Research Article
Accounting for Environmental Sustainability of the Tourism Industry: The Case of
Perhentian Island
Rosmini Ismail1*, Khalizul Khalid2, Hartini Jaafar3, Ramlee Ismail4
*1,2,3,4Faculty of Management and Economics,
UniversitiPendidikan Sultan Idris,TanjongMalim, Perak, Malaysia
1*rosmini@fpe.upsi.edu.my
Article History: Received: 10 November 2020; Revised: 12 January 2021; Accepted: 27 January 2021;
Published online: 05 April 2021
Abstract: The study is undertaken to account and measure externalities that have crossed beyond its environmental limit due
totourism activities. These measurements later integrated into thetourism revenue estimates.Hence, the study’s objectives include estimating tourism revenue, quantifyingand monetizing environmental degradations and presenting the Environmentally Sustainable Tourism Revenue (ESTR) statement.Visitors spending served as proxies to tourism revenue estimates. Data were collected from 923 tourists of Perhentian Island and analysed using two-steps decision tree analysis through Chi-Square Automatic Interaction Detection (CHAID) procedure in SPSS 22.0 software. The costs of the environment were measured loosely based on the concept of ecological footprint, tourism carrying capacity, and economic valuation techniques.The findings suggest that the cost of the environment which comprised of overshoot of environmental resources, overcapacity of environmental services and overuse of environmental asset were RM5,446,563.00, RM506,576.00 and RM1,612,160.94 – RM3,626,722, respectively.Perhentian Islands’ total cost of degradation was recorded at RM9,579,861.00 (upper limit) with net tourism revenue of RM124,724,324.00. The implication of the study suggests that Perhentian Islands tourism externalities has exceeded between5.5% to 7.1% of its environmental limit and therefore, tourism activities on the islands incline towards unsustainability. Several steps need to be taken to rectifythe environmental issues identified in the study to ensure the sustainability of the islands.
Keywords: Externalities, Environmental Limit, Sustainability, Tourism Activities, Perhentian Islands
1. Introduction
In general, the natural environment (interchangeably used with the term environment) serves several essential functions to all life forms. These functions are commonly groups into various categories(Dunlap & Jorgenson, 2012; Hanley, Shogren, & White, 2007; Miller & Spoolman, 2011;Singh & Shishodia, 2007). These include as, the supplier of environmental resources for the productions of economics goods, contributor to environmental services and amenities,including serving as sink function for carbon and other waste of human activities. Finally, it serves the role as a provider of natural landscapesfor the establishment of communities. Examples of these crucial elements are lands and other landscapes, while fish, livestock and crops as natural resources for consumptions. Apart from that, the dual functions of water, air and soil which not only act as a contributor but also as receiver of unwanted waste.
Unfortunately, human activities, more often than not, caused disturbances to the functions provided by the environment. Thesemay result in depletion of natural resources, degradations of environmental services and deterioration of natural landscapes. Regrettably, these environmental externalities are commonly ignored in traditional measure of nation’s performance, namely the Gross Domestic Product (GDP) estimates (Hashimoto, Oda, & Qi, 2018; Kubiszewski et al., 2013; Kumar & Smith, 2019; Vaghefi, Siwar, & Aziz, 2015). It is a concern especially for nature-based tourism which relies heavily upon its natural environment to generate economic benefit in terms of tourism receipt and employment (Tourism Malaysia, 2019; World Travel &Tourism Council (WTTC), 2015).
Acknowledging tourism sector dependency on the natural environment and how environmental externalities may affect the wellbeing of the host community, future visitors and the sustainability of the tourism destination itself, various proposals were put forth to account for the environment (Dragović, Tzannatos, Tselentis, Meštrović, & Škurić, 2018; Jones, Munday, & Bryan, 2016; Ragab & Meis, 2016; Sun, Lenzen, & Liu, 2019). Each of these studies offer different perspectives to account for the environment. Sun et al. (2019),for example, review the accounting frameworks for national tourism carbon emission inventory by using Taiwan as a case study. Meanwhile,Ragab and Meis (2016), adopt the TSAP to convert resources used in the Egypt tourism industry into carbon emissions.
