Investigating Total Economic

Total
INVESTIGATING Economic Value
Of ECO-TOURISM
2011
In Pulau Payar
MARINE PARK
Department of Marine Park Malaysia
INVESTIGATING TOTAL ECONOMIC

VALUE OF ECO-TOURISM IN
PULAU PAYAR MARINE PARK
2011

Ministry of Natural Resources and Environment
in collaboration with
Universiti Utara Malaysia
2011
JABATAN TAMAN LAUT MALAYSIA
INVESTIGATING TOTAL ECONOMIC

VALUE OF ECO-TOURISM IN
PULAU PAYAR MARINE PARK
DEC 2011
Copyright Department of Marine Park Malaysia

Malaysia, 2012
All right reserved. No part of this publication may be reproduced or stored in any form
that can be retrieved or transmitted in any form or by any means, electronic or mechanical,
including photocopy, recording or other means, without written permission from the
publisher.
Publisher:
Level 11, Wisma Sumber Asli
No. 25, Persiaran Perdana, Presint 4
62574 Putrajaya
Malaysia
ISBN 978-983-44311 - x - x
Bibliography Citation
Norlena Hasnan, Kamarruddin Ibrahim & et al, Department Of Marine Park Malaysia,
2012, Investigating Total Economic Value of Eco-Tourism in Pulau Payar Marine Park,
Ministry of Natural Resources and Environment, Putrajaya, Malaysia, xxxpp.
Cover courtesy:
Dr. Sukarno Wagiman
Printed by:
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Editors
Dr. Norlena Hasnan
Kamarruddin Ibrahim
Contributors
Prof. Dr. Rushami Zein Yusoff
Assoc. Prof. Dr. Shahimi Mohtar
Dr. Nor Hasni Osman
Azhar Ahmad
Munauwar Mustafa
Hasnizam Hasan
Abdul Ghaffar Salleh
Mohd. Zainudin Othman
Mohd Azril Ismail
Zulkufli Aziz
Azahari Ramli
Acknowledgement
Our heartfelt appreciation goes to all the Project Drafting Team who assisted in making this
research a reality.
We would like to extend our gracious gratitude to all users, stakeholders, agencies and
organization for their constructive comments and which have contributed in making this
study a valuable research and has given the sense of belonging to all who have participate
directly or indirectly. These include invaluable information and facts from the Department
of Marine Park Malaysia (JTLM) and Department of Fisheries that had contributed a lot to
the success of this study.
Editors
EXECUTIVE SUMMARY
Introduction
This work has highlighted the total economic value of the existing marine protected
area (MPA) system with intention, in part, to enhance the biodiversity conservation
activities in this country. In todays environment, even though the MPAs are
increasingly understood, increasing conservation decisions still require dire economic
justifications. However, the benefits of MPA have seldom been quantified, even
internationally, and neither have their opportunity costs. Understanding the costs and
benefits of Pulau Payar Marine Park (PPMP) is also particularly pertinent in view of
existing policies, strategies and action plans.
The aim of this project was to provide preliminary estimates of the costs and benefits
associated with PPMP, in particular, that could potentially lead to ability to estimate
how these costs and benefits might change under different scenarios of other MPA
size and components intensity.
This project works within a Total Economic Value (TEV) framework. TEV
comprises direct use value, indirect use value and non-use value. Direct use value
may be consumptive or non consumptive (e.g. diving). Indirect use value is where
Study area and overall approach

Pulau Payar Marine Park (PPMP) is situated off the coast of Kedah, between Pulau
Langkawi and Penang. The marine park consists of a group of four islands i.e. Pulau
Payar, Pulau Kaca, Pulau Lembu and Pulau Segantang. Pulau Payar is the largest of
the islands with an approximate length of 1.75 km (Aikanathan and Wong, 1994).
The Island is made of predominantly rock and characterized by steep cliffs and wavecut gullies. PPMP has limited strips of beach coast. Only four sandy beaches can be
found in PPMP with approximately 100 m to 150 m long each. The entire island is
covered by dense vegetation.
an ecosystem provides inputs into an economic activity elsewhere (fish landed in

this case). Non-use value comprises the option value of retaining an ecosystem for
future use, and existence value which is the wellbeing derived from knowing that
something exists, expressed in terms of public willingness to pay. In addition to these
values we examine the management and opportunity costs associated with PPMP.
The study was based on empirical data collection through surveys, as well as models
constructed using available data. A survey of visitors was carried out in 4 days on a
total of 120 visitors and 2 members of the JTLM staff were interviewed. It should be
noted that this is a preliminary study, and these sample sizes need to be boosted.
Capture Fisheries
Using published report on landed fish at the access point surveys, the catches attribute
to the presence of fish in PPMP was valued. This was based on the estimated value
per fish to the recreational shore (RM140), The resultant economic value of fish
caught from PPMPs MPA along the Kedah coast was valued at RM123,332,493.30
million per year. This value is estimated to be around RM1.173 billion in 20 years
with 10% discount rate.
Tourism
PPMP has attracted a total of some 96,097 visitors during the 2010 financial year,
attracting total revenues in the region of RM480,485.00 which is the consumer
surplus for PPMP. This is the additional amount that visitors have paid for over
and above what they actually had to pay. For the next 20-year period with the same
conservation fee, the value is going to achieve RM3.7 million at 10% discount rate.
ii
The enjoyment of these nature reserves is derived from marine activities as translated
by 79.20% (snorkeling) and 57.50% (swimming). About 73% of the tourists had
decided to visit this nature reserve way back from their hometowns. Based on the
study, the total expenditure attributed to the PPMP is estimated to be RM19.219
million (96,097 x RM200.00), including consumers surplus.
Aesthetics
The Aesthetics values for PPMP are confined to coral reef and reef fish values. Due
to unavailability of information, the coral reef value was excluded from the TEV
calculations. However, the reef fish value surrounding the circumference of 2 nautical
miles of PPMP as per year was valued at RM50.6 million. At discount rate 10%, the
present aesthetic value over 20-year period is expected to be RM481.7 million.
Coastal Protection
By using Benefit Transfer method, for an estimated 0.251km2 of coral reef surrounding
PPMP, it was found that approximately the total value of coastal protection to conserve
coral reef in year 2010 was around RM217,256.19. The present coastal protection
value over 20-year period with 10% discount rate is estimated at RM2.07 million.
Bequest value
The bequest value of the MPA was determined using the Contingent Valuation Method
which elicits peoples willingness to pay to retain or improve an environmental
amenity or to prevent its loss. Respondents involved in the survey were predominantly
locals. Only 37% are foreign citizens including Europeans and East Asia. Since
the sample size was too small, the quantitative estimates only restricted to these
respondents. The survey also did not capture a significantly representative group in
terms of country of origin, income and race.
On average, the overall willingness to pay (as a once-off payment), meant to
conserve for future generations or equates the future value of the current system, was
iii
Carbon Sequestration
Considering the cost of USD2,700 per hectare per year as the basis for calculation,
it was identified that the cost for carbon sequestration in the PPMP region for 2010
was around RM213,206.08. At 10% discount rate, the carbon sequestration is valued
for 20 year period by RM2.03 million.
RM1,268,480.40 million. This figure could be translated into the willingness to pay
of an additional RM12.60 per person for local tourists and an additional RM14.30 per
person for foreign tourists or an additional RM13.20 in general. The average present
bequest value for the next 20-year period (discount rate at 10%) is going to increase
to RM12.1 million. It should be noted that this study should only be considered as a
preliminary estimate since the result was generated from a small sample size.
Management costs
For the financial year of 2010, the management cost (maintenance and research)
incurred on PPMP was approximately RM1.3 million which did not reveal economies
of scale. However, actual management costs are not the same as ideal management
costs, and these costs are low compared the global average. The expected present
value of maintenance cost over 20-year period is estimated at RM 913,302.12, where
as the present value of research and education cost is expected at RM 11.4 million for
the same time period at 10% discount rate.
Conclusion
This study has found that PPMP coast provide substantial value over and above the
value that other coastal areas would otherwise generate. The total economic value
of the PPMP includes the catchment of fish which add value to the commercial
fisheries in surrounding areas, is estimated to be RM174 million (USD55.3 million)
for year 2010. The non-use value of the PPMP, when estimated as an annual value,
is also substantially greater than the use value alone. This is a substantial cost,
which therefore requires that the overall costs and benefits are compared in order to
determine if increasing protection incurs an overall gain or loss in welfare.
iv
Using the findings reported in the preceding chapter, we estimated that the present
value of PPMP over a 20 year period, using a discount rate of 10% is RM1.7 billion
(USD 530 million). The most important note is that the costs of PPMP as an MPA
are outweighed by the benefits. This is in spite of the fact that both, the costs and
benefits were conservatively estimated.
Table of Content
Table of Contents
Executive Summary
List of Table
List Of Figures
xi
Chapter 1 Background of the Study

1.0 Introduction
1.1 Tourism in Malaysia
1.2 Ecotourism
1.3 Marine Parks in Malaysia
1.4 Study Site: Pulau Payar Marine Park (PPMP)
1.4.1 Background of PPMP
1.4.2 Good and Services in PPMP
1.5 Problem Statement
1.6 Research Objectives
1.7 Research Outputs
1.8 Research Impacts
1.8.1 Contribution to Economy

1.9 Significance of the Study
8
9
2.0 Introduction
10
2.1 Total Economic Value
11
2.1.1 Direct Economic Values
14
2.1.2 Indirect Use Values
14
2.1.3 Option Values
15
2.1.4 Non-Use Values
15
Chapter 2 Literature Review
Chapter 3 Research Methodology

