THE FACTORS THAT INFLUENCING WILLINGNESS TO PAY THE VISITORS OF PANGANDARAN BEACH USING CONTINGENT VALUATION METHOD (CVM)

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THE FACTORS THAT INFLUENCING WILLINGNESS TO PAY THE VISITORS OF PANGANDARAN BEACH

USING CONTINGENT VALUATION METHOD (CVM)

FAKTOR- FAKTOR YANG MEMPENGARUHI WILLINGNESS TO PAY PENGUNJUNG OBJEK WISATA PANTAI PANGANDARAN MENGGUNAKAN CONTINGENT VALUATION METHOD (CVM)

UNDERGRADUATE THESIS

Written by:

SINDI SITI FATIMAH ZAHROH 20130430006

FACULTY OF ECONOMICS AND BUSINESS

INTERNATIONAL PROGRAM FOR ISLAMIC ECONOMICS AND FINANCE (IPIEF)

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i

Written By:

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ii

In partial fulfillment for the requirement for the degree of Bachelor of Economics

(Sarjana Ekonomi) at International Program for Islamic Economics and Finance

(IPIEF), Economics Department

Written By:

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iii

USING CONTIGENT VALUATION METHOD (CVM)

Written By:

May, 4th 2017 Agreed by:

Supervisor 1: Supervisor 2:

Diah Setyawati Dewanti, SE., M.Sc

NIK: 143 066

Dyah Titis Kusuma Wardani, SE., MIDEc

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Written By:

This Undergraduate thesis has been revised and validated before the Examination Committee of the International Program for Islamic Economics and Finance

(IPIEF), Department of Economics, Faculty of Economics and Business, University of Muhammadiyah Yogyakarta

Date: May, 4th 2017 The Examination Committee:

Dr. Endah Saptutyningsih, SE,Msi

Chief, Examiner

Diah Setyawati Dewanti, SE., M.Sc. Yuli Utami, S.Ag, M.Ec.

Co-Examiner Co-Examiner

Approved by,

Dean of Faculty of Economics and Business University of Muhammadiyah Yogyakarta

Dr. Nano Prawoto, SE., M.Si

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DECLARATION

Name : Sindi Siti Fatimah Zahroh Student Number : 20130430006

I hereby declare that this undergraduate thesis entitled “The Factors that Influencing willingness to pay the visitors of Pangandaran Beach using Contingent Valuation Method (CVM)” does not consists of any content that ever being proposed for any degree in order university, ideas of any research and

publication of others, in exception all quotes and ideas which are purposedly

taken are considered as the research references and listed in the reference list.

Therefore, if any violation of intellectual right is found in this study, I agree to

accept any relevant academic consequences.

Yogyakarta,May, 4th 2017

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MOTTO

“Never stop learning because life never stop teaching”

“Allah akan menaikkan orang-orang yang beriman dari kamu dan orang-orang yang berilmu dengan beberapa derajat”

(Q.S Al Mujahadah : 11)

“Sesungguhnya Shalatku, Ibadahku, hidupku dan matiku hanyalah untuk Allah SWT, tiada sekutu baginya.

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This Undergraduate thesis I dedicate to my beloved parents, my sister and

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INTISARI

Penelitian ini bertujuan untuk mengetahui apakah usia, pendidikan

terakhir, tingkat pendapatan,biaya rekreasi dan frekuensi kunjungan

mempengaruhi kesediaan membayar (Willingness To Pay) pengunjung obyek wisata Pantai Pangandaran. Penelitian ini menggunakan data primer dengan jumlah responden sebanyak 100 responden yang dilakukan secara acak atau random sampling. Willingness To Pay dapat diperkirakan dengan menggunakan pendekatan Contingent Valuation Method (CVM). Alat analisis pada penelitian ini menggunakan regresi linier berganda pada SPSS 16.

