Establishment of a protected area in Vanuatu

The Australian Centre for International Agricultural Research (ACIAR) project ANREI/90/20 assisted in the establishment of a number of protected areas in Vanuatu by improving information flows and by establishing appropriate institutional structures. The total research benefit from this project is estimated to be: - A$1.89 million divided up as follows.$0.14 million is the present value to landowners, based on estimates of the surplus—return on land above logging returns foregone. For most areas, the benefits to the landowners exceeded the returns from logging and the landowners were willing to establish the area without compensation arrangements. - $1.07 million is the project’s contribution to improving the net returns on logging activities—assuming that only 10 per cent of the actual change can be attributed to the project. The project significantly improved the economic outcomes for logged areas through (i) training and (ii) the establishment of institutions that improved control by the Department of Forests (Vanuatu) and strengthened the landowners’ rights. This enabled Vanuatu to negotiate for higher royalties on timber harvests, the acceptance of codes of practice for harvesting, and lower the environmental costs of logging. - $0.67 million is the net present value of tourist payments, assuming a growth in tourism of 1 per cent a year. A willingness-to-pay survey of Australian tourists to Vanuatu, which was part of the project, put a value on protected areas of $20 per tourist. This benefit accrues to Australian tourists unless a charge is levied on tourists. Such a charge is a potential source of income for the Vanuatu economy. When the contributions of the project to the affected landowners, the broader community and Australian tourists are added, the net present value of the project is estimated at just under $1.5 million, a benefit–cost ratio of 4.5:1, at a discount rate of 5 per cent. The internal rate of return is 22 per cent. The project also estimated Australian households were willing to pay, on average, $3 per household to protect forests in Vanuatu. While it was revealed that payment is more likely to be the value placed on forest conservation in the Pacific Islands rather than just in Vanuatu, it provides a basis for justifying assistance by Australia of around $0.5 million a year for improving conservation practices in the region.