Economic valuation of coastal water quality improvements in Tobago

The quality of the coastal waters is now a major environmental issue in Tobago due to its role in supporting the economically important tourism sector and for safeguarding public health. In this paper we report the results of two choice experiments designed to estimate willingness to pay (WTP) for an improvement in coastal water quality for two groups of beach recreationists: snorkellers and nonsnorkellers. Responses from 284 respondents were analyzed and included both locals and tourists to the island who participated in beach recreation. Latent class and mixed multinomial logit models were used in the analysis of the responses to explain the presence of any unobserved taste heterogeneity. The results indicate that individual specific means of WTP estimates vary significantly between snorkellers and nonsnorkellers. The results from the analysis using the latent class model identified two subgroups with distinct preferences with the snorkeller group. Unobserved taste heterogeneity was better represented for the nonsnorkellers with a mixed multinomial logit model. This study not only addresses the lack of valuation estimates on this island but also demonstrates the importance of using estimation methods that account for individual specific differences in WTP estimates. By understanding how preferences vary between and within the sub populations, policy makers are better able to manage this natural resource in a sustainable way and to strategically position the recreational product to accommodate these differences. By linking the management recommendations to WTP values, they can also gain an understanding of how different recommendations will be valued by different segments of users. This gives managers a measure of how well potential policies will be accepted if they are implemented.