Estimating the recreational demand for a marine park in southern sri lanka; the case of hikkaduwa marine park

MINISTRY OF EDUCATION AND TRAINING NHA TRANG UNIVERSITY KORALALAGE CHAMINI DINUSHIKA Estimating the Recreational Demand for a Marine Park in Southern Sri Lanka; the Case of Hikkaduwa M

MINISTRY OF EDUCATION AND TRAINING

NHA TRANG UNIVERSITY

KORALALAGE CHAMINI DINUSHIKA

MINISTRY OF EDUCATION AND TRAINING

NHA TRANG UNIVERSITY

KORALALAGE CHAMINI DINUSHIKA Estimating the Recreational Demand for a Marine Park in Southern Sri Lanka; the Case of Hikkaduwa Marine Park

MASTER THESIS

Major:

Marine Ecosystem Management &

Climate Change Topic allocation Decision

Decision on establishing the

ACKNOWLEDGMENT

I would like to express the deepest appreciation to the Faculty / Deparment of Graduate Studies, Nha Trang University for providing me with all facilities to broaden my vision and knowledge on the diverse aspects of the management of coastal ecosystems and Climate Change, and assisting me in all respects to successfully complete this thesis

My special thanks go to Prof.Oscar Amarasinghe Faculty of Agriculture, University of Ruhuna, Sri Lanka for the continuous support extended to my Msc study and research, and especially for his patience, motivation, enthusiasm, and for expanding our skills through immense knowledge His guidance helped me at all times of conducting research work and writing of this thesis

A deep sense of gratitude is owed to the NORHEAD project on Climate Change, for providing me a great opportunity of pursuing my Masters Studies in the field of Marine Ecosystem Management and Climate Change At the same time I would like to express my thanks to all the teachers of this masters’ program who guided me to complete the masters’ program successfully

Last but not the least, I would like to thank my family: my parents and to my brothers and sister for supporting me spiritually and morally, throughout the writing this thesis

Table of Contents

UNDERTAKING iii

ACKNOWLEDGMENT iv

LIST OF ABBREVIATIONS vii

LIST OF TABLES viii

LIST OF FIGURES ix

APPENDICES ix

Abstract xi

CHAPTER 1 INTRODUCTION 1

1.1 Objectives 4

CHAPTER 2 LITERATURE REVIEW 5

CHAPTER 3: METHOD 15

3.1 Selection of Study Area 15

3.2 Population and sample 22

3.3 Sampling method 22

3.4 Data collection 22

3.4.1 Secondary sources of data 22

3.4.2 Primary sources of data 23

3.5 Theoretical Concepts 24

3.6 Data Analysis 28

CHAPTER 4 RESULTS and DISCUSSION 29

4.1 Selected Socio economic and Demographic characteristics of the local visitors to the Hikkaduwa Marine Park 29

4.2 Detailed Analysis of selected Socio economic and Demographic characteristics of the local visitors to HMP 29

4 2.1 Age distribution of the local visitors 29

4 2.2 Average monthly income of local visitors to Hikkaduwa Marine Park 31

4 2 3 Educational standards of local visitors to HMP 31

4 3 Visit Characteristics of local visitors to the Hikkaduwa Marine Park 32

4 3.1 Annual number of visits to the HMP by local visitors 32

4 3.2 Access time to Hikkaduwa Marine Park by local visitors 33

4 3.3 Mode of transport to Hikkaduwa Marine Park by local visitors 34

4.3 4 Main recreational purpose of local visitors to visit Hikkaduwa Marine Park 35

4 4 Selected Socio economic and Demographic characteristics of the foreign visitors to the

Hikkaduwa Marine Park 36

4.5 Detailed Analysis of Selected Demographic and Socio economic characteristics 36

4 5.1 Number of foreign visitors by age class 36

4 5.2 Detailed analysis of Income of foreign visitors 37

4 5.3 Educational achievements of the foreign visitors to the Hikkaduwa Marine Park 38

4.6 Visit Characteristics of foreign visitors to the Hikkaduwa Marine Park 39

4 6.1 Frequency of annual visits by foreign visitors to Hikkaduwa Marine Park 39

4 6.2 Main purposes of visiting Hikkaduwa Marine Park by foreign visitors 40

4 6.3 Foreign visitors’ awareness of alternative sites to the Hikkaduwa Marine Park 40

4 7.1 Opportunity cost of time 42

4 7.2 Calculation of Travel cost for multiple site visitors 43

4.7.3 Recreational demand of local visitors to Hikkaduwa Marine Park 44

4 7.4 Recreational Demand curve for local visitors to Hikkaduwa Marine Park 44

4 8 Travel benefits 47

4 9 Recreational Demand of foreign visitors to Hikkaduwa Marine Park 51

4 10 Impact of climate change on visitor behavior in HMP 54

4 11 High impact scenario affecting for visitation rate for local and foreign visitors 55

4 12 Contribution of estimation of recreational values towards improved management of HMP 56

CHAPTER 5 CONCLUSION 58

CHAPTER 6 REFERENCES 62

IPCC Intergovernmental Panel on Climate Change

ITCM Individual Travel Cost Method

IUCN International Union for Conservation of Nature

IUV Indirect Use Value

LKR Sri Lankan Rupees

MD Multi Destination

MPA Marine Protected Area

NARA National Aquatic Resources Agency

NUV Non- Use Value

PP Primary Purpose

Rs Rupees

SP Stated preference

TC Travel Cost

TEV Total Economic Value

UNFCCC United Nations Framework Convention on Climate Change ZTCM Zonal Travel Cost Method

LIST OF TABLES

Table 2.1 Relationship between valuation methods and value types……… 9 Table 3.1 Consumer Surplus Estimates for the Whole Recreation Experience Using the ZTCM……… 27 Table 4.1 Selected socio economic and demographic characteristics of the local visitors to Hikkaduwa Marine Park……… ……….29 Table 4.2Educational standards of local visitors to HMP……….……… 32 Table 4.3 Mode of transport to Hikkaduwa Marine Park by local visitors………… ……….35 Table 4.4 Selected Socio economic and demographic characteristics of foreign visitors to the Hikkaduwa Marine Park……… 36

