Quantifying the Costs and Benefits of Coastal Water Quality Improvements in the Ko Chang Marine National Park, Thailand

Environ. Process. Quantifying the Costs and Benefits of Coastal Water Quality Improvements in the Ko Chang Marine National Park, Thailand Sunida Piriyapada 0 Erda Wang 0 0 S. Piriyapada ( The water quality in Ko Chang Marine National Park coast has been problematic for many years. Recently, a conservation plan has been made by the local government for protecting the ocean beaches by constructing a sewage treatment plant in the region. This study uses the contingent valuation method (CVM) to measure the benefits associated with the proposal of the wastewater treatment plant (WWTP), followed by conducting cost-benefit analysis (CBA) in order to justify the feasibility of the public fund appropriation by the government fiscal policy, such as taxes. A completed questionnaire survey of 300 randomly clustered households was analyzed. Household willingness to pay (WTP) was estimated using Tobit models. The results indicate that the mean WTP for the proposed wastewater treatment project is $73.36 per household per year, translating into an aggregate monetary benefit of $298,774 per year for the local community. Additionally, the CBA result shows that the net present value (NPV) of the project attains $465,162.48 per year, internal rate of return (IRR) reaches 9.14 %, and benefit-cost ratio (B/C) ends up with 2.21 with all those intangible benefits excluded from the calculation. Therefore, the proposed wastewater treatment plant project is economically profitable. Willingness to pay; Contingent valuation; Cost-benefit analysis; Tobit model; Wastewater treatment plant 1 Introduction Thailand possesses a total coastline of about 2,600 km. Due to its unique geographical characteristics, the coastline represents an important attraction and contributes significantly to the overall tourism revenue for the nation. Specifically, the Ko Chang Marine National Park (KCMNP) represents a typical beach park in Thailand where there are abundant tourism resources, including high quality beaches, corals, offshore islands and natural scenery; all these ultimately become major resources for mass tourism development. Nevertheless, the long stretches of Ko Chang coastline are threatened by bacterial contamination from the surrounding island community, mainly due to its rapid economic development, accompanied by a great number of migrants who settled down in the vicinity of the coastal area. The high density of population in tourism areas and the inadequate infrastructure pose a serious threat to the coastal park environment, and the coastal ecological system as well. One threat comes from wastewater discharge, directly resulting from household uses. Historically, this problem of sewerage discharge was not considered as a big issue, owing to its relatively small magnitude, but, in recent years, as a result of the rise of the population and the number of tourists, ocean water pollution has turned out to be a serious hazard noticed by the local government and tourists. Policy makers have expressed significant interest in policy relevant non-market valuation and the use of market-based instruments to ensure efficient use and conservation (Molinos et al. 2010) . While the environmental resource valuation could link human welfare and natural systems to ensure ecologically sustainable development (Howarth and Farber 2002; Chen and Jim 2008) , one of the key pieces of information in the process is to obtain the economic value accrued to each type of natural resource and its related recreational activity. As this information is acquired, a maximum economic efficiency could be achieved by using the principle of marginal cost being equal to marginal benefits (Ahmed and Gotoh 2006) . One commonly used method to disclose a non-market resource value is the contingent valuation approach, according to which individuals are asked to state their willingness to pay (WTP) for non-market benefits, or their willingness to accept (WTA) compensation for non-market costs (Mitchell and Carson 1989) . Another economic analysis, which compares the monetary costs and the benefits of a public project, is the cost–benefit analysis, which provides the economic feasibility associated with the implantation of a proposed policy action (Prest and Turvey 1965; Price 2000) . In determining whether a public investment is socially profitable, a decision criteria of CBA is typically performed using three financial indicators: the net present Value (NPV), the internal rate of return (IRR) and the benefit-cost ratio (B/C). In order to achieve environmentally sound management, a survey of local residents in the Ko Chang was administrated, which involves local residents’ public preferences and willingness to pay for nature conservation, as a means to assess public acceptances into the economic value that they attach to a public good or service (Pavlikakis and Tsihrintzis 2003) . In this paper, using the concept of the joint CVM and CBA analysis, a quantificati (...truncated)