Hasil analisis penelitian menunjukan variable usia berpengaruh positif dan signifikan terhadap Willingness To Pay (WTP), variable pendidikan terakhir berpengaruh positif dan tidak signifikan terhadap Willingness To Pay (WTP), variable tingkat pendapatan berpengaruh positif dan signifikan terhadap Willingness To Pay (WTP), variabel biaya rekreasi berpengaruh positif dan signifikan terhadap Willingness To Pay (WTP) dan frekuensi kunjungan berpengaruh positif dan signifikan terhadap Willingness To Pay (WTP) pengunjung obyek wisata Pantai Pangandaran.

.

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ABSTRACT

This research aims to examineon how age, education level, income level, recreation fee and visit frequency affect on willingness to pay (WTP) of visitors inf Pangandaran Beach. This researchused primary data observedf 100 of respondentsconductedrandom sampling method. Furthermore, Wilingness to pay (WTP) predicted by Contignent Valuation Method (CVM) approach. In addition, this researchemployed Multiple Regression Model on SPSS16 as data analysis program.

The result of this research shows that age variable has positive and significant effect on willingness to pay (WTP), income level variable has positive and significant effect on willingness to pay (WTP), recreation fee has positive and significant effect on willingness to pay (WTP) and visit frequency has positive and significant effect on willingness to pay (WTP) of visitors in Pangandaran Beach.

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ACKNOWLEDGEMENT

All praise to the God Almighty Allah S.W.T the most gracious and merciful for His guidance and blessing during this research is conducted. Peace and salutation always be to the Prophet Muhammad peace be upon him altogether with his accompanies.

After the establishment of this study on “Analysis of Willingness To Pay For The Enviromental Improvement of Way Kambas National Park : Contingent Valuation Method (CVM)” the author gives special appreciation to the parties in supporting the accomplishment of this study. In particularly they are:

1. The respectable Dr. Nano Prawoto, SE.,M.Si., as Dean of Economics Faculty. 2. The respectable Alm. Dr. Masyhudi Muqorobin, SE.,Akt., M.Ec., as Director

of International Program for Islamic Economics and Finance UMY.

3. I would like to thank to my supervisors, Diah Styawati Dewanti, SE,.M.Sc and Dyah Titis Kusuma Wardani, SE., MIDEc for the continuous support of my undergraduate thesis, for the patience, motivation, enthusiasm, immense knowledge, and the guidance helping me in all the time of my thesis and writing it..

4. Dear all IPIEF lectures and IPIEF staff: Dr. Wahdi Yudhi, Diah S Dewanti, M.Sc., Yuli Utami, M.Ec., Dr. Firman Pribadi, Dr. Jaka Sriyana, Dr. Abdul Hakim, Mr. Hudiyanto, Ayif Faturahman, M.Si, Dr. Endah Saptutiningsih, Dr. Lilies Setiartiti, Hendrianto, M.Ec, Anggi Rahajeng, M.Ec, Mr. Umar, MA, Mr. Sahlan, Mrs. Linda Kusumastuti, SE and Mrs. Novi Diah, MM.

5. A special feeling of gratitude to my beloved parents; Mamah and Bapak (alm). Thank you so much for endless love, prayers and encouragement, trust, and all the things you have done to me since I was a little girl until I can finish my undergraduate studies.

6. I also thanks to my beloved brothers and sister Aris and Rena for their support, understanding and good wishes whenever I needed

7. The deepest thanks to all my colleagues, friends, and to some people that I cannot mention their names one by one who took part in making this thesis real.

8. For my boarding school Husnul Khotimah and my beloved frends ALUMNI16HK thank you for giving me a precious moments and friendship. 9. My classmates IPIEF 2013. Thank you for everything my brothers and sisters

from another family. My friends who assisted and accompanied me with the work discussed in this paper.

10.My friends from Economic studies 2013.

