1. Chul-Oh Shin · Won-Keun Chang Korea Maritime Institute
Assessing the Economic Benefit of Natural Preservation from Marine Protected Area
A Case Study of Saeng-Do Island, Busan
7. June 2007
Chul-Oh Shin · Won-Keun Chang
Korea Maritime Institute

2. A Case of Estimating Economic Benefit from MPA
Presentation Organization
Section 1 Introduction
Section 2 MPA and Economic Valuation
Section 3 Case Study Site: Saeng-Do Island
Section 4 Measurement Method and Survey Design
Section 5 Estimation Results
Section 6 Concluding Remarks
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
1/19

3. A Case of Estimating Economic Benefit from MPA
1. Introduction
A Case of Estimating Economic Benefit from MPA
Marine Protected Areas (MPAs) is a major policy tool
protecting endangered species
conserving natural resources
pristine environments
supporting marine biodiversity
425 MPAs (10,603.6 km2)
Wetland Protected Areas, Coastal and Marine National Parks, Fisheries Resources Protected Areas, Marine Resources Conservation Areas, Ecosystem Reserves, Bird Habitat Protection Areas, Uninhabited Islands for the Special Protection, Natural Heritages, and Underwater Landscape Sites
Economic benefit using the economic valuation technique
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
2/19

4. 2. MPA and Economic Valuation
A Case of Estimating Economic Benefit from MPA
Benefit and Cost from MPAs
Benefit (direct use value and non-use value):
Ecosystem goods and services
Fisheries - increased fish catches
Tourism - increased tourism and recreation opportunities
Esthetic values - people’s psychological satisfaction
Cost
Direct costs - construction of infrastructure, establishing legal basis, operation costs (e.g. enforcement costs)
Indirect and opportunity costs (negative impacts for the visitors, costs of developing infrastructure outside of MPA, increased certain species and their impact on others)
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
3/19

5. 2. MPA and Economic Valuation
A Case of Estimating Economic Benefit from MPA
Willingness to pay (WTP)
The cornerstone principle in measuring the benefit from the marine environmental protection is the concept of the consumer’s WTP
Represents the amount people would be willing to pay to avoid a marine environmental degradation for the specific sites (e.g.. Saeng-Do Island) or to achieve a stated improvement
WTP concept is not only consistent with the tenets of modern welfare economics, but is also related to the actual benefit produced by MPAs
Contingent Valuation (CV) method
Mainstream approach to environmental valuations
Maximum willingness-to-pay (WTP)
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
4/19

6. A Case of Estimating Economic Benefit from MPA
3. Saeng-Do Island
A Case of Estimating Economic Benefit from MPA
Status of Saeng-Do Island
Location: 1.4 km from port of Busan
Size: 8,088 m2
Government ownership, high fishery pressures
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
5/19

7. 3. Saeng-Do Island Geographic Scope 6/19
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
6/19

8. 3. Saeng-Do Island Status of Saeng-Do Island 7/19
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
7/19

9. 4. Measurement Method and Survey Design
A Case of Estimating Economic Benefit from MPA
Sampling and Survey Methods
Random sampling (considering population distribution and sex ratio in Busan)
Resident of 400 Busan metropolitan areas
Whose ages range from 20 to 65
Face-to-face interviewing survey (20 to 30 minutes)
Operated by the private survey company
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
8/19

10. 4. Measurement Method and Survey Design
A Case of Estimating Economic Benefit from MPA
The Payment Vehicle
The payment vehicle used for this study included price of the anti-spam program.
The anti-spam program has a private function used only for its owners.
The WTP question format asked each respondent to pay a particular dollar amount for every year as a local tax payment.
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
919

11. 4. Measurement Method and Survey Design
A Case of Estimating Economic Benefit from MPA
Survey Instrument and the Elicitation Method
Respondents were asked for the amount of money that they would be willing to pay to prevent environmental degradation and to clean up the Island.
Specifically, One-And-One-Half Bound question (Cooper et. al.(2002)) employed in this study is a frequently used elicitation method in DC-CV studies.
The sets of the first original bids used in this study were: 1,000, 2,000, 3,000, 4,000, 5,000, 6,000, 7,000, 8,000, 9,000, 10,000 won.
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
10/19

12. Show Card 1 Current Status 생도지역 바다의 오염 사례 방치된 선박 잔해와 각종 쓰레기
바다 밑에 방치된 폐그물과 낚싯줄
통발과 그물의 잔해 모습

13. Degradation from fishing
Show Card 2
Current Status
Degradation from fishing
바다 밑에 방치된 낚시 미끼
무단으로 상륙하여 낚시를 하는 모습

14. Show Card 3 Efforts to clean up Saeng-Do
생도에 대한 조사와 쓰레기 수거작업을 하고 있는 해양구조단의 작업 모습

15. Abundance of Biodiversity
Show Card 4
Future Status 범돔
청줄돔
거북복
쏠베감팽
Abundance of Biodiversity

16. Show Card 5
Future Status
Coral reef

17. 4. Measurement Method and Survey Design
A Case of Estimating Economic Benefit from MPA
Let be the index for each respondent in the sample
(1)
The log-likelihood function for the spike model is given by:
(2)
The mean WTP in the model can be calculated as:
(3)
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
16/19

18. A Case of Estimating Economic Benefit from MPA
5. Estimation Results
A Case of Estimating Economic Benefit from MPA
Estimation Results
Variables
Estimates
Constant
0.5867
(3.74)*
Bid
-0.262
(-9.21)**
Number of observations
Log-likelihood
400
Wald statistic a
(p-value)
369.42
(0.00)**
Mean WTP(C+)
t-value b
95% confidence interval c
99% confidence interval c
2,850 won
10.92**
[2, ,429 won] [2.53 – 3.60 USD]
[2, ,340 won] [2.60 – 2.39 USD]
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
17/19

19. A Case of Estimating Economic Benefit from MPA
5. Estimation Results
A Case of Estimating Economic Benefit from MPA
Expanding from Sample to Population Estimates of WTP
Scenarios
Estimates (annual value)
Lowest estimate
2,705,470,407 won [app. 2,847,863 USD]
Middle estimate
3,203,402,850 won [app. 3,372,003 USD]
Highest estimate
3,757,163,340 won [app. 3,951,750 USD]
Number of household in Busan: 1,124,001
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
18/19

20. A Case of Estimating Economic Benefit from MPA
6. Concluding Remarks
A Case of Estimating Economic Benefit from MPA
Value for the marine resources
Saeng-Do Island has much marine environmental resources in Busan metropolitan area
Non-use value from the MPS
Basic benefit data for the Regulatory impact analysis
One-And-One-Half Bound Methodology
The 1st applied case in Korea
Improved methodology in estimating WTP
Chul-Oh Shin and Won-Keun Chang Korea Maritime Institute
19/19

21. A Case of Estimating Economic Benefit from MPA
Thank You