Consequently, both Dragović et al. (2018) and Jones et al. (2016) also focus on carbon emissions of tourism activities. However, while Jones et al. (2016) proposed to establish indicators that link different tourism
consumption to the externalitiesproduced directly, for example, carbon equivalent emission from the waste stream, Dragović et al. (2016) estimate the exhaust emission from a cruise ship. In summary, even though there are various frameworks and proposals to account for environmental impacts caused by tourism activities, they are developed for specific objectives. The same goes for this study where the research framework is developed for objectives which differs from past literatures models and frameworks.
The main focus of the study is to monetarily account human activities that has exceed the ecological limits of the environment within the context of tourism at a destination, namely PulauPerhentian.In other words, this study account for externalities that has gone beyond its environmental limits. This study also departs from previous frameworks in terms of its unit of analysis, where,rather than undertaking the whole nation such as in Jones et al. (2016), for Wales, Sun et al. (2019) for Taiwan and Ragab and Meis (2016) for Egypt, the study instead focus on indicators for a specific tourism site. Hence, the study is to account for the sustainability of Perhentian Islandand present it in a report known as the Environmentally Sustainable Tourism Revenue statement (ESTR).
2. Literature Review
For many years, the constraint of natural resources was perceived as the limits to economic growth (Brock & Taylor, 2005). Instigated by Meadows, Meadows, Randers, and Behrens III (1972), the notion gave out of a cautionary advise (Meadows & Randers, 2012) about the planet reaching its limits within one hundred years if the current (1970s) unsustainable economic growth trend remained unchanged. The notion of environmental limits to economic growth sparked quite a debate with some rejected the notion or criticized, while others were defending it. The first view rebuffed the notion, asserting that resources are becoming more abundant and thus posing no limitation to economic growth (Johnson, 2000; Neumayer, 2000). Another point emphasized was that through technology advancement, economic growth could be sustained indefinitely (Neumayer, 2000). From this viewpoint, even though some economists believed that the environmental impacts might affect wellbeing, they uphold that with appropriate economic growth, technological progress and shifts in preferences, the issues will be remedied and thus removing any constraints on growth (Hepburn & Bowen, 2012).
Meanwhile, another view believed that environmental limitation might affect growth in consumption and production. This perspective aligned with Malthus (1798) theory of population, which argued that living standards would eventually driven to a bare subsistence level (Neurath, 2017). Consequently, those within this path stressed that when the use of environmental resources has gone beyond its limit or capacity, the resource will fail to function or not to function as it was supposed to (Witten, 2001). Brooks (2013) believed that in order to avoid exceeding the limits to growth, the world needs to heed Meadows‘s recommendations and argued that Bhutan‘s development model is the proof to this.
Through the sustainable development concept, it is essential to acknowledge that natural resources are, vital for securing economic growth and development, not just today but for future generations. The term was conceptualized since its introduction in Brundtland’s report ‘Our Common Future’ by World Commission on Environment and Development (WCED) (1987). It emphasized on development that fulfill the present needs without compromising future generations ability to meet their own (WCED, 1987). In September 2015, the United Nations General Assembly unanimously adopted a new Agenda for Sustainable Development (UN 2015). The Agenda features 17 Sustainable Development Goals (SDGs) and 169 associated targets, which UN member countries have committed to implement by 2030. Acentral feature of the Agenda is its explicit recognition that social and economic development hinges on the sustainable management of the natural environment and its resources (Terama et al., 2016).
It means sustainably consuming environmental resources – whether by improving the efficiency of resource consumption or by adopting new production techniques and product designs. Simultaneously, avoiding breaches in critical thresholds beyondwhich natural assets cannot be replaced or support the desired level of economic activity (Everett, Ishwaran, Ansaloni, & Rubin, 2010). The interaction between growth and the environment is taken to the next level when there were profound empirical studies on the relationship between per capita income and pollution. It is highlighted through the influential Environmental Kuznets Curve (EKC),works of literature(Gill, Viswanathan, & Hassan, 2018; Ginevičius, Lapinskienė, &Peleckis, 2017; Shahbaz, Haouas, &Van Hoang, 2019).
On a different perspective, the economic growth had a positive role in enhancing welfare (Clarke & Islam, 2005; Popescu, 2016). However, the threshold hypothesis stated that at a certain economic growth level, the attending cost would exceed the benefit (Erickson, 2019; Max-Neef, 1995). When it comes to this condition, the
wellbeing of the citizens will decrease while the economy continues to grow. Hence, growth should not be continuously perceived as a positive direction for an economy. Consequently, the GDP has always been taken as an indicator of economic performance but it failed as an indicator of welfare (Armiento, 2018; Boori et al., 2015; Howarth& Kennedy, 2016). It is because the GDP does not distinguish between economics activities that contribute to welfare or reduce them (Walker, Mair, &Druckman, 2018) and it failed to include environmental externalities from economics activities (Beça& Santos, 2010; Lawn, 2003).