Yogyakarta, May, 4th 2017

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xi CONTENTS

TITLE PAGE ... i

SUPERVISORS AGREEMENT PAGE ... iii

AUTHORIZATION PAGE ... iv

CHAPTER II LITERATURE REVIEW ... 14

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6. Concept Willingness To Pay ... 22

7. Economic Valuation ... 23

8. Contingent Valuation Method ... 28

9. Local Revenue ... 35

B. Previous Research ... 38

C. Hypothesis ... 44

D. Research Framework ... 45

CHAPTER III RESEARCH METHODOLOGY ... 46

A. Objective of Research ... 46

B. Respondents Characteristic of Pangandaran Beach ... 60

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CHAPTER V RESULT AND ANALYSIS ... 73

A. Research Variable Statistics Description ... 73

B. Clasical Assumption ... 75

1. Multicollinearity Test ... 75

2. Heteroskedasticity Test ... 77

3. Normality Test ... 79

C. The Regression Estimation Result... 80

D. T Test (Variable Interpretation) ... 81

1. Age Variable ... 81

2. Income Level ... 82

3. Recreation Fee ... 83

4. Visit Frequency ... 84

E. F Test ... 85

F. R2 Test (Determination Coefficient) ... 86

G. Discussion ... 86

CHAPTER IV CONCLUSION AND SUGGESTION ... 94

A. Conclusion ... 94

B. Suggestion ... 95

REFERENCES ... 97

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LIST OF TABLE

Table 4.1.Respondent of Pangandaran Beach Based on Gender ... 60

Table 4.2.Respondent of Pangandaran Beach Based on Age ... 61

Table 4.3.Respondent of Pangandaran Beach Based on Last Education ... 62

Table 4.4.Respondent of Pangandaran Beach Based on Job ... 63

Table 4.5.Respondent of Pangandaran Beach Based on Income Level ... 63

Table 4.6.Respondent of Pangandaran Beach Based on Recreation Fee ... 65

Table 4.7.Respondent of Pangandaran Beach Based on Visit Frequency ... 66

Table 5.1.Variable Statistics Description ... 68

Table 5.2.The Value of Tolerance and VIF ... 76

Table 5.3.Glejser Test ... 78

Table 5.4.Normality Test ... 80

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LIST OF FIGURE

Figure 1.1. The Amount of Visitors in Pangandran District Tourism ... 7

Figure 2.1. Total Economic Value ... 25

Figure 4.1.Pangandaran District Map ... 58

Figure 4.2.Perception of Enviromental Condition ... 67

Figure 4.3.Respondent Perception About Cleanless of Environmental ... 69

Figure 5.1.Scatterplot ... 77

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ABSTRACT

This research aims to examineon how age, education level, income level, recreation fee and visit frequency affect on willingness to pay (WTP) of visitors inf Pangandaran Beach. This researchused primary data observedf 100 of respondentsconductedrandom sampling method. Furthermore, Wilingness to pay (WTP) predicted by Contignent Valuation Method (CVM) approach. In addition, this researchemployed Multiple Regression Model on SPSS16 as data analysis program.

The result of this research shows that age variable has positive and significant effect on willingness to pay (WTP), income level variable has positive and significant effect on willingness to pay (WTP), recreation fee has positive and significant effect on willingness to pay (WTP) and visit frequency has positive and significant effect on willingness to pay (WTP) of visitors in Pangandaran Beach.

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1

CHAPTER I

INTRODUCTION

A. Background

One of the aims of economic development is to provide welfare for all

Indonesian people. Tourism in Indonesia has been considered important

because of the tourism sector could reduce unemployment and also became

one of the driving engine of the economy. Tourism sector has trickle-down

effect to another sector such as craft industry, food, hospitality, travel

agencies so that it can surely afford create jobs and increase income

(Rahardjo, 2002). Law No. 9 of 1990 on Tourism, explain construction

tourism as part of national development has the objective, among others

widen and spread evenly business opportunities, employment and welfare.

Thus, development in the field of tourism has an impact to increase the

income which could improve the community welfare.

