The Bioeconomics of WhaleWatching and Whale Hunting: A Summary

A BIOECONOMIC AND SOCIO-ECONOMIC ANALYSIS OF WHALE-WATCHING, WITH ATTENTION GIVEN TO ASSOCIATED DIRECT AND INDIRECT COSTS

Authors: Brendan J. Moyle (Massey University, New Zealand) and

Mike Evans (University of Alberta, Canada)

ABSTRACT

Whale-watching has been promoted as an economic activity that when combined with a ban on whale hunting, maximises economic benefits to participating communities. This argument is criticised for the following reasons. First, the benefits of whale-watching are inflated. This inflation results from using industry turnover, rather than economic surplus, as a measure of benefit. Economic studies of whale- watching that use appropriate methodologies generate estimates about one order of magnitude lower than whale-watching reports using turnover. Such inflation is exacerbated by the practise of using industry inputs as benefits rather than as costs, and including indirect expenditures that can be attributed to non-whale attributes of the site, thus assuming whales, rather than, e.g., tourism infrastructure or prior values, induces such expenditures. Whale-watching proponents often claim that the purported benefits of whale-watching are conservative estimates of economic benefit because multipliers are excluded from their assessments. However, multipliers should be excluded on methodological grounds. Furthermore, the environmental and social costs of whale-watching are not properly incorporated into proponents’ analyses. In such studies, the benefits of whale hunting are systematically under-estimated by using market price as a proxy for value, while ignoring the various social (including health) and cultural benefits that are found in whaling societies, quite apart from the commercial values of hunting. It is argued that for countries that are peripheral to the core whale-watching nations in North America, Japan, and Australasia, the industry has a Hotelling structure. In Hotelling-markets, travel distance is the principal factor affecting demand; the distance of peripheral sites from the core means that the growth in whale-watching is bypassing such sites. This is demonstrated in the case of Vava’u in Tonga. This strongly suggests that countries on the periphery with an interest in whale hunting would, in economic or developmental terms, be ill-advised to permit whale-watching activity to replace whale hunting. The profitability of a whale-watching-alone strategy involves several risks, including competition resulting from expansion of whale-watching activity at sites closer to the core whale-watching areas. It is demonstrated that the economic returns from whale resources can be maximised by retaining a whale hunting option for cases where resource populations rise above that necessary for conservation or tourism activities. By eliminating this option for the prospect of uncertain gains from whale-watching, such countries expose themselves to predictable economic and social shocks. It is demonstrated that in typical “peripheral” (in relation to the “core” whale watch areas) countries, such as South Pacific island-nations, the removal of marine resource-exploitation options has exacerbated socio-economic shocks such as the spread of diet-related non-communicable diseases. Such peripheral countries have a lesser ability to absorb such shocks, hence the elimination of hunting options is an imprudent risky development route. It is concluded that the case for substituting whale-watching for whale hunting is based on poor economic analysis, while retaining the option for whale hunting is prudent and provides an important social and economic buffer for such peripheral nations.

INTRODUCTION

Whale-watching in global terms, is a growing eco-tourism activity. The growth in this industry is summarised in the report by Hoyt (2000). That whale-watching is a valuable economic activity is not in doubt, and is accepted in this report. However, published estimates of the economic value, and assumptions about the overall socio-economic benefits of this industry, are highly questionable due to the use of inappropriate methodologies and flawed economic reasoning employed in these assessments.

The consequent exaggerated benefits claimed by the industry and its supporters have provided justification for some to argue that whale-watching should replace commercial whaling. Such claims of economic rationality are frequently made by protectionist governments and non-governmental organisations, and form part of the justification advanced by Australia and New Zealand in their arguments in favour of a South Pacific whale sanctuary (Hill 1996; Lee 2001a, b; New Zealand 2001). These claims appear to be supported by a recent report on the benefits of whale-watching within the South Pacific region (Orams 1999).

The inflated benefits claimed for whale-watching are a concern because they may redirect countries’ resource management and/or economic development policies into an inefficient use of resources. The sources of this bias, and a suggested approach for arriving at a more appropriate assessment of the costs and benefits associated with whale-watching and other use options, are presented below. This assessment is based upon a bioeconomic analysis of whale-watching and other whale management options, followed by a consideration of various socio-economic and non-commercial costs associated with whale-watching, including the benefits forfeited when alternative sustainable uses of whales resources are not captured.

It will be shown that the case for replacing whale-hunting by whale-watching, as presented by studies on whale-watching conducted to date, is weak. Whale-hunting generates a range of benefits to whale-hunting communities, and represents a valuable development option. It is recommended that this option be retained for the reasons outlined below. Whale hunting should not be sacrificed for economic benefits that may be illusory, and where the potential for adverse social and economic impacts is high.

SOME THEORETICAL CONSIDERATIONS

The estimation of the economic benefits of any activity is obtained, in the first instance, by calculating a ‘surplus’ measure of welfare. This measure is the difference between the ‘price’ a consumer bears in order to use a good or service, and the price they would be willing to pay. Where suppliers provide goods at lower prices than the consumer is willing to pay, this creates consumer benefits. This concept is illustrated in the diagram below.