There are various interpretation to externality. Defined as a market failure by Bator (1958) and neoclassical economists (Helbling, 2010), the label was contended instead as missing market by Baumol and Oates (Berta, 2017; Hansen, 2002; Vatn& Bromley, 1997). Through Pigou's terminology, Dahlman (1979) asserts that externality occurs when there is a divergence between private and social cost. It is when the receiver of a utility whose actual value depends on the behaviour of the supplier, who does not take this effect into account during the decision-making process (Verhoef, 2002). Within the context of tourism, Stabler et al. (2010) assert that tourism externality occurs when the production decision of one party affects the output revenue and profit of another producer. Since tourism activities depended on non-market goods that include human-made heritage structures and natural landscapes with aesthetic value, the use of these goods may generate positive or negative externalities for that particular destination.
Examples of positive externalities were when tourism activities contribute to a better quality of life to the host community such as rise in economic status through income and employment, healthier surrounding through environmental beautification and conservation to attract tourists, and improved amenities via upgraded public facilities. However, when tourism activities encouraged the destruction of the environment, displacement of community and uncontrollable production of waste, these negative externalities threat the livelihood of its host’s residents. In another angle, tourism externality arises when consumption of one party affect the utility of another consumer (Stabler et al., 2010). It happened when there is a decrease in satisfaction of current visitors due to the activities of previous visitors that deteriorate the destination’s natural landscape.
Since the environment is as public goods, therefore the public has the right to enjoy a healthy environment, concurrently carrying the obligations to maintain its quality. As a result, several proposals were brought forth along with its market-based mechanism to account for and internalize these externalities in order to maintain the environment’s sustainability (Emas, 2015; Ismail, Forgie, & Khalid, 2012; Ismail, Jaafar, & Khalid, 2016). Even though sustainability does not require zero externalities since it is unrealistic to achieve one (Van den Bergh, 2010), respecting the environment and its limits which representa constraint on human activities needs to be in sustainable development agenda (Holden, Linnerud, Banister, Schwanitz, &Wierling, 2017).
Consequently, if these externalities did not exceed the environment’s thresholds, for example, environmental resources are depleted within its limit, the wastesabsorbed within the capacity of environmental services sink function, and environmental asses were managed appropriately for utilization, these externalities may not cause permanent harm to the environment. Only when thresholds were cross over, the impact may be permanent and irreversible and therefore consider as non-sustainable development (Brown, Turner, Hameed, & Bateman, 1997). Therefore, this study account and measure externalities that have exceeded its environmental limit and integrate them into the tourism revenue estimates.
3. Methodology
The study engaged in primary data collection in order to estimate total visitor spending as a proxy to tourism revenue. Secondary resources were also utilized in the study for environment component. Perhentian Islands were chosen as a case study for this study due to several reasons.One, the islandsconsist of two islands that accommodate different type of tourists. Perhentian Kecil is a backpacker concentrate areas whereas PerhentianBesar is for those who prefer privacy and spacious surrounding. Two, the availability of tourist arrivals data from the Marine Park Department and Reef Check reports on coral reefs condition can easily be accessed.
The Frameworks
The whole concept of the study is to account for externalities which exceed the ecological limits of environments’ functions (environment and ecosystems will be used interchangeably throughout the thesis). These externalities exist due to economic activities of tourism when visitors consume tourism services such as accommodations, food & beverages, transportations, entertainment & recreations and retail. Visitors spending, on the other hand, maybe segmented according to several predictor variables, namely, demographic and
trip-related characteristics. Consequently, the components or items within the Environmentally Sustainable Tourism Revenue Statement may vary from one tourist destination to another.
The research framework covers the idea of identifying, quantifying, monetizing and communicating the economic and environmental impact of tourism activities, as illustrated in Figure 1. The economic items consist of five expenditure categories and the environmental component consist of overshoot ecological footprint of land usage, degradation due to tourists’ lack of space (overcapacity) and coral reef degradation. It is important to note that the quantification of these components utilizes secondary resources. However, there were several environmental degradation functions excluded from the study, namely depletion of environmental resources and carbon emission of the environmental services function. These were omitted due to inaccessible or unavailability y of information.