3.0 Introduction
17
3.1 Research Design
17
3.2 Research Framework
19
3.2.1 TEV Mathematical Model
20
3.2.2 Type of Benefits / Costs
20
3.3 Variables Used (Operational Definitions)
17
3.3.1 Capture Fisheries
22
3.3.2 Tourism / Recreational
22
3.3.3 Research / Education
22
3.3.4 Aesthetic
22
3.3.5 Coastal Protection
23
3.3.6 Carbon Sequestration
23
3.3.7 Bequest Value
23
3.4 Valuation Techniques
24
3.4.1 Production Approach
24
3.4.2 Benefit Transfer Approach
24
3.4.3 Willingness to Pay
24
3.5 Illustration of Mathematical Calculation
25
Chapter 4 Research Findings
vi
4.0 Introduction
26
4.1 Nationality of Tourists
26
4.2 Intent to Visit
27
4.3 Boarding Jetty
28
4.4 Frequency of Visit
29
4.5 Aware of Marine Park
29
4.6 Activities at Pulau Payar Marine Park
30
4.7 Willingness to Pay among Visitors
31
4.8 Willingness to Pay among Local Visitors
31
4.9 Willingness to Pay among Foreign Visitors
33
4.10 Attractiveness of Pulau Payar Marine Park
33
4.11 Total Economic Valuation of PPMP
36
a. Value of Capture Fisheries
37
b. Value of Tourism
37
c. Research and Education Cost
38
d. Value of Aesthetics
39
e. Value of Coastal Protection
40
f. Value of Carbon Sequestration
40
g. Value of Bequest Value
41
h. TEV for 20 year period
42
Chapter 5 Conclusion
References
43
47-56
Appendices
Appendix A1: Present Value (PV) of Capture Fisheries at 5% discount rate for 5,
10 and 20 years respectively
Appendix A2: Present Value (PV) of Tourism at 5% discount rate for 5, 10 and 20
years respectively
Appendix A3: Present Value (PV) of Maintainance cost at 5% discount rate for 5,
Appendix A4: Present Value (PV) of Research Cost at 5% discount rate for 5, 10
and 20 years respectively
Appendix A5: Present Value (PV) of Aesthetic Value at 5% discount rate for 5, 10
Appendix A6: Present Value (PV) of Coastal Protection at 5% discount rate for 5,
Appendix A7: Present Value (PV) of Carbon Sequestration at 5% discount rate for
5, 10 and 20 years respectively
Appendix A8: Present Value (PV) of Bequest Value (mean WTP) at 5% discount
rate for 5, 10 and 20 years respectively
A11-A11
vii
Appendices A
Appendix A9: Present Value (PV) of Bequest Value (minimum WTP) at 5%

discount rate for 5, 10 and 20 years respectively
Appendix A10: Present Value (PV) of Bequest Value (maximum WTP) at 5%
Appendix A11: Net Present Value at Pulau Payar at 5% discount rate
Appendices B
B1-B11
Appendix B1: Present Value (PV) of Capture Fisheries at 10% discount rate for 5,
Appendix B2: Present Value (PV) of Tourism at 10% discount rate for 5, 10 and 20
years respectively
Appendix B3: Present Value (PV) of Maintainance cost at 10% discount rate for 5,
Appendix B4: Present Value (PV) of Research Cost at 10% discount rate for 5, 10
Appendix B5: Present Value (PV) of Aesthetic Value at 10% discount rate for 5, 10
Appendix B6: Present Value (PV) of Coastal Protection at 10% discount rate for 5,
Appendix B7: Present Value (PV) of Carbon Sequestration at 10% discount rate
for 5, 10 and 20 years respectively
Appendix B8: Present Value (PV) of Bequest Value (mean WTP) at 10% discount
Appendix B9: Present Value (PV) of Bequest Value (minimum WTP) at 10%
Appendix B10: Present Value (PV) of Bequest Value (maximum WTP) at 10%
Appendix B11: Net Present Value at Pulau Payar at 10% discount rate
Appendices C
viii
Appendix C1: Present Value (PV) of Capture Fisheries at 15% discount rate for 5,
Appendix C2: Present Value (PV) of Tourism at 15% discount rate for 5, 10 and 20
years respectively
Appendix C3: Present Value (PV) of Maintainance cost at 15% discount rate for 5,
C1-C11
Appendix C4: Present Value (PV) of Research Cost at 15% discount rate for 5, 10
Appendix C5: Present Value (PV) of Aesthetic Value at 15% discount rate for 5, 10
Appendix C6: Present Value (PV) of Coastal Protection at 15% discount rate for 5,
Appendix C7: Present Value (PV) of Carbon Sequestration at 15% discount rate
for 5, 10 and 20 years respectively
Appendix C8: Present Value (PV) of Bequest Value (mean WTP) at 15% discount
Appendix C9: Present Value (PV) of Bequest Value (minimum WTP) at 15%
Appendix C10: Present Value (PV) of Bequest Value (maximum WTP) at 15%
Appendix C11: Net Present Value at Pulau Payar at 15% discount rate
Appendices D Questionnaires
ix
Appendices E Slide Presentation to JTLM
List of Table
Table 1.1 Number of visitors to Pulau Payar Marine Park
Table 3.1 Calculation of capture fisheries present value at 10% discount rate for 10 years 21
Table 4.1 Nationality of Tourists
27
Table 4.2 Willingness to pay among visitors
32
Table 4.3 Willingness to pay local visitors
32
Table 4.4 Willingness to pay among foreign visitors
33
Table 4.5 Present value of capture fisheries
37
Table 4.6 Net present value of tourism
38
Table 4.7 Present value of research and education costs
39
Table 4.8 Present value of aesthetics
39
Table 4.9 Present value of coastal protection
40
Table 4.10 Present value of carbon sequestration
40
Table 4.11 Present value of bequest value
41
Table 4.12 Economic value of Pulau Payar Marine Park
41
Figure 1.1 Pulau Payar Marine Parks
Figure 2.1 Total Economic Value Concept
21
Figure 3.1 Research Design
27
Figure 3.2 The Total Economic Valuation (TEV) Model for Pulau Payar
32
Figure 4.1 Nationality of Tourists
32
Figure 4.2 Intent to visit
33
Figure 4.3 Boarding Jetty
37
Figure 4.4 Frequency of visit
38
Figure 4.5 Aware of Marine Park
39
Figure 4.6 Activities at Pulau Payar Marine Park
39
Figure 4.7 Coral reef attractiveness
40
Figure 4.8 Coral fish attractiveness
40
Figure 4.9 Avi vauna attractiveness
41
Figure 4.10 Flora attractiveness
41
xi
List of Figures
Investigating The Total Economic Value Of

Eco-Tourism In Pulau Payar Marine Park 2011
CHAPTER ONE
BACKGROUND OF THE STUDY
1.0 Introduction
Malaysia has committed itself into transforming 10% of its marine areas into marine
parks by the year of 2020 (JTLM, 2011). These parks form huge warehouses that host
treasures like coral, fish, sea-lives habitats and so on that could uniquely define the
health and wealth of the nation. For now, these treasures form unique attractions to
national eco-tourism (which is a part of the key areas in the government transformation
plan) and also form a unique indicator that reflects the nations sustainability into the
future.
1.1 Tourism in Malaysia
Malaysia comprises the Peninsular and East Malaysia on the island of Borneo and
covers a total area of 329,758 square kilometers. The countrys climate is warm and
humid throughout the year. Malaysia is one of the most botanically diverse countries
in the world. It is endowed with many natural attractions, particularly sandy beaches,
enchanting islands, diverse flora and fauna, tropical forest retreats and magnificent
mountains that are among the best in the region.
Specifically, tourism is a growing sector and gaining importance in the Malaysian

economy. In 1999, about 7.9 million foreign tourists visited the country generating
some RM13.4 billion in foreign exchange earnings. The majority of the foreign
Malaysia is a multi-racial country with a population of approximately 22 million

consisting of Malays, Chinese, Indians and various indigenous people in Sabah and
Sarawak. This has made the country unique in such a way that it comprises the three
major civilizations and cultures in Asia and, without doubt, a land of fascinating
sights and attractions. The services sector, including the tourism industry, is the
major revenue earner as well as the largest contributor to Malaysias Gross Domestic
Product (GDP) at 46% in 1999, followed by manufacturing (30%), agriculture (9.3%),
mining (7.3%) and construction (3.6%), in order of importance.

tourists were from neighbouring Asian and Pacific countries such as Singapore,
Japan and China. Undoubtedly, the tourism industry in Malaysia is relatively new
with tremendous potential to be developed. In view of this, the country is making a
concerted effort to further develop the industry as a whole, including the ecotourism
sector. Complementing the effort, the Malaysian government has embarked on a
plan to promote the country as one of the primary tourist destination in the region.
1.2 Ecotourism
There are many definitions of ecotourism. The most commonly used definition is the
one established by the International Ecotourism Society (TIES, 1990), which defines
ecotourism as responsible travel to natural areas that conserves the environmental
and sustains the well-being of local people. Ecotourism allows for more tourist
expenditure to stay in the local economy, subsequently boosting the national
wealth.
In order to implement ecotourism activities successfully, there must be joint efforts
between various entities like government, the private sector and the local communities.
In facilitating the efforts, a special committee, which comprises members from the
federal and local governments, private sector and NGOs, has been formed (MOCAT)
to spearhead the overall implementation of the National Ecotourism Plan. Based on
the recommended action, activities like workshops, training programs and ecotourism
projects have been conducted under the Eighth Malaysian Development Plan.
1.3 Marine Parks in Malaysia

A Marine Park is a sea area zoned as a sanctuary for the protection of marine
ecosystems especially coral reef and its associated flora and fauna, like the sea
grass bed, mangrove and the seashore (Hiew, 2000). Protecting special biological
and environment values have been the main objectives behind the establishment of
marine parks in the country. However, due to open access to marine park resources
and failure of the market system in restricting their use, over-use and environmental
degradation have resulted. The degradation of marine parks might affect the
sustainability of ecotourism in the future. In addition, the market failure is associated
with users not paying the full costs of using the natural resources in the marine parks.