Figure 1. The Surplus Measure of Welfare

In Fig. 1, the surplus measure is the area ‘Pab’ under the demand function above. This is the area above the total expenditure on the good, which is the area ‘0PbQ’. The surplus in this sense is the net benefits generated by the good above the actual expenditure on the good. Calculating a surplus measure of welfare depends in the first instance on being able to generate the segment of the demand function (either Marshallian or Hicksian) necessary for such calculation. In the case above, the segment a-b is the minimum necessary. For market goods, such functions can be readily derived from sales data.

For goods with non-market characteristics, the demand function cannot be directly observed. Such goods are often classed as ‘environmental goods’. These are goods in the sense they provide something of positive value to subjects. That these benefits are not revealed by market behaviour does not discount them as having economic values. There are two widely used techniques that can be used to derive the demand function (hence identify surplus measures). The first is by using travel distance as a proxy for the price a subject is willing to pay. This method is known as the Travel Cost Method. The second technique is the Contingent Valuation Method. This places the environmental good in a hypothetical market where consumer bids are observed and these are then used to derive the demand function. This approach is used in the United States to assess environmental damages; a well-known recent example was assessing the environmental cost of the Exxon Valdez oil-spill in Alaska.

The Travel Cost Method was used by Loomis et al. (2000) to calculate the consumer surplus associated with whale-watching. This returned values of between US$43 and US$50 per person per day. The Contingent Valuation Method has been used to calculate similar surplus measures (Samples et al. 1986). The problem however with the contingent valuation is that it calculates the total non-use value, whereas whale-watching is concerned with a particular non-consumptive use value. It is argued that for threatened wildlife, non-use values are likely to exceed use-values (Boyle and Bishop 1987).

Total non-use values include a range of attributions that do not depend on the direct use of the wildlife. For instance, a subject may believe that wildlife has intrinsic value or existence value, which gives it a right to exist independent of any direct utility to humans; such individuals may feel that wildlife has spiritual values or is of national significance. Such existence values however, are not the only relevant value. Another category is bequest values. Here the subject attaches value to wildlife because he/she wishes to make a bequest of it to other people. In the case of option values, the wildlife is conserved so that the valuer retains the option of using it at a later date. The practise of hunters voluntarily reducing their hunting effort, even if this imposes hardship in the short-term, is a manifestation of such option values.

These different sources of value contribute to the demand for environmental goods -- even if there is no market for them. In practise it is the manifestations of these values in some budget-allocation exercise that causes us to attribute value to a resource. The actual motivations for this attribution of value are often not analysed when calculating ‘surplus’ measures of benefit. The point being made here is that a surplus measure of welfare will include several different sources of value. Whale-watching is concerned with one manifestation of one non-consumptive use value. It is necessary to isolate this from other sources of value that exist prior to the whale-watching experience.

Crucially, naïve estimations of the economic benefits of whale-watching (e.g., Duffus 1988; Orams 1999; Hoyt 2000) have neither estimated demand functions nor calculated surplus measures of value. In these studies, the total expenditure attributed to the whale-watching industry is used as the basis of value. This means that the area ‘0PbQ’ is being (incorrectly) used to assign value to the stock. This method provides estimates of value for the whale-watching industry that are often one order of magnitude greater than economic studies that employ more appropriate methodologies. Thus, Hoyt (2000) generates a figure of about US$100 per whale watcher, Duffus generates estimates of US$ 262[1] per whale watcher, and Orams estimated US$ 212-223[2] per person, all inflated figures due to the inappropriate methodology being followed. It is accepted that an estimate of ‘industry turnover’ provides useful information to resource managers, but these estimates need to be interpreted with care. The absence of an explicit demand function creates significant problems in interpreting the results of such studies and severely weakens the robustness of the claimed benefits.

THE QUESTIONABLE USE OF MULTIPLIERS IN ASSESSING ECONOMIC BENEFITS

It should also be noted that such studies compound the error being made, by stating that the estimates obtained are conservative estimates, or under-estimates, of the true value. This error is due to the claim that omitting multiplier effects from these valuations will cause the true value of whale-watching to be under-estimated.

Multipliers refer to the stimulation a local economy may receive from an injection of spending -- in this case from whale-watchers. As such stimulation is dissipated if prices rise, or if there are capacity constraints on the expansion of the local economy, or if taxation, or other expenditure on imports reduces local spending, it follows that calculating such multipliers is associated with considerable empirical difficulties. Indeed, the effect of stimulating one part of the economy (e.g., by introducing a whale-watching enterprise) may result in depressing other sectors of the economy by forcing up wages and directing investment away from competing or alternative economic activities.