Figure 1. Research Framework
Referring to Figure 1, visitors’ spending on the five tourism expenditure categories will give rise to externalities following its ecosystems’ functions. Visitor spending calculation used the visitor spending segmented approach as proposed by Stynes (1999b) and the estimates of total visitor spending (Stynes & White, 2006). Meanwhile, within the System Environmental-Economic Accounting, ecosystems are defined as assets that provide ecosystem services to people (Hein, Obst, Edens, & Remme, 2015).
The bases for distinguishing environment’s role according to its ecological functions is illustrated in Figure 2.Under the context of this study, ‘people’ refers to visitors and host community of a selected tourism destination. The study opts to adopt the description of four environment’s functions from Singh and Shishodia (2007) and Hanley et al. (2007) which were (i) as a supplier of economic goods, (ii) serving as sink function for waste, (iii) as a natural landscape for recreational and (iv) provider of amenities for habitable atmosphere.
Figure 2.Environment’s role according to ecological functions
The counterpart of the environment’s functions were their externalities which can be grouped into three environment’s role categories. The association between the two is illustrated in Figure 3, the analytical framework of the study. The analytical framework is developed to explain the operational conduct of the conceptual framework. Externalities occurred when environmental resources were depleted while supplying for the production of economic goods. Environmental services were degraded while providing for habitable atmosphere and absorbing waste. Environmental asset depreciated and was impaired when it was used for recreational activities. This study recognizes the costs of depletion, degradation and depreciation when the function has exceeded its footprint, capacity and use limit respectively.
Thus, the cost environment was highlighted as an overshoot of environmental resources, overcapacity of environmental resources and overuse of environmental asset. The terms were selected (overshoot, overcapacity and overuse) based on the technique utilized to estimate them. Overshoot is estimated based on the ecological footprint (Wackernagel, 2009; Wackernagel et al., 1999), overcapacity was based on tourism carrying capacity (Parpairis, 2004) which originated from carrying capacity concept (Leopold, 1933). As for impairment of environmental assets, that were unsustainable used or overuse causing deterioration, the study adopted the economic, environmental valuation assessment.
Specifically, the environmental resources provide materials and other resources for the production of economic goods. In this study, economic goods include accommodation supplied by the tourists’ operators in the form of rooms provided at the resorts or hotels. It means land usage for accommodation for tourists were considered as environmental resources. Simultaneously, the environmental limits for land usage were determined using ecological footprint set by the local authority for tourism land usage. If the land usage for resorts and hotels exceed this ecological limits, this overshoot is monetized.
VISITORS SPENDING
ENVIRONMENTS’ ROLES AND FUNCTIONS TOURISM PRODUCTS DISTURBANCES ENVIRONMENT AL RESOURCES ENVIRONMENTA L SERVICES ENVIRONMENTA L ASSETS ECONOMIC GOODS SINK/AMENITIES RECREATIONAL ACCOMMODATIO NS FOOD & BEVERAGES
EXTERNALITIES DEPLETE DEGRADE DEPRECIATE
ENTERTAINMENT & RECREATIONS ECOLOGICAL LIMITS MAXIMUM FOOTPRINT MAXIMUM CAPACITY MAXIMUM USE RETAIL
OVERSHOOT OVERCAPACITY OVERUSE TOURISM
REVENUES
MONETIZATION
NET TOURISM REVENUE = TOURISM REVENUES - $OVERSHOOT - $OVERCAPACITY - $OVERUSE Figure 3. Analytical framework of the study
Next function is the environmental services which serve as the sink function to the waste created during tourism activities and simultaneously creating amenities to visitors such as living space and global life support. The parameter of environmental services degradation is limited to amenities in the form of living space were estimated for this study. Adequate living space give impact to visitors’ satisfaction, and this, in return, will create repetitive visits. The study used secondary resources provided by the local authority or previous studies conducted on the tourism site to estimate this. Any amount beyond the ecological limits were converted into financial price.