Table 4.5 Model summary and parameter estimates for local visitors’ recreational demand curve for HMP……….……….45

Table 4.6 Independent variables and the coefficients that affect the number of visits of local visitors to HMP……….47 Table 4.7 Model Summary and Parameter Estimates for the local visitors travel benefits obtained while on travelling……… 48 Table 4.8 Model summary and parameter estimates for local visitors’ true recreational demand curve for HMP……….… 50 Table 4.9 Model summary and parameter estimates for foreign visitors’ recreational demand curve for HMP ……… … 52 Table 4.10 Independent variables and the coefficients that affect the number of visits of foreign visitors to HMP……….53

LIST OF FIGURES

Figure 2.1 Total Economic Value framework: Use and non-use values of a marine eco

system… 6

Figure 3.1 Map of Hikkaduwa Marine Park……… 15

Figure 3.2 Detailed map of Hikkaduwa Marine Park……….17

Figure 3.3 Individual travel cost model – Illustrative demand curve……… 26

Figure 3.4 whole recreation experience demand curve……… 28

Figure 4.1 Percentage of local visitors to Hikkaduwa Marine Park, by Age Group………30

Figure 4.2 Average monthly incomes of local visitors to Hikkaduwa Marine Park……… 31

Figure 4.3 Annual number of visits to the Hikkaduwa Marine Park by Local Visitors……….33

Figure 4.4 Access time to HMP by local visitors……… 34

Figure 4.5 Number of visits per year to HMP with the changing access times……… 34

Figure 4.6 Main purpose of visiting Hikkaduwa Marine Park by local visitors……….35

Figure 4.7 Age distribution of foreign visitors to the Hikkaduwa Marine Park……… 37

Figure 4.8 Average monthly income distributions of foreign visitors to Hikkaduwa Marin Park……… 38

Figure 4.9 Educational achievements of foreign visitors to the Hikkaduwa Marine Park ………38

Figure 4.10 Frequency of annual visits by foreign visitors to the Hikkaduwa Marine Park………… 39

Figure 4.11 Main purposes of visiting the Hikkaduwa Marine Park by foreign visitors……… 40

Figure 4.12 Awareness among foreign visitors of alternative sites to Hikkaduwa Marine Park……… 41

Figure 4.13 Local visitors recreational demand curve for HMP………45

Figure 4.14 travel benefits obtained by local visitors with the distance they travelled……… 48

Figure 4.15 Recreational demand curve with net travel cost for HMP by local visitors………50

Figure 4.16 foreign visitors recreational demand curve for HMP……… 52

Figure 4.17 Local Visitors respond for a 50% reduction of the beach area due to Climate Change……… 54

Figure 4.18 Foreign Visitors respond for a 50% reduction of the beach area due to Climate Change………54

Figure 4.19 The most important climate change scenario affecting visitation rate – Local visitors ………55

Figure 4.20 The most important climate change scenario affecting the visitation rate- foreign sample ………56

APPENDICES

Abstract

Hikkaduwa Marine Park (HMP) provides many environmental services and generates

a number of values Hence maintaining the health of the marine environment and the relevant ecosystem is of paramount importance However, in the absence of a market value of the HMP, management decisions are seriously affected because investment on ecosystem sustainability cannot be justified Hence this study was undertaken aiming

recreational demand for the Hikkaduwa Marine Park using the Travel Cost Method,

how an estimation of recreational values would contribute towards improved management of the Park The methodology employed consisted of a pre tested questionnaire administered to a sample of local and foreign visitors to the HMP Data were analysed using simple linear regression technique with the help of SPSS statistical software The study estimated the total recreational value of the HMP to be 7.4 million USD per year for local visitors and 0.93 million USD for foreign visitors, with a total of 8.3 m USD Results revealed that there were travel benefits reaped by the visitors, which increased with travel distance which revealed the preference of local visitors for longer trips Re-estimation of recreational demand for HMP using net travel cost (Travel Cost – Travel Benefits) revealed a higher consumer surplus and the recreational value increased from 7.4 m to 9.1 million Further results revealed that sea level rise is the most significant impact of climate change which would reduce the beach area and consequently the visitation rate of both local and foreign visitors Therefore, when making strategic plans towards improved management of HMP, it is very important to pay special attention to the protection of beach area Finally as there

is no entry fee to HMP it is suggested to establish a suitable entry fee because of the colossal recreational value of the site, while searching for donations The huge recreational value of the HMP also justifies a sizeable government budget allocation towards improved management of the HMP

Key words: Climate change, Recreational demand, Travel cost method

Estimating the Recreational Demand for a Marine Park in Southern Sri

Lanka; the Case of Hikkaduwa Marine Park

CHAPTER 1 INTRODUCTION

Being an island, Sri Lanka is endowed with a rich and colossal marine environment, which offers many opportunities for the improvement of country’s economy with an array of marine resources and activities Moreover, Sri Lanka’s coastal zone provides a number of environmental services that contributes significantly towards maintaining the sustainability of both the ecosystem and the human system, while generating high total economic values including use and non-use values In the context of coastal ecosystems coral reefs are a resource of immense importance for a large number of people, especially the coastal populations of the developing world (Berg et al, 1998)

As defined by 2005 Millennium Ecosystem Assessment, coral reefs provide benefits under the four categories of ecosystem services They are regulating, provisioning, cultural and supporting services Regulating services include protection of shores from storm surges and waves; prevention of erosion Provisioning services include fisheries, building materials, etc Supporting services include cycling of nutrients, fish nursery habitats while tourism and spiritual appreciation are some examples for recreational services Since coral reef ecosystems are massive service providers it is so important to conserve and preserve them for the long term benefits derived from them

