UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS VALUATION OF RECREATIONAL SERVICE BY THE MANGROVE ECOSYSTEM IN THANH PHU NATURAL RESERVE BY NGUYEN THI DIEU THUY MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, November 2015 UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS VALUATION OF RECREATIONAL SERVICE BY THE MANGROVE ECOSYSTEM IN THANH PHU NATURAL RESERVE A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By NGUYEN THI DIEU THUY Academic Supervisor: PHAM KHANH NAM HO CHI MINH CITY, November 2015 ABSTRACT This study is part of a research project conducted to estimate environmental service value of the mangroves in Thanh Phu ward, Ben Tre province, South Vietnam to inform policy makers in applying the Payment for Forest Environmental Services program The study set out to measure recreational value of the forest through ecotourism activities using Contingent Valuation Method with double bounded dichotomous choice model The result shows that willingness to pay is affected by income and whether respondent thinks that environmental issues in Vietnam are properly addressed Mean WTP calculated using parametric and nonparametric method is US $15.62 and US $12.61 respectively, which yields aggregate WTP at US $2,656,204 with a lower bound of US $2,146,273 Keywords: mangroves, ecosystem service valuation, Contingent Valuation Method, double-bounded dichotomous choice model Abbreviations: CVM – Contingent Valuation Method, WTP – Willingness to pay, PFES – Payment for Forest Environmental Services i ACKNOWLEDGEMENT My thanks goes to Dr Pham Khanh Nam for giving me the chance to participate in the study which this thesis is part of, for his constant supervising and for his invaluable advice in helping me finish this thesis I am also grateful to Dr Truong Dang Thuy for initiating my interest in the method used in this thesis and also for his advice I thank my mother for her support to make it possible for me to write this thesis I thank everybody at VNP for creating an academic environment where I learn skills and knowledge to write my thesis Specially, I would like to thank my classmate Nguyen Duy Chinh for giving me a lot of help and support when I work on the thesis ii TABLE OF CONTENTS ABSTRACT i ACKNOWLEDGEMENT ii TABLE OF CONTENTS iii LIST OF FIGURES vi LIST OF TABLES vi CHAPTER INTRODUCTION 1 PROBLEM STATEMENT RESEARCH OBJECTIVES RESEARCH QUESTIONS SCOPE OF STUDY THESIS STRUCTURE CHAPTER SUMMARY CHAPTER LITERATURE REVIEW ECOSYSTEM SERVICES VALUES MEASUREMENT OF WELFARE CHANGES REVIEW OF EMPIRICAL STUDIES 10 a Overall valuations of mangrove ecosystem services 11 b Valuations of recreational service for estuarine and marine ecosystems 12 c Valuations of recreational services as environmental goods using CVM 13 d Estimates of recreational services of mangroves in Vietnam and in other countries 14 CHAPTER SUMMARY 15 iii CHAPTER METHODOLOGY 16 CONTINGENT VALUATION METHOD 16 a Steps in implementing CVM 16 b Elicitation format for the WTP amount 17 SCENARIO AND PAYMENT VEHICLE 19 MODEL OF WILLINGNESS TO PAY 21 ESTIMATION OF WILLINGNESS TO PAY 22 a Parametric estimation 22 b Nonparametric estimation 24 DATA 27 CHAPTER SUMMARY 28 CHAPTER ANALYSIS RESULTS 29 OVERVIEW OF THANH PHU AND THE NATURAL RESERVE 29 a Thanh Phu district and tourism development 29 b Thanh Phu Natural Reserve 31 PRELIMINARY STATISTICS 35 a Descriptive statistics 35 b Correlation of coefficients 40 c Willingness to pay by bid levels 43 NON-PARAMETRIC ESTIMATION 45 DETERMINANTS OF WILLINGNESS TO PAY 45 PARAMETRIC ESTIMATION 47 AGGREGATE WILLINGNESS TO PAY 47 CHAPTER SUMMARY 48 iv CHAPTER CONCLUSIONS AND SUGGESTIONS 49 CONCLUSIONS 49 POLICY IMPLICATIONS 50 METHODOLOGICAL REMARKS 51 SUGGESTIONS FOR FURTHER RESEARCH 52 CHAPTER SUMMARY 53 BIBLIOGRAPHY 54 APPENDICES 62 v LIST OF FIGURES Figure Schematic representation of the ecosystem services Figure Extract of bid questions from questionnaire 20 Figure Administrative map of Ben Tre 29 Figure Map of Thanh Phu Natural Reserve’s current situation 32 Figure Shares of occupational groups in the sample 37 Figure Respondents’ knowledge about the situation of mangrove area in Vietnam 39 Figure Graph of survivor function after the tenth iteration 45 Figure Bootstrapping result for value of non-parametric WTP 73 LIST OF TABLES Table Bid groups 20 Table Classification of flora species in Thanh Phu Natural Reserve: 33 Table Some rare and threatened species in Thanh Phu Natural Reserve 34 Table Description and summary of respondents’ socio-economic characteristics 36 Table Ranking of importance of social issues in Vietnam 38 Table Ranking of importance of ecotourism benefits to respondents 39 Table Correlation of coefficients 41 Table Percent of ‘yes’ responses for different bid levels 44 Table Regression result of the bivariate probit function 46 Table 10 Estimate of mean WTP and confidence interval 47 Table 11 The first iteration of