship with many other countries more than 1000 years ago That is the reason why Cham islands has preserved many unique architectural constructions as Hai Tang pagoda – built in 1753 on the west of Hon Lao… Aside from its abundant ecological system, it is also well-known that Cu Lao Cham MPA has inherited a worth culture from ancestors: Sa Huynh, Champa, Dai Viet With its relics excavated, people find out the relations between Cham islands and other countries and Cham islands is a famous port of Silk Road on the beach

Cham islands have 1,549 hectares of natural forest and 6,716 hectares of water surface Since 2003, this area was selected to set up the project MPA under the Development Cooperation in Environment Program of the Government of Vietnam and Denmark It has plenty of significant ecosystems such as coral reefs, sea grass beds, sea grass beds with tremendous value for biodiversity By 2006, MPA Cham was officially established under the People's Committee of Quang Nam province

3.2.1 Biodiversity in Cham islands

3.2.1.1 Terrestrial biological resources

Cham islands is one of the rare islands which still retain the vegetation with the large covered area, about 60-70% Natural forest in Cham islands is distributed mainly at the height from 50m to 500m There are lots of economic value woods in here The result of Cu Lao Cham forestland studies discover that it has 288 species of the high-

21

class plant being in the list medicinal plant (Long, 2008) With their hundred-year experience, Cham islands residents selected and refined lots of remedy good for people‘s health such as: digestion function support; tonic blood; flu and cough treating; neurasthenia; better tendons and bones; black-hair making; dysentery treating and others… from the precious list of medicinal plant

Besides the resource of marine and forest organism, Cham islands also have its speciality_swallow‘s nest which brings rich economic benefit for locality and becomes the symbol of island Although many wars and the residents‘ exploit made effects on, the strong management of the local government has kept the valuable biological diversity of Cu Lao Cham forest

3.2.1.2 Marine biological resources

Cu Lao Cham MPA has an area of 5,175 hectares of water surface, with around 311 hectares of coral reefs, 500 hectares of sea grass with bountiful beneficial marine species According to the most recent studies, scientists have recognized that Cham islands possesses about 277 species of reef building corals in 40 genres and 17 families, 270 fish species of 105 genres, 40 families, 5 species of lobsters, 97 species

of mollusks and numerous species having ecological, economic and scenic value (Long, 2008)

Around Cham islands, the important environments in the waters are coral reefs, sea grass beds, rocky shore, and sandy bottom But it is considered that coral reefs and sea grass beds are the most productive ecosystems Based on the diversity of environment, marine organisms and the importance of fishing grounds, Cham islands have been determined and realized as a Marine Protected Area in Vietnam The biodiversity value of Cu Lao Cham MPA is evaluated as follows:

Coral reef

22

According to many research, the most common and important habitat in Cu Lao Cham MPA waters coral reefs They are widely distributed in the shallow waters with the morphology and profile varying considerably Coral reef communities occur in patches around most of the islands Fringing coral reefs mainly occurred on the west and southwestern part of Cham islands and most of the smaller islets In overall, some

261 species of 59 genera of 15 families of scleractinian corals, 15 species of 11 genera

of 6 families of soft corals, 3 species of fire corals (Milleporidae), 1 species of blue coral (Helioporidae) and 2 species of horny corals (Order Antipatharia) were recorded

in Cu Lao Cham MPA waters (Tuan et al 2004)

Coral reef fish

Some 200 species of reef-associated fishes, in 85 genera from 36 families, were recorded in Cham islands and adjacent islands (Tuan et al., 2004) The families Pomacentridae (39 species) and Labridae (33 species) were both well represented, as was the Chaetodontidae, with 19 species of butterfly fishes (Tuan et al., 2004) Several commercially important species were found including nine siganids, six serranids, six lutjanids, two lethrinids and one Haemulids (Tuan et al., 2004) Most of the targeted fish families collected for food and aquarium trades were either scarce or absent (Le, 2006)

3.2.2 Cu Lao Cham marine protected area

Recognizing the importance of conservation of representative examples of globally significant coastal and marine biodiversity and ecologically sustainable use of renewable natural resources (e.g fisheries), the Vietnamese Government has been taking step to conserve marine biodiversity, to effectively manage resources and to improve livelihood of local communities With the support from the Danish Government through project ―Support to Marine Protected Area Network in Vietnam‖

on the banned list including seasonal ban, except for research purposes permitted by the Government; Exploitation of marine animals with size smaller than specified sizes, except for allowed catches for aquaculture purposes; Industrial scale aquaculture; Any kind of mining; Activities that cause beach erosion around islands; Activities converting land and water use illegally; Activities that introduce exotic flora and fauna species that might cause damages to the environment, natural ecosystems and biodiversity in the MPA; Activities that pollute the environment including noise and vibration with the intensity greater than permitted limit

Moreover, according to Decision 88/2005, the functional zones (see the Figure 3) and activities for specific zone are regulated as follows:

