The efficiency of the Environmental Management Charge in the Cairns management area of the Great Barrier Reef Marine Park

Abstract

Using data from a survey of more than 1000 domestic visitors to the Northern section of the Great Barrier Reef (GBR) – predominantly those travelling on live-aboard dive boats – this research investigates the (tax) efficiency of the Environmental Management Charge (EMC). The travel cost method (with a zero truncated negative binomial specification) is used to estimate the price elasticity of demand, and those estimates are used to estimate the deadweight losses, the losses in visitor numbers that could be ‘blamed’ on the EMC and the associated taxation revenues for different types of trips. The welfare loss for each dollar of revenue raised from the EMC was estimated at less than one per cent for each type of trip considered. The analysis therefore suggests that, for these types of trips in this part of the reef at least, the EMC is a very efficient tax – particularly when compared with other taxes. This has important implications beyond the GBR, particularly in countries who struggle to find sufficient funds to properly manage world heritage areas: taxes such as these may be a relatively efficient and equitable means of collecting such revenues.