Indonesia is one of an archipelago country that has a wide range of

beauty, both of land and sea are attractive to be enjoyed. In every area of

Indonesia has a typical characteristic that is exhibited, such as performing

arts or cultural diversity. Because of the characteristic that possessed in every

area so it creates some attractive tourist spot to visit. For example Bali, Bali

is one of famous tourist spot in Indonesia Bali is popular foreign tourist

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Another tourist spot that popular in Indonesia especially West Java

Province is Pangandaran Beach, Pangandaran beach have so many tourist attraction they are Pasir Putih Beach, Green Canyon and cultural art festival such as Jaipong. Another tourist attraction in Indonesia is Gili Island that located in

Lombok West Nusa Tenggara Province. The Gili is popular for scuba diving and snorkeling but also for relaxing, swimming and partying.

Tourism can be defined as a journey from one place to the other place that

is temporary, which is usually carried out those people who want to refresh their

mind after the hard work and spent the time with their family to recreation. The

one reason why people traveled religious impulse, such as recreation to some

religious places to explore the science of religion.The other reason why people

traveled is to doing sport activity or just watch some sport event (Spillane in

Maryam 2011).

Tourism development in some region brings many benefits to the local

community, such as communities can establish economic enterprises around

tourism. In terms of government, tourism activities can support economic growth

and tourism activity can also provide income of the area that came from the tax,

parking fees, tickets, and can bring in foreign exchange from the tourist that

visited. The other benefit of tourism is increasing productivity and income of

household in tourism area, they can build some business such as Hotel and

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Selviana (2012), the United Nations resolution had been said that tourism

as a basic and desirable human activity deserving of the praise and

encouragement of all people and government. Tourism can be defined as an

activity that has multiple dimensions of the circuit a development process.

Development of the tourism sector concerning on social, cultural,

economic and political (Spilalne, 1994). This is in line with contained in Law

No. 10 of 2009 on tourism which states that the implementation of tourism

intended to increase national revenue in order to improve the welfare of the

country, expand and flatten business opportunities and jobs, spur regional

development, introduce and utilize objects and tourist attraction in Indonesia as

well as fostering a sense of patriotism and relationship between nations. Tourism

also gives foreign exchange to the country that is cames from the arrivals visitor

that visited so it will increase the national income of country.

According to Baskoro (2013), the construction can be used as a means to

create awareness of national identity and diversity. Develop and improve existing

tourism sector in each region is a part of development. Efforts to foster

development in the tourism sector should be supported by adequate resources and

good management. Element of natural resources related to the development of

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The impact of tourism on economic sectors according to the WTO in

Selviana (2012) tourism provides the following benefits, they are: (I) Increasing

the local product of agriculture, so the development of tourism and agricultural

development will open up a golden opportunity for farmers to promote the crops.

Tourism encourages farmers to innovate, learn new techniques in food

production and also spurred food management those will encourage farmers to

have self-sufficient. (II) Accelerating the development of location or land that is

less productive, such as the construction of tourism facilities in the area or

dryland greening so it can be economically valuable and more useful. (III)

Stimulate interest and demand for exotic products and typical for a region or

country, usually for the area that opened for tourism purposes, there must be a

seed that is relied upon, such as crafting unique, exotic scenery, and others. If the

demand of the product is increase it will inflict exports and that phenomena will

create the development of region economy and also the country. (IV) Increasing

the number and demand for fishery and marine products. Tourist who visit

frequently use fishery products, thus increasing the demand for fish on fishermen

and I will increase their income. (V) Encourages the development of the region

and the creation of new economic zones. (VI) Avoid concentration of people and

spread economic activity. (VII) The deployment of infrastructure in remote

regions. (VIII) Management of resource management as a source of revenue for

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In the side of social sector the benefits of tourism according to the WTO

in selviana (2012), they are: (I) the differentiation of social structure life

positively are (a) the transition and transformation of labor from the agricultural

sector to the services sector, including tourism, (b) modernization of agricultural

sector, (c) the development of the craft industry, (d) a decrease in the gap

between the level of revenue, (e) equality of educational opportunities among

social stratification. (II) modernization of the family gets a new status of women

in traditional peasant family. If women obtain and have the opportunity to work

in the field of tourism, it will encourage other families to change perspective.

They will be honored women. (III) expand the horizons and perspectives of the

community to the outside world, in the presence of tourists in some sites will

change the attitude and outlook of the local society. Society is no longer negative

prejudice against tourists who come before knows well.