24

Extremely protected zone (Core zone) is a zone which is specified by coral reef

ecosystem and marine biodiversity This zone is totally conserved, managed and protected carefully, maximum restricted from negative impacts on habitats, and capable for scientific research, training and education Besides activities prohibited to the entire Cu Lao Cham MPA, activities are prohibited in this zone include: Collecting mineral specimen, coral, wild animals, aquatic fauna and flora, microbiological samples; and any kinds of visiting or excursion, touring, swimming, snorkeling, diving

Ecological rehabilitation zone is a zone which is managed, protected and well

organized with activities for recovering ecological habitats, biodiversity and natural marine resources in order to economically benefit communities Some areas in this zone might be added into the extremely protected zone in the future In this zone more additional activities are prohibited such as construction, housing, anchoring in coral reef areas; and any kinds of exploitation of forestry or aquatic products

Controlled development zone includes the following zones:

Tourism development zone is a zone concentrating on all tourism activities which are available to generate income for the local people These tourism activities are under controlled by he Management Board of MPA such as scuba diving, visiting, coral reefs watching by glass bottomed boat, surfing, sailing, swimming, research, education, training, and community entertainment

Community development zone is located on lands where people live including Bai Lang, Thon Cam, Bai Ong, and Bai Huong villages of Cham islands

Reasonable fishing zone is reserved for organizing reasonable marine resources exploitation, developing relevant activities (fishing, aquaculture and other suitable gears) in order to increase income, improve living standards and

generate alternative income for MPA communities

of time (OPC), expenses at Cham islands (COSTC) as well as total travel cost (TTC)

26

The second part of the questionnaire deals with questions relating to the willingness to pay of visitors Visitors are asked if they will be willing to contribute towards the improvement of the islands through entrance fees and how much they will be willing

to pay

The last part had six questions covering a range of issues such as age, gender, level of education, employment status as well as income of the visitor As usual the question relating to the gender of the visitors has two options, i.e male and female In the data set, this gender variable is treated as a dummy i.e male = 1 and female = 0 The question on level of education, it had six options, ranging from primary school education to university education (undergraduate and postgraduate education) In the data set, the respective options are ranked from 1 to 6 in ascending order For the question on job or employment status, the options are office worker, business owner, freelancer, unskilled worker, student, unemployed, and retired There is a follow up question for those employed asking them to state their occupation The question on income level asks visitors to state their average monthly income before tax

3.3.2 Sample design

The data used in the thesis were obtained from an on-site survey of domestic visitors

on Cham islands Face-to-face interviews were conducted during the period of April - August 2013 The convenience sampling technique was employed in this survey By this, I randomly selected visitors to answer a questionnaire at the beach in Cham islands in the noon when they gathered to rest and have lunch In each group of visitors, only one of them is chosen to fill the questionnaire because their spendings are similar Only visitors from the age of 16 and above were interviewed because the children below 16 will feel difficult understanding some of the questions At first, some visitors declined to answer the questionnaire because they did not the purpose of this survey As a result, I explained this survey could help local government administrate much better Cham islands This method was effective

27

A total of 300 surveys were collected, but not all of them can be used for analysis The main reason is that some visitors refused to answer questions related to their income level From the 300 completed surveys, 241 responses were used to analyze in the final econometric models

3.3.3 Variables and expected signs

Table 2: Definition of variables in the data set

TRIP5 Number of trips undertaken in the last 5 years

COSTC Onsite expenses at Cham islands

SUB Substitute site expenses

MAR Marital status (married = 1, not married = 0)

EMP Employment status (employed = 1, unemployed = 0)

TRIP5: The number of trips to the site of a visitor for the past five year period This is independent variable

TTC: TTC is the most important variable of this model and makes a big effect on number of trips It is the total travel cost of visitor but excludes the onsite expenses at Cham islands Because the coefficient on TTC has the expected negative sign, the more TTC is, the less number of trips is

COSTC: This variable represents the onsite expenses at Cham islands of a visitor The coefficient on COSTC has the expected negative sign, which yields a negatively sloped demand curve for person-trips

SUB: This variable represents the price of substitute site in VND Higher cost of substitute site would be expected to lead to a rise of demand for visiting Cham islands

28

MAR: This variable represents the marital status of visitor It is treated as a dummy variable, where 0 for single visitor and 1 is for married visitor, to test whether marital status of visitors is an important determinant of choosing to travel to Cham islands or not The expected sign of this relationship is indeterminate

GEN: This represents the gender of the visitor It is treated as a dummy variable, where 0 for female and 1 is for male, to test whether gender of visitors is an important determinant of choosing to travel to Cham islands The expected sign of this relationship is indeterminate

AGE: This variable is the age of visitor Generally, a positive relationship is expected between person‗s age and the choice of improved environmental plans This is because the person‗s interest in environmental improvement increases as s/he becomes older

EMP: This represents the employment status of the visitor It is treated as a dummy variable, where 0 for unemployed and 1 is for employed, to test whether employment status of visitors is an important determinant of choosing to travel to Cham islands or not The expected sign of this relationship is positive

