LITTORAL 2010 Adapting to global change at the coast

London 21-23 September 2010, Royal Geographical Society

The role of coastal water quality

for tourism demand
and the regional economy –
Coupling ecological and economic models

Jesko Hirschfeld1,
Gerald Schernewski2, Nardine Stybel2, Jürgen Meyerhoff3, Ralf Scheibe4

1
Institut für ökologische Wirtschaftsforschung (IÖW),
2
Leibniz-Institut für Ostseeforschung Warnemünde, 3TU Berlin, 4Universität Greifswald
Socioeconomic Analysis

Questions

 Socioeconomic effects of improvements in ecosystem services

provision:

 How do improvements in water quality (indicator: transparency)

affect the number of visitors?

 What is the effect of changes in tourism demand on the regional

economic product?

 How are these findings integrated into the into the ecological-
economic Extend model?

 Which are the results of the model runs?

 Costs and Benefits of measures to improve water quality in the Odra

Lagoon – does ICZM pay off?

Jesko Hirschfeld
Model Coupling – Nutrient Transport Model

Jesko Hirschfeld
Model Coupling – Estuary Ecosystem Model

Mussel
module

Transparency
Nutrient-retention

Jesko Hirschfeld
 Conceptual Model:
Model Coupling – Estuary
Oder river Ecosystem
basin - coast Model

Jesko Hirschfeld
River basin management Conceptual Model:
options
Oder river basin - coast

Water Framework
Directive (governance)

Oder river basin loads

(MONERIS)
Tourism (economy)
Mussel farming
(economy)

Water transparency

Mussel farming
(ecology)
Oder lagoon ecology
(ERGOM)

Baltic Sea ecology

(ERGOM)
Model Coupling – Regional Economic Model

Jesko Hirschfeld
 Tourism demand function - Seasonality
Regional total number of tourist overnight stays per year:
approximately 200,000, plus 340,000 one day visitors

Overnight stays at Inner Odra Lagoon per month

(2006-2008 average)

40.000

35.000
overnight stays per month

30.000

25.000

20.000

15.000

10.000

5.000

0
1 2 3 4 5 6 7 8 9 10 11 12
month

black: bathing season months, grey: non-bathing season months

Jesko Hirschfeld
Tourism demand function –
Dependency on water quality (transparency) I

Assumption: Current visitor numbers determined (among other

factors) by the status quo of water quality

Empirical survey statements: Improvement of transparency

would make visits more attractive

Empirical survey statements: A significant improvement would

pursuade 25 % of the summer visitors to come more often

Conservative assumption: An 1.0 m improvement of water

transparency would pursuade 25 % of the summer visitors to
come 0.25 times more often, non-bathing season not influenced

Result:
A 1 m increase in water transparency would increase the number
of summer overnight stays by 6,850, that means +6.75% of
summer stays or +3.4% of annual overnight stays

Jesko Hirschfeld
Tourism demand function –
Dependency on water quality (transparency) II
Further conservative assumptions:
Current visitor numbers constant if transparency stays at status quo
Visitor number would be negatively affected if transparency would
deteriorate to zero – since more than 55 % of the visitors intend to
go swimming
While an 1.0 m improvement of water transparency would pursuade
25 % of the summer visitors to come 0.25 times more often, a 2.0 m
improvement would cause 25 % of the summer visitors to come 0.5
times more often.

Resulting demand function values (cet. par.):

Water transparency -0.5m (=0m) constant (0.5m) +1m +2m
Overnight stays -3,425 ±0 +6,850 +13,700
% of overnight stays -1.7% ±0% +3.4% +6,8%

Jesko Hirschfeld
Tourism demand function –
Dependency on income and beach area
Further assumptions:
Travel decisions are highly sensitive to income development – they
vary with squared GDP growth rates *(GDPgrowth rate)²
Current beach area supply: 16 ha. During summer days (May-
Sept) every visitor during the bathing season is supplied with an
average of 66m² beach area per head
Beach congestion is negatively connotated. Therefore additionally
supplied beach area per head is slightly increasing visitor numbers
opposed to status quo, while increasing congestion reduces it
(68% stated, that it is important to them having not too many other
people at their beach).
If the number of visitors varies at a rate of at least 5% of the beach
area per head variation, one additional ha beach would then induce
0.3% or 340 additional annual overnight stays in summer season.

