ANALYSIS
Coastal landscape and the hedonic price of accommodation

https://doi.org/10.1016/j.ecolecon.2006.08.001Get rights and content

Abstract

The impact of climate change on tourism has been examined in terms of changes in a destination's climate; the impact of ancillary effects such as sea-level rise has been neglected. In this study the role that coastal and other landscape features have on the attractiveness of tourist destinations is examined using the hedonic price technique. The average price of accommodation in the coastal districts of Schleswig-Holstein, Germany is explained using landscape and other characteristics of these districts. As parts of the coastline of Schleswig-Holstein are protected by dikes, adaptation measures as well as natural coastal features are represented in the dataset. The analysis shows that an increase in the length of dikes in a given district would result in a reduction in the average price of accommodation. An increase in the length of open coast results in an increase in the average price of accommodation. For two districts, the impact of sea-level rise is examined through a comparison of the costs of different coastal protection measures compared to the resulting changes in revenue from accommodation. The costs of dike construction along with the effect of reduced accommodation prices favour the use of beach nourishment to protect the coast.

Introduction

Studies on the impact of climate change on tourism focus on the relationship between climate and demand. Ancillary effects, however, like sea-level rise, will also have an impact on demand. Sea-level rise will result in the loss of low-lying islands, the loss of low-lying land at the coast and the erosion of beaches and cliffs. Nevertheless, there is a range of adaptation measures that can minimize these problems. In some cases, these measures will also change the appearance of the coast. To assess the impact of climate change on tourism information is needed on the relationship between coastal morphology and tourism demand. The importance of the coast for tourism can be seen in works of cultural history (Corbin, 1999), in qualitative studies (for example Mieczokowski, 1990) and in quantitative studies (Hamilton and Lau, 2005, Lise and Tol, 2002, Maddison, 2001). In the quantitative tourism studies mentioned above, different types of coastal landscape or morphology are not distinguished. This study is the first to link accommodation price with coastal and other landscape attributes. Layton and Brown (2000) and Fleischer and Sternberg (in press) examine the willingness to pay for climate change mitigation in order to preserve certain kinds of landscape. In this study, however, the focus is on the effect of adaptation measures on the attractiveness of the coastal landscape for tourism.

The state of Schleswig-Holstein in Northern Germany has been chosen as the study area. Schleswig-Holstein has two quite different coastlines: first, to the west there is the North Sea coast and second, to the east there is the Baltic Sea coast. In addition, there is the coastline of the river Elbe, which is heavily influenced by the North Sea. Tourism promotion in Schleswig-Holstein is organised at the level of the Gemeinde or district. These are small administration units at the level of LAU2.1 The coastal districts included in this study have an average area of 21 km2, and the maximum area is 67 km2. The smallness of the districts allows a high-resolution study of tourism in the region.

To examine the effect that landscape and in particular seascape has on tourism demand the hedonic price method is used. The hedonic hypothesis is that goods are valued for their utility bringing characteristics, and that this is reflected in the willingness to pay for these characteristics and hence in the price. In tourism research, this method is not frequently used. Fleischer and Tchetchik (2005), however, apply this method to the price of rural tourist accommodation in Israel. They focus on whether tourists value that their accommodation is located on a working farm. In this study the focus is on whether tourists value their accommodation being located in a district with certain coastal characteristics, and if so by how much.

In the second section, the study area is described. The hedonic method is introduced in the third section. The data used in this study and the model specifications are described in the fourth section. The fifth section presents the results of the regression analysis. The implications of these are discussed in the sixth section, and the seventh section concludes.

Section snippets

Study area

Schleswig-Holstein is the most northerly state in Germany, bordering Denmark in the North, and its southern border is defined by the river Elbe and the City State of Hamburg. The eastern border is shared with the state of Mecklenburg-Western Pomerania.