EDU: This represents education background of visitor Higher level of education would be expected to lead to a better understanding of the benefits of traveling a natural recreation site Therefore, a positive relationship is expected between EDU and the choice of traveling to Cham islands

INC: This is monthly income of the traveler and the expected sign of this relationship

is positive This is due to the fact that income reflects the ability to pay, so people with higher income have more visits they make

GROUP: This represents the number of travellers in group to Cham islands and the expected sign of this relationship is positive

29

Table 3 illustrates the expected sign of variables used in TCM

Table 3: Expected sign of the coefficients in the model

3.4.1 Computing total travel cost

From the above data, the total travel cost per visitor is calculated as the sum of the round-trip travel costs, opportunity costs of time and other expenses For local visitors, the total travel cost mainly is the spending at Cham islands because it takes only around 2 hours for them to come to Cham islands, they do not have to pay too much for moving, staying… However, visitors from other provinces have to spend more for flight tickets, hotel,… So the charge spent at Cham islands should be excluded from the total cost of travel and be counted as an independent variable If not, this will lead to deviation in estimates of Cham islands entertainment content

3.4.1.1 The Round Trip Cost

Cham islands is becoming one of the most attractive destination to visit in Hoi An Currently, according to statistics of authors' survey, 100% of tourists visiting Cham island come from Cua Dai (Hoi An) However, Hoi An has no airport, train station so most visitors have to concentrate in Da Nang, then use transit vehicles as taxis, buses,

30

rental cars, motorcycles to Hoi An The results of empirical studies showed that a large group of 15 visitors usually book the tour (included transit cars) before, and retail customers typically use a taxi to Cua Dai The customers living in Quang Nam province often go by motorcycle, but the number of them is not high

Table 4: Means of transportation to Cham islands

Following the data of Table 4, there are 26.97% of visitors have to use the transit vehicles to travel to Hoi An because they went to Da Nang by train or plane So, trip cost of visitors is the sum of the ticket of train or plane and the cost of transit vehicles they have to pay

On the other hand, 45.64% of interviewers choose only bus to come to Cham islands from starting point In this case, based on the data of some travel agencies, round-trip cost per visitor fluctuates between VND 430 to 500/km depending on quality of transportation and journey

For small group (about seven members who usually use taxi or rent-car to move), total trip cost will be shared together to calculate personal cost

Tourists living in Quang Nam province or coming from neighboring provinces often use bike to transfer and the rate of travelers used motorcycle is 21,58% So, their trip costs are gasoline, and other expenses The figures of some motorcycle business center indicate that trip cost per visitor ranged from 300 to 400 VND/km

31

However, Cham islands (or Hoi An) is only one of many destinations they visit (in one journey) Only a small number of local tourists consider that Cham islands is the goal of the trip Therefore, the trip cost of tourists to the Cham islands is adjusted for the number of places in the trip For tourists only visiting Cham islands, total real trip cost will actually be used as trip cost of tourists For visitors traveling from two places

or more, the total travel expenses will be divided by the number of destinations to calculate the trip cost of visitors to Cham islands

3.4.1.2 The Opportunity cost of travel time

Visitors who use the time cost for a trip to Cham islands (short or long term) cannot

do anything to earn money or satisfy other purposes in this time Therefore, the cost of time is the opportunity cost So, it is very necessary to determine time cost

Both Deaton & Muellbauer (1980) and Hanley & Spash (1993) suggested that someone who stop working to travel, his salary is the opportunity cost of time and should be used as a price of time costs

According to (OECD-1994), someone can feel satisfied or unsatisfied when visit entertainment place, they also travel at weekend So, adjusted time cost should be used

to calculate time cost

From some previous researches relating to opportunity cost, author judges this element through some assumptions:

- Total time tourists visiting Cham islands include moving time, staying time, sightseeing time and it is determined from the beginning to the end of the journey

- Based on Deaton & Muellbauer (1980), opportunity cost of time appears will

be calculated when someone stop working to travel So, opportunity cost will

by the number of places in the journey

3.4.1.3 The other cost

Other costs include the cost of eating, staying and other expenses necessary for the trip (excluding direct spending like entrance ticket…) that they pay during the journey Because spending in Cham islands is an independent variable, the exclusion

of direct spending is very important to avoid the overlap

It is very difficult to calculate exactly the cost of food, the cost of accommodation and other necessary expenses Therefore, visitors are asked to conjecture the average cost per day of stay (for tourists staying over one day), eating cost per day and incidental expenses

Similar to trip cost and opportunity cost of time, this whole costs is considered as other costs for tourists only visiting Cham islands With someone visiting many places (in one journey) other costs will be average number of the total other costs

3.4.2 Econometric models

Data used in the thesis was collected by directly interviewing tourists at Cham Island However, as Shaw (1988), on-site samples address some problems that lead to bias when estimating the recreation demand functions That is:

- Firstly, because the dependent variable is presented the number of visits of

an individual in a given period, it is non-negative integers