Jesko Hirschfeld
Integration of Socioeconomics into the
SPICOSA Model System (EXTEND)

Tourism demand function

t

Dt = T° * (1 + ss *(0.017* Wtr t – 0.034) + (At - A°)*0.05) + T

1
t-1
* (gt)²

Dt = Tourism demand (number of visitors per year t)

T° = Number of visitors in year 2008 (vector of different types of visitors:

overnight stays, campers and day visitors)
Tt = Number of visitors in year t (vector)
ss = Share of summer visitors (0.55)
Wtr t = Water transparency [m] in year t (Wtr t ≥0)
gt = GDP growth rate in year t
At = Beach area in year t (A° = 16.000m²)

Jesko Hirschfeld
Integration of Socioeconomics into the
SPICOSA Model System (EXTEND)
Tourist expenditures (gross turnover)

ij
Ti * eij

Ti = Number of visitors of type i; i = 1 visitors staying overnight in Hotels with

more than 8 beds, i = 2 visitors staying in hotels < 9 beds,
i = 3 campers, i = 4 day visitors

eij = Expenditures of visitors of type i on goods and services of type j per day

Regional net turnover from tourist expenditures

ij
Ti * (eij - VATj)

VATj = Value Added Tax on goods and services of type j

Jesko Hirschfeld
Integration of Socioeconomics into the
SPICOSA Model System (EXTEND)
Regional value added through tourist expenditures

 ij
(Ti * (eij - VATj) * vj ) * v2

vj = regional value added multiplier for goods and services of type j

(first round multiplier)

v2 = regional value added multiplier for goods and services (second round)

Municipal tax revenue from tourism

ij
(Ti * (eij - VATj) * vj ) * v2 * m

m = tax share of tourism generated regional value added that remains at the
disposal of regional municipalities
Jesko Hirschfeld
Integration of Socioeconomics into the
SPICOSA Model System (EXTEND)
Local jobs dependent on tourism

( ij
Ti * (eij - VATj) * vj ) * v2 * 1/w

w = average regional income per employee

Jesko Hirschfeld
Regional economic model: output examples

Overnight guests spend 73 € per head per day on average,

campers 27 €, day visitors 24 € per head per day
Taking into account first and second round multiplier effects (on the
basis of a regional input-output analysis) this means an increase in
regional economic product by the expenditure of overnight guests
spending of 38 € per head per day and for day visitors‘ spending by
11 € per head per day
Tourism‘s contribution to the regional economic product (inner
Lagoon region) currently lies at 13 Mio. € per year, generating
approximately 1,000 jobs (6% of regional workforce)
Tax revenues for regional municipalities due to visitors‘
expenditures: 580.000 € per year
Model simulation result example: Effects of 1 m transparency
enhancement: +450,000 € regional economic product, +20,000 tax
revenue per year, +36 jobs

Jesko Hirschfeld
Cost-benefit analysis – Choice Experiment

Jesko Hirschfeld
Cost-benefit analysis preliminary results

Costs of the introduction of mussel farming

vs.

Income from mussel farming and additional benefits

Benefits of 1 m enhancement of water transpareny:

(calculation of present values over 20 years at 3% discount rate)
because of additional visitors (regional value added): 6,5 Million €
because of additional benefits to the visitors (willingsness to pay for
1 m transparency enhancement): 9,5 Million €
Result: Benefits of 16 Million € in 20 years

To qualify the results, a sensitivity analysis will be carried out

Jesko Hirschfeld
Socioeconomic Analysis – Discussion (ICZM-Oder)

Agricultural measures are more cost-efficient than further

improvement of sewage treatment beyond compliance with
the Waste Water Directive (2015)

The most cost-efficient measures could be implemented in

Poland. But purchasing power disparities should be taken
into account when discussing a fair burden sharing.

Measures to reduce nutrient immissions into the Odra River

will not pay off only by benefits within the inner Odra
Estuary region

The beneficial effects on the water quality at the Baltic

coastline and the Baltic Sea in general must additionally be
taken into account – also in light of climate change

Dr. Jesko Hirschfeld

Life after SPICOSA:

RADOST -
Regional Adaptation Strategies for the German Baltic Coastline

www.klimzug-radost.de

Contact:

jesko.hirschfeld@ioew.de

Institute for Ecological Economy Research, Berlin

Institut für ökologische Wirtschaftsforschung (IÖW)

www.ioew.de

Dr. Jesko Hirschfeld