A Cost-Benefit Analysis of Ecotourism: A Case Study of Xe Pian National Protected Area, Champasak Province, Lao PDR

Abstract

The tourism sector in Lao PDR is growing rapidly, especially ecotourism. The Government of Lao PDR is attempting to implement ecotourism within protected areas across the country as a means of protecting natural resources, reducing poverty, and encouraging local sustainable development. This study contains a cost-benefit analysis of a project designed to promote ecotourism in the Xe Pian National Protected Area (NPA). Two scenarios are evaluated: first, the status quo, in which no additional investments to promote ecotourism are undertaken, and, second, the ecotourism project for Xe Pian NPA. The latter scenario involves major investments to encourage community participation in sustainable tourism, agriculture, and forest management and protection.

A net present value of $ 1.8 million was obtained for the status quo scenario using a 10 % discount rate and 10-year planning horizon. The ecotourism scenario results in an NPV of $ 6.7 million and a benefit-cost ratio of 2.84. The results clearly indicate that the ecotourism project can generate greater net benefits for society than the status quo. The study identifies three main issues that need to be addressed in order to promote ecotourism in Xe Pian: weak enforcement of conservation regulations, limited funding resulting in ineffective management of National Protected Areas, and the need to adopt a community-based tourism approach. Further more detailed recommendations are offered by the authors for policy planners in the Government of Laos, as well as the project’s administrative bodies.