Tourism is the world’s largest growing industry and coral reefs add significantly to the value of coastal tourism In the mid-1990s, coastal tourism contributed about $20.0 million per year to the national economy of Sri Lanka (Berg et al., 1998) In 2007, a study estimated that the average global value of coral reef recreation is $184 per visit,

at 2000 prices (Brander et al, 2006) Studies showed that, tourism and recreation account for $9.6 billion of the total $29.8 billion global net benefit of coral reefs (Cesar, Burke and Pet-Soede, 2003 in Conservation International, 2008) The high biological diversity and clear waters of tropical reefs also support an abundance of recreational activities such as SCUBA diving, snorkeling, island tours, and sport fishing These activities can be highly lucrative for individual economies

Hikkaduwa coral reef is one the most beautiful coral reefs found in Sri Lanka and the

sanctuary in 1979, the first official marine protected area in the country and in 2002 it was upgraded to the status of a Marine National Park It is a diverse coral reef consisting of around 60 species of hard coral along with over 170 species of reef fish Its golden sand, sun, snorkeling and surfing site enhance the attraction of many local and foreign tourists Because Hikkaduwa is close to Colombo and also because the reefs are closer to the roads, it is frequently visited by tourists and locals who are

experienced significant growth during the early 1970s to 1980s Hikkaduwa has become the most popular coastal resort area in the country with an estimated 294,545

Despite the numerous economic benefits coral reefs provide, reef ecosystems are under threat of irrevocable decline worldwide from a suite of anthropogenic stressors Corals have been disappearing as a result of bleaching, disease, storm damage and a range of human activities, including overfishing, use of destructive fishing gear, anchor damage and pollution At the same time, algae have increased as herbivores and grazers, such

as sea urchins and some fish species, that keep them in control, have declined through disease and overfishing Moreover, global climate change is also threatening reefs through coral bleaching, disease, and ocean acidification, leading to both reef destruction and structural degradation In Sri Lanka, damage to coral reefs generated erosion on the south and west coasts, which in 1998 were estimated to average 40-cm

a year Some $30.0 million had already been spent on coastal constructions to curtail this, and it has been estimated that the cost of replacing the coastal protection provided

by these reefs would be $246,000 to $836,000 per km (Berg et al., 1998)

According to Wilkinson et al, 1999 in Edward B et al, 2011 “The overall estimated economic damages from lost fisheries production, tourism and recreation, coastal protection, and other ecosystem services from the 1998 Indian Ocean coral bleaching event have ranged from $706 million to $8.2 billion” However, global reductions in tourism due to recent climate change-driven coral bleaching events are estimated in the billions (Wilkinson et al 1999) These reasons are same with the degrading coral ecosystem in Hikkaduwa too Despite these reasons to meet the rapidly increasing tourist demand many activities were taken place in Hikkaduwa ecosystem and they

were created problems due to the absence of proper development plans (Nakatani et al,

1994) Negative environmental and social impacts due to unplanned development ultimately undermined the area’s attractiveness to visitors Degradation of the coral reef, declining coastal water quality, depleted coral fish populations, sedimentation of the coral reef', inadequate solid waste disposal systems, coastal erosion, inadequate anchorage facilities for fishing boats are pointed out as problems which affect marine ecosystem and recreational activities in Hikkaduwa, needing immediate management attention

Usually the value of goods and services traded in the market are reflected by their prices A central problem in estimating the value of natural resources is that many of their services are not commonly traded in competitive markets Even though marine reserve areas provide many services they cannot be sold or bought in a competitive market Most environmental resources are considered public goods and are considered

as ‘non-rival’ in consumption and ‘non-excludable’ in provision (Begg et al 1987) Hence such resources have often been undervalued and at worst been treated as free goods leading to their overuse (Brander et al 2006).Therefore, a sound knowledge of the value of these services is very much important in making correct resource management decisions

Since Hikkaduwa Marine Park provides many environmental services and generate a number of values, the health of the marine environment and ecosystem must be maintained (even improved) Normally the government budget allocation for the management of marine parks is quite limited Under such circumstances, the other alternative way of securing funds to manage the part would be to generate additional revenue from the park Since at present no entry fee is charged for the Hikkaduwa

system is not known management strategies of this nature cannot be adopted It is towards this direction that the present study is undertaken Assuming that recreational values represent the major share of the total economic value of the Hikkaduwa Marine Park, this study aims at making an assessment of the recreational value of the park

1.1 Objectives

The major objective of the study is to estimate the recreational value of Hikkaduwa Marine Park aiming at improved management of this site

The more Specific Objectives of the study are,

i To estimate the recreational demand for the Hikkaduwa Marine Park using the Travel Cost Method

ii To find out the impacts of climate change on park visitation rates

iii To examine how an estimation of recreational values would contribute towards improved management of the Park

CHAPTER 2 LITERATURE REVIEW

Ensuring the environmental sustainability is one of the Millennium Development Goals (United Nations, 2015) Terrestrial and marine protected areas in many regions have increased substantially since 1990 But overexploitation of marine fish stocks led

to declines in the percentage of stocks within safe biological limits, down from 90 per cent in 1974 to 71percent in 2011.It is quite clear that attempts should be made to protect these ecosystems from overexploitation and degradation Possession of precision data is therefore a must in this regard, to take correct policy decisions Large data gaps remain in several development areas Poor data quality, lack of timely data and unavailability of disaggregated data on important dimensions are among the major challenges As a result, many national and local governments continue to rely on outdated data or data of insufficient quality to make planning and decisions Strengthening data generation and the use of better data in policymaking and monitoring are becoming increasingly recognized as fundamental means for development (United Nations, 2015)

In taking actions to ensure environmental sustainability we need to know the value of the natural resources Various valuation techniques have been developed to assess the

introduced in the 1980s in an essay entitled “Towards the measurement of total economic value” by Peterson and Sorg (1987) The total economic value of marine protected areas comprises both its use and non-use value components

