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Paper presented at the 2013 Tourism Economics conference, with Melville Saayman

Paper presented at the 2013 Tourism Economics conference, with Melville Saayman

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  • Tourism is a key sector in the global economy that makes significant contributions to GDP and employment. Travel and tourism is also responsible for approximately 5% of global carbon dioxide emissions. By 2035, under a “business as usual” scenario, carbon dioxide emissions from global tourism are projected to increase by 130% . Environmentally and socially responsible leisure activities have become a key issue in the development of tourism. Tourists are starting to demand “green” facilities and experiences and are often willing to pay for it. This paper aims to make a contribution to the literature on the characteristics of the people who are willing to pay for greener products and services and focusses on a major sports event in South Africa – the Cape Argus Pick ‘n Pay Cycle Tour in Cape Town, South Africa. Most of the participants fly or drive significant distances to participate and spend a number of days in and around Cape Town as tourists. An online carbon calculator shows that the carbon footprint of the average participant is approximately 150kg of CO 2, for the event. This can be offset by planting 1.2 trees Specifically, we inks cyclists’ willingness to pay to offset their carbon footprint for a race to their attitudes towards or beliefs about the initiatives in place to ensure a greener cycle tour.
  • The earth that sustains life as we know it, is commonly owned by everyone and utilised by all. As a consequence, the environment suffers the effects of negative externalities, specifically the pollution that occurs during all our production and consumption activities. The market fails to account for the social costs since no-one owns their share of a sustainable environment to sell to polluters and no market or price exists. Cooperation: Everyone could work together and cooperate to reduce our consumption and the consequent pollution. This is an unlikely global solution as cooperation will be undermined by the “prisoners’ dilemma”… Similarly, a user-pays approach may be possible, but will be limited to voluntary contributions. Since on-one owns the environment it is not clear to whom payments should be made when you pollute . Coercion: Government may sell pollution rights in a cap-and-trade system and fine those that do not cooperate. Or they may levy carbon taxes on polluters. The airline industry is an example. In both cases success will depend on the ability of government to measure the pollution, link it to the polluters, set the tax rate and enforce it.
  • Three methods are used: the Travel Cost Method (TCM), the Hedonic Pricing Method (HPM) and the contingent valuation method (CVM). CVM: To determine willingness to pay, people are presented with a specific scenario about, for example climate change, and asked whether they would be willing to pay for mitigation efforts. This value that they attach to sustainability is contingent on the scenario presented and the payment is entirely hypothetical. Contingent Valuation Method has key elements: The scenario presented to the respondents in the survey matters because: It can challenge respondents' knowledge of the topic. It can influence their views on the coordination problem. It is linked to the proposed intervention. CV methods can employ open-ended questions, dichotomous choices, payment cards or bidding games. The way in which the willingness to pay question is framed determines the statistical analysis that is possible and whether the economic value of the environmental good in question can be inferred. The “cheap talk” problem: Since the payment is hypothetical, the stated preference may be distorted by a “warm glow” effect – people enjoy saying that they would contribute to a good cause. The difference between the willingness to pay and actual behaviour becomes the cheap talk. Researchers try to limit this by adding a direct explanation of this problem to their survey document.
  • This paper extends this line of work by returning to a sports event and focusing on participants’ attitudes towards /beliefs about the initiatives in place to ensure a greener cycle tour. The following section describes the data collected at the 2012 Cape Argus Pick ‘n Pay Cycle Tour and cyclists’ responses to the question: “ Would you be willing to pay R20 ($3) extra, that will be donated to Food and Trees of Africa, as an offset for your carbon footprint?”