Finally, the third function of the environments is to provide aesthetics value for recreational, spiritual and educational activities. Environmental asset used for this purpose is examined for deterioration. If the asset is found to deteriorate beyond its environmental limits, the percentage of deterioration is monetized. Ultimately, net tourism revenue is estimated, and it is presented in the structure of the corporate financial statement called Environmentally Sustainable Tourism Revenue statement as depicted in Figure 4.
Perhentian Island
Environmentally Sustainable Tourism Revenue Statement For The Year Ended 2015
TOURISM PRODUCTS RM RM
Accommodations Food & Beverages Transportations
Entertainment & Recreational Retail
Marine Park Fees (RM5 per person)
TOTAL TOURISM REVENUES COST OF ENVIRONMENT
Land Overshoot Tourists Overcapacity
- Coral Reefs Impairment ESTIMATED DEGRADATION NET TOURISM REVENUES
Figure 4.Proposed Environmentally Sustainable Tourism Revenue Statement for Perhentian Island The Instrument
The study employs a survey method through distributing questionnaires which act as an instrument to collect primary data. The questionnaire was developed by adapting and adopting items from past literatures. Additionally, there were several new items introduced as well to align with the objectives. Overall, there were four components within the questionnaire, namely socio-demographic characteristics, trip-related characteristics, total and segmented spending and finally psychographic factor (satisfaction). In total, there were five items for demographic and socio-economic characteristics, namely gender, age, household income, marital status and country of origin. For household income, the respondents were required to state their currency. Meanwhile, trip characteristics consisted of seven items which include companionship, dependent on the trip, motivation, recreational activities and day’s stay in Malaysia and Island. The instrument was sent to experts for validation purposes.
The Site
Perhentian Islands comprises of two islands called, Perhentian Kecil and PerhentianBesar. The islands are located at the north-eastern coast of Terengganu state in Malaysia and can be accessed through Kuala Besut Jetty with 45 minutes boat ride. The Island has witnessed a stable increased of tourists to the island in the last eight years (Figure 5). A huge jump in 2013 (140,131) from 2012 (105,221) accounted for around 25% increase. Before 2009, the number of tourists is less than 100,000 tourists. However, after almost a decade, the number is almost double with 180,000 tourists in 2016. The arrival to the island corresponds with the number of tourist to Terengganu state Marine Parks (Figure 5). One of the most interesting fact to note is the contrast between the arrival to Perhentian Island and other Marine Parks islands in Terengganu. WhilePerhentian documented an increased every year (exception to 2015 with very slight decrease), a combination of other islands showed a decline in arrivals (Figure 6) from 2013 to 2016. It showed that Perhentian Island is a significant tourist’s attraction in Terengganu.
Figure 5.Visitors Arrival 2009 – 2016
Figure 6. Comparative Visitors Arrival (2009 – 2016)
According to interviews with the Marine Park Department, the highest international tourists’ arrivals were between July and August, whereas domestic tourists were most likely to crowd the island during public and school holidays. The islands were closed to the public during January, November and December due to monsoon season and indicated as ‘healing period’ for the island.
According to these sources, the overall proportion of international and domestics tourists were approximately 40/60 annually (international/domestic) for recent years (illustrated in Figure 7 and Figure 8). Statistics revealed that 2015 and 2016 total arrival to the island were 152,358 and 180,481 visitors respectively. Out of this number, 55,988 (2015) and 67,804 (2016) were international tourists.
Figure 7.Visitors Arrival in 2015
Figure 8. Visitors Arrival in 2016 The Analysis
The study used total visitors spending as a proxy to tourism revenue of the Perhentian Islands. Information regarding visitors’ spending is collected for eight months during 2015 and 2016. Consequently, even though the multiplier effect was vital for this type of study, it is crucialto note that this study departs from others in regards to the objectives and constraint of the study. It is not the aim of the study to estimate yield northe economic impact of tourism destination, which requires for multiplier or secondary effect to be included in the estimation. Instead, the study’s estimation of revenue was only a part of tourism yield as in other studies. Therefore at this stage, the multiplier effect was not required to be included in the study.
Overall, there were four measuring techniques adopted in the study to analyse the data. Styne’s segmented visitors spending equation (Equation 1) is appliedto estimate revenue, tourism carrying capacity to estimate overcapacity, ecological footprint to measure overshoot and economic valuation to measure loss of income and decline in coral reef value. Visitor spending equation (Equation 2) is utilized together with Chi-Square Automatic Interaction Detector (CHAID) since the latter was commonly used in expenditure-based segmented studies.