Remoundou et al., 2009 cited in Shammi A and Tai S Y, 2013 explains that “Use value denotes a set of benefits resulting from direct use of the resources by individuals However, non-use values consist of the values that a person attaches to environmental goods and services although they themselves do not use it Use Values can be divided into Direct Use Values and Indirect Use Values Direct Use Values include both extractive uses and non- extractive uses Examples for extractive values from a marine reserve are fisheries, pharmaceuticals, etc Recreation, tourism, research and education are some examples for non-extractive uses from a marine reserve area Indirect use value (IUV) refers to different kinds of important ecosystem functions that are vital to the survival of marine resources Act as habitat for different fish species and control

Figure 2.1 Total Economic Value framework: Use and non-use values of a marine eco system

coastal erosion are some of the examples for indirect use values from a marine reserve area”

“Benefits that can be generated without any physical use are denoted as Non-use values (NUV) Non-use values can be categorized in to Option, Bequest and Existence Values Optional Value is based on how much individuals are willing to pay today for the option of preserving the asset for future (personal) direct and indirect use” (Shammi A and Tai S Y, 2013)

Bequest Value, while excluding individuals’ own use values, is the value that people derive from knowing that others (perhaps their own offspring), will be able to benefit from the resource in the future Bequest value (BV) consists of the knowledge that future generations may benefit by preserving important marine ecosystems (McConnell, 1983) Existence value (EV) is defined as what people are willing to pay

to protect the marine ecosystems even if it does not render any benefit but simply because it exists Some economists (Feenberg and Mills, 1980) prefer the resource valuation methodology used for nonmarket goods be based on observed consumption behavior Total Economic Value framework and some examples for the values generated by a marine ecosystem are presented in figure 2.1

Source: Adapted from Spurgeon et al, 1992 and Munasinghe and Lutz, 1993

Total economic value Use value

Direct use Indirect use

Physical Protection

Marine ecosystem Beaches

Land forms Coastal extension Global life support Carbon and Calcium store

Future use Future

generation use

Coral reef habitats Endangered species Conservation and preservation of marine bio diversity

According to the literature there are three main families of valuation techniques They are direct market based approaches, revealed preference approaches, and stated preference approaches

(1) Market-based techniques use evidence from markets in which environmental goods and services are traded, markets in which they enter into the production functions for traded goods and services, or markets for substitutes or alternative resources

(2) Revealed preference methods estimate demand for an ecosystem good or service through statistical analysis of individuals’ willingness to incur the costs associated with benefiting from the good or service Values of certain cultural ecosystem services, notably recreation and aesthetic enjoyment, are often assessed using these methods, but revealed preference techniques may also be applied to any ecosystem service that involves incurring a measurable cost (Luke et al., 2010) These methods only measure use values There are two main methods:

(a) Travel cost method (TC), which is mostly relevant for determining

recreational values related to biodiversity and ecosystem services It is based on the rationale that recreational experiences are associated with a cost (direct expenses and opportunity costs of time) The value of a change in the quality or quantity of a recreational site (resulting from changes in biodiversity) can be inferred from estimating the demand function for visiting the site that is being studied (Bateman et al., 1993)

(b) Hedonic pricing (HP) approach utilizes information about the implicit

demand for an environmental attribute of marketed commodities For instance, houses or property in general consist of several attributes, some

of which are environmental in nature, such as the proximity of a house to

a forest or whether it has a view on a nice landscape Hence, the value of

a change in biodiversity or ecosystem services will be reflected in the change in the value of property (either built-up or land that is in a (semi-) natural state) By estimating a demand function for property, the analyst can infer the value of a change in the non-marketed environmental benefits generated by the environmental good (Luke et al., 2010)

(3) Stated preference methods are based on surveying representative samples of a population in order to estimate willingness to pay for hypothetical changes in ecosystem service provision SP techniques are very widely applicable, used for example for biodiversity, and are the most commonly used techniques to capture non-use values (UNEP-WCMC, 2011)

(a) Contingent valuation uses a direct question of willingness to pay for a

specified change Uses questionnaires to ask people how much they would be willing to pay to increase or enhance the provision of an ecosystem service, or alternatively, how much they would be willing to accept for its loss or degradation

(b) Choice experiments estimate implicit values from choices between

options with different specified characteristics It attempts to model the decision process of an individual in a given context (Hanley and Wright, 1998; Philip and MacMillan, 2005) Individuals are faced with two or more alternatives with shared attributes of the services to be valued, but with different levels of attribute (one of the attributes being the money people would have to pay for the service)

According to the literature some valuation methods are more appropriate than others for valuing particular ecosystem services and for the elicitation of specific value components Table 2.1 shows the links between specific methods and value components

Table 2.1 Relationship between valuation methods and value types

Mitigation/ Restoration cost

Direct and indirect use

Production- based

Production function

Factor income Indirect use

Revealed preference Travel cost method

Direct (indirect use)

Source: UNEP-WCMC (2011)

Travel Cost Method:

Travel cost method is one of the methods which use to estimate the economic value of environmental goods and services It is generally used to calculate the economic value the recreation sites

Individual and Zonal TC methods

As discussed above travel cost method stated that the main costs of outdoor recreation are the travel and time costs incurred to get to the recreation site TCM is used to derive the demand function for visits to a site and the area between the demand curve and the price line gives the consumer surplus for that site The TCM has been widely used in the past for the values of recreational activities (Bennett,1996; Haab and McConnell, 2003)The main advantage of the travel cost approach is that it is based on actual choices rather than the stated preference (willingness to pay) in a hypothetical situation(Shammi A and Tai S Y, 2013)

In individual travel cost method, use a more detailed survey data of individual visitor

to a particular site to estimate the recreational demand while in zonal travel cost method mostly secondary data are used to estimate the recreational demand of that particular site as a whole The individual travel cost models are generally preferred over the zonal travel cost model The zonal travel cost model is statistically inefficient since it aggregates data from a large number of individual observations into a few

zonal observations (Georgiou et al., 1987 in Sukanya das, 2013)

