Welfare effects of mining externalities: a combined travel cost and contingent behaviour study

ABSTRACT

This paper applied the combination of travel cost method and contingent behaviour method to estimate the change in the recreational use value of the tourism site as a result of the adjacent mine implementation. The externalities considered were the visibility of the mine to the highest peaks of the area, traffic and noise effects, impacts on endangered aquatic species, and impacts on recreational possibilities. The data, containing five observations from each respondent, were analysed with the negative binomial count data model. The results show the sensitivity of visitors to the geographical scope and magnitude of mining externalities and to the visibility of the mine to the highest peaks. Moreover, the number of intended visits to the area correlates with gender, age, and recreational activities. Compared to an average visitor of the site, anglers, paddlers, and overnight hikers were subject to larger losses in welfare. Alternative scenarios on future mining externalities correspond to 29%–86% reductions in annual number of trips, corresponding to an annual welfare loss of 196–577€ for an average tourist.

KEYWORDS:

• Contingent behaviour
• travel cost method
• mining
• externalities
• national parks
• recreation
• nature-based tourism
• environmental valuation

Acknowledgements

This piece of research focusing on nature-based tourists in Kuusamo was funded by Metsähallitus. It was a subproject of the research project (2013–2014) on the valuation benefits and costs of mining activities in Finland. The authors thank the personnel of Metsähallitus for cooperation in survey design and administration and maps in survey, Vesa Keto for the location map, Anneli Hopponen and Taneli Tulla for research assistance, and Tuija Lankia for suggestions regarding the modelling. Part of the analysis was conducted during the project Economics of Aquatic Foodwebs funded by the Academy of Finland (grant no. 1263337) which Kosenius acknowledges.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. At exchange rates 13 May 2015, these sums correspond to €11–€12 increases in the consumer surplus.

2. Another theory-derived variable, the availability of substitute sites, is expected to be negatively correlated with intended visits. The survey question related to substitutes was formulated as whether the respondent would not visit any place in case the number of visits to the Oulanka–Ruka area reduces as a result of the mine implementation. As this information may not successfully reflect the substitutability of the study site, the variable was not included in the model.

3. Points in Figure 2 refer to the locations of data collection were the Hautajärvi Visitor Center (the northern starting point of the 80 kilometer-long Karhunkierros hiking trail), the Oulanka Visitor Center (main information point of the Oulanka National Park), the Oulanka National Park Camping Ground (camping area close to the Oulanka Visitor Center), the Ruka information point (situated in the Ruka tourism village close to the Ruka Fell, the highest peak of the area), and Karhuntassu Customer Service in Kuusamo city centre.

4. Attitudinal factors were tested in demand models as explanatory variables, but as they may reflect the preferences in the same way as the frequency of visits to the area, these models are not reported. We thank an anonymous referee for pointing this out.

5. Alternative measures of travel costs, such as stated amount of all travel expenditures (fuels, tickets, restaurants, accommodation, access fees, etc.) were considered. Additionally, travel time could be accounted.

Additional information

Funding

The research was funded by Metsähallitus. A part of analysis conducted by Kosenius was funded by the Academy of Finland [grant number 1263337].