An economic evaluation of environmental recovery of the skier-dominated area in the Mt Togyu National Park in South Korea

Field: Economics, Econometrics and Finance (Social Sciences)

This thesis reports a cost-benefit analysis (CBA) of an hypothetical removal of the Muju ski resort developed in 1991 in the heart of the Mt Togyu National Park in the central region of the Republic of Korea (South Korea). The key question is whether the environmental recovery option on the Muju ski resort could generate greater utility than the current situation from the perspective of hikers and skiers, who are representative recreationist groups for the national park.Hikers and skiers may or may not have similar tastes in resource uses of Mt Togyu. With this uncertainty, one of the primary goals of this study is to identify the attitudes of hikers and skiers towards the environmental resources lost from the Muju ski resort area. The attitudinal compatibility can be detected through willingness-to-pay (WTP) amounts of both groups for hypothetical recovery of the lost environmental amenities.The choice modelling technique was employed for this purpose. In choice modelling, people are asked to indicate their preferred choice from three or more distinct scenarios, which compose a choice set. Each scenario is described by a bundle of attributes. Respondents choose one alternative from each of several choice sets. Their choices thus state preferences between the alternatives, provided that respondents make implicit trade-offs across a range of attributes. In the context of valuing the lost benefits of the Muju ski resort area, a principal attraction of the choice modelling approach is its mechanical capability of estimating compensating surplus associated with a technically infinite number of management options ranging from the current situation to the full recovery scenario.The attributes selected to describe the choices in the questionnaire for this study were a quasi-levy as a payment factor, recovery of rare environmental assets, reforestation of denuded areas and net increase in average travel time per skier. It was found that when additional travel time amounts to 12 hours, the compensating surplus estimate for skiers becomes negative. In this circumstance, a Pareto improvement cannot be achieved from removal of the Muju ski resort and frill environmental recovery of the area, yet a potential Pareto improvement is still secured. It was found that the welfare loss for skiers becomes greater than the welfare gain for hikers when additional travel time including otherwise unnecessary overnight accommodation reaches about 32 hours.The author made use of TCM-related data obtained from questions in the form of a followup in the choice modelling questionnaire. The current recreational value of the ski resort was estimated to be 8,699 won per visit on average over the current skiing users. Further, the aggregate use benefits of the resort for the whole skiing visitors were estimated to be 3,410 million won as for year 1998. This information was input in a further CBA, under the assumption that the recreational use value accruing to skiers in future would no longer exist - that is, there are no alternative ski facilities available for the current users, regardless of the amounts of additional travel time. The value that hikers and skiers placed on the lost environmental assets was found to be still greater than the current recreational use value. In other words, the full recovery option satisfies the Kaldor-Hicks criterion even if the current users of the resort had to lose skiers' future use value. This result suggests that the environmental recovery scenario should be accepted, considering that this scenario will increase the overall welfare of both stakeholder groups. Given that the preservation value that may be expressed in monetary terms by non-users is expected to be positive, the costs and benefits estimated in this study will be useful in making a social decision from a wider viewpoint.Two other important findings of this study are worth mentioning. First, the choices made by hikers were not influenced by the motive of pure altruism towards skiers. Second, it cannot be said that skiers take a weaker sustainability view than hikers do. In other words, skiers revealed no less strong environmentalism than hikers, regarding recovery of the lost environmental assets.