Imports are recognised as a major leakage of the multiplier process. Further, tourism in the South Pacific is heavily dependent on imports. In the Orams report (1999) this is recognised and accounted for by discounting the value of fuel expenditures to 10% of their expenditure. However, such discounting was not pursued for things like the food and accommodation consumed by tourists. While some of these goods and services derive from the local economy, many are in fact dependent on imported commodities, and thus as in the purchase of fuel, cause a percentage of the ‘value’ to leak from the Tongan economy. On the remote atolls of Tonga, this leakage is often severe.

Crucially the overall economic effects claimed in whale-watching reports are in reality diversions of spending by visiting whale watchers away from their own local economies and toward a foreign economy. Therefore, whale-watching does not cause an increase in overall spending as is frequently claimed. Hence the total economic outcome (taking into account domestic and foreign economic effects) is extremely difficult to assess. The argument that multipliers should be taken into account if only they could be calculated is spurious. Multipliers should be ignored because they are methodologically inappropriate in these instances.

FAILURE TO DISTINGUISH BETWEEN GROSS AND NET BENEFITS

The whale-watching studies that use expenditures to provide a measure of ‘benefit’, attribute exaggerated value to the industry. Using total expenditure (or industry turnover) as a proxy for economic value causes this problem. This proxy measure is inappropriate for two reasons. First, it treats all expenditures in the industry as a ‘good’; there are no ‘bads’ (or more accurately, ‘costs’) taken into account. Thus a range of expenditures within the industry are actually counted as ‘benefits’ when, in reality, they are ‘costs’. Much of the indirect benefits associated with this expenditure-approach are for items such as accommodation and food. This is typified in the Orams (1999) report, where the estimate of value would drop to roughly one-third of his assessment if food and accommodation ‘costs’ were not counted as ‘benefits’.

Such items as food, accommodation, souvenirs, boat operations, and fuel are commodities and services that can only be provided at a cost to the enterprise and the wider community. We note that Orams (1999) initially states that gross (rather than net) benefits are estimated in his report, but this point receives little subsequent acknowledgement nor is identified in reports (e.g. Hoyt 2000) that cite Orams’ work. Inputs such as food and accommodation require the allocation of societal-resources to their provision. It is a basic requirement for the profitability of the industry that the revenue received from customers exceeds the cost of providing these inputs. Thus the treatment of all expenditures as benefits can only be done if all inputs are provided at zero cost. This is plainly nonsensical. The practice of not removing input-costs from these estimates of the value of whale-watching contributes to the exaggerated claims of benefits derived from this activity.

THE PROBLEMATIC CLAIM OF CAUSALITY

The second reason that such expenditures are treated inappropriately, is because the assumption that whale-watching induces these indirect expenditures is unproven, and in some circumstances, it is implausible. For example, a prior attribution of ‘existence’ values to whales may well be the reason visitors purchase souvenirs: someone may buy souvenirs not necessarily as a result of the whale-watching experience, but because they arrive at this site already valuing whales. In this sense, it cannot be claimed that whale-watching causes expenditures to be made on these items. Indeed, whale souvenirs are sold at many non-whale-watching sites precisely because whales are widely valued.

This questionable assertion of causality causes other problems, including the assumption that whale-watching will induce spending on items such as accommodation and food. It is quite plausible that providing a tourism-industry infrastructure is what subsequently induces expenditure on whale-watching. If this is the case, then building hotels and providing air links may cause expenditures to be made on whale-watching, rather than the whale resource causing expenditures to be made on hotel stays and air fares as is claimed. Indeed, a recent appraisal of ecotourism in New Zealand (Pearce and Wilson 1995) suggests results that contradict the simple whale-watching-causing-tourism thesis promoted by some advocates. Pearce and Wilson (op. cit.) found that far from the sole motivating factor for ecotourism, whale-watching was one of many activities that drew tourists, and indeed, it was one of the lower ranked activities. Parenthetically, this is also supported in the study on Tonga, which found that a minority of visitors were attracted by the whales (Orams 1999).

HOW GOOD IS THE EVIDENCE THAT WHALES ATTRACT TOURISTS?

It is beyond the scope of this particular report to fully investigate this claim of causality. The case study of Tonga (Orams 1999) provides weak evidence (obtained by collecting “attitudinal” data on tourist motivation) that whale-watching is the explanatory factor behind tourism. Such attitudinal reports however, are vulnerable to biases generated by the questionnaire process. Subjects may respond differently to the questionnaire than they would choose to behave in an actual setting, reporting attitudes they believe will (favourably) influence the survey results or supply answers they believe will please the researcher or conform to prevalent social attitudes. Finally, the questionnaire may (unintentionally) omit those factors that have importantly influenced tourists’ decisions to visit the site (e.g. the availability of cheap airfares at a convenient time). For this reason, actual behaviour should be preferred to subjective statements on attitude. Interestingly, despite the use of whales as a tourism icon and the growth in both international tourism and whale-watching in general, visitation rates to Vava’u (the primary whale-watching region of Tonga) did not reflect the attraction of this industry to visitors. This is illustrated with the following random walk (ARIMA) model for visitors to the site.