Tourism has provided a sizeable foreign exchange for the country.

Indonesia as the largest archipelago country in the world with 17,508 islands or

called as a maritime country, because the growth of tourism in Indonesia is

always on top of economic growth so Indonesia has realized the importance of

the tourism sector Indonesian economic development. Since 1978, the

government will continue to increase tourism in Indonesia. This is based on TAP

MPR No. IV / MPR / 1978, that tourism needs to be upgraded and expanded to

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Coaching and development of travel is done by taking into account the

preservation of cultural and national identity. For that we need to take steps and

arrangements and target based on integrated policy, among other areas of

promotion, provision of facilities and the quality and continuity of service.

Based on Indonesian Statistics on the international arrivals to Indonesia in

2011 reached 7.6 million it generated foreign exchange earnings of US$ 8.55

billion or it is increased 12.51% compared year 2010, while in 2010 the total

arrivals is 7.00 million with foreign exchange earnings is 7.60 billion.

Pangandaran is one of the tourism destination owned by West Java,

especially in the district administration of Pangandaran. The capital of

Pangandaran district is Parigi. In the north side, the district borders with district

of Ciamis and Banjar City. In the east side, Pangandaran borders with Cilacap

regency. In the south side, Pangandaran district borders with Indian Ocean. And

in the west side, Pangandaran district borders with Tasimalaya city. Pangandaran

is a division of Ciamis district.

Pangandaran has potential of economic in tourism sector. Some of the

featured attractions in the county is already well known by foreign tourists,

among other attractions are Pangandaran beach, Batukaras beach, Madasari

beach, Batuhiu beach, nature reserves and tourist Penanjung Taneuh vinegar or

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Based on national spatial context on the National Spatial Plan (RTRWN)

or in Indonesia is Rencana Tata Ruang Wilayah Nasional, in PP no 47 year 1997

on RTRWN, Pangandaran and surrounding area is one of the leading areas of

tourism in West Java. In West Java Governor Regulation No. 48 Year 2006 on

Regional Tourism Development Master Plan (RIPPDA) West Java Province,

stated that the Pangandaran Beach Recreation Area is one of nine Area Tourism

seed in West Java. As well as in West Java Perda No. 22 Year 2010 concerning

RTRWP West Java in 2009, Pangandaran area designated as a strategic area of

the province.

Pangandaran as one of the tourist sites is quite advanced with provided

various complete facilities so it makes the tourists comfortable. Pangandaran also

provide a considerable contribution to local revenue in 2012, Pangandaran beach

give revenue to the district as IDR 2.380.237.000. However the rate may not

correspond with the government target which IDR 2.750.000.000 per year.

Although Pangandaran beach has not achieve target, but the numbers that

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Source: Departement of Tourism, Industry and SMEs of Pangandaran

FIGURE 1.1

The Amount of Visitors in Pangandaran District Tourism

From the graph above show that the visitors of Pangandaran Beach tourist

object has more visitors than other tourist object. This graph shows that

Pangandaran Beach has uniqueness and beauty that can increase the interest of

visitors so they are more prefer to visit Pangandaran Beach. From the data above

show that the vistors of Pangandaran beach decrease in year 2014 with amount of

visitors 952.095 but in year 2015 the visitors of Pangandaran Beach increase with

amount 1.838.646.

The number of visitors who visit can affect environmental conditions, if

visitor not aware condition of environment, if the numbers of visitors keep 2013

2014

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increase the environmental conditions will be under threat and hygiene is not

maintained.

This was shown by the number of garbage around the coast of

Pangandaran, the visitors littering regardless of the surrounding environment.

The other problem that faced are many facilities have not been maintained well

and some facilities have not been met.

For the maintenance improvement of fiber quality in Pangandaran beach

and environmental quality improvements that maintained continuity of society

should have a stake in preserving the coastal environment, and it requires a fund.

Levies imposed on visitors is used for operational funds and used to improve the

quality of the environment and development of Pangandaran Beach.