An advancement of the travel cost model was substantiated in 1947 by Harold Hotelling, in reply to a request from the National Park Service on how to measure benefits (Arrow and Lehmann, 2005) Following that, Clawson first estimated the recreational demand by initiating the idea of TCM (Clawson, 1959; Clawson and Knetsch, 1966) to estimate demand for a recreation site and measure the consumer surplus (Bockstael, et al., 1986).According to Shammi A and Tai S Y, 2013, the travel

cost method possesses one of the most debatable weaknesses, which is accounting for the opportunity cost of travel time, conducting multi-purpose sites and multi-destination trips

TCM has some limitations when valuing marine protected areas TCM fails to give true welfare measures because it is based on the traditional Marshallian demand curve (Mitchell and Carson, 1989) Moreover, most of the visitors may be ‘meanderers’ or multi-purpose or multi-site visitors that would cause distortions in the regression analysis (Hanley and Spash, 1993)

Multi-destination trips:

Single destination trip involves the individual going directly to the recreation site, and then returning directly to his or her home Therefore all out-of-pocket cost and travel time are used to visit the site in question for the recreation activity being modeled A multi-destination trip is such that an individual has another destination on the way to the recreation site, nearby the recreation site or on the way back home In this case we cannot interpret the entire trip cost as the price paid for visiting any one particular site (John et al, 2000) If these multi-destination observations are treated in the same way

as single destination trips, Haspel and Johnson, 1982 in John et al, 2000 claim that the

TCM will overestimate the benefits of a trip to the particular study site To get rid of this problem Smith and Kopp, 1980 suggested is to identify such individuals from survey questions or statistical analyses and drop them from the sample But then it will underestimate the total recreational benefits of the site Moreover to minimize this problem Gum and Martin, 1975 have made a suggestion to identify the cost share of each destination Another way of dealing with these multi destination individuals is separate travel cost by directly asking the people what share of their travel cost is allocated to each destination, or dividing up total trip cost by length of stay at each destination Mendelssohn et al (1992) have suggested treating multi-destination visitors as demanding a bundle of sites It is this bundle of sites that is valued Parsons and Wilson (1997) in their study treated the incidental visits to other recreation sites as complements to the study site, and include multi destination trips in the demand estimation These multi-destination (MD) trips are distinguished from single destination or primary purpose (PP) trips by a dummy variable in the regression The dummy variable and its interaction with price capture the shift and rotation of the demand function, respectively

Travel Time

According to Chae et al., 2011 the opportunity cost of travel time, which represents the value of the time taken for travelling, is a sensitive issue in recreational demand studies While most travel cost studies have considered the opportunity cost of travel, these have been applied in different ways such as using a fraction of wage rate, excluding leisure time when calculating travel cost etc… (e.g Cesario, 1976; McConnell, 1992; etc.) There is no consistently agreed rule as to how these costs should be applied Cesario and Knetsch (1976) suggested that the opportunity cost of travel time would be some proportion of the wage rate and used 60% of the wage rate

in a recreation analysis

Cesario (1976) provided an early cogent discussion of the incorporation of the value of time into travel cost models Despite the decades of research into the value of time Randall’s (1994) observation that “the cost of travel time remains an empirical mystery” remains valid and estimating the value of travel time (or, in most cases,

rather the opportunity cost of time) remains a frequently discussed problem in the literature on TCM (e.g., Hanley and Barbier 2009, Garrod and Willis 1999)

Regarding the value of on-site time, McConnel (1992) argued that the opportunity cost

of on-site time should be included in the price variable McConnel concluded that accounting for on-site time presents such a difficult problem that no systematic method had been developed, either conceptually or empirically Smith, Desvousges and

McGevney (1983) suggested that cost would be some proportion k of each individual’s

wage rate

Cesario’s (1976) suggestion that commuter’s travel time values of 25–50% of an individual’s wage rate was widely adopted Using a fraction of wage rate has remained probably the most common approach, with the compromise value of 33% being the most broadly accepted level (Hellerstein and Mendelsohn 1993, Garrod and Willis

1999, Gürlük and Rehber 2008)

In a further development, Feather and Shaw (1999) used shadow wages (the values of extra units of leisure time) as the opportunity cost of travel time and compared this with previous approaches (using a fraction of wage rate and hedonic wage equations)

Climate change impacts on the visitation rates of visitors to HMP

Climate change has been defined as “a change in the state of the climate that can be identified (e.g using statistical tests) by changes in the mean and/or the variability of its properties and that persists for an extended period, typically decades or longer” by The Intergovernmental Panel on Climate Change (IPCC, 2007) IPCC definition of Climate Change refers to any change in climate over time whether due to natural variability or as a result of human activity and that is quite dissimilar in the usage of the United Nations Framework Convention on Climate Change (UNFCCC), where climate change refers to “a change of climate that is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and that is in addition to natural climate variability observed over comparable time periods” (IPCC, 2007) Both natural and anthropogenic drivers cause climate change Sea level rise, global warming, changes in precipitation patterns, increase in extreme climate events are some of the climate change impacts identified Sri Lanka being an island is

susceptible to these identified climate change impacts IPCC’s Forth Assessment Report (AR4) in 2007 projected a global average temperature increase in the range of 0.3- 4 0C at the end of the 21st century (IPCC, 2007) Not only that these impacts of climate change surely make negative influence on environmental processes but also many socio economic activities of the country are vulnerable to these bad impacts

Sea level rise is also a result of warmer climate It may cause many negative consequences to the marine eco systems including flooding, salinization of fresh

water, damage to infrastructure and beach erosion, According to Cruz et al, 2007 the

current sea level rise rate in coastal areas of Asia is reported to be 1-3 mm per year which is marginally greater than the global average With the increase of global warming sea level rise is accelerated It will cause socio economic problems to coastal regions and coastal eco systems specially with the coastal erosion and inundation Sri Lanka being a country with beautiful low lying beaches attracts many local and foreign visitors It creates many employment opportunities around HMP which is situated in south down of Sri Lanka