Equation 1. Total Spending for Segmented Analysis (Stynes& White, 2006)
Where,
S = total spending
Sj= total spending in spending category j, j = 1,...J
4274 12863 13721 16528 15298 5486 12561 11583 4056 1180 5383 7086 8636 6055 11333 9757 5258 1300 0 5000 10000 15000 20000
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Visitors Arrival to Perhentian Island in 2015
N = total number of visitors m = number of segments
Mi = segment i's share of total visits, i = 1,...m.
andsij= average spending of a member of segment i on spending category j.
(Stynes & White, 2006) The estimation revenues denoted by R, is the total spending five expenditure categories namely Accommodation (ACC), Food and Beverages (FB), Transportation (TR), Entertainment and Recreation (ENTREC) and Retail (RET). It is estimated using the equation below.
Equation 2 𝑅 = 𝑆𝐴𝐶𝐶+ 𝑆𝐹𝐵+ 𝑆𝑇𝑅+ 𝑆𝐸𝑁𝑇𝑅𝐸𝐶 + 𝑆𝑅𝐸𝑇 = 𝑆𝑗 𝑖 𝑗 =1 = 𝑖 𝑗 =1 𝑁 ∗ 1 − 𝜌𝑧𝑗 ∗ 𝑀𝑡𝑖 𝑚 𝑡,𝑖=1 ∗ s𝑡𝑖𝑗 Where, R = Revenues
Sj = total spending for category j, j = 1,...i
N = total number of visitors
𝑝𝑧𝑗 = Probability of zero-spending on category j
m = number of segments/nodes
Mti = levelt of segment/nodei’s share of total visits, t,i = 1,...m.
s𝑡𝑖𝑗 =average spending at levelt of segment/nodei for category j
As for tourism carrying capacity, ecological footprint and environmental valuation, this study utilized reliable and valid resources to determine environmental limit and thus estimate overcapacity, overshoot and overuse. i. “Study on the Repositioning PulauPerhentian as a Premier Ecotourism Destination” (Tourism Planning Research Group (TPRG), 2015)
ii. “Garis Panduan Perancangan: Pembangunan Fizikal Pulau-pulau dan Taman Laut”(Jabatan Perancangan Bandar dan Desa Semenanjung Malaysia, 2015)
iii. The degradation of coral reefs is extracted from Reef Check report “Status of Coral Reefs in Malaysia, 2015”(Reef Check Malaysia, 2015)
iv. The estimation of loss of revenue for coral reef uses Reefs at Risk Threat Index as a proxy for future reef condition (Burke & Maidens, 2004; Burke, Reytar, Spalding, & Perry, 2011; Burke, Selig, & Spalding, 2006). v. Bequest value of coral reefs is extracted from“Total Economic Value of Marine Biodiversity Malaysia Marine Parks”(Gaik& Izarenah, 2016)
4. Findings and Discussions
It is estimated that the total spending on five categories namely accommodation, food and beverages, transportation, entertainment and recreation, were one hundred and thirty-four million, three hundred and four, ninety-five thousand ringgit (RM134, 304, 095.00) (Figure 9), This includes payment for conservation fee of RM5.00 per person. The per person feefor 152,358 visitors brings the total of RM761,790.00. Findings from several other studieswere comparable with the results of this study within the perspective of revenue per tourist’s calculation. Vianna et al. (2018) recorded that in 2012 the shark diving receipt in Semporna, Sabah accumulated an approximate of USD9.8 million from the sector. In comparison with this study recreational sector receiptof RM35.087 million, the shark diving estimated receipt was RM30.280 million (sans inflation) after accounting for foreign exchange rate.Additionally, tourism receipt per tourist for Langkawi Island were RM1547.00 for the year 2015 (LADA, 2019). In this study, Perhentian Island’s receipt per tourists was estimated at RM952.21. This number can be considered as comparable.