  • About the survey: The cyclists were surveyed before the race at the expo and selected on a next-to-pass basis. A total of 180 completed questionnaires were used CVM: Knowledge: scenario of 150kg CO2 footprint and global warming Cooperation: green views focused on specific and feasible initiatives Mitigation: Food & Trees for Africa with a clear task of planting trees for mitigation
  • The first factor represents the cyclists who feel that more information, about the carbon footprint and about recycling, is important. They want to get involved and feel that the opportunity to buy carbon credits or to financially support green initiatives will help to ensure a greener cycle tour. The second factor groups together responses that indicated the importance of a broader view of a green cycle tour. These cyclists want more local food products in environmentally friendly packaging, bio-degradable products, and material on recycled paper as well as energy saving at the expo. The recyclers are presented by the third factor. They focused on recycling as the key to a greener cycle tour. The final factor captured the views of cyclists who feel that doing your own bit – in the form of the “stash your trash” initiative – is the important part of a greener cycle tour.
  • The model does well at predicting those who said that they are willing to pay, but less so for those who said that they are not willing to pay. There is a positive and significant relationship between stated willingness to pay and spending. Those cyclists that can afford to spend more say that they will do so. There are also positive and significant relationships between the types of cyclists, based on their green views, and their willingness to pay. Compared to the do-your-bit category that ranked the stash-your-trash initiative highly, those that with the green money, who want green products and the recyclers are positively associated with stated willingness to pay to offset their carbon footprint.
  • Adding the gender age and education variables to the equation slightly improves the prediction, but in all of their cases the coefficients are insignificant. To have a closer look at the interactions that these variables may have with green views and willingness to pay, the following figures present cross-tabulations of willingness to pay, the different green views and the relevant explanatory variable. It is clear that there is a strong positive association between willingness to pay, education level and the green money and green products views. These levels of multicollinearity precludes including gender, age and education in the model.
  • Surveys and promotions can be used to try to identify green-minded consumers. A survey can ask them about their green views, or green behaviour at home. Promotions can take the form of a voucher where consumers can choose between spending the money on themselves or spending it on a green project. To develop their green consumers, venues or events can raise awareness of the environmental impact of visitors’ behaviour. Providing more information about mitigation efforts, like planting trees or recycling can go some way to influence people’s green views. Further research in this field needs to examine the range of explanatory variables of willingness to pay. It would be possible to refine the measures of people’s green views, depending on the context, but researchers should also consider and try to measure other influences, such as perceived efficacy of interventions, or the role of perceptions of others’ efforts.

Green wheels turning? Green wheels turning? Presentation Transcript

  • GREEN WHEELS TURNING?Willingness to pay and participants views ongreen initiatives at the Cape Argus Pick n Paycycle tourPaper prepared for the IATE 2013 International Conference, 1-4July 2013, University of Ljubljana, Slovenia.ByWaldo Krugell & Melville Saayman
  • 1) Introduction• Tourism and the environment – some key stats…• Tourists are starting to demand “green” facilities andexperiences and are often willing to pay for it.• This paper examines the characteristics of the peoplewho are willing to pay and focusses on a major sportsevent – the Cape Argus Pick ‘n Pay Cycle Tour in CapeTown, South Africa.• Specifically, we asked them about their attitudes towardsthe initiatives in place to ensure a greener cycle tour.
  • 2) Why would they pay?• The environment as a common pool resource:• Is commonly owned by everyone and utilised by all.• It suffers the effects of the pollution that occurs during all ourproduction and consumption activities.• The market fails to account for the social costs.• Getting people to pay: cooperation or coercion?• Mitigation will require a combination of voluntarycontributions and compulsory taxes.
  • 2) How can we determine WTP ?• Since no formal market exists a sustainable tourismexperience or a green event, researchers have to useindirect ways to determine willingness to pay.• TCM, HPM, CVM…• Contingent Valuation Method has key elements:• The scenario presented to the respondents in the survey.• This matters because…• The way in which the willingness to pay question is asked.• The "cheap talk" problem.