Figure 2. Air Tourist Arrivals in Vava’u, 1995-99 (Original data from Orams 1999)

Referring to Fig. 2, it is only after the first-half of the 1999 season (time period 48 onwards), that visitation rates appear to increase. However, this increase is followed by a decline that is greater than predicted. This post-1998 improvement in visitation rates, however, is attributed to improved airline service (Orams 1999). The conclusion that whales, rather than improved tourism infrastructure, are attracting visitors to the area, remains purely speculative. Vava’u is a popular tourist destination where a variety of alternative marine attractions to whale-watching exist (op. cit.).

As Hoyt (2000) notes, many highly developed Pacific tourist-destination countries (including Australia, Canada, New Zealand, Japan, the U.S.) have their own well-developed whale-watching industries. Such an industry can be characterised as an instance of Hotelling competition. In this market, consumers prefer sites that are closer to them where competing sites are offering similar goods for consumption. In a Hotelling-market, the pool of customers willing to bypass closer sites to observe whales is likely to be small. Put simply, there is little reason to bear the high costs of flying to a remote location to view whales when this can be done at a significantly lower cost much closer to home. Pearce and Wilson (1995) suggest that just such conditions in the New Zealand whale-watching industry account for the lack of participants from Australia and North America.

The lack of economic sophistication in many whale-watching reports avoids considering the effect of a Hotelling market on whale-watching demand. This essentially frustrates any attempt to infer that whales attract tourists. Accounting for the impact of Hotelling-competition requires estimating demand functions that explicitly incorporate travel distance and cost. This has not been done in such reports, thus making the claim that whales attract tourists, speculative at best. At worst, the claim is implausible, especially for remote locations. Such sites are likely to have a variety of alternatives to whale-watching (e.g. Vava’u has several other marine attractions) and such ‘bundling’ of activities makes it difficult to isolate the impact of whale-watching. The assumption that whale-watching is attracting tourists is not based on either robust empirical data or coherent economic reasoning.

HOW ELASTIC IS THE DEMAND FOR WHALE-WATCHING?

Whale-watching is an industry that is relatively easy to enter, given the widespread distribution of whales. An enterprise of this porosity to new entrants is one where existing operators can easily find that their profitability becomes reduced as competitors enter the market. At the present time, numerous South Pacific countries are being encouraged to develop whale-watching industries by the activities undertaken by the South Pacific Regional Environment Program (SPREP) and the Australian and New Zealand governments. As more countries or business operators enter the industry, the alleged economic viability of the earlier-established businesses will be subject to increased risk from competition (as has been noted [Graburn 1990] for similar proposals advocated elsewhere).

This threat to the economic viability of whale-watching presented by industry expansion is illustrated by the situation at Ogata in Japan (Murakami 1996). In 1989 there were eight tour boats operating at this location; this number had grown to 61 boats by 1996, together with an increase in whale-watching sites (to 20) throughout Japan. In combination, this has resulted in a significant loss of revenue to tour operators in Ogata, who now only make $US10-12,000 per year in profit. This is simply inadequate to replace the income from foregone fishing opportunities. In similar manner, the foreign and local whale-watch operators at Andenes, in northern Norway, found that despite the financial support of an international environmental organisation, whale-watch operations could not be made economically viable (Ris 1999). Further, Hoyt (1995) has noted that the rate of growth of the whale-watching industry declined between 1992 and 1994 due to the saturation of certain markets.

This suggests that for whale-watching industries that are at the periphery -- as opposed to the core in North America, Japan and Australasia -- demand is likely to be highly elastic. Maintaining a high visitation rate based on whale resources will present these peripheral industries with a major challenge together with significant risks. For nations like Tonga and others in the South Pacific, all of which suffer from a geographic disadvantage vis a vis the more developed nations from which many (potential whale-watching) tourists are drawn, the porosity of the whale-watching industry should present some concern.

WHALE-WATCHING AND THE SOUTH PACIFIC SANCTUARY PROPOSAL: QUESTIONING THE ASSUMPTIONS

In an apparent efforts to gain support for the South Pacific whale sanctuary proposal, the Australian and New Zealand governments claim that economic benefits will result from establishing whale-watching enterprises throughout that region (e.g., Hill 1996; Lee 2001a, b; New Zealand 2001). However, a more realistic economic analysis suggests that expanding whale-watching businesses in the South Pacific region may dangerously imperil, rather than enrich, the economies of some of those South Pacific island nations. The Australasian sponsors of this proposal appear prepared to risk damaging the few existing whale-watch enterprises by encouraging nations and businesses to compete among themselves in an uncertain market. The economic returns promised to the region’s island states from investing in this activity are dangerously exaggerated. Further the assertion that whale-watching and whale consumption are incompatible activities, deliberately limits the potential diversification, and hence enhanced security, of marine resource-based development opportunities in the region.

