Utilizing environmental information and pricing strategies to reduce externalities of tourism: the case of invasive species in the Galapagos

ABSTRACT

The increase in demand for nature-based tourism brings economic and educational benefits but risks the introduction of invasive species. Increasing the length of tourist trips can better balance these benefits and risks by maintaining revenues while reducing the number of unique contacts with tourists. Changing the relative prices of trips can induce tourists to take longer trips. We hypothesized that providing information about the negative externalities of tourism could improve the effectiveness of such pricing strategies.

We administered one of two discrete choice surveys to tourists considering a trip to the Galapagos. One of the surveys described the Galapagos as a fragile ecosystem susceptible to invasive species; the second described it as a standard nature-based destination. For each sample, we estimated the probability of the tourist choosing a short versus long trip, given the tourist's personal information and trip options presented to him. We then simulated the demand for trips using three pricing strategies. We found that providing information on invasive species significantly increased the efficacy of strategic pricing. We propose using a two-prong approach to tourism management: educate potential tourists about the islands’ vulnerabilities, and simultaneously increase the per-day cost of short trips relative to that of longer trips.

KEYWORDS:

• Biodiversity
• choice experiment
• information bias
• invasive species
• externalities
• tourism
• willingness-to-pay

JEL:

• Q26
• Q57

Acknowledgments

The research was possible because of funding from the Latin American and Caribbean Environmental Economic Program. We want to thank the World Wildlife Fund (Galapagos Program) for the support provided during the fieldwork. Finally, the authors thank the Galapagos National Park, the Charles Darwin Foundation and FUNDAR Foundation. Nicole Herdina and Maria Jaramillo provided valuable assistance during the fieldwork. The views expressed and any errors in this document are solely of the authors.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

Latin American and Caribbean Environmental Economics Program.

Notes on contributors

César Viteri Mejía

César Viteri Mejía is senior economist on land and marine conservation issues for the Americas Marine Field Division and the Eastern Tropical Pacific Seascape Program at Conservation International. His work applies complex economic tools to evaluate public policy application on issues such as fisheries management, invasive species control, farmland restoration, and tourism management. His research interest is focused on understanding the economic behavior of individual and how they interact individually or collectively with ecosystems.

Sylvia Brandt

Sylvia Brandt is associate professor of resource economics and public policy at the University of Massachusetts Amherst. She has published in the areas of fisheries management, climate change economics and public health. Her research is funded by the Environmental Protection Agency, National Science Foundation, and National Marine Fisheries Service.