  • 2) Who are willing to pay?• Demographic variables are used to distinguish thecharacter of the survey samples.• The common explanatory variables used in the studiessurveyed include measures of:• Environmental engagement,• Environmental attitudes / beliefs,• Education level,• Perceived efficacy of policy / strategy,• Political views,• Level of certainty of climate change and policy outcomes,• Expected future temperature / precipitation levels, and• Perceptions of others’ efforts.
  • Description of the survey data• More about the survey…• Elements of the CVM: knowledge, cooperation, mitigation.• Description of the data:• 180 completed questionnaires.• 72% male.• Average age 41 years.• 54% English speaking.• 37% diploma/degree, 29% post-grad qualification.• 37% professional positions, 20% in management.• 29% local residents.• Our WTP question: “Would you be willing to pay R20 ($3)extra, that will be donated to Trees of Africa, as an offset foryour carbon footprint?” (yes/no)
  • Description of the survey data• Willingness to pay:• 111 would pay, 39 would not, 30 skipped WTP question.• Cross-tabs of WTP and demographic variables show:• A greater proportion of women were willing to pay.• The age groups 18 to 30 years (68.9%) and 51 to 60 years (71.4%)had the biggest share of those who said they are willing to pay.• There is little variation in willingness to pay between the differencesin marital status and different language groups.• WTP per level of education were: 55% for Grade 12 only, 64% forthose with diploma/degree, 65% for those with post-gradqualification.• The average of total spending of those who said they are willing topay was R5’317, and for those who said they were not willing topay, it was R3’420.
  • PCA of the green views• We also asked cyclists about their opinions on initiativesthat could ensure a greener cycle tour.• Principle component analysis of these views was used tocharacterise a type of cyclist.• Exploratory factor analysis was used with principle componentsextraction and varimax rotation.• Anderson-Rubin method was used to obtain standard normal factorscores.• The KMO measure of sampling adequacy was 0.880.• In total four factors were identified with Eigen values greater thanone and they explain 73 per cent of the variance of the data.• The following table shows the type of cyclists by theirgreen views.
  • Green money Green products Re-“cyclers” Do your bit• Providingopportunity to buycarbon credits• Providingopportunity tofinancially supportother greeninitiatives at the race• Providing info ofcarbon footprint atthe cycle tour• Opportunity to bepart of Ride forNature with WWF-SA• Recognition of clubsor teams thatsupport a greenercycle tour• Providing inforegarding currentrecycling activities• Providing inforegarding recyclingmethods for cyclists• Use of local productsand produce by foodvendors• Environmentallyfriendly packaging offood• Use of energy savinglights at the expo• Cycle Tour supportinga particularconservationorganisation• Providing opportunityto buy bio-degradableproducts at the expo• Marketing materialprinted on recycledpaper• Recycling bins at theexpo• Recycling bins alongthe route• Visible signage forbins along the route• Recycling of paper,bottles, cans before,during and after therace• Stronger awareness ofstash your trashinitiative• Cyclists retaining theirown litter, disposingafter race
  • Predictors of WTP• To determine how these green views are related to WTPa binary logistic regression model was estimated.Willing topayNot willingto payWilling to pay82 4 95.3Not willing to pay 31 3 8.870.8ObservedPredictedStep 1 WTP,1=yes,2=noOverall PercentageExp(B) S.E. Sig.Green views: Do-your-bit .074Green views: Green money .300 .599 .044Green views: Green products .220 .718 .035Green views: Re-cyclers .685 .590 .522Total spending 1.000 .000 .072Constant .568 .286 .048
  • Predictors of WTP• Why we did not add the demographic variables…
  • Conclusions and recommendations• The key finding is that specific types of green views werepositively and significantly associated with statedwillingness to pay.• What are the recommendations for practitioners andresearchers?• Tourism service providers or event organisers who want to maketheir offerings more environmentally friendly and get people to payfor it, will need to target their initiatives. They need to identify theirgreen-minded consumers and developing them.• Further research in this field needs to examine the range ofexplanatory variables of willingness to pay, such as perceivedefficacy of interventions, or the role of perceptions of others’ efforts.