The coastal zone of Schleswig-Holstein consists of three coastlines: at the North Sea, at the Baltic Sea and along the River Elbe. The North Sea and Baltic Sea coast are quite different in terms of their coastal morphology. The North Sea coast was

The hedonic price method

The hedonic price method, developed theoretically by Rosen (1974), is based on the idea that any differentiated product can be seen as a bundle of characteristics. The value that consumers attach to the characteristics will be reflected in the price of the differentiated product. The price of an individual characteristic is called the implicit or shadow price.

Hedonic price analysis is widely used for different goods such as cars (Irandoust, 1998), computer equipment (Doms and Forman, 2005) and

Data

The accommodation price data used in the analysis is taken from the tourist brochures of the coastal districts. These brochures, as well as containing the marketing and promotional information about the district, list all of the businesses providing accommodation with details on the number of beds, price per room or per unit and the facilities of each accommodation unit. From the 146 coastal districts, it was possible to calculate price data for 92 districts, which is more than what is

Results of the regression analysis

The model specifications were estimated using panel corrected least squares (Williams, 2000). Each of the specifications has 189 observations allocated to 92 clusters. Table 3 shows the results for the combinations of C1 to C3 with the landscape specification L1. R2 ranges from 0.68 to 0.70; coastal specification C3 has the highest R2. Table 4 shows the results for the coastal combinations C1 and C2 with the landscape specification L2.6

Discussion

The results described above show that the type of coastal landscape has an effect on the price of accommodation. Sea-level rise will have an impact on the coastal landscape, whether through erosion or land loss. Flooding of low-lying areas is a particular problem in Schleswig-Holstein, which will be exacerbated with sea-level rise and an increase in storminess. Sterr (2000) reckons that with a 1 m increase in sea level there will be an increase in the probability of flooding by up to 1/10 at

Conclusion

This study has provided a way of examining the value that tourists attach to different coastal attributes. Districts with open coast accrue higher accommodation prices than districts with other coastal types. The hedonic prices of the different coastal types produced from this study can be used along with other tourism data to compare the impact on revenue caused by changes in the attractiveness of the coast through adaptation measures to sea-level rise. For an estimate of the change in welfare

Acknowledgements

This study was funded through the European Commission Research DG I project DINASCOAST (EVK2-2000-22024). I would also like to thank: Richard Tol and David Maddison for the discussions that led to the production of this paper, Horst Sterr, who provided information and contacts that were very helpful for this study, Jenny Behm, Hanna Breitkreuz, André Krebber and Ina Thiel, who helped with data collection, data processing and GIS. All errors and opinions are the author's own.

References (32)

  • J.M. Hamilton et al.

    The role of climate information in tourist destination choice decision-making

  • J. Hofstede

    Integrated management of artificially created salt marshes in the Wadden Sea of Schleswig-Holstein, Germany

    Wetlands Ecology and Management

    (2003)
  • J. Hofstede et al.

    Wertermittlung sturmgefährdeter Gebiete in Schleswig-Holstein

    Mitteilungen des Franzius-Instituts für Wasserbau und Küsteningenieurwesen Heft

    (2000)
  • D. Kelletat

    Coastal geomorphology and tourism in the North Sea coast

  • Landesvermessungsamt Schleswig-Holstein, 2005. CD Top50 Schleswig-Holstein/Hamburg (Version 3)...
  • D.F. Layton et al.

    Heterogeneous preferences regarding global climate change

    Review of Economics and Statistics

    (2000)
  • Cited by (128)

    • An estimate of the value of the beachfront with respect to the hotel room rates in Thailand

      2022, Ocean and Coastal Management
      Citation Excerpt :

      In the past literature, the variable of coastal protection structures could raise or drop accommodation prices. For example, Hamilton (2007) tested the effect of the open coast (no costal structure built) and the dikes on accommodation prices. The study indicated that the increase in the dike length along the coastlines would drop the accommodation price.

    • Spatial hedonic analysis to support tourism-sensitive tsunami mitigation planning

      2021, International Journal of Disaster Risk Reduction
    View all citing articles on Scopus
    View full text