Consequently, it is suggested here, that the assumptions behind this Australasian proposal require critical review. One assumption is that because whale-watching appears to be a rapidly growing industry, South Pacific countries ought to actively enter this particular business field. However, the limited available evidence does not support this assumption of expansive economic opportunities, for the numbers of tourists visiting Vava’u (Fig. 2) indicates that no such growth in tourist numbers is evident in this established, yet peripheral, South Pacific whale-watch location. It is worth noting that Vava’u, one of the few known breeding areas for South Pacific humpback whales, is a particularly favourable whale-watching location, arguably unmatched among South Pacific island nations. Unlike other island locations, Vava’u offers a high probability of sighting, in sheltered inshore waters, one of the most spectacular large whale species favoured by whale watchers.

A second assumption is that the existing demand for whale-watching is inelastic. This assumption implies that demand will not decrease in existing sites even if more countries introduce competing sites. This assumption, as applied to South Pacific island nations, is not well grounded in economic theory or empirical data. Thus advocates of the Australasian proposal are discounting the economic risks associated with promoting an exclusively whale-watching option as the best (or only) means of generating benefits from whale resources. It is likely that an increase in the number of tour operators and countries engaged in whale-watching would represent a threat to the profitability, and possibly the viability, of at least some of the existing whale-watching businesses in the South Pacific region.

A third assumption (mentioned earlier, so not detailed here) is that industry costs can be counted as ‘benefits’. This requires the nonsensical condition of ‘tourism inputs’ being generated at zero cost. Consequently the estimates of the economic value of the industry are greatly inflated.

The fourth assumption is that whale-watching and whale hunting are incompatible activities. This assumption is contradicted by the situation that exists in all the whaling nations today (e.g. Canada, some eastern Caribbean nations, Japan, Norway, the Philippines, and the United States) where both whale hunting and whale-watching co-exist. In some cases (e.g., in Canada and Norway) whale-watching opportunities are provided in active whaling communities.

OPTIMIZING THE BENEFITS OBTAINABLE BY WHALE RESOURCE USE

To justify replacing whaling with whale-watching, whale-watch promoters claim that the ‘average whale’ possesses greater economic value as a tourist attraction than as a harvested resource. This argument ignores the ability of natural populations to replace losses when used in a sustainable manner. As a result of ignoring the renewable nature of whale resources, whale-watch advocates argue that communities must chose one activity over the other, rather than enjoy the benefits each provides; however, as mentioned above, management plans can, and do, easily accommodate the needs of both activities.

Another important problem created by this error is that the value of the ‘average whale’ means nothing for the optimal management of whale populations. Recognising that the precautionary approach must apply to any use of whales, and that value can be realised from the non-consumptive use of whales through whale-watching, there is nonetheless no necessary economic or conservation conflict in also pursuing the sustainable consumptive use of whales. This can be viewed as a complimentary form of use that provides a variety of additional economic and non-economic benefits (outlined below).

This combined use is illustrated in Fig. 3, noting that the two demand functions in this graph are conjectural. The actual number of whales is represented on the horizontal axis, and the value of the whale resource in both whale-watching and whale hunting is expressed as a monetary metric on the vertical axis. The following assumptions are made for purely illustrative purposes.

the actual population of whales is at Q”.

the average or median whale corresponds to the point Q’.

Here the value of whale-watching at low numbers exceeds the harvested value of the whale. In short, the more whales that occur at the locality, the more likely it is that tour operators will find a whale and that consequently customers’ expectations will be satisfied. However, an increase in likelihood of viewing whales occurs at a diminishing rate. At high numbers the addition of an extra whale may simply result in an imperceptible increase in the probability of viewing a whale. This ‘extra whale’ can be removed without impacting on tourist satisfaction derived from whale-watching at that locale. Indeed, operators can rarely (if ever) offer assurances of constancy in numbers of whales available for tourist viewing, strongly suggesting that there is no particular threshold number that must be available for viewing to be attractive to tourists.

Figure 3. Maximising Benefits: Whale-watching and Whale Hunting

Ignoring the impact of supply-functions (e.g. the different costs associated with whale-watching and whale hunting at different levels of supply) for illustrative purposes, it can be argued that the optimal strategy would be to cease whale hunting any time that the population of whales sank below Q*. Below Q*, whales are theoretically worth more as a tourist attraction than as a food resource. Any time the population rose above Q*, this portion of the population could be harvested without in any way detracting from its economic value as a tourist attraction. At the point Q*, whales become more economically valuable as a source of food than as an object of touristic appeal.

Although this discussion is theoretical in nature, understanding the relationship between the consumptive and non-consumptive use of whales is important if the objective of using whale resources is to channel economic benefits to affected local communities and regional economies. If the goal is to increase the economic benefits associated with whale resource uses to particular nations, then both whale-watching and whale hunting are options worth considering in a critical and objective manner. Preventing harvests when the resource population can sustain them, and when the viability of the whale-watching industry is not threatened by harvesting (i.e. above Q*), makes little economic sense. Furthermore, deciding against the whale hunting option at this time, given the implausible assumptions and lack of evidence used to justify this decision, is imprudent and ill-advised.