This study was conducted to determine how the visitor's ability to pay in

order to improve environmental quality of Pangandaran Beach using Contingent

valuation model (CVM). Contingent Valuation Model (CVM) is one of a

methodology based on a survey in order to determine and estimate the magnitude

of public appraisal of goods and services as well as comfort. Another objective of

the Contingent Valuation Model (CVM) is to determine the willingness to pay

(willingness to pay) of the community and a desire (willingness to accept). This

technique is based on the assumption of ownership rights, therefore, if the

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resources, so the relevant measurements is the maximum willingness to pay to

obtain goods and services.

Conversely, if the individual has that natural resources, so the relevant

measurements is the most minimal desire to receive compensation for lost or

damaged of natural resources that he had (Garrod and Willis, 1999, in Nugroho,

2012). Contingent valuation method (CVM) can used as (1) estimate the

willingness to pay of individuals to change the quality of travel; (2) be able to

assess the trip with a lot of tourist destinations; (3) be able to assess the pleasure

of using environment both users and non-users of natural resources; (4) items

whose value is too low can be assessed by this method (Mitchell and Carson,

1989; Lee et al, 1998, in Nugroho, 2012).

According Sasmi (2016), using the contingent valuation method (CVM),

last education, age, income level, and vocation fee variable influence willingness

to pay (WTP) of the vistors of Goa Cemara Beach tourism object. The previous

study that used the same method, showed that last education, age, invome level,

and vocation fee variable influence willingness to pay (WTP) in the preservation

of Goa Cemara Beach.

According to (Saptutyningsih 2012) in study to identify the highest air

pollution areas and to estimate household marginal Willingness To Pay (WTP)

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sub districts in Yogyakarta City and one sub district in Gunungkidul have highest

concertation of particle polution (PM10). The result hedonic price method

conclude that by adopting a two stage estimation procedure an increase 1%

increase in the level of PM10 reduced property price in the study area by 0.32%.

marginal implicit price for reducing PM10 is IDR 957.900,00. The household are

willing to pay an additional amountof 1.34 percent for a reduction in PM10 by

1%.

In order to develop tourism in district of Pangandaran Beach, need

cooperation between the government, communities and institutions. The tourism

development is important to maintain the beauty of Pangandaran Beach and also

to increase the number of tourist that visit to Pangandaran Beach. So that the

author took the title "Factors that Influence Willingness To Pay Visitors of Pangandaran Beach Tourism Using Contingent Valuation Model".

B. Limitation of Research Problem

In order to conduct the research which is consistent with the objectives, hence

the writer sets the following restriction:

1. The research is done only in Pangandaran district, especially in the object of

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2. The dependent variable of this research is willingness to pay and the

independent variable in this research are the visitor of Pangandaran beach,

travel cost, age, the level of income, education and visit frequency.

3. This research uses Contingent Valuation Method (CVM) and regression

analysis in the research process. CVM has a major drawback, namely the

emergence of bias, bias may result from wrong strategy and study design.

Thus, it is expected to further research can use different methods so that

research results can be compared with previous studies.

4. This study is not using binding game or dicotomous choice.

C. Formulation of Problem

In this research, the writer has some formulation of problems, they are:

1. How to measure the size willingness to payvisitors of Pangandaran Beach.

2. Will age influence visitors willingness to pay in Pangandaran Beach?

3. Will education level influence visitors willingness to pay in Pangandaran

Beach?

4. Will level of income influence visitors willingness to pay in Pangandaran

Beach?

5. Will recreation fee influence visitors willingness to pay in Pangandaran

Beach?

6. Will visit frequency influence visitors willingness to pay in Pangandaran

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D. Research Objectives

Based on the introduction and problem statement, the objectives of the

research are:

1. To know the size of willingness to pay a visitors Pangandaran Beach tourism

2. To know the influence of age on the willingness to pay a visitor of

Pangandaran Beach.

3. To know the influence of last education on willingness to pay a visitor of

Pangandaran Beach.

4. To know the influence on the income level of willingness to pay a visitor of

Pangandaran Beach.

5. To know the influence of the