The Value Natural Capital for the Tourism Industry of Aruba
Governments around the world are taking an interest in the measurement of well-being to improve their policy decisions. Aruba has started the process of implementing and localizing the United Nations Sustainable Development Goals in order to measure progress that contributes to overall well-being of its citizens. One of the main pillars of Aruba’s economy is the tourism industry since it provides the main source of employment and income to many citizens on the island. The island is currently home to approximately 115,000 residents and more than 1.6 million tourists visit the island every year (CBS). The total contribution of the tourism industry (including wider effects from investment, supply chain and induced income impacts) was US$ 2,434.5 million in 2016, which accounted for 88.1% of Aruba’s GDP (WTTC, 2017). But even more important, the total contribution of the tourism industry to employment in 2016 was 89.3% of the total employment on Aruba. Most tourists on Aruba visit the island for its beaches and the marine environment, so the perceived quality of the tourist experience and the return rate to the island depend on the quality of the natural environment. Stated differently; the local economy including the employment of many citizens working in the travel and tourism industry on the island strongly depends on the quality of Aruba’s nature. This report determines the monetary value of the natural environment, the Natural Capital, relevant for the tourism industry on Aruba using the market price method within the environmental economics approach.
Touristic expenditures and ecosystems dependency ratios are obtained by conducting a tourist exit survey (n=584). Not all tourist expenditures and activities are for 100% attributable to an ecosystem. There is a distinction between tourist expenditures that are partly attributable to ecosystems (e.g. accommodation) and tourist expenditures that are fully attributable to ecosystems (e.g. diving); the ecosystem dependency ratio accounts for this difference. The total value of tourist expenditures that can be related to Natural Capital (i.e. gross annual value of Natural Capital) is estimated at US$ 564 million. The part of the value added created in the tourism industry that can be attributed to the natural environment of Aruba is estimated at US$ 269 million.
On top of that, the total willingness-to-pay (WTP) by tourists for enhanced nature protection on Aruba is examined using the contingent valuation method. During the same tourist exit survey respondents were asked directly how much they are willing to pay for enhanced nature protection on the island. Based on the mean of these stated WTP’s the total estimated WTP for nature protection by tourists visiting Aruba is US$ 10.6 million per year. This total WTP is a hypothetical monetary value and might be interpreted as the potential extra benefits of Aruba’s ecosystems for the local economy, provided that the money is spent on nature protection.
It is important to note that the environmental economics approach takes an anthropocentric view. Something will have value only if it provides a service to humans. This is in contrast to the belief that ecosystems and biodiversity have an intrinsic value in itself which justifies their conservation. Economic value is only one dimension of the overall value of nature (Balmford et al., 2011) and in order to integrate other dimensions that cannot be expressed in monetary terms (e.g. intrinsic value, freedom of choice, human rights) other analyses in addition to economic valuation are needed (e.g. livelihoods assessment, vulnerability assessment, capabilities to make choice assessments) (TEEB, 2010).
Finally, to obtain an idea of the spatial distribution around the island of its natural capital value for tourism the report presents value maps of Aruba considering both recreational and aesthetic values. During the same tourist exit survey tourists were asked to state their recreational and aesthetic values around the island. Furthermore, photographs from crowdsourced social media were analysed. According to the results from the tourist exit survey the most important hotspots are Eagle Beach, followed by Palm Beach and California Light House and the dunes. Based on the social media data, considering the perception of both tourists and locals, the most important aesthetic hotspots arethe Natural Bridge, Baby Beach and the California Lighthouse and its surrounding dune area.
The main recreational hotspots are the three white beaches along the western coast of the island (i.e. Malmok, Palm Beach and Eagle Beach).