This conjectural illustration suggests that the average whale (Q’) is worth more as a tourist attraction than as a food source. Thus, on theoretical grounds it seems that whale protectionists’ arguments are plausible. However, in reality the strong form of this argument is irrelevant, for to claim that whales have commercial value as a whale-watching resource does not mean that any alternative whale use diminishes the economic returns from the whale-watching industry. Management of whales, or strengthening local economies, does not revolve around conjecture about a hypothetical ‘average’ whale. Rather, these questions can (depending on the priorities of each affected sovereign nation) involve deciding on the use of actual whales when they exist in greater numbers than are required for conservation, or for use in attracting tourists.

INFLATING THE BALANCE SHEET

The debate over the appropriate economic use of whales also suffers from what can be termed the ‘stacked balance sheet’. Current economic estimates of the value derived from whale-watching are ‘stacked’ in favour of obtaining a high value for that particular use. This is accomplished by reporting and estimating as many values as possible as being the product of the whale-watching industry, while discounting any environmental, social, or economic costs. Thus, for example, industry expenditures (costs) are counted as ‘benefits’. However, when comparing the value of whaling, no such inclusion of both market and non-market benefits are used in estimating the value of harvested whales. For instance, the value at market price, rather than a surplus measure of welfare, is used. This is equivalent to treating P (in Fig. 1) as the estimate of harvested value rather than ‘Pab’. In similar fashion, if whale hunters included industry expenditures, e.g., on fuel and wages, as ‘benefits’, this too would greatly exaggerate the returns from their particular whale-using activity.

This tendency to inflate the balance sheet, discounts both the benefits of whale hunting and the socio-economic and associated costs of whale-watching. In small peripheral communities such as Tonga, whale-watching occurs almost exclusively in the monetised sector of the economy, where its engagement with traditional sharing and gift-exchange practices is minimal. Consequently, most economic relationships involved with whale-watching activities are mediated by and understood as commodity exchanges. However, in many of the small island nations of the South Pacific (as in many other regions of the world), contemporary small-scale marine production is embedded in both the monetised and the non-monetised (the latter usually being referred to as the ‘subsistence’) sectors of the economy.

In Tonga, fisheries production goes into both the market and traditional exchange circuits (Evans 1999, 2001). The socio-economic value of production that goes into markets is fairly easily incorporated into economic models, but the significance of gift exchange is not. Such gift exchanges have an insurance role in society, by widening the distribution of fisheries harvests and thus insuring that many households and individuals enjoy nutritional benefits. Such exchanges are also fundamental in maintaining family and community relationships and practices. The continuance of these various institutions is important for the long-term maintenance and vitality of Tonga society and culture (Evans 2001). These non-market benefits are typically ignored in whale-watching studies that indirectly or obliquely argue against whale hunting options (e.g. Orams 1999). Precluding marine primary production as a development option is imprudent and may be associated with significant, and unanticipated, social costs.

NON-MONETARY INCENTIVES FOR PRUDENT WHALE USE

It is entirely inappropriate and inaccurate to presume whale hunters are only interested in maximising commercial profits. Whaling is carried out by a wide variety of smallholders and some larger business enterprises today, typically at levels of take well below the maximum sustainable yield. While it is possible that in certain cases, economic considerations could prevent a harvest at maximum sustainable yield from occurring, current effort does not seem to be explained by such economic considerations (Conrad 1989; Bloch and Hanusadottir 1993; Bjorndal et al. 1997; Freeman et al. 1998). It appears that the observed lowered whaling effort actually relates to the sustainable use of these valued resources to ensure long-term community and cultural persistence.

The theory of natural resource exploitation of a renewable resource (such as whales) is relatively simple, and conforms to the reasons for prudent harvesting suggested above. The theory posits that harvest should continue up to the point where the value of the last animal harvested equals its value as a living animal. This, at one level, recognises that animals have to be left to perpetuate a population in order to make continued harvest possible, but in actuality it also implies that a variety of non-commercial values are attributed to whales by whalers, their communities, and the responsible management agencies. It is these non-commercial values that cause harvest effort to stop well before the maximum sustainable yield is realised. Conrad (1989) demonstrates for instance that Alaskan Eskimo [Inupiat] catch-rates of the bowhead whale must also include a positive valuation of an increase in bowhead populations.

The addition of commercial non-consumptive values into the theory of natural resource exploitation does not fundamentally change these principles, it simply adds new elements to the mix of values to be considered (Conrad 1989). Arguments that present the problem in stark ‘either/or’ terms are at best misguided. At worst they appear likely to be a thinly veiled attempt to impose (frequently alien) moral/ideological dictates on whaling communities for the purpose of changing their customary food-producing practices (as has been documented [Ris 1993] in northern Norway).

