Private Sector Management of Marine Protected Areas: The Chumbe Island Case

Private Sector Management of Marine Protected Areas: The Chumbe Island Case

Primary Country: Tanzania
Ecosystem: coral reef
Sample Value Estimates:
(a) US$1.2 million overall investment made for privately managed Chumbe Island Coral Park in 1998 (b) US$200 per person net all-inclusive overnight price per person - excluding agents' commission - with occupancy rate of 41% was necessary to reach break-even-point in 1998. In the second year of the commercial operations, the Chumbe project still received less than this amount per guest and had a lower occupancy rate than required. A feasibility study based on nominal costs - not including volunteer work and opportunity costs - produced an IRR of 9% anda capital payback period of 7 years which is less than what most investors in tourism facilities in Tanzania would consider attractive.
Region: Africa

Publication information

Riedmille, S. “Private Sector Management of Marine Protected Areas: The Chumbe Island Case” In: H.S.J. Cesar (ed.). Collected Essays on the Economics of Coral Reefs. CORDIO, Kalmar University, Sweden. p. 228-240., 2000

Addtional Notes

The main positive aspects the private protected area such as Chumbe: (a) a hands-on approach to capacity and monitoring through inexpensive on-the-job training of local fishers by volunteers produced very competent and committed park rangers (b) the park raised conservation awareness (c) at an overall investment of US$1.4 million over 9 years at 1999 prices, the cost of private management would be considered lower than with donor-funded project (d) better prospects for sustainability when the incentives for cost effectiveness are stronger for private operations than for government-run projects. The negative aspects of the project: (a) the regulatory environment is characterised by cumbersome bureaucratic requirements (b) investment security is reduced by the fact that land tenure in Tanzania and Zanzibar are only available on leasehold (c) the logistical requirements of building on an island greatly increases development costs (d) capital recovery from investment in conservation is typically dependent on one single sector of the economy: tourism.

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