calculating TSCA 71 Table 12 The second iteration of calculating TSCA 72 vi CHAPTER INTRODUCTION PROBLEM STATEMENT Vietnam is one among the countries most vulnerable to climate change and the mangroves are one effective protection against sea level rise Mangroves also provide many other services including support for fishery and aquaculture, provision of food and raw material, carbon sequestration, water supply and regulation and recreational activities However, the mangroves are reported to have declined rapidly due to deforestation, from 408,500 hectares in 1943 to 155,290 hectares in 2000 of which only about 21% is of high-quality natural forest (Sam, D.D., N.N Binh, N.N Que, and V T Phuong, 2005) Funding is necessary to protect the mangroves, yet it is often lacking Drawing on the concept of payments for environmental services, a solution to generate and distribute cash for conserving ecosystems, the government has developed the national program of Payment for Forest Environmental Services (PFES) (Hawkin, 2010) Specifically, the Prime Minister has issued decree 99/2010 to guide the application of PFES to five groups of services provided by forests: soil related, water supply related, carbon sequestration, recreation based on natural landscape and finally, aquaculture-related In order to decide the levels of payment and also to make informed decisions of socioeconomics planning, it is important that policy makers know of the value of the services provided by mangrove forest This study is part of an assignment that arises from that need, seeking to gauge the economic value of the mangrove ecosystem in Ben Tre province Every day hundreds of tourists go to the beaches in the coastal district of Thanh Phu, Ben Tre (Quoc Vinh, 2015) Among the attractions are the clean beaches, cheap seafood and learning to the work on shrimp farms (Le Luong, 2015) These are supported by the presence of the mangroves besides its own green lush, which can interest tourists to pay to spend time in, learn from and support That way, Thanh Phu could follow Can Gio and capitalize on the current crowds of tourists to develop ecotourism centering on the mangroves Also, the mangrove ecosystem in Thanh Phu is officially recognized as a natural reserve and put under care of the authority The combination of mangrove forest presence, stewardship and available crowd of tourists makes Thanh Phu Natural Reserve an ideal place for carrying out evaluation of the recreational service using Contingent Valuation Method RESEARCH OBJECTIVES Firstly, the study will estimate the monetary value that tourists coming to Thanh Phu are willing to pay for the tourism service of the mangroves in Thanh Phu Natural Reserve, Ben Tre Secondly, the author will attempt to identify factors affecting this willingness to pay RESEARCH QUESTIONS The study seeks to answer the following questions: - How much the tourists coming to Thanh Phu are willing to pay for the tourism value of the mangroves in Thanh Phu Natural Reserve? - What are the determinants of this willingness to pay? PART 2: HYPOTHETICAL TRIP AND WILLINGNESS TO PAY Information about the mangroves in Vietnam Mangroves has very important role in coastal land expansion, dykes protection, erosion control, protection against storms and flying sand… In the 2004 Asian tsunami, areas with mangroves suffer much less damages Economically, mangrove forests are also sources of timber, firewood, inputs for industries and medicine Additionally, they are habitats for many species of insects, birds, reptiles, mammals, shrimps, crabs, fishes… In Vietnam, most mangroves areas are concentrated in the South In the North, due to cold winter and narrower estuaries, the areas of mangroves are smaller Along the Middle’s beaches there are few swamps, the majority of area is occupied by sand-banks; there are only spots of mangrove forests along the 1000km length Mangrove forests in the South have diverse and abundant biomass In Thanh Phu alone, there are 119 of vascular plant species belonging to 45 plant families Fauna in the forest includes many species such as oysters, ark shells, shellfishes, mussels, shrimps, crabs, fishes… There are also a lot of species living in the tree, on land, eating leaves, nectar, fruits and seeds such as monkeys, squirrels, mice, wild boars, bees Insect eating, meat eating, omnivorous species include otters, fishing cats, snakes, lizards, crocodiles, bats Another populous group is that of birds; they concentrate in spots of tens of thousands with storks, geese, pelicans, cranes, gulls… Mangrove forests in the South develop from the estuaries of Dong Nai river to Ha Tien, but thrive most in the area of nine estuaries of Delta and the Ca Mau peninsula Before 1945, the mangrove forests account for 400,000ha, concentrated mainly in the South (more than 150,000 in Ca Mau) After two wars, overexploitation, conversion for 65 aquaculture, tourism