Environmentally Sustainable Tourism Revenue Statement For The Year Ended 2015
TOURISM PRODUCTS RM RM
Accommodations 31,368,989
Food & Beverages
23,374,246
Transportations 28,787,758
Entertainment & Recreational 35,087,165
Retail 14,924,147
Marine Park Fees (RM5 per person) 761,790
TOTAL TOURISM REVENUES 134,304,095
COST OF ENVIRONMENT
Overshoot 5,446,563
Overcapacity 506,576
- Overuse 1,612,161 – 3,626,722
ESTIMATED DEGRADATION 7,565,300 – 9,579,861
NET TOURISM REVENUES 124,724,234– 126,738,795
Figure 9.Perhentian Island’s Environmentally Sustainable Tourism Revenue 2015
As for the cost of environment, the results indicate that Perhentian Island may have overshoot, overcapacity and overuse its environments for tourism activities. The biggest over-degradation came from overshoot of land usage forcommercially use buildings, especially for rental accommodation purposes has exceeded the maximum footprint per acre. The value of overshoot is estimated at RM5,446,563.00. Meanwhile, overcapacity in this study indirectly measures over-crowdedness where it evaluates visitors inhabiting a space. The study found that, during peak times, the maximum number of visitors occupying particular space may have been exceeded.It can be argued that the feeling of crowdedness could lead dissatisfaction and thus, loss of income. This value is estimated at RM506,576.00 and representing the total exceeded number of visitors revenue per person. Finally, the overuse of environmental asset is estimated between RM1,612,161.00 and RM3,626,722.00. Environmental asset in this study is limited only to coral reefs. Indirectly, this cost measures coral reefs decline in value due to damages and loss of income.
Summing up, the total degradation was recorded atRM9,579,861.00 (upper limit) and RM7,565,300.00(lower limit) from the total tourism revenue of RM134,304,095.00. Subtracting the cost of environment the net tourism revenue is within the range of RM126,738,795.00 (upper limit) and RM124,724,234.00 The proportion of cost degradation over total spending is within the range of 5.5 – 7.1%. This percentage is comparable to another study the documented the economic cost of marine plastic (degradation due to plastic) that causes a decline in annual ecosystem service was 1 – 5% annually (Beaumont et al., 2019).
5. Conclusions and Recommendations
The study is undertaken to estimate the net tourism revenues of PulauPerhentian. The main objective behind this notion is to arrive at a certain number of revenues generated by tourism activities by taking account of the unnecessary pressures these activities had on the environment. The degradation caused by human activities ought to be monetized in order to understand the severity of the damages. It could be argued that since money is the universal language, estimating the degradation in a monetary unit will assist in clarifying the extent of the problem/issue.
Therefore, this study measures externalities that havegone beyond its environmental limit within the scope of tourism. These measurements were later monetized and integrated into tourism revenues estimated through visitors spending. It is undertaken to estimate the net tourism revenues of PulauPerhentian. In this context, net tourism revenues are calculated by subtracting the environmental outflow resulted in tourism activities from the estimated inflow of tourism activities in the form of total visitor spending.
Conclusively, the study has found that externalities of environmental resources, environmental services and environmental asset may have exceeded its environmental limit. Therefore, the following are recommendations concerning environmental sustainability of Perhentian Island:
i. Environmental resource within the context of this research is the land usage. Perhentian Island has exceeded the land area coverage as permitted by the authority. The study would like to recommend further restriction of developing new commercial accommodations, monitoring and enforcement in regards to this matter.
ii. Environmental services may also have exceeded its capacity in terms of number of tourists within a specific area. It is important to emphasize that over-crowdedness may cause dissatisfaction and therefore affect visitors experience on the island. It may lead to loss of future income. Therefore, the number of rooms, beds and camping space to cater visitors should not exceed the number of tourists allowed on the island at any point of time.
iii. Environmental asset, namely coral reef, is slightly impaired and overuse. Chemicals from sunscreen lotions and sewage water released into the ocean as reported by Reef Check causes for the coral’s condition to decline. It is suggested that campaign on using coral reef-friendly sunscreen lotion to be promoted and available on the island. The study also suggested that improving the sewage system to overcome this issue.
Overall, the cost of degradation was recorded at RM9,579,861.00 (upper limit) with net tourism revenue of RM126,738,795.00. The proportion of cost degradation over total spending is between 5.5% and 7.1%. This percentage is comparable to other studies within the same path. However, for future studies, net tourism revenues should be estimated for other tourism destinations for comparison purposes in the short run. In the long term, an index of sustainability can be established based on the results. Other than that, the study also put forth a recommendation to develop social indicators in the future and inserted into the net tourism revenue estimation. As a result, the dimensions for the three pillars of sustainable development is complete, and, Malaysia can fulfilanother one of its obligations as an implementer of Agenda 21.
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