Despite the popularity of the marine protected areas as a management tool, increasing evidence shows that many fail to achieve conservation objectives Although several MPAs exist in Sri Lanka, most are not managed, and resource extraction and habitat degradation continue unabated At present the declaration and management of many MPAs is carried out without adequate consideration of the ecology, socio economic realities, or long term management sustainability MPAs vary from large fishery reserves and multiple use parks to small strict conservation zones and sanctuaries depending on habitat, resource available for management and conservation objectives (Nishan et al, 2007)

Cabinet approval had been granted to the Ministry of Fisheries in 1980 to declare Hikkaduwa harbor area as a marine sanctuary and it was not preceded Then in 1982 under the Inter Ministerial Committee on Marine Parks and Sanctuaries formed by National Aquatic Resources Agency (NARA) Hikkaduwa was declared as a marine sanctuary in order to conserve coral reefs in the near shore However the absence of proper management and anthropogenic activities caused the reef degrade Glass bottom boat anchoring on the live corals, reef walking by visitors and glass bottom

operators, coral and shell collection, effluent discharges from hotels, ornamental fish collection, sedimentation due to coastal erosion, coastal construction and river runoff are few reasons which resulted in coral reef degradation In 1985 De Silva and Rajasuriya proposed a management strategy and some recommendations such as displaying colorful boards which indicates the sanctuary area and its regulations, licensing glass bottom boats through local government authorities and zonation of the reef area Further management actions taken by the management authorities were not succeed For an example, attempt was taken to stop fishing with in the sanctuary by the Department of Wild life Conservation in 1993 and it was not succeeded due to conflicting interests and legislations More over the guards assigned by the Department

of Wild life Conservation to protect the reef from destructive actions were not successful in preventing major causes to damage the coral reef (Rajasuriya et al, 1995)

There is lack of proper management plan to HMP yet Literature shows that earlier management efforts were failed due to lack of information on the value of recreation site which did not enter the cost/ benefit analysis There is lack of literature on the estimation of the value of the recreation site even Rajasuriya et al, 1995 highlighted the need of research to develop economic models to determine the value of reef resources and how they can be used in a sustainable and it recommends to carry out awareness program on the value of the reef adjacent area and the coral sanctuary which is now treat as a marine park to educate its stakeholders Hence there is a need

to estimate the recreation value of HMP to implement a proper management plan

CHAPTER 3: METHOD 3.1 Selection of Study Area

This study focuses on the Hikkaduwa Marine Park, a very popular recreational site for local population and for tourists, which was selected purposively as the study site due

to its well-recognized importance as a recreational site and a site with enormous environmental and socio economic values needing protection and management This site is located in Hikkaduwa, which is a coastal town, notorious for its sandy beaches, clear blue sunny sky, surfing sites, coral reef and tourism The study area is shown in Figure3.1

Figure 3.1 Map of Hikkaduwa Marine Park

Hikkaduwa town is located in Southwest coast in Sri Lanka and it belongs to Wellabada Pattu AGA’s division Generally it has a tropical climate The average annual temperature is around 26.7 0c and annual average precipitation is around 2862mm.Southern Sri Lanka consists of three main districts including Galle, Matara and Hambantota Hikkaduwa belongs to the Galle district and there are 19 DS divisions in Galle district The highest population of Galle district is reported from Hikkaduwa DS division in 2012 It is 101909 people (Census of Population and Housing, 2012) Talking about the employment,of the Hikkaduwa community, the majority are engaged in the tourism industry, directly or indirectly Some examples are gem business, restaurants, guest houses, trade stalls, touring, guiding, bathik art, garments, handicrafts etc Further they are engaged in the fishing industry, coir industry, few in agriculture and in the government sector as well However the economy of Hikkaduwa today is mainly based on the tourism industry Its attractiveness to both foreign and local visitors is strongly related to the presence of a beautiful beach with a coral reef and, the amazing under water marine environment extremely rich with colorful reef fish and sea grasses Moreover the recreational activities around the coral reef include surfing, coral watching, scuba diving, snorkeling etc The presence of a “glass bottom boat service” attracts many local visitors to the site who wants to observe the underwater reality of the Hikkaduwa Marine Park without wetting their feet

Figure 3.2 Detailed map of Hikkaduwa Marine Park

Source: IUCN Sri Lanka and the Central Environmental Authority (2006)

Hikkaduwa Marine Park is located on Sri Lanka’s southwestern coast in the Galle District of the Southern Province- approximately 100 km south of Colombo and 15 km north of Galle, at a latitude of 6'09'N and longitude 80'08'E It is 104 ha in extent and consisting of the reef lagoon and adjacent areas It is the first Marine Protected Area (MPA) in Sri Lanka with a coastline of approximately 1.35Km and located between the Hikkaduwa fisheries harbor and rocky islets near Coral Garden Hotel (figure 3.2)

It can be accessed by train and bus like public transport methods, which are quite convenient, because it is found by the side of the Galle-Colombo A2 main road Those who are travel by train can get down from Hikkaduwa Train Station which is located near the Hikkaduwa bus stand It was declared as a Marine Reserve in May 1979 under the Fauna and Flora Protection Ordinance and later its status was updated as a marine reserve It is the first of the two marine sanctuaries in Sri Lanka, selecting from recommendations made of about 20 marine protected areas

As the first true MPA declared in 1961 at Hikkaduwa, it was initially managed as a fisheries protected area under the Fisheries Ordinance to halt indiscriminate fishing (HSAMMSCC, 1996) Subsequently, marine sanctuary was declared in 1979.In 1998,

it was declared a Nature Reserve and the protected area was extended to 104 ha, after

which it was upgraded to the status of a National Park in 2002 (Rajasuriya et al, 2002)

Department of Wild Life Conservation of Sri Lanka is the management authority of HMP at present