Thus it is possible that the park may be subject to excessive use, overcrowding and
biological degradation. The high level of usage may result in conflicts between users,
the social and biological carrying capacity, limits of acceptable change and potential
environmental degradation.
In the long run, Malaysia has committed itself into transforming 10% of its marine
areas into marine parks by the year of 2020 (JTLM, 2011). These parks form huge
warehouses that host treasures like coral, fish, sea-lives habitats and so on that could
uniquely define the health and wealth of the nation. For now, these treasures form
unique attractions to national eco-tourism (which is a part of the key areas in the
government transformation plan) and also form a unique indicator that reflects the
nations sustainability into the future.
Study Site: Pulau Payar Marine Park (PPMP)
1.4.1 Background of PPMP
Pulau Payar Marine Park (PPMP) is situated off the coast of Kedah, between
Pulau Langkawi and Penang. The marine park consists of a group of four
islands i.e. Pulau Payar, Pulau Kaca, Pulau Lembu and Pulau Segantang.
Pulau Payar is the largest of the islands with an approximate length of 1.75
km (Aikanathan and Wong, 1994). The Island is made of predominantly rock
and characterised by steep cliffs and wave-cut gullies. PPMP has limited
strips of beach coast. Only four sandy beaches can be found in PPMP with
approximately 100 m to 150 m long each. The entire island is covered by
dense vegetation. The Pulau Payar group of islands constitutes one of the few
coral reef areas found off the west coast of Peninsular Malaysia. The type
of coral reefs in PPMP is fringing reef. The coral fringes off the islands are
shelter to a vast diversity of marine flora and fauna. Major coral genera include
Acropora, Octocorals, Porites, Platygyra, Goniopora, Sponges, Corallimorph,
Diploastrea and Plerogyra (Aikanathan and Wong, 1994; Harborne et al.,
2000). Fish observed underwater include barracuda, giant grouper, rabbit fish,
triggerfish, damsel fish and sharks (Harborne et al., 2000).
1.4
Figure 1.1 : Pulau Payar Marine Parks
The Pulau Payar Marine Park Centre was open to public in 1989, with restriction
as fisheries prohibited area. This island was gazette as a marine park in 1994. The
establishment of this island as a marine park is the first step to conserve marine
resources from future impact of tourism on the island itself. Nowadays PPMP is
receiving pressure from influx of visitors. The total number of visitors to PPMP has
been increased in every year (as in Table 1.1).

Table 1.1 : Number of visitors to Pulau Payar Marine Park
YEAR
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
COUNTRY OF ORIGIN
NUMBER OF VISITORS
LOCAL
19,944
FOREIGN
LOCAL
FOREIGN
LOCAL
FOREIGN
LOCAL
FOREIGN
LOCAL
FOREIGN
LOCAL
FOREIGN
LOCAL
FOREIGN
LOCAL
FOREIGN
LOCAL
FOREIGN
LOCAL
FOREIGN
LOCAL
FOREIGN
86,836
38,027
89,514
56,259
77,516
44,291
70,393
36,282
98,990
19,607
74,492
26,043
86,605
24,580
86,049
23,298
72,773
25,454
77,412
26,429
69,668
106,780
127,541
133,775
114,684
135,272
94,099
112,648
110,629
96,071
102,866
96,097
(Source: JTLM Portal)
Facility-wise, there are man-made environment available such as toilets and

rubbish bins. At the entry point, tourists are greeted with an informative
gallery that provides brief information about the island and services offered.
The other interesting and unique package that attracts tourist attention is the
Pontoon which is located on the eastern shore of Pulau Payar. Sheltered from
1.4.2 Goods and Services in PPMP

Pulau Payar Marine Park offers abundance of opportunities for ecotourism
activities especially through its terrestrial and marine environment. Water
sports like snorkeling and swimming are the most popular services enjoyed
by tourists on the island. Relaxing, fish feeding and sunbathing were also the
other major activities participated by the tourists (Zaidnuddin, et al., 2000).

the south-west winds and surrounded by Pulau Kaca, Pulau Lembu and Pulau
Segantang, its clear water and rich diversity of marine life offer visitors a
firsthand encounter with nature. The pontoon is specially built to cater for
both environmental and recreational needs which are strategically positioned
away from various authorities and sensitive marine life, and away from the
coral colonies to prevent from any damaging effects to the corals. The pontoon
is also equipped with the followings (Hiang Aun, 2000):

Swimming platforms take off points for swimming and snorkeling

Diving platform
Changing rooms
Fresh water showers
Under water observatory viewing marine life without getting wet
Sun deck sun bathing and island view
Bar soft drinks and beer sales
Snorkeling equipment masks, snorkels, fins and life jacket
Diving equipment regulators, buoyancy compensators (BC), tank,
weights, masks and fins
Glass bottom boats coral viewing and transfer to Marine Park Centre
Dive boat transport certified divers to different dive sites
1.5 Problem Statement

Economists consider ecosystems as capital goods generating valuable services, some
of which are marketable while others are not (e.g. Point 1992). This approach is used,
for instance, by studies attempting to justify the interest of biodiversity protection
on economic grounds (Brown and Goldstein, 1984, Alexander, 2000). As a result,
various studies focusing on the valuation of ecosystem services have been conducted
(Constanza and Faber, 2002; De Groot et al. 2002; Faber et al. 2002). However,
natural assets are often providers of multiple services, which create difficulties
when trying to assess their economic value (Desaigues and Point, 1990). A number
of assessment methods such as travel cost and contingent valuation have been
developed to estimate the economic value of these services (e.g. Randall and Stoll,
1983, Desaigues and Point, 1990). Yet, only small part of this literature is dedicated

to the economic valuation of natural assets deals with marine ecosystems (Alban,
Alperre and Boncoeur, 2005). Hence, this research presents quantitative estimates
of the economic and financial value of activity undertaken within the PPMP for the
financial year 2005 - 2010.
The Eco-Tourism Economic Value (TEEV) concept used in this research, covering:
1. Use and non-use values.
2. Within the former, direct and indirect values, also broken down into extractive
and non-extractive uses and goods and services.
3. Some of these may or may not line up well with standard stocks and flows
concepts, and in many cases, valuations are both difficult and subjective.
This is not to say that such values are either unimportant or not worth attempting to
quantify but they cover dimensions not easily incorporated into the current national
accounting framework.
1.6 Research Objectives

In order to support the effort to drive the Pulau Payar Marine Park (PPMP) towards
sustainability and greater competiveness in line with International Union of
Conservation of Natural Resources (IUCN) standards, the following objectives of
the study have been identified:
This research is much less ambitious in a way that:

1. It only looks at national accounts-based flows for which market transactions can
readily be estimated and for which input-output tables can be compiled.
2. It concentrates on value added, gross product and employment.
3. It does not look at stocks because of the fledgling state of the art in relation to
environmental accounting using national accounts frameworks.
4. And it concentrates on only three industries: tourism, commercial fishing and
cultural and recreational activity, where the first and third of these include
estimates for recreational fishing.

1. To explore areas that contribute to economic value of the Pulau Payar Marine
Park;
2. To quantitatively estimate the economic and financial value of Eco-Tourism
activities in the Pulau Payar Marine Park;
3. To help enhance scientific and technological knowledge, educational, social,
cultural and aesthetic values of marine biodiversity.
1.7 Research Outputs
This research highlights:
1. Areas that contribute to economic value to PPMP
2. Components of Eco-Tourism economic activities in PPMP
Besides that, it will also put into better perspective the following issues:
1. Mathematical model of Eco-Tourism in PPMP
2. Total value of Eco-Tourism activities in PPMP
1.8
Research Impacts
1.8.1 Contributions to Economy
a. Able to draws a significant amount of visitors (domestic and foreign)
into PPMP
b. Able to identify total economic impact in terms of gross output
(i.e. revenue) and number of job opportunities (i.e. number of workers
and wages) in the existing economy related to PPMP per year.
c. Able to compare the growth of total economic impact to previous years
d. Able to enhance public awareness on the existence PPMP as a regional
economic growth center.
1.9 Significance of the Study

In view of the above, it is highly significant that a study be conducted on these
unique treasures to translate them into economic values that define the wealth of
the nation. In view of this issue, most of the previous economic studies focus on
employing environmental economic tools such as the Travel Cost Method (TCM),
Contingent Valuation Method (CVM) and Choice Modelling (CM) with the aim of

measuring consumer welfare and gains rather than the direct financial flow (Yacob,
Shuib, Mamat and Radam, 2008; Yacob, Radam, Wahidin & Shuib, 2009).
This study is deemed to identify some information on total economic values of PPMP
which has never been acknowledged before. This would translate, in isolation, the
values of direct and indirect marine inventory. Furthermore, this study will establish
a mathematical model that will be flexible enough to perform similar evaluations on
other Marine Parks in this country. The significance of these resources to Malaysia
will be analyzed based on:
1. Their contribution to the national economy (in terms of Gross Domestic Product
(GDP) percentage, and generation of Government revenue).
2. Their roles (beneficial and adverse) in the conservation of the environment.
(Basiron, 1995).

CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter is divided into two parts. The first part describes the socioeconomic
literature dedicated to various aspects of marine parks eco-tourism. The second part
is devoted to methodological issues. It first deals with concepts and related issues
to the total economic value (TEV). The valuation techniques that have been used to
derive TEV will be presented.

2.1 Total Economic Value
Pagiola, von Ritter, and Bishop (October 2004) mentioned that economists typically
classify ecosystem goods and services according to how they are used. According to
them, the main framework used should be the Total Economic Value (TEV) approach
as developed by Pearce and Warford (1993).
Researchers such as Spurgeon and Aylward (1992) and Munasinghe and Lutz (1993)
divided total economic value into two major components which are use value and nonuse value (Please refer to Figure 1). The two components then are further divided into
three sub-components such as direct uses, indirect uses and existence value. Direct
uses and indirect uses in this case are referred to use value while existence value is
categorized as non-use values. However, it should be noted that some terminologies
or terms that we used may be varies among the researchers.
Hence in the following section we offer detail discussions on each component and
sub-component of TEV.
10

TOTAL ECONOMIC VALUE
Use Value
Direct use
Extractive:
Capture Fisheries
Tourism
Recreation
Research
Education
Aesthetic
Indirect Use
Biological support to :
Fisheries
Turtles
Sea birds
Non-use Value
Existence Value
Endangered species
Charismatic species
Threatened species
Cherished reefscapes
Physical protection to :
Ecosystems
Landforms
Navigation
Coastal extension
Global life support :
Calcium store
Carbon store
Decreasing tangibility of value to individuals
Figure 1: Total Economic Value Concept
Use value can be divided into direct use and indirect use value (Yeo, 1998).
Direct use values refer to ecosystem goods and services that are used
directly by human beings. They include the value of consumptive uses such
as harvesting of food products, timber for fuel or construction, and medicinal
products and hunting of animals for consumption (Pagiola et al., October
11
2.1.1 Direct Economic Values

Focus on direct use values associated with the resource, in particular
fisheries and tourism. This is most likely because - due to their commercial
nature - they are easier to measure and of more obvious interest to policy
makers.

