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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.