The physical features of HMP were explained in IUCN Sri Lanka and the Central Environmental Authority, 2006 as “The Hikkaduwa reef has a shallow reef crest enclosing a shallow reef lagoon on the leeward side The lagoon has a depth of 0.5-1.5m and is dominated by stands of live and dead coral interspaced by sand This award side of the reef crest has an outer reef slope composed primarily of limestone and some live coral The Hikkaduwa Ganga and several small canals open out to the sea near the reef Sediment transport along the coastline is predominantly northwards Hikkaduwa is located in the south western wet zone and receives an annual rainfall of over 2,000 mm Mean average temperature is around 270 C The area is influenced by the southwest monsoon, which results in rough seas and strong winds and currents

freshwater input and resuspension of bottom sediments” Further coral reef consists of

60 species of hard coral along with over 170 species of coral reef fish Butterfly fish, Parrot fish and snappers are some examples for reef fish in Hikkaduwa Cabbage like Montipora corals, branching Acropora corals along with boulder type and encrusting corals can be found in Hikkaduwa More over turtles have made this a habitat for them Three species of globally endangered turtles can be found in the reef (IUCN Sri Lanka and the Central Environmental Authority, 2006) However the El Nino event taken place in 1998 made a severe damage to the coral cover of HMP More over the Tsunami event occurred in 2004 resulted in a considerable damage to the reef Apart from the damage caused by the El Nino event in 1998 and the Tsunami incident in

2004, high sedimentation, physical damage to corals from glass bottom boats, pollution and uncontrolled tourism are threats which cause degradation of the ecosystem

Source: Exploresrilanka, 2015

Source: Exploresrilanka, 2015

Source: Exploresrilanka, 2015

Source: Exploresrilanka, 2015

Further the beach area is famous among tourists and some activities like snorkeling, swimming, coral watching by using glass bottom boats are common to see in HMP

Today the local economy of HMP is driven primarily by the tourist industry Tourism

is the sixth largest foreign exchange (FE) earner of the national Foreign Exchange (FE) Receipts per tourist per day US $ 98.0 in 2011 in Sri Lanka (Sri Lanka Tourism Development Authority, 2011)

Surveys show that over 1,500 people are directly employed in the industry and there

are over 300 tourist related establishments (CTI3, 1992b) Most of the establishments are owned by people living in the area and the total revenue generated in 1992 was around Rs 188.16 million ($W S 3.84 million) Tantrigama, 1994)

Not only HMP but also there are various places around it which attracts the visitors Seenigama Dewalaya (a Temple of God), Turtle hatchery center, Tsumani museum are some of these attractions

3.2 Population and sample

Sampling is the key to survey research The visitors to the Hikkaduwa Marine Park were first divided in to two categories; local and foreign visitors The total local and

sample consisted of 110 visitors to the Hikkaduwa |Marine Park above the age of 18;

68 local visitors and 44 foreign visitors The sample size was limited to 110, due to time, cost and other resource limitations

3.3 Sampling method

The method of Convenience Sampling was used to select the sample of the study Convenience sampling refers to the non-probability process by which a scientist gathers statistical data from the population This form of selection is done based on the ease of obtaining empirical data Rather than gathering a more accurate array of data from the population, the researcher simply gathers data from people nearby This sampling method is frequently used for preliminary research work since it requires less time and money than random sampling Moreover, the population considered here consists of visitors to HMP, which is a variable and unknown population, of whom a sampling frame does not exist Hence simple random sampling method was not employed in this study Every odd numbered visitor whose age is more than 18 years was interviewed which I met at the marine park However, it should be noted that, even though this method of sampling is easy and quick, it might not represent the population adequately

3.4 Data collection

Data were obtained from both primary and secondary sources, as described below

3.4.1 Secondary sources of data

parks and observations, which consisted of reports, books and journal articles Further data on numbers of local and foreign visitors to Hikkaduwa Marine Park were obtained from the statistics maintained by the Wild Life Department of Sri Lanka

3.4.2 Primary sources of data

A questionnaire survey was employed to obtain primary data Further observations on travel benefits, Discussions with tour guides and hoteliers were the other primary data collection methods

Survey questions were formulated in such a way to obtain information to construct a recreational demand model using the Travel Cost Method The questionnaire was made of three main parts: a visitor’s socio economic characteristics such as age, sex, marital status, education, average monthly income, family size, number of dependents, etc; b recreational travel characteristics such as where the respondent started the journey, expenses related to the journey, respondent’s mode of travel, number of visits per year, average duration of stay, alternative sites to HMP etc… and c the respondent’s response for a change in the features of the marine park due to climate change 120 questionnaires were distributed of which only 110 questionnaires were used for the analysis, since 10 questionnaires did not furnish adequate information due

to respondent’s low interest in filling up the whole questionnaires due to the time constraints, thus avoiding giving exact figures etc

First a pretest was carried out and after, making minor adjustments to the questionnaire, the questionnaire was then administered to the sample of respondents The survey was conducted both during week days and weekends to take into account the significant variation in numbers of visitors during these two time segments For the local visitors the interviews were conducted in the Sinhala language (local language) since almost all the local visitors were quite familiar with Sinhala language, which made it so easy to capture their ideas, while for the foreign visitors the questionnaire was translated into English The visitors were interviewed individually It took about five to seven minutes to complete the questionnaire and most of the respondents expected the investigator to read questions to them This also prevented any misunderstanding of the questions by the respondents, since the investigator could explain well the questions to them A mail questionnaire survey was also conducted However, this method was not found to be fruitful due to the busy schedule of tourists who hardly spent their free time at the hotel room to fill questionnaires

3.5 Theoretical Concepts

Hikkaduwa is a public site, with no admission fee People who use the resources and services of the HMP, do not pay for them So it is impossible to measure the value of this site by using market prices

Therefore, this study employed the Travel Cost Model (TCM) to value the HMP TCM

is a survey based technique where a questionnaire is administered to a sample of visitors at a site in order to ascertain their place of residence; necessary demographic and attitudinal information; frequency of visit to the site under consideration and other sites; and trip information such as purposefulness, length, associated costs, etc From such information, visit costs can be calculated and with the other relevant information gathered by the questionnaire a demand function for the site can be developed In the simplest case this demand function can then be used to estimate the recreation value of the whole site