2004) or the use of goods and services extracted from the marine ecosystem
such as fish, aggregates and energy (Saunders, Tinch, and Hull, 2010). Yeo
(1998) divided direct use value bequest.
On the other hand, according to Pagiola et al. (2004), the value of nonconsumptive uses of Marine Park was referred to recreational and cultural
activities that do not require any harvesting activities. Pugh (2008), in his
research on socio-economic indicators of marine-related activities, further
elaborated the non-consumptive uses of PPMP by focusing on the use of
marine ecosystem for leisure and recreation such as holiday tourism, cruising
and leisure craft services, and for research and development. Research and
development falls into three categories i.e. industry sector research, higher
education institutions research and public sector research (Pugh, 2008).
Direct use values are most often enjoyed by people visiting or residing in the
ecosystem itself.
Fisheries are considered an extractive direct use value of coastal ecosystems
(i.e. resources are removed from the ecosystem). Other extractive uses include:
coral mining, harvest of live corals for the aquarium trade and wood production
from mangroves. Tourism is a non-extractive direct use value associated with
coastal ecosystems, particularly coral reefs (i.e. individuals use it directly,
but do not remove anything). Research and education activities associated
with coral reefs/ mangroves may also be considered non-extractive direct use
values of these ecosystems (Fiji).
12
In general, direct use values can be considered as the most easiest variable
to be measured, since they usually involve observable quantities of products
whose prices can usually also be observed in the market-place. Recreation
is also relatively easy to value as the number of visits is directly observable.
Assessing the benefit received by visitors is more difficult, but a large body
of literature has developed to tackle this problem, mainly using surveys
of tourists actual travel costs or of their stated willingness to pay to visit
particular sites.

Meanwhile, measuring indirect use value is often considerably more difficult
than measuring direct use values For one thing, the quantities of the service
being providedsuch as the amount of carbon stored in biomass or in the
soilare often hard to measure. While their contribution of ecosystem services
to the production of marketed goods and services may be significant, it is often
difficult to distinguish it from that of other, marketed inputs to production.
Moreover, many of these services often do not enter markets at all, so that
their price is also difficult to establish.
The aesthetic benefits provided by a landscape, for example, are nonrival
in consumption, meaning that they can be enjoyed by many people without
detracting from the enjoyment of others. Non-use value is the most difficult
type of value to estimate, since in most cases it is not, by definition, reflected
in peoples behavior and is thus almost wholly unobservable (there are some
exceptions, such as voluntary contributions that many people make to good
causes, even when they expect little or no advantage to themselves). Surveys
are used to estimate non-use or existence values, such as consumers stated
WTP for the conservation of endangered species or remote ecosystems which
they themselves do not use or experience directly.
Some argue that diverse ecosystems are more resilient and thus provide a kind
of natural insurance against climatic and other risks (Perrings, 1998). Others
suppose that the likelihood of finding useful products in nature varies with
the number of natural expressions considered or, in other words, that diverse
ecosystems are more likely to contain economically useful plants, animals or
biological compounds (Laird and ten Kate, 2002; Simpson and others, 1994;
Barbier and Aylward, 1996; Rausser and Small, 2000). Finally, there is some
13
From an economic perspective, the benefits derived from conserving biological

diversity are among the most difficult to define and quantify. While it is
relatively easy to identify the benefits obtained from individual components
of biodiversity, such as the value of harvesting particular wild species, it is not
so easy to describe the benefits of variability itself.

evidence that the general public including home buyers and tourists prefer
variation in ecosystems to homogeneous landscapes (Garrod and Willis, 1992;
Powe and others, 1995).
2.1.2 Indirect Use Values
Most existing indirect use valuations have focused on coastal protection (see
McKenzie et al, 2005; Gustavson, 2000; Cesar, 1996). Coral reefs, mangroves
and coastal littoral vegetation provide protection to agricultural land and human
settlements from floods, storms and erosion. Another important indirect use
values is waste assimilation. Mangroves and seagrass beds effectively process
inadequately treated sewage and other waste, by absorbing excess nutrients,
before this enters the sea (and affects fisheries and health). Other indirect use
values include: habitat and biological control, and water quality control. Due
to the difficulty inherent in measuring the relative contribution of an ecosystem
to these services and functions of nature, there are very few valuation studies
that estimated the economic value of these indirect use values (Fiji).
Indirect use values are derived from ecosystem services that provide benefits
outside the ecosystem itself. Examples include the natural water filtration
function of wetlands, which often benefits people far downstream, the storm
protection function of coastal mangrove forests, which benefits coastal
properties and infrastructure, and carbon sequestration, which benefits the
entire global community by abating climate change. These functions often
affect activities that have directly measurable values, allowing their value to
be estimated.
14
2.1.3 Option Values

Option values (and the closely-related concept of quasi-option values) are
rather complex use values, which essentially represent the value today of
potential future information about the ecosystem in question. They are an
indicator of how much we value holding onto something that we do not know
enough about at present, with the view that more will be learned in the future
(Fiji).

Option values are derived from preserving the option to use in the future
ecosystem goods and services that may not be used at present, either by oneself
(option value) or by others/heirs (bequest value) Provisioning, regulating, and
cultural services may all form part of option value to the extent that they are
not used now but may be used in the future.
2.1.4 Non-Use Values
Non-use values refer to the value attached to a resource, independent of ones
use of it. There are two main non-use values: bequest value, and existence
value. Bequest values represent the value attached to preserving an ecosystem
for use by future generations, independent of ones own use of the ecosystem.
These are considered of particular relevance in Fiji, given the importance that
people attach to their way of life (Turner, 2000). Existence values refer to the
value associated with the actual existence of an asset (e.g. ecosystem, cultural
heritage) independent of ones use of the asset (hence: non-use value). For
example, many people donate towards save the rhino or save the rainforest
charities, without ever expecting to see or visit either a rhino or a rainforest.
What they value.
Due to the nature of Pulau Payar as the protected marine park that prohibits
the consumptive uses of its resources, this research will focus on the
non-consumptive uses of its resources as suggested by Pugh (2008). However,
instead of holiday tourism, cruising and leisure craft services, this research
will focus on leisure snorkeling as the main non-consumptive uses; while
for research and development, the focus of this research will be on higher
education institutions research and public sector research for the purposes of
knowledge and public policy.
15
Non-use values refer to the enjoyment people may experience simply by

knowing that a resource exists even if they never expect to use that resource
directly themselves. This kind of value is usually known as existence value
(or, sometimes, passive use value).

CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This research is based on case study approach which is widely recognized in many
social science studies especially when in-depth explanations of a social behavior
are sought after. Through case study methods, a researcher is able to go beyond the
quantitative statistical results and understand the behavioral conditions through the
actors perspective. Furthermore, case study research excels at bringing us to an
understanding of a complex issue or object and can extend experience or add strength
to what is already known through previous research. Case studies emphasize detailed
contextual analysis of a limited number of events or conditions and their relationships.
By including both quantitative and qualitative data, case study helps explain both the
process and outcome of a phenomenon through complete observation, reconstruction
and analysis of the cases under investigation [Tellis, (1997)].
3.1 Research Design
This research applied a mixed-method approach as the study aimed to understand
efforts that drive the Pulau Payar Marine Park towards sustainability and greater
competiveness. Hence, it was vital to explore areas that contribute to economic value
of the Pulau Payar Marine Park through various sources and multi stages of data
collection, as explained in the following section.
In maneuvering all resources towards achieving the research objectives, a Balanced
Approach was used as the strategy to balance the tradeoff between control, realism
and generalizability. For that, research activities were conducted in a few stages in
which specific intentions were realized as described in the following Chart 3.1:
16

START
CHART 3.1: Research Design

Proposal
(Workshop 2)
Indentify Objective
Framework
Literature review
(Workshop 3)
No
Unexpected
weather
conditions
Interview at Alor
Setar
May
Site Visit 1
Plan 2 days trip
1 day trip
Site Visit 2
Meeting identify
info needed
June
Interview at
Penang
Identification
Feasible variable
Indentify key contact

person related to
PPMP issue
Trip 1-Distribute
Questionnaire at
PPMP
July
Contact Marziana
Fisheries Institute
Terengganu
Dept. of fisheries
Penang
August
Face to face
Interview at Dept of
Fisheries Putrajaya
Trip 2-Distribute
Questionnaire at
PPMP
Feasible research
Framework
Interim report
(Workshop 4)
Analysis data and
report writing
(Workshop 5)
Meeting Review interim
report
1st draft final report & presentation JTLM
Final presentation and submission of the report

JTLM
Sept
Face to face Interview at

Dept of Fisheries A.Setar
(Shuhada)
Oct
Comment from JTLM

Improvement
17
Idea
Generation
(Workshop 1)
April
Nov
2011
18

3.2 Research Framework
This study utilized the Total Economic Value (TEV) as a framework. There were
a few models capable of describing similar valuation processes. Basically, TEV
model categorized all the elements under two main component; use value and nonuse value. After careful considerations, the TEV model relevant for Pulau Payar
environment and applied in this research is illustrated by Figure 3.1.
TOTAL ECONOMIC VALUE MODEL FOR PULAU PAYAR
USE VALUE
Direct Use
Extractive
Capture
Fisheries
Non-Extractive
Tourism
Research /
education
Aesthetic
Indirect Use
NON-USE VALUE
Bequest Value
Physical Protection To:

Coastal Protection
Global Life Support:
Carbon
sequestration
Decreasing tangibility of value to individuals