THE NATURE OF WHALERS’ NON-COMMERCIAL VALUES

The non-commercial values held by whaling peoples may include those of a cultural or social nature; some community-based whalers in various countries are motivated by strong desires to bequeath robust populations to others in their families and communities. There may also be value-associated societal norms that limits harvest to satisfy local or wider community needs only (Sanderson 1991; Kalland and Moeran 1992;Freeman et al. 1998). Whaling may also be an expression of cultural or community life that maintains traditions and links with ancestors or community predecessors (Manderson and Hardacre 1989; Bestor 1989; ISG 1992). These would all be non-commercial benefits attributed to whaling over and above any ‘market’ attribution of value. The relative importance of market and non-market values of whales is however, outside the scope of this report, although such determinations have been abundantly reported in the scientific literature (Bockstoce et al. 1982; Akimichi et al. 1988; Braund et al. 1989; 1990; Moeran et al. 1992; Freeman 1993; Young et al. 1994).

Nonetheless, the point here is that the use of market value as a proxy for the economic significance of whale hunting severely discounts the important non-market values attributed to whales by whale hunters. As such, the consequences of exaggerating the benefits from whale-watching and discounting the benefits from whale hunting heavily biases the comparison of the two activities in favour of whale-watching. This bias involves serious risk if it misleads decision-makers into believing such a whale management or economic development option is based on sound economic advice.

In the case of deciding upon the rational use of whale resources, this bias-induced risk is exacerbated by the fact that most whale watchers come from relatively wealthy industrialised nations, while those communities wishing to engage in whale hunting are often relatively poor. Equity considerations may require weighting the benefits of whale-utilisation in favour of whale hunters, for considerations of social equity are not only a human rights issue, but today are an accepted principle of enlightened and efficacious conservation practice and wildlife and fisheries management (IUCN/UNEP/WWF 1991; UN 1992).

NON-MARKET BENEFITS RESULTING FROM CONSUMPTIVE WHALE USE: THE ISSUE OF HEALTH

Whale hunting and the consumption of whale meat are significant social activities whose importance, both in economic and more importantly non-market terms, requires adequate consideration when whale-use options are being objectively discussed. Outside of narrowly economic considerations, both the cultural and social values that whale hunting sustains, and the health-promoting benefits associated with the consumption of whale products, have important public health and social security consequences.

Calls by whale protectionists for the elimination of consumptive whale use occur in the context of increasing challenges to smaller nations in terms of, e.g., nutrition and health, and economic development and national security. Taking Tonga as representative of many South Pacific small island nations, a serious health crisis has been precipitated by changing diets and increased consumption of low-quality imported foods. Of particular concern are the imports of high-fat content meats like mutton flaps [sheep bellies] and poultry parts [including ‘turkey tails’] which, ironically, are imported from several of the nations advocating the non-use of whale meat.

In Tonga, import levels of these fatty imported foods (e.g., mutton flaps, poultry parts, sausages, and corned beef) have increased from 3.39 million kg in 1989, to 5.56 million kg in 1999. The consequent increases in consumption of such food represent almost a doubling of import-expenditures to the Tongan economy (during which time the population size has scarcely changed) and a greater than 60 per cent increase in per capita consumption of these low-nutrition foods. The health consequences of this changing diet are severe, as a 1997 WHO epidemiological study of diabetes and cardiovascular diseases on Tonga concludes:

Noncommunicable diseases (NCDs) are common and increasing in Tonga. In the last ten years, cardiovascular mortality has increased by 42 per cent… Diabetes patients have high complication rates from kidney, eye and foot diseases. The main reason for the rising NCD rates are increased imports of meat… leading to high levels of fat consumption… (Scragg 1997)

NCDs are of concern in many parts of the developing world today (Collins et al. 1990; Hodge et al.1996; Popkins and Koak 1998; World Health Organization 1998; Seidell 2000; South Pacific Consumer Protection Progamme 2000). Given the known association between diet-related non-communicable diseases (such as various cardiovascular diseases, obesity, and diabetes) and the consumption of fatty foods (Campbell 2000; Hermansen 2000), concern is clearly warranted. Recent research has shown that these consumption patterns on Tonga are not a product of either dietary preference or an erroneous perception of nutritional values, but rather, are due to price and ease of availability (Evans et al. 2000). Thus, the resulting health problem is not the result of peoples’ lack of knowledge about nutrition, but rather, is due to their limited access to better-quality affordable meats.

DIET-RELATED NON-COMMUNICABLE DISEASES IN THE SOUTH PACIFIC

Thus the opportunity costs of deferring whaling activity are not simply economic in nature, but, as noted above, also involve serious human health issues (which of course, also do include a significant economic cost for treatment etc). Increased production and consumption of fish, whale, and other marine protein offers non-market benefits. The nutritional and health benefits of consuming marine fats and protein have long been known, and are now well established (Dyerberg et al. 1975; Bang et al. 1980; Kuhnlein et al.1991; Kuhnlein and Soueida 1992; Jensen et al. 1997, O’Keefe and Harris 2000). When considered in relation to the increased consumption of imported foods, the net health effect on the general Tongan population of suppressing whale consumption (in the questionable belief that this is necessary in order to encourage whale-watching), is detrimental in ways not accounted for in the various reports proclaiming the benefits of whale-watching at the expense of whale hunting.

