The potential implications of environmental deterioration on business and non-business visitor expenditures in a natural setting

Abstract

Nature-based tourism can be an important source of income for regional economies but relies on a healthy environment. Using data collected from business and non-business visitors to Australia’s coast adjacent to the Great Barrier Reef, the authors generate estimates of the potential financial impact of environmental degradation, demonstrating a novel way of testing and controlling for hypothetical response bias. More than 90% of non-business visitors and 67% of business visitors came to the region for at least one nature-related reason. Average daily expenditure was similar for both visitor segments (≈AUD$190), but the determinants of expenditure varied. All visitors reacted much more negatively to the prospect of environmental degradation than to a 20% increase in (local) prices, although business visitors were much less responsive than non-business visitors. Adjusting for hypothetical response bias, the authors estimate that substantial environmental degradation could reduce visitor expenditures (and thus local tourism incomes) by at least 17%.