Source: Adapted from Yeo (1998)
This model is an adaptation from Yeo (1998), where all the variables except captured
fisheries under sub-component extractive direct use had been considered under
different categories. It was due to specific policies applied to Pulau Payar that outlined
prohibitions for all catchments, harvest and related activities within Pulau Payar and
two nautical miles sea zone from the shore measured at the lowest low tide. In this
study, we identified coral reef and aquarium fishes as an aesthetic component which
fell under non-extractive category.
19
Figure 3.1: The Total Economic Valuation (TEV) Model for Pulau Payar
Investigating The Total Economic Value Of Eco-Tourism In Pulau Payar Marine Park.
JABATAN
TAMAN LAUT MALAYSIA
2011
3.2.1
TEV Mathematical
Model
3.2.1 TEV
Mathematical
Model
In
value of
of each research
research variables,
variables, this
this study
study employed
employed
In order
order to
to evaluate
evaluate the
the value
TEV
equation
(1) (1)
proposed
by OGarra
(2007) (2007)
which was
adopted
TEVmathematical
mathematical
equation
proposed
by OGarra
which
was
from
Boardman
et al.(2001).
This mathematical
equation
reflected
the costadopted
from Boardman
et al.(2001).
This mathematical
equation
reflected
the
benefit
analysis
which which
took in took
account
the gross
cost, discount
rate and
cost-benefit
analysis
in account
thebenefits,
gross benefits,
cost, discount
number
yearsofthat
explained
the areas
of study.
rate and of
number
yearssignificantly
that significantly
explained
the areas
of study. The
The
mathematical
mathematicalequation
equationcan
canbebeseen
seenasasfollows:
follows:
NPV =
netpresent
presentvalue
value
NPV
= net
B
= gross annual economic benefits, over n years, at a discount rate of i
=gross annual economic benefits, over n years, at a discount rate of i
i
= discount rate
i
= discount rate
C
= cost per year
C
=
per year
n
= cost
number
of years that we are interested
theofdiscount
used
in the valuations of marine resources
nEmpirically,
= number
years thatrates
we are
interested
ranged between 5% and 15% (Gustavson, 2000). The calculation of equation
Empirically, the discount rates used in the valuations of marine resources ranged
(1) utilized a few discount rates within that range.
between 5% and 15% (Gustavson, 2000). The calculation of equation (1) utilized
a few discount rates within that range.
20
3.2.2 Type of benefits /costs

Based on our preliminary study, we found that four (4) elements under use
3.2.2
Type of benefits
value components
and /costs
three (3) elements under non-use value components
Based
on our preliminary
study,using
we found
four (4) elements
use seven
value
were feasible
to be measured
TEV that
mathematical
model.under
All these
components
and three
(3) elements
non-use
value
components
were
elements consisted
of capture
fisheries,under
tourism,
research
/ education,
aesthetic,
feasible
to be measured
TEV
model.
these seven
coastal protection,
carbon using
fixation
andmathematical
bequest value.
TheseAllelements
were
elements
consisted
of capture
research
/ education,
aesthetic,
considered
as either
benefitsfisheries,
or costs tourism,
to the Pulau
Payar
stakeholders.
For
coastal
carbonthere
fixation
and
bequest
value.
These the
elements
werea
each of protection,
these elements,
were
several
ways
in getting
data and
considered
as either
benefitswere
or costs
to theinPulau
Payar stakeholders.
Forvalue.
each
few valuation
techniques
adopted
measuring
these elements
of
these
were several
ways
in gettingsub-components,
the data and a type
few
Table
3.1elements,
described there
the categories
of each
component,
of benefit / cost, source of data and
20 the valuation technique which had been
considered in this study.
described the categories of each component, sub-components, type of benefit /

cost, source of data and the valuation technique which had been considered in
this study.

Table 3.1: Type of benefits, source of data and valuation technique used
COMPONENTS
SUBCOMPONENTS
TYPE OF BENEFIT
/ COST
SOURCE OF
DATA
VALUATION
TECHNIQUE
USE VALUE
Direct Uses
1. Capture
Fisheries
2. Tourism
3. Research /
education
4. Aesthetic
Coral reef
Aquarium fish
Fishery
Department
JTLM
JTLM
Production
Approach
Production
Approach
Secondary data
based on
market prices
Production
Approach
5. Coastal
protection
6. Carbon
sequestration
Secondary data
based on
empirical study
Benefit Transfer
7. Bequest Value
Survey in Pulau
Payar
WTP
Indirect Uses
NON-USE
VALUE
Benefit Transfer
Table 3.1: Type of benefits, source of data and valuation technique used
3.3
Variables Used (Operational Definitions)
3.3.2 Tourism /recreational

The tourism elements considered in this study were the number of tourists
and their nationality documented by the JTLM. All tourists were charged for a
conservation fee during their visit to Pulau Payar since 1999. This charge was
included in their package ticket, where the conservation fee for adults was at
RM5.00 and where as students, retired citizen and children were at RM2.50.
21
3.3 Variables
Used (Operational Definitions)
3.3.1 Capture fisheries
3.3.1
Capture fisheries
The capture fisheries were defined as the catchment done outside the two
The
capture fisheries were defined as the catchment done outside the two
nautical mile sea zone from Pulau Payar shore measured at the lowest low tide.
nautical
milearea
sea for
zonethefrom
Pulaufisheries
Payar shore
measured
the lowest
low
The landing
captured
included
Kuala at
Kedah
and Kuala
tide.
landing
area for
thethat
captured
fisheries
Kualathe
Kedah
and
Muda.The
The
assumption
was
Pulau Payar
hadincluded
always been
breeding
Kuala
Muda.
assumption
wasfrom
thatcoral
Pulau
Payar
hadfishing
always
beenin the
place for
fishesThe
and would
move out
area
to many
areas
the
breeding
place forespecially
fishes andnearby
would Kedah
move out
fromThe
coral
area
many
fishing
Strait of Malacca
water.
data
ontothe
amount
of
areas in the Strait of Malacca especially nearby Kedah water. The data on the
amount of capture fisheries were based on secondary data obtained from the
21
Department of Fisheries in Kedah.

3.3.3 Research /education
There are many research activities had been carried out in PPMP either
scientific study (e.g: Alias, 2008) or economic valuation (e.g: Mohd. Rusli,
2009) and involved many parties. However, for the purpose of this study and
within the time given we used an assumption on the value of research budget
given for year 2010.
3.3.4 Aesthetic
Aesthetic value is one of the sub-components under Use Value but has been
classified as non-extractive. This aesthetic value is very valuable and is
the main reason that attract tourist all over the world to visit PPMP. This
study identifies coral reef and aquarium / reef fish as variables that are non-
extractive due to the PPMP policy where catchment activities are prohibited.
3.3.5 Coastal protection
In order to abstains Pulau Payar from any distraction especially along the
beaches, coastal protection programs should be done and properly coordinated.
However based on the preliminary study, there was no systematic coastal
protection programs carried-out. In this conjunction, the economic value of
the coastal protection in the Pulau Payar was estimated using benefits transfer/
cost replacement approach. This involved transferring values from other
studies to the Pulau Payar context. Empirically, coastal protection is valued
by the contribution of the coral reef per km2.
22
3.3.6 Carbon sequestration

Carbon sequestration is very important to support global community by
abating climate change. According to Sathirathai (1998), carbon sequestration
is a process that fixes carbon dioxide thru mangrove and limestone. This
process will offset CO2 emissions, and helping to slow down the greenhouse
effect.However in Pulau Payar, the carbon sequestration process will involve
limestone or more specific by coral reef. The value of carbon sequestration
is derived based on other studies which measured the area of coral reef per
hectare.

3.3.7 Bequest value
Bequest value is one of the sub-components under Non-Use Value. The
value is derived from conserving the future ecosystem goods and services
that is not going to be used at present. This study employed Contingent
Valuation Method which surveyed tourists opinion in conserving PPMP. Their
willingness to pay in the future towards all the goods and services provided in
PPMP is measured as a bequest value.
3.4 Valuation Techniques
This study applied three approaches in evaluating each type of benefits/costs that were
considered in our feasible sub-component of the total economic valuation of Pulau
Payar. The three valuation techniques were production approach, benefit transfer
approach and willingness to pay. The description of each technique is as follows:
3.4.2 Benefit Transfer Approach

Benefit transfer is an application to a set of data developed for addressing
one particular environmental or natural resource valuation question to another
context. Benefit transfer could be a reasonable method for determining such
values by estimating values of non-market natural resources and services.
Benefit transfer applications for this study was done using estimation based on
expert opinion through proxy values. This proxy values were used in relative
manner based on the similar geographic area.
23
3.4.1 Production Approach

Production approaches estimated the value of each variables obtained from
an ecosystem by subtracting all costs associated with the production of goods
(or services), from the total revenue obtained. Total revenue was typically
calculated using market prices for the good in question. If the good (or service)
was not sold on the market, but was used for subsistence purposes, then one
may appropriately define the economic value of the goods using the market
price of a substitute product.

3.4.3 Willingness to Pay
Contingent valuation method (CVM) is a survey method using questionnairebased approach that is deliberated to estimate the economic value of nonmarket goods. Willingness to Pay (WTP) is one of the most important concepts
in CVM. WTP is the maximum quantity consumers are ready to pay for a good
or service. More specifically, WTP is the amount of money that a person is
willing and able to pay to get pleasure from recreational facilities. It measures
whether an individual is willing to sacrifice their income in order to obtain
more goods and services, and is typically used for non-market goods. This
study used mean value of the WTP multiply by number of tourists to Pulau
Payar in getting the value for component non-use value, specifically bequest
value.
3.5 Illustration of Mathematical Calculation
The illustration of mathematical simulation for one of the subcomponent is shown in
Table 3.2. Table 3.2 illustrates the calculation of capture fisheries present value for
10 years at 10% discount rate. This study utilized three different discount rates i.e.
5%, 10% and 15%. All other worksheets of the calculation for TEV are displayed in
the Appendices.
Table 3.2: Calculation of Capture Fisheries Present Value at 10% discount
rate for 10 years
24
Capture sheries value in year 2009 = RM880,946,381

% contribution from PPMP= 14%
Bi = 880946381 X 14%
B0 / (i + 1)0
=
123332493.3
1
=
112120448.5
B1 / (i +1)
B2 / (i+ 1)2
=
101927680.4
B3 / (i + 1)3
=
92661527.68
=
84237752.43
B4 / (i + 1)4
5
=
76579774.94
B5 / (i + 1)
=
69617977.22
B6 / (i + 1)6
7
B7 / (i + 1)
=
63289070.2
8
=
57535518.36
B8 / (i+ 1)
B9 / (i+ 1)9
=
52305016.69
10
=
47550015.18
B10 / (i + 1)
PV (10, 10%)
=
881157275

As a result of all the calculations, Table 3.3 illustrates the findings for Pulau Payar
TEV Table 3.3: Pulau Payar TEV for 10-year Period.
TABLE 3.3: ILLUSTRATION OF PULAU PAYAR TEV
VARIABLES OF TEV
ECONOMIC VALUE
PER YEAR
Capure Fisheries
Benefit
Tourism
Benefit - Cost
Research and Education
Cost
Aesthetic
Coral
Aquarium fishes
Benefit
Coastal protection
Benefit
Carbon sequestration
Benefit
Bequest Value
Benefit
TOTAL
[........... , ...........]
The TEV of the