The negative health impacts caused by the substitution of imported high-fat foods for indigenous food resources is a serious issue throughout the South Pacific region (Coyne 1984; Thaman 1983, 1988; South Pacific Consumer Protection Programme 2000; Shell 2001) and indeed, throughout the developing world. In Tonga, the high incidence of diabetes and cardiovascular diseases is understood to derive in large part from the replacement of indigenous marine food with imported substitutes of low nutritional value. According to the Tongan National Food and Nutrition Committee:

An area of particular concern in relation to the increasing problem of non-communicable disease in Tonga is the heavy consumption of mutton flaps and other fatty meats. Due to the high fat content of these fatty meats, the high level of consumption is a major contributing factor to the prevalence of overweight and obesity. Obesity and overweight are major determinants of many non-communicable diseases and induces diabetes, heart diseases and stroke. It also increases the risks of diet-related diseases such as cancers and other health disorders. (Tonga 1997).

In regard to these health problems, a return to greater consumption of traditional foods, including whale in the case of Tonga, is locally recognised as offering protection against some of the negative health consequences associated with high consumption levels of imported fatty foods. Given the well-known health benefits associated with consumption of marine products (particularly the long-chain polyunsaturated fatty-acid found in marine mammals, as referenced above), campaigns and policies that perpetuate a high consumption level of unhealthy imported foods by actively discouraging a return to sustainable whale harvesting, appear to be dangerously ill-advised.

ASSESSING DIRECT AND INDIRECT COSTS ASSOCIATED WITH SOME OF THE CONSEQUENCES OF CONSUMING UNHEALTHY IMPORTED DIETS: THE CASE OF TONGA

The substitution of whale-watching for whale consumption has direct, as well as indirect, costs. Health professionals in Tonga estimate that slightly more than half of all health-related spending results from diagnosing and treating various diet-related non-communicable diseases (Evans et al. 2000). As the total treatment expenditures of the Tongan Ministry of Health in 1998-99 was T$6.0 million [US$2.8 million], the direct costs to the nation for treating these diet-related NCDs is estimated to be slightly more than T$3.0 million [US$1.4 million].

Comprehensive accounting of the cost of illness to society, whether through calculations of lost incomes, lost human resources (social capital), and the collateral emotional and social trauma that accompanies disease and death, is possible, although extremely complex. The full impact of diet-related NCDs (including heart disease; stroke; blindness, amputations and death due to diabetes; and various other medical consequences of obesity) are experienced most frequently by middle-aged and older people (Tupoulahi 1997). For this reason, calculations of the cost of pre-mature mortality (Potential years of life lost, PYLL - deaths before 65) are relatively smaller than for diseases which effect primarily younger people. However, a more culturally- and socially-appropriate approach to assessing the full cost of NCDs will take account of the multi-dimensional complexity of illness. Rather than providing a strictly quantitative (and largely inadequate) assessment of the issue, a qualitative assessment provides a more meaningful and comprehensive understanding of this issue.

Diet-related disease, such as diabetes or stroke, create profound impacts on communities by debilitating or removing key community actors and cultural brokers in the prime of their social lives. Not only does the cost of caring for afflicted individuals devolve upon immediate (and often extended) families and communities, but the untimely loss of key community members can, in aggregate, impair the productive capacity, and the vitality and maintenance of important cultural institutions. In the case of small nations, these losses can negatively impacts the collective wellbeing to a degree not experienced in larger countries.

CONCLUSION

Whale-watching is a new and potentially valuable industry, but proponents have over-estimated its benefits. Because whale-watching is often linked to a ban on alternative uses of the resource, realisation of the full value of whales for developing and developed nations alike is inhibited.

Whale-watching is not an economic panacea, but rather, it is one new commercial avenue to be explored with care. Economic diversity is generally socially beneficial, and can offer increased development benefits and community sustainability. Therefore, it is only reasonable and just to objectively assess a variety of whale-use options in those regions where these highly valued renewable resources exist. Increasing resource-use options can offer increased community and national benefits, which contribute to strengthening the economy, food security, human health, and the maintenance of social and cultural values, institutions, and practices.

Seeking to preclude resource-use options on the basis of the economic arguments advanced by some whale-watching studies is an ill advised and imprudent policy decision that increases the vulnerability of small peripheral countries to shocks. Among these external shocks are those generated by increased competition from tourism sites situated closer to the ‘core’ population areas, and unanticipated changes in future demand for whale-watching. Various internal shocks result from the health-threatening increased consumption of low-quality imported substitutes that displace nutritionally important indigenous marine foods, and by so doing cause consequent erosion of the highly-adaptive social insurance functions associated with the subsistence sector.

An objective and open-minded consideration of the optimal use of whale resources suggests that opportunities may exist to derive a wide range of economic and non-economic benefits by developing, in locally-appropriate fashion, both consumptive and non-consumption uses of available renewable resources within limits set by sustainability considerations.

ACKNOWLEDGEMENTS

This study has been completed with funds provided by the International Foundation for the Conservation of Natural Resources. Earlier research in Tonga was supported by the Canadian International Development Agency and the Icelandic International Development Agency.

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