activities… the area of mangroves decreases rapidly In 1982 there is 252,000ha; in 1999 there is about 200,000 and in 2002 there is only 155,000 In 2005, mangrove forest area was 157,500 In recent years, the total mangrove forest area is increasing gradually, but the rest are mostly newly planted forest In 2010, total land area of mangroves was 171.514 hectares Scenario Suppose you are offered a tour of hours exploring the mangroves A paddling boat will take you into the forest This is an ecotourism tour which contribute to local economic development without damaging the environment In addition to a treat of calm relaxation, a tour guide will inform you with knowledge about forest He/she will tell and show you: - The state of mangrove forests in Vietnam and Ben Tre - How the forest serves as habitat and breeding ground for aquatic species - How the mangroves thrive in salty water and provide coastal protection against wind, storm and erosion to human - Other functions like nutrient cycling, water purification, raw material provision and carbon sequestration - The species and their biological features you may see in the forest, including mangrove plants, mollusk, crustacean, fish, amphibian species and birds (some are illustrated here) Đước - Rhizophoraceae Bần - Sounerrtiaceae 66 Bồ nông - Pelecanus Tắc kè - Gekko gecko The tour is organized by the Mangrove Forest Management Board In order to have this trip, you will need to pay a fee with cash by buying ticket from the Management Board Any profit will be used to support the conservation of the forest Would you pay a fee of to have that trip?  Yes  go to question  No  go to question If the fee is , would you pay it to have that trip? Yes  No  If the fee is , would you pay it to have that trip? Yes  No  10 Are you sure you would (not) participate if there is such a trip? Completely sure Sure Not very sure Not sure Completely unsure 67 11 What are the reasons you did not pay to take the trip? Choose up to three I cannot afford that amount I think the price is unreasonably high I am not interested in seeing and understanding the forest I prefer to spend time doing other activities I have visited a mangrove forest before I plan to visit a different mangrove forest PART 3: SOCIO-ECONOMIC INFORMATION 12 How old are you? Age: _ 13 Your gender:  Male  Female 14 Marital status:  Single  Married  Other, please specify: _ 15 Main occupation Government employment Private employment Self-employment (own business) Fisherman/ farmer Laborer/mechanic/tailor/skilled worker Overseas foreign worker Pensioner (retired) Other, please specify: 68 16 Highest education attainment Please give the highest level attended (For example, college – 3rd year) Educational attainment Highest level attended  No formal schooling  Elementary  High school  Vocational  College  Graduated  Post-graduated 17 Please list number of household members per age group Age group Number of household members Children (17 yrs) 18 Please list number of household members accompanying you here per age group Age group Number of household members Children (17 yrs) 69 19 Please check the average monthly HOUSEHOLD income bracket where your household belongs to (include the cash earning of all family members who are working or gainfully employed, including yourself)  Less than mil.VND  From 16 to |z| [95% Conf Interval] -+ -answer1 | bid1 | -4.49e-06 7.99e-07 -5.62 0.000 -6.06e-06 -2.93e-06 envissue | -.3351678 1762551 -1.90 0.057 -.6806215 0102859 income | 4.23e-08 1.62e-08 2.61 0.009 1.05e-08 7.41e-08 _cons | 1.596394 274777 5.81 0.000 1.057841 2.134947 -+ -answer2 | bid2 | -4.49e-06 7.99e-07 -5.62 0.000 -6.06e-06 -2.93e-06 envissue | -.3351678 1762551 -1.90 0.057 -.6806215 0102859 income | 4.23e-08 1.62e-08 2.61 0.009 1.05e-08 7.41e-08 _cons | 1.596394 274777 5.81 0.000 1.057841 2.134947 -+ -/athrho | 510512 2528743 2.02 0.044 0148875 1.006137 -+ -rho | 470344 1969326 0148864 7641593 -Likelihood-ratio test of rho=0: chi2(1) = 2.43777 Prob > chi2 = 0.1184 WTP estimation using Robb and Krinsky procedure, restricted version: + -+ | MEASURE | WTP | LB | UB | ASL* | CI/MEAN | | + + + + + | | MEAN/MEDIAN | 3.5e+05 | 313237.38 | 408273.75 | 0.0000 | 0.27 | + -+ *: Achieved Significance Level for testing H0: WTP0 scalars: r(CI_Mean) r(mean_UB) r(mean_LB) r(mean_WTP) = = = = 2720173459629142 408273.75 313237.375 349376.1571107929 79 ... SERVICE BY THE MANGROVE ECOSYSTEM IN THANH PHU NATURAL RESERVE A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By NGUYEN... mangrove ecosystem services, valuations of recreational value for estuarine and marine ecosystem, applications of CVM in valuation of recreational services and finally, estimates of recreational services... shows that the number of tourists coming to Thanh Phu keeps increasing with improvements in infrastructure and unfolding services (Quoc Vinh, 2015) THESIS STRUCTURE The thesis remains in four chapters