Pulau Payar is
estimated by
adding up the
fisheries value,
tourism, aesthetic,
research and
education, coastal
protection, carbon
seqestration and
bequest value
[........... , ...........]
The range of values presented = the lower bound and upper bound of
bequest values
25
PV (10-year
period, i=10%)

CHAPTER FOUR
RESEARCH FINDINGS
4.0 Introduction
This chapter consists of two main sections that report the findings of the research.
The first section is divided into ten parts and offers information about the nationality
of tourists. Later, this chapter highlights several reasons for tourists visits to Pulau
Payar, tourists departure point and the frequency of visit. Besides that, this chapter
also highlights some information with regards to the tourists level of awareness
in preserving the marine park, tourists activities and tourist attractions in view of
PPMP. In addition to that, the value of PPMP will then be illustrated based on extra
value both, the local and foreign, visitors would be willing to pay when they visit
PPMP.
The second section focuses on the valuation of the Total Economic Value (TEV).
The valuations for each sub-component of the TEV which involve seven research
variables are measured thru TEV mathematical model. The results for all research
variables are discussed based on their present value for 10 and 20 year periods at
three different discount rates; 5%, 10% and 15%. Finally, this study comes out with
the economic value per year and TEV for PPMP for the next 20 years at 10% discount
rate.
4.1 Nationality of Tourists
In this study, for the duration of survey, researchers managed to survey one hundred
and six tourists during the data collection phase. Out of this number, 62.3 percent
were Malaysians while the other 37.7 percent were foreigners. Majority of these
foreign tourists were from Asia (42.5 percent) and Europe (37.5 percent); followed
by Russia & Balkan countries (10 percent), USA (5 percent), and Australia (5 percent)
as described by the following table:
26

Table 4.1: Nationality of Tourists
Num. Of Tourists
66
5
8
5
3
2
3
4
2
1
2
2
1
1
1
106
Figure 4.1: Nationality of Tourists
Percent
62.3
4.7
7.5
4.7
2.8
1.9
2.8
3.8
1.9
.9
1.9
1.9
.9
.9
.9
100.0
27
Country
Malaysia
China
India
Germany
Russia
Ireland
France
Great Britain
Singapore
Thailand
Australia
USA
Austria
Japan
Belarus
Total

4.2 Intent to Visit
Respondents were then asked to state whether their visit to Pulau Payar Marine Park
was by their own choice or due to other reasons. As shown in Figure 4.2 below, 73
percent of them mentioned that they intentionally chose to visit the Marine Park,
while the other 24 percent of the respondents said that they did not specifically choose
to visit the Marine Park.
Figure 4.2: Intent to Visit
28
4.3 Boarding Jetty

Ferries to Pulau Payar Marine Park can be boarded at four jetties. The jetties are
located at Langkawi Island, Penang Island, Kuala Kedah, and Satun, Thailand. Figure
4.3 below shows that majority of respondents (93.4 percent) boarded the ferries from
Kuah, which is located at Langkawi Island.

93.4%
3.8%
0.9%
1.9%
Satun
Penang
Langkawi
Kuala
Kedah
Figure 4.3 : Boarding Jetty
4.4 Frequency of Visit

Respondents were also asked to state the number of their previous visits to Pulau
Payar Marine Park. 82.2 percent of them mentioned that the visit was their first visit.
The other 9.4 percent, 4.7 percent, and 3.7 percent of the respondents had already
visited the Marine Park either once or twice already, between three to five times, and
more than five times, respectively.
82%
First
Time
Less than
3 time
Between
3-5 times
4%
More
than 5
time
Figure 4.4: Frequency of Visit
29
9%
5%

4.5 Aware of Marine Park
With regard to the awareness of the respondents towards Pulau Payar as a Marine
Park, almost 70 percent of them provided a positive answer; while the other 30
percent either did not aware about that or did not answer the question at all.
Figure 4.5: Aware of Marine Park

4.6 Activities at Pulau Payar Marine Park
Ferries to Pulau Payar Marine Park can be boarded at four jetties. The jetties are
located at Langkawi Island, Penang Island, Kuala Kedah, and Satun, Thailand. Figure
4.3 below shows that majority of respondents (93.4 percent) boarded the ferries from
Kuah, which is located at Langkawi Island.
30

Eco-Tourism
Pulau
Marine Park 2011
Figure
4.6: Activities at In
Pulau
Payar Payar
Marine Park.
4.7 Willingness to Pay among Visitors
Next,
respondents
asked to
state the highest user fee that they are willing to
4.7 the
Willingness
to were
Pay among
Visitors
pay
visit
the Marine
Park
andtothe
usethe
of highest
its facilities
to that
preserve
thewilling
environment
Next,tothe
respondents
were
asked
state
user fee
they are
to pay to
in
and
the islands.
Theofrespondents
given
list of fee
ranges
from
visit
thearound
Marine Park
and the use
its facilities towere
preserve
the the
environment
in and
around
the
islands. The
respondents
list of to
feeanswer
ranges the
fromhighest
RM0.50fee
to RM
RM0.50
to RM
100.00.were
Theygiven
weretheasked
they100.00.
wouldThey
be
were asked
to answer the highest fee they would be willing to pay.
willing
to pay.
Figure 4.4: Frequency of Visit
Table 4.3: Willingness to Pay among Visitors
Amount of Fee
Num. Of
Tourists
Percent
RM0.50
5.7
RM1.50
6.6
RM2.00
1.9
RM3.00
1.9
RM5.00
14
13.2
RM9.00
0.9
31
31
Investigating
The Total Economic
Of Eco-Tourism In Pulau Payar Marine Park.
JABATAN
TAMAN
LAUT Value
MALAYSIA
RM10.00
21
19.8
RM15.00
1.9
RM20.00
8.5
RM25.00
4.7
RM30.00
11
10.4
RM40.00
3.8
RM50.00
10
9.4
RM60.00
1.9
RM70.00
2.8
RM80.00
0.9
RM90.00
RM100.00
5.7
Total
106
100.00
Mean
2011
RM13.20
The result showed that the mode is RM10 with 21 number of respondents, followed by RM 5 (14
respondents), RM30 (11 respondents), RM50 (10 respondents), and RM20 (9 respondents).
The mean amount among the respondents is RM13.20 and this result includes both local and
foreign tourists.
Table 4.4: Willingness to Pay among Local Visitors
32
Amount Of Fee
Num. of Local Visitors
Percent
RM0.50
6.1
RM1.50
9.1
RM2.00
1.5
RM3.00
1.5
RM5.00
12
18.2
RM9.00
1.5
RM10.00
11
16.7
RM15.00
1.5
32

Investigating The Total Economic
Value Of Eco-Tourism
In Pulau
Payar Marine
Park. 2011
Eco-Tourism
In Pulau
Payar
Marine
Park 2011
4.8
RM20.00
8.33
RM25.00
4.55
RM30.00
10.6
RM40.00
RM50.00
9.1
RM60.00
3.0
RM70.00
1.5
RM80.00
RM90.00
RM100.00
5.7
Total
66
100.00
Willingness to Pay among Local Visitors
Among local visitors, the mode for the highest user fee that they are willing to pay is RM5 with
12 number of respondents, followed by RM 10 (11 respondents), RM30 (7 respondents), RM50
(6 respondents), and RM1.50 (6 respondents). The mean amount among local visitors is
RM12.60.
4.9
Willingness to Pay among Foreign Visitors
According to Table 4.5, among foreign visitors, the mode for the highest user fee that they are
willing to pay is RM10 with 10 number of respondents, followed by RM 20, RM30, RM40, and
RM50, with 4 respondents each. The mean amount among foreign visitors is RM 14.30.
Amount of Fee
Num. of Foreigners
Percent
RM0.50
RM1.50
2.5
RM2.00
2.5
RM3.00
2.5
RM5.00
RM9.00
RM10.00
10
25
RM15.00
2.5
33
33
Table 4.5: Willingness to Pay among Foreign Visitors
Investigating
The Total Economic
JABATAN
TAMAN
LAUT Value
MALAYSIA
4.10
RM20.00
10
RM25.00
RM30.00
10
RM40.00
10
RM50.00
10
RM60.00
RM70.00
RM80.00
2.5
RM90.00
RM100.00
2.5
Total
40
100.00
2011
Attractiveness of Pulau Payar Marine Park
In this last section, findings on respondents perceptions on the level of attractiveness of Pulau
Payar Marine Park are being presented. There are four dimensions of attractiveness that were
being assessed. The four dimensions are the coral reef attractiveness, coral fish attractiveness,
avi fauna attractiveness, and flora attractiveness.
Figure 4.7 below shows that only 11 percent of the respondents among local and foreign
tourists answered high and very high for the influence of attractiveness of coral reef on their
decision to go to Pulau Payar Marine Park. The two highest percentages of respondents
choice were 44 percent for moderate and 30 percent for low.
Figure 4.7: Coral Reef Attractiveness
34
34

In Pulau
Payar Marine
Park. 2011
Eco-Tourism
In Pulau
Payar
Marine
Park 2011
Similar to coral reef attractiveness, findings on the attractiveness of coral fish that influence the
respondents decision to visit Pulau Payar Marine Park reveal that 46 percent of them rate it at
the moderate level, while 34 percent of them gave a low rating (Figure 4.8).
Figure 4.8: Coral Fish Attractiveness

Figure 4.9 below shows that 46 percent of the respondents gave a moderate rating while 34
percent of the respondents gave a high rating for the influence of avio fauna attractiveness on
Figure 4.9: Avi Fauna Attractiveness
35
35
their decision to go to Pulau Payar Marine Park.
Investigating
The Total Economic
JABATAN
TAMAN
LAUT Value
MALAYSIA
2011
At almost the same percentage as the influence of avi fauna attractiveness on their decision to
go to Pulau Payar Marine Park, 43 percent of the respondents gave a moderate rating while 31
percent of the respondents gave a high rating for the influence of flora attractiveness on their
decision to go to Pulau Payar Marine Park.
Figure 4.10: Flora Attractiveness
All in all, the rating of the level of attractiveness of Pulau Payar Marine Park was at a moderate
level for all four dimensions of attractiveness. However, for coral reef and coral fish influence on
the decision of the respondents to visit the Marine Park, the next highest rating was at a low
level; while for the influence of avio fauna and flora on the decision of the respondents to visit
the Marine Park, the next highest rating was at a high level.
4.11
Total Economic Valuation of PPMP
The total economic value (TEV) of Pulau Payar Marine Park (PPMP) is estimated based
on seven values of research variables.
The TEV are summation of these values
36
namely; capture fisheries, tourism, research and education, aesthetics, coastal
36