The TCM evaluates the recreational use value for a specific recreation site by relating demand for that site (measured as site visits) to its price (measured as the costs of a

visit) A simple TCM model can be defined by a 'trip-generation function' (tgf) such as

V = f (C, X) (1)

Where,

V = visits to a site

C = visit costs

X = other socioeconomic variables which significantly explain V

The literature on TCM deal with two basic variants of this model according to the

particular definition of the dependent variable V (Sukanya das, 2013) They are

number of visits made per year by individual to a particular site and visits from a particular zone to a particular site

01 The Individual Travel Cost Method

The 'Individual Travel Cost Method' (ITCM) simply defines the dependent variable as the number of site visits made by each visitor over a specific period, say one year

The individual travel cost model estimate individuals’ recreation demand functions This is done by observing the visitation rate of individuals who make trips to a recreational facility as a function of the travel cost The value of a recreation site to an individual is the area under each demand curve summed over all individuals

We can specify the individual travel cost model as:

Vij = f (Cij, Eij, Si, Ai, Yi, Hi, Ni, Mi)

where, Vij = number of visits made per year by individual i to site j

Cij = individual's total visit cost of visiting site j

Eij = individual i's estimate of the proportion of the day's enjoyment which was

contributed by the visit to site j

Si = dummy variable; individual i's assessment of the availability of substitute sites -Ai = age of individual i

Yi = income of individual i's household

Hi = size of individual i's household

Ni = size of individual i's party

Mi = dummy variable; whether individual i is a member of an outdoor or environmental organization

The demand curve for the site is illustrated by taking number of visits per year as the independent variable and total travel cost as the dependent variable Integrating under this curve gives us our ITCM estimate of consumer surplus per individual Consumer surplus for the site is then obtained by multiplying the individual consumer surplus with the number of individuals visiting the site annually

02 Zonal Travel Cost Method

The 'Zonal Travel Cost Method' (ZTCM) on the other hand, partitions the entire area from which visitors originate into a set of visitor zones and then defines the dependent variable as the visitor rate (i.e., the number of visits made from a particular zone in a period divided by the population of that zone)

The ZTCM approach redefines the trip generating function (tgf) as;

Vhj/Nh = f (Ch,Xh)

where: Vhj = Visits from zone h to site j

Nh = Population of zone h

Ch = Visit costs from zone h to site j

Xh = Socioeconomic explanatory variables in zone h

The visitor rate, Vhj/Nh, is often calculated as visits per 1,000 population in zone h Discussion of the ZTCM is illustrated by reference to a constructed example detailed

in Table 3.1 which estimates the recreation value of a hypothetical site The method proceeds as follows:

Figure 3.3 Individual travel cost model – Illustrative demand curve

Table 3.1 Consumer Surplus Estimates for the Whole Recreation Experience Using the ZTCM

Average travel cost per

household visit (4)

Consumer surplus per households

- all visits

(5)

Consumer surplus per household per visit (6)

Total consumer surplus

(7)

Source: Bateman (2003)

The steps involved in estimating ZTCM can be summarized as:

(i) Initially the data on the number of visits made by households in a period and their origin is collected via on-site surveys

(ii) The area encompassing all visitor origins is subdivided into zones of increasing travel cost (column 1 of Table 1) and the total population (number of households) in each zone noted (column 2)

(iii) Household visits per zone (column 3) is calculated by allocating sampled household visits to their relevant zone of origin

(iv) The household average visit rate in each zone (column 4) is calculated by dividing the number of household visits in each zone (column 3) by the zonal population (number of households; column 2)

(v) The zonal average cost of a visit (column 5) is calculated with reference to the distance from the trip origin to the site

(vi) A demand curve is then fitted relating the zonal average price of a trip (travel cost)

to the zonal average number of visits per household The curve estimates the demand for the "whole recreation experience"

Figure 3.4 shows the whole recreation experience demand curve The estimation of this curve involves the implicit assumption that households in all distance zones react

in a similar manner to visit costs They will make same number of trips if faced with the same level of costs

(vii) In each zone the household consumer surplus for all visits to the site (column 6) is calculated by integrating the demand curve between the price (cost) of visits actually made from each zone and that price at which the visitor rate would fall to zero

(viii) The annual total consumer surplus for the whole recreation experience is estimated in each zone, total household consumer surplus must firstly be divided by the zonal average number of visits made by each household to obtain the zonal average consumer surplus per household visit (column 7) This can then be multiplied by the zonal average number of visits per annum (column 3) to obtain annual zonal consumer surplus (column 8)

(ix) Cumulating annual zonal consumer surplus (column 8) across all zones gives our estimate of total consumer surplus per annum for the whole recreational experience of visiting the site

Source: Sukanya das, 2013

3.6 Data Analysis

The survey data were tabulated using Microsoft Excel Data were analysed using descriptive statistics such as graphs, charts etc Linear regression analysis was performed using SPSS package to develop the recreational demand function model for Hikkaduwa Marine Park

Figure 3.4 whole recreation experience demand curve

CHAPTER 4 RESULTS and DISCUSSION

4.1 Selected Socio economic and Demographic characteristics of the local visitors

to the Hikkaduwa Marine Park

The selected socio economic and demographic characteristics of the local visitors to the HMP are given in Table 4.1 The sample consisted of 71% males and 29% females Sixty nine percent of the local sample was married 87% of the respondents were Buddhists and the rest (13%) belonged to other religions A local visitor had an average family size of 4.32 while the average number of dependents of a local visitor

4.2 Detailed Analysis of selected Socio economic and Demographic characteristics

of the local visitors to HMP.

4 2.1 Age distribution of the local visitors

Age is a factor which is closely related to many decisions of our lives The way we behave our preferences (towards everything, including meals, clothes, friends, hobbies), where we travel and with whom we travel: all these choices vary with age