My

1. GREEN TOURISM-ECONOMICS
CARBON FOOTPRINTS AND WILLINGNESS
TO PAY FOR CLIMATE CHANGE MITIGATION
Guest lecture at the Beijing Foreign Studies University
April 2012
by
Waldo Krugell
School of Economics

2. Outline
1. Introduction
2. The literature:
• The environment as a common pool resource
• Tourism and climate change
• Mitigation of climate change and willingness to pay
3. South African research:
• Tourism research in SA – only a few green shoots
• WTP at a sports event
• WTP at a tourist destination / venue
• WTP to see the Big-5 at the Kruger National Park
4. My "green" tourism economics research manifesto!
5. Conclusions

3. 1) Introduction – tourism economics
• Tourism is a key sector in the global economy that makes
significant contributions to GDP and employment.

4. 1) Introduction – tourism economics
• The sector is expected to grow by 4-5% in 2012, reaching
one billion tourist arrivals.
• One of the most significant recent changes is the rise of
China to the third place in the international arrivals
ranking.

5. 1) Introduction – tourism economics
• South Africa:
• Received 8 million visitors in 2010.
• That is 16% of visitors to Africa.
• And we received US$ 9,070 million in tourist receipts.
• Tourism arrivals grew by 15% between 2009 and 2010.

6. 1) Introduction – tourism +
environment
• Travel and tourism is also responsible for approximately
5% of global carbon dioxide emissions
• By 2035, under a “business as usual” scenario, carbon
dioxide emissions from global tourism are projected to
increase by 130%.
• Environmentally and socially responsible leisure activities
have become a key issue in the development of tourism.
• See the cases of the "low carbon" Olympic flame, or the current
debate over carbon taxes on flights into and out of the E.U.
• There is a large literature on the environment, climate
change and tourism.

7. 2) The literature
• The environment as a common pool resource:
• The earth’s atmosphere and the climate that sustains life as we
know it, is commonly owned by everyone and utilised by all – no-
one has to pay to live on earth!
• As a consequence, the environment suffers the effects of negative
externalities, specifically the pollution that occurs during all our
production and consumption activities.
• The externality is the difference between the private and social
costs.
• The market fails to account for the social costs since no-one owns
their share of a sustainable environment to sell to polluters and as
such no market or price exists.

8. 2) The literature
• Are there any solutions?
• We cannot stop tourism to reduce the related pollution to zero.
• There may solutions in cooperation of coercion.
• Cooperation:
• Everyone could work together and cooperate to reduce our
consumption and the consequent pollution.
• This is an unlikely global solution as cooperation will be
undermined by the “prisoners’ dilemma”.
• Similarly, a user-pays approach may be possible, but will be limited
to voluntary contributions.
• Since on-one owns the environment it is not clear to whom
payments should be made when you pollute.

9. 2) The literature
• Coercion:
• Government may sell pollution rights in a cap-and-trade system
and fine those that do not cooperate.
• Or they may levy carbon taxes on polluters.
• In both cases success will depend on the ability of
government to measure the pollution, link it to the
polluters, set the tax rate and enforce it.
• These solutions also suffer from a cooperation problem,
but at a country level:
• If all governments believe that all the others will allow pollution they
will not create carbon markets or set carbon taxes.

10. 2) The literature + tourism
• Practically speaking, the effects of human activity on the
environment, also our tourism activities, will have to be
mitigated by a combination of voluntary contributions and
compulsory taxes.
• Research into tourism and climate change has focussed
on four aspects:
• The impact of tourism on climate change.
• The impact of climate change on tourism.
• Adaptation to climate change.
• Mitigation of climate change.

11. 2) The literature + tourism
The impact of tourism on climate The impact of climate change on
change: tourism:
•Measure travel behaviour, linked to drivers •Measure how the climate change has
of climate change. influenced travel behaviour
•Measure perceptions of the links between
travel behaviour and climate change.
•Explain differences between perceptions
and impacts.
Adaptation to climate change: Mitigation of climate change:
•Measure how travel behaviour has changed •Measure the willingness to pay to mitigate
in response to climate change. climate change.
•Measure how the accommodation sector •(Determine the economic value of
has changed in response to climate change. environmental goods).
•Measure how the transport sector has •This can be related to transport,
changed in response to climate change. accommodation, events.
•Policies emphasise the polluter-pays-
principle.

12. 2) The literature + willingness to pay
• There are three approaches to determine how
much people are willing to pay to mitigate the
environmental impact of the travel and tourism
activities:
• The travel cost method.
• The hedonic pricing method.
• The contingent valuation method.

13. 2) The literature + WTP, CV method
• Payment is hypothetical
• Valuation is contingent on the scenario presented.
• Examples:
• General approach to WTP and climate change mitigation –
Johnson & Nemet (2010).
• McKercher et al. (2010) examine the attitudes of Hong Kong
residents towards tourism and the environment, and the willingness
of residents to change their behaviours in response to climate
change.
• For focus specifically on air travelers' willingness to pay to offset
their CO2 emissions, see Brouwer et al. (2007).
• For tourists' willingness to pay for specific environmental goods,
see Casey et al. (2010) who examined WTP additional fees to
protect the coral reefs tourists were visiting in Mexico.

14. 3) SA research
• Despite the fact that South African tourism is very much
nature based, there has been very little research into
valuation of the environment or mitigation of climate
change.
• Our work at the NWU's research area: Tourism Research
in Economics, Environs and Society (TREES) has taken
three approaches:
• WTP for carbon offsets at a sport event.
• WTP for green accommodation, wine and food at a tourist venue.
• WTP to view the Big-5 in a national park.

15. 3.1) WTP for a green race
• For our first paper we went to the Two
Oceans Marathon and asked runners
whether they are willing to pay for a green race
• Our analysis showed that the carbon footprint of the
average participant is approximately 480kg of CO2, which
can be offset by planting 2.2 trees.
• We asked if they were willing to pay a higher race fee that
can be used to mitigate this impact on the environment.
• 502 athletes participated in the 2011 survey.

16. 3.1) WTP for a green race
• Description of the data:
• Males 65%, females 35%.
• Average age 38 years.
• 57% English speaking, 26% Afrikaans.
• 32% holds a diploma or degree.
• 23% post-grad qualification.
• 27% professional occupations, 13% self-employed.

17. 3.1) WTP for a green race
• The scenario and WTP questions:
• 11% skipped the WTP questions
• 27% indicated that they were not willing to pay.
• 62% said they would.
• Of those that were willing to pay:
• 62% said that they would pay R10 (7.8 CNY)
• 12% were willing to pay R30 (23.6 CNY)
• 19% were willing to pay R50 (39.3 CNY)

18. 3.1) WTP for a green race
Variable Cross-tab with WTP
Gender 58% of men WTP and 68% of women
Age group 18-50 years: 62-64% WTP, 51-60 years only 53% and
those 60 years and older 71% WTP
Marital status Single or divorced more WTP compared to married
Language Greater % of Afrikaans speakers WTP
Education More athletes with degree/ diploma (69%) or with post-
grad qualification (66%) were willing to pay
Occupation 72% of self-employed were willing to pay

19. 3.1) WTP for a green race

20. 3.1) WTP for a green race
WTP categories in Ordered Probit regression
Gender Females (+) WTP, compared to males
Marital status Not married (+) WTP**, compared to married
Language English (-) WTP, compared to Afrikaans
Education All coefficients (-) WTP compared to no schooling
Occupation Self-employed**, Admin**, Students* (+) WTP,
compared to professionals
Province of residence WC, KZN, MP, LP (-) WTP, compared to internationals
Nights in Cape Town (+) WTP
Age (+) WTP**
Total spending (+) WTP

21. 3.1) WTP for a green race
Multinomial logistic regression (compared to not willing to pay)
WTP R10 (+) WTP: Being married, from EC, feeling responsible
(-) WTP: all categories of education, compared to no
schooling
WTP R30 Only the reasons for paying were significant
Education coefficients are positive, but insignificant
WTP R50 (+) WTP: Self-employed**, Admin*, Civil servants * were
willing to pay, compared to professionals
(+) WTP: Age

22. 3.1) WTP for a green race
• Conclusions:
• We have identified some of the predictors of willingness to pay for
a green race.
• Spending may be a proxy for income, but did not yield significant
results.
• Differences between married and non-married people and between
the self-employed and other occupations may reflect differences in
discretionary income.
• Education did not have the expected positive relationship.
• The reasons why people said they were willing to pay, were
important.

23. 3.2) WTP at a tourist venue
• In another round of research, we surveyed day visitors at
a tourist venue.
• Spier wine estate and hotel has a very green and
sustainable approach and we asked visitors about their
green behaviour at home and their willingness to pay for
green accommodation and organic food and wine.
• 160 visitors participated.

24. 3.2) WTP at a tourist venue
• Description of the data:
• 60% female and 40% male.
• Most are between the ages of 25 and 41 years.
• 58% were from the Western Cape province and the rest
were visitors from further afield – approximately 26%
were foreigners (U.K., U.S., Germany).
• 62% were English speaking, 31% Afrikaans and 7%
spoke other home languages.
• 47% professionals, 23% self-employed.

25. 3.2) WTP at a tourist venue
• Most visitors were not aware of the green initiatives at
Spier.
• But say that they would visit a wine farm that recycles,
encourages eco-friendly behaviour, makes use of energy-
saving technology and supports green initiatives.
• And their willingness to pay extra:
• 63% indicated that they would be willing to pay extra.
• R118 (92.6 CNY) for green accommodation
• R27 (21.2 CNY) for an organic meal
• R16 (12.5 CNY) for an organic bottle of wine

26. 3.2) WTP at a tourist venue
• Next we used exploratory factor analysis to identify types
of tourists based on their reported green behaviour at
home.

27. 3.2) WTP at a tourist venue
• Next we used exploratory factor analysis to identify types
of tourists based on their reported green behaviour at
home.

28. 3.2) WTP at a tourist venue
WTP green accommodation – logistic regression model
Gender Females (+) WTP, compared to males
Language English speakers (+) WTP, compared to Afrikaans
Province Visitors from Western Cape (+) WTP compared to
others
Occupation All occupations (+) WTP
Type of green tourist + WTP Green shoppers, green gardeners, green misers

29. 3.1) WTP at a tourist venue
• Conclusions:
• Again. we have identified some of the predictors of
willingness to pay for a green tourism.
• But demographic variables are not as significant as one
finds in the international literature.
• The type of tourist, classified by their green behaviour,
is what matters for willingness to pay.

30. 3.2) WTP for the Big-5
• For our final effort we made the issue more specific.
• In stead of focusing on climate change in general or green
or sustainable tourism, we were specifically interested in
tourists' valuation of the Big-5.
• The the lion, African elephant, Cape buffalo, leopard and
the rhinoceros are some of the biggest attractions in the
national parks.
• And the opportunities to view these species in their
natural habitat is a public good.
• But what monetary value do tourists place on the Big-5?

31. 3.2) WTP for the Big-5
• A survey was conducted in the northern part of the Kruger
National Park at the Olifants, Letaba, Mopani and Punda
Maria restcamps.
• 289 tourists participated.
• Respondents were asked what role the Big-5 plays in their
decision to visit the Park.
• And, what amount of their total spending per visit they
would allocate to the opportunity to view the Big-5 in the
Park.

32. 3.2) WTP for the Big-5
• Description of the data:
• 69% Afrikaans speaking.
• Average age 48 years.
• 85% married.
• 65% with accompanying children.
• 48% from Gauteng province.
• 35% with diploma / degree, 28% with post-grad qualification.
• 37% earn gross annual income > R550 000 (433 800 CNY)
• Average spending per visit R10 300 (8127 CNY) for staying 6
nights.
• Of the spending, on average, R3 500, or about a third is allocated
to the opportunity to view the Big-5.

33. 3.2) WTP for the Big-5
WTP amount of spending allocated, OLS regression model
Language English speakers (+) WTP, compared to Afrikaans
Age (+) WTP
Marital status Not married (+) WTP, Living together (-) WTP
Education Higher levels of education (+) WTP
Income Higher income (+) WTP
Number of visits More visits to the Park (-) WTP
Role of the Big-5 If they indicated that the Big-5 is an important
consideration in visiting the Park (+) WTP

34. 3.2) WTP for the Big-5
• Conclusions:
• Education and income come out as clear predictors of willingness
to pay.
• Can Park management leverage this for the protection and
conservation of for example Rhinos?
• Four hundred and forty eight (448) rhinos were illegally killed across
South Africa in 2011.
• The poaching of rhinos in the Kruger National Park accounted for 252 of
the 2011 total.
• South Africa already lost 168 rhinos in 2012.

35. 4) My "green" tourism economics
research manifesto!

36. 4) My "green" tourism economics
research manifesto!

37. Conclusions
• Tourism and the environment.
• What can economists add?
• Experiments and randomized control trials.
• It is the type of tourist that matters.
• The importance of awareness and education.