In Pulau
Payar Marine
Park. 2011
Eco-Tourism
In Pulau
Payar
Marine
Park 2011
protection, carbon sequestration and bequest value. The following section describes
each of the values and the findings of its present value (PV).
4.11.1
Value of Capture Fisheries
Capture fisheries are considered to have significant impact on the TEV of PPMP. Using
retail value of marine fish landings (Department of Fisheries, 2010) at Kedah coast the
catches attribute from the presence of fish in PPMP was valued. In 2009, the total value
of fish landings in Kedah was RM880,946,381.00. Meanwhile the contribution from
Pulau Langkawi was around 14% of the total capture fisheries in Kedah (Mahyam et.
al., 1998). Thus, this study used 14% as a basis in estimating the contribution
percentage of PPMP towards the total capture fisheries. Table 4.6 indicates the only
one extractive value under TEV component associated with present values (PVs).
Table 4.6: Present Value of Capture Fisheries
Present Value
PV over 10-year period (RM)
i=5%
1,075,673,315.07
1,660,327,967.41
Discount rates (i)

i=10%
881,157,274.98
1,173,331,534.11
i=15%
742,309,741.46
895,311,450.64
The resultant economic value of fish caught from PPMPs MPA along the Kedah coast
is valued at RM 123,332,493.30 million per year (refer to Appendix B1). The PV is
estimated to be within RM 895 million to RM1.660 billion in 20 years at 5% - 15%
discount rate.
4.11.2
Value of Tourism
attracting total revenues in the region of RM480, 485.00 which is the consumer surplus
37
37
PPMP has attracted a total of some 96,097 visitors during the 2010 financial year,
Investigating
The Total Economic
JABATAN
TAMAN
LAUT Value
MALAYSIA
2011
for PPMP. This is the additional amount that visitors have paid for over and above what
they actually had to pay which is RM 5.00 per person. To preserve the environment and
maintain the cleanliness of PPMP, JTLM had spent almost RM8, 000 per month which
total-up the cost to RM96,000 yearly. The PV of gross benefit achieved from tourism
over 10 and 20 year period is ranging from RM2.9 million and RM3.5 million (at 15%
discount rate) to RM4.2 million and RM6.5 million (at 5% discount rate) for these two
consecutive periods. Whilst the PV of the maintenance cost over 10 and 20 year period
are within RM 577,802 and RM 696,896 (at 15% discount rate) to RM 837,287 and RM
1.2 million (at 5% discount rate) for the same two periods. The detail PVs are shown in
Table 4.7.
Table 4.6: Net Present Value of Tourism
Present value
Discount rate (i)

i=5%
i=10%
i=15%
PV of gross benefits over 10-year period (RM)
4,190,662.81
3,432,857.33
2,891,928.04
PV of gross benefits over 20-year period (RM)
6,468,390.14
4,571,124.66
3,487,999.88
PV of cost over 10-year period (RM)
837,286.55
685,878.44
577,801.79
1,292,372.19
913,302.12
696,895.82
NPV over 10-year period (RM)
3,353,376.25
2,746,978.88
2,314,126.26
NPV over 20-year period (RM)
5,176,017.94
3,657,822.55
2,791,104.06
Overall, the net present values (NPVs) over 10-year period are RM 3.4 million, RM 2.7
million and RM 2.3 million at 5%, 10% and 15% discount rates respectively.
Furthermore, the enjoyment of these nature reserves is derived from marine activities
as translated by 79.20% (snorkeling) and 57.50% (swimming), while, about 73% of the
tourists had decided to visit this nature reserve way back from their hometowns. Based
38
on the study, the total expenditure attributed to the PPMP is estimated to be RM19.219
million (96,097 x minimum RM200.00), including consumers surplus.
38

In Pulau
Payar Marine
Park. 2011
Eco-Tourism
In Pulau
Payar
Marine
Park 2011
4.11.3
Research and Education Cost
The research budget allocated to JTLM was around RM900, 000, while an expense on
education activities was RM 300,000 for a financial year 2010. Thus the total value is
expected to be RM 1.2 million a year. However the actual cost spends exactly to PPMP
is not available. Table 4.7 indicates PVs of the research and education cost.
Table 4.7: Present Value of Research and Education Costs
Present Value
Discount rates (i)

i=10%
i=5%
10,466,081.92
16,154,652.41
i=15%
8,573,480.53
11,416,276.46
7,222,522.35
8,711,197.77
The estimated PV of cost for 10 year period is within RM 7.2 million to RM10.5 million
and for 20 year period is within RM 8.7 million to 16.2 million within the three discount
rates.
4.11.4
Value of Aesthetics
The aesthetics values for PPMP are confined to coral reef and reef fish values. Due to
unavailability of information, the coral reef value was excluded from the TEV
calculations. According to Alias (2008), the average density of coral reef fish population
inside the PP protected area was 29,000kg/km2. Meanwhile the sea zone in the
protected area in km2 is approximately to be 50.43km2. Thus, based on the minimum
market price for reef fishes (USD11/kg = RM34.62/kg), the reef fish value surrounding
the circumference of 2 nautical miles of PPMP as per the year was valued at RM 50,
636, 375.68 (refer Appendix A5, B5 & C5). The estimated PVs for 10 and 20 year
period are illustrated in Table 4.8.
Present Value of Aesthetics
Present value
Discount rate (i)

i=5%
i=10%
i=15%
N/A
N/A
N/A
PV over 10-year period (RM) - coral reef

39
39
Table 4.8:
Investigating
The Total Economic
JABATAN
TAMAN
LAUT Value
MALAYSIA
N/A
2011
PV over 10-year period (RM) - reef fishes
N/A
N/A
53,348,522.04
44,346,836.85
37,785,748.70
87,556,304.49
61,874,867.55
47,213,661.11
At 10 % discount rate, the present value for reef fishes to be around 62 million in 20
years.
4.11.5
Value of Coastal Protection
Based on Constanza et al (1997), the value of coastal protection provided by reefs was
at USD 275, 000 (RM 865, 562. 50 as at USD 3.1475 per RM1.00) per km2 of reef per
year. By using Benefit Transfer method, for an estimated 0.251km2 (LEK Report) of
coral coverage in PPMP, it was found that approximately the total value of coastal
protection by coral reef per year is around RM 217, 256.19 (refer Appendix A6, B6 &
C6). Thus, the present values for 10 and 20 year periods are shown in the Table 4.9.
Table 4.9: Present Value of Coastal Protection

Present value
Discount rate (i)

i=5%
i=10%
i=15%
1,894,850.88
1,552,201.41
1,307,614.73
2,924,748.49
2,066,880.58
1,577,134.68
At 10% discount rate, the coastal protection is valued for 20 year period at RM 2.07
million.
4.11.6
Value of Carbon Sequestration
Considering the benefit of carbon sequestrated by coral reef which is valued at USD
2,700 (RM8, 498.25) per hectare per year (Emerton & Kekulandala, 2003), this study
transferred that benefit as the basis for calculation. For 25.1 hectares of coral coverage
40
in PPMP it was identified that the value for carbon sequestration in the PPMP region per
year is RM 213, 306.08. Table 4.10 indicates the PVs for both study periods.
40

In Pulau
Payar Marine
Park. 2011
Eco-Tourism
In Pulau
Payar
Marine
Park 2011
Table 4.10: Present Value of Carbon Sequestration

Present value
Discount rate (i)

i=5%
i=10%
i=15%
1,860,399.04
1,523,979.57
1,278,725.01
2,871,571.25
2,029,300.94
1,542,290.34
At 10% discount rate, the carbon sequestration is valued for 20 year period by RM 2.03
million.
4.11.7
Value of Bequest value
The bequest value of the MPA was determined using the Contingent Valuation Method
which elicits peoples willingness to pay to retain or improve an environmental amenity
or to prevent its loss. Respondents involved in the survey were predominantly locals.
Only 37% are foreign citizens including Europeans and East Asia. Since the sample
size was too small, the quantitative estimates only restricted to these respondents. The
survey also did not capture a significantly representative group in terms of country of
origin, income and race.
On average, the overall willingness to pay (as a once-off payment), meant to conserve
for future generations or equates the future value of the current system, was RM1,
268,480.40 million. This figure could be translated into the willingness to pay of an
for foreign tourists or an additional RM13.20 in general. It should be noted that this
study should only be considered as a preliminary estimate since the result was
41
41
additional RM12.60 per person for local tourists and an additional RM14.30 per person
Investigating
The Total Economic
JABATAN
TAMAN
LAUT Value
MALAYSIA
2011
generated from a small sample size. For economic value in 10 year and 20 year
periods, the values are illustrated in Table 4.11.
Table 4.11: Present Value of Bequest Value

Present Value
PV over 10-year period (RM) - mean WTP
PV over 20-year period (RM) - mean WTP
PV over 10-year period (RM) - minimum WTP
PV over 20-year period (RM) - minimum WTP
i=5%
11,063,349.81
17,076,549.96
419,066.28
646,839.01
Discount rates (i)

i=10%
9,062,743.34
12,067,769.11
343,285.73
457,112.47
i=15%
7,634,690.03
9,208,319.69
289,192.80
348,799.99
Bequest value is estimated at RM 12 million based on mean value of WTP = RM13.20,

and only RM457, 113 for the minimum WTP = RM0.50 both values for 20 year period
at 10% discount rate.
4.11.8
TEV for 20 year period
The economic value per year for each of components of TEV is shown in Table 4.12.
The results indicate that capture fisheries contribute almost 70% to the TEV and
followed by aesthetic value of 29%. Where as, other components only contribute for the
remaining 1% of the total economic value per year. This study found that the value is
within RM174 million (USD55.3 million) to RM175 million (USD55.7 million) per year. In
the next 20 year period, TEV for PPMP is estimated to be nearly RM 1.7 billion (USD
530 million) with 10% discount rate.
Table 4.12: Economic values of Pulau Payar Marine Park
Component of TEV
42
Capture Fisheries
Tourism
Research / Education
Aesthetic
Economic Value per

Year (RM)
123,332,493.34
384,485.00
-1,200,000.00
50,636,375.68
42
PV (20-year period, i=10%)

(RM)
1,173,331,534.11
3,657,822.55
-11,416,276.46
481,732,386.57

In Pulau
Payar Marine
Park. 2011
Eco-Tourism
In Pulau
Payar
Marine
Park 2011
217256.19
213,306.08
48,048.50
1,268,480.40
173,631,964.78
174,852,396.68
2,066,880.58
2,029,300.94
457,112.47
12,067,769.11
1,651,858,760.75
1,663,469,417.39
43
Coastal protection
Carbon sequestration
Bequest Value
min WTP
ave WTP
TOTAL
LOWER BOUND
UPPER BOUND
43

CHAPTER FIVE
CONCLUSION
This study was conducted to determine the total economic value of Pulau Payar
Marine Park, Kedah. The Marine Park is an area of the sea zone, two nautical miles
from the shore at the lowest tide, preserved as a sanctuary for the protection of
marine eco-system especially coral reefs and its flora and fauna. The Department
of Marine Park is a federal agency under the Ministry of Natural Resources and
Environment (NRE) which has been tasked to establish, administer and manage
Marine Parks in Malaysia. The principle aims of establishing Marine Parks in the
country is to protect, conserve and manage is perpetuity representative marine ecosystems of significance, particularly coral reef and their associated flora and fauna,
so that remain undamaged for the future generations.
Pulau Payar Marine Park consists of four islands that form the archipelago of Pulau
Payar. The islands are Pulau Payar itself, Pulau Lembu, Pulau Kaca and Pulau
Segantang. Pulau Payar Marine Park is located about 19nm south of Pulau Langkawi,
32nm north of Penang and 15nm west of Kuala Kedah. The islands was gazette as a
Marine Park in 1994 under the Fisheries Act 1985 (Amended 1991).
Pulau Payar is the largest of the archipelago, with an area of 31.2 hectares and an
approximate length of 1.75 km and about 500 meters wide. It rises to 80 90 meters
above sea level at the peak point. Coastline of the island is about 3.35 km with
very limited beach and flat land with no freshwater sources. The four sandy beaches
are found at the eastern side of the island. The entire length of its north-western
coast is predominantly rocky and characterized by steep cliffs and wave-cut gullies.
Two longest beaches, around 100 meters each, are located in front of marine park
information centre and commercial tourist platform. The entire island is covered
with dense vegetation.
44
The goal of this study is to provide preliminary estimates of the costs and benefits
associated with Pulau Payar Marine Park, in particular, that could potentially lead

to an ability to estimate how these costs and benefits might change under different
scenarios in view of the Marine Park Area size and the components intensity. This
study works with the Total Economic Value (TEV) as the research framework which
comprises the elements of direct use value, indirect use value and non-use value.
Direct use value refers to consumptive or non consumptive values. Indirect use value
covered in this study provides landed fish statistics. The non-use elements comprises
of the option value in retaining an ecosystem for future use. While, an existence
value refers to the wellbeing derived from knowing that something exists, which
referred to in this study as the public willingness to pay. In addition to these values,
this study also examined the management and opportunity costs associated with
Pulau Payar Marine Park.
For the TEV, this study employed TEV mathematical model that concentrates on
the cost and benefit analysis. It is found that PPMP coast provides substantial values
illustrating the significance of the PPMP to the nation. The values involved can be
summarized as follows:

Capture Fisheries In this study the capture fisheries element is based
on the published report on landed fish at the access point surveys, the
catches attribute to the presence of fish in Pulau Payar Marine Park was
valued. The resultant economic value of fish caught from PPMPs MPA
along Kedah coast was valued at RM123,332,493.30 million per year.
This value is estimated to be around RM1.173 billion in 20 years with
10% discount rate.
45
In this study, the data collection method used was structured questionnaire that
covered direct use, indirect use and non-use value in terms of awareness and bequest
value in view of willingness to pay. All these dimensions measure the impact and
the effect of the Total Economic Value of Pulau Payar Marine Park. Series of survey
were carried out in 4 days on a total of 120 visitors. Since this study was a crosssectional study, 120 respondents are considered sufficient in representing the whole
population of Pulau Payar visitors. The tool used to analyze the data is SPSS 18 and
applied descriptive analysis in presenting the information.
46
Tourism In 2010 financial year the total of 96,097 visitors had visited
Pulau Payar Marine Park which attracted gross revenues in the region
of RM480,485.00. This is the additional amount that visitors have paid
for over and above what they actually had to pay. For the next 20-year
period with the same conservation fee, the value is going to achieve
RM3.7 million at 10% discount rate.
Aesthetics Values This value confined to the coral reef and reef fish
values. For this study, the coral reef value was excluded from TEV
calculations model because of the unavailability of coral reef data.
However the reef fish value surrounding 2 nautical miles of PPMP as
per year is estimated at RM 50.6 million. At discount rate 10%, the
present aesthetic value over 20-year period is expected to be RM 481.7
million.
Coastal Protection In this study, coastal protection was measured

using the Benefit Transfer Method. For an estimated 0.251km of coral
reef surrounding PPMP, the approximate value of coastal protection
to converse coral reef per year is estimated at RM 217,256.19. The
present coastal protection value over 20-year period with 10% discount
rate is estimated at RM 2.07 million.
Carbon Sequestration The estimation of carbon sequestration value in

PPMP in view of Benefit Transfer method was based upon USD2,770
per hectare per year. As a result, the carbon sequestration identified in
PPMP is valued at RM 213,306.08 per year. At 10% discount rate, the
carbon sequestration is valued for 20 year period by RM 2.03 million.
Bequest Value In this study, the existence value of Marine Park

Area was determined by the Contingent Valuation Method which
elicits peoples willingness to pay to retain or improve an environment
amenity. The respondents of study were 37% foreign tourists including

Europeans and East Asians. The overall willingness to pay to conserve
future generations or equates the future value of the current system
was RM1, 268,480.40 million. This figure could be translated into the
willingness to pay of an additional RM12.60 per person for local tourists
and RM14.30 per person for foreign tourists or an additional RM13.20
overall for willingness to pay by tourists of PPMP. The average present
bequest value for the next 20-year period (discount rate at 10%) is going
to increase to RM12.1 million.

Management Costs the management cost including maintenance and

research & education incurred on PPMP was approximately RM1.3
million. The expected present value of maintenance cost over 20-year
period is estimated at RM 913,302.12, where as the present value of
research and education cost is expected at RM 11.4 million for the same
time period at 10% discount rate.
This study has provided a thorough outline of the role of Total Economic Value analysis
in promoting the sustainable management of marine protected areas in the PPMP.
The study started from a broad overview of issues surrounding marine ecosystems
and narrowed its focus to the PPMP. Strategies used to combat these problems were
discussed, including all components of Total Economics Value measurement. In
particular, marine protected areas were identified as having high conservation value
despite a number of underlying problems such as conflicts between conservation and
development needs, a lack of well-defined boundaries and scientific rationale and
insufficient funding sources. Economic analysis was presented as a vital strategy
to promote the sustainable management of marine protected areas. The idea of the
47
Conclusively, using the findings reported in the preceding chapter, it is estimated that
the Total Economic Value (TEV) of PPMP over a 20 year period, using a discount
rate of 10% is RM1.7 billion (USD 530 million). The most important note is that the
costs of PPMP as an MPA are outweighed by the benefits. This is in spite of the fact
that both, the costs and benefits were conservatively estimated.

classification of values was explained, while the steps and potential application of
economic analysis were outlined. This study perhaps can contribute to the awareness
of the society about the value of Marine Park in Malaysia.
48

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INVESTIGATING TOTAL ECONOMIC

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JABATAN TAMAN LAUT MALAYSIA

INVESTIGATING TOTAL ECONOMIC

Copyright Department of Marine Park Malaysia

Study area and overall approach

an ecosystem provides inputs into an economic activity elsewhere (fish landed in

Chapter 1 Background of the Study

1.1 Tourism in Malaysia

1.3 Marine Parks in Malaysia

1.4 Study Site: Pulau Payar Marine Park (PPMP)

1.4.1 Background of PPMP

1.4.2 Good and Services in PPMP

1.5 Problem Statement

1.6 Research Objectives

1.7 Research Outputs

1.8 Research Impacts

1.8.1 Contribution to Economy

2.1 Total Economic Value

2.1.1 Direct Economic Values

2.1.2 Indirect Use Values

2.1.3 Option Values

2.1.4 Non-Use Values

Chapter 2 Literature Review

Chapter 3 Research Methodology

3.1 Research Design

3.2 Research Framework

3.2.1 TEV Mathematical Model

3.2.2 Type of Benefits / Costs

3.3 Variables Used (Operational Definitions)

3.3.1 Capture Fisheries

3.3.2 Tourism / Recreational

3.3.3 Research / Education

3.3.5 Coastal Protection

3.3.6 Carbon Sequestration

3.3.7 Bequest Value

3.4 Valuation Techniques

3.4.1 Production Approach

3.4.2 Benefit Transfer Approach

3.4.3 Willingness to Pay

3.5 Illustration of Mathematical Calculation

Chapter 4 Research Findings

4.1 Nationality of Tourists

4.2 Intent to Visit

4.3 Boarding Jetty

4.4 Frequency of Visit

4.5 Aware of Marine Park

4.6 Activities at Pulau Payar Marine Park

4.7 Willingness to Pay among Visitors

4.8 Willingness to Pay among Local Visitors

4.9 Willingness to Pay among Foreign Visitors

4.10 Attractiveness of Pulau Payar Marine Park

4.11 Total Economic Valuation of PPMP

a. Value of Capture Fisheries

c. Research and Education Cost

e. Value of Coastal Protection

f. Value of Carbon Sequestration

g. Value of Bequest Value

h. TEV for 20 year period

Appendix A9: Present Value (PV) of Bequest Value (minimum WTP) at 5%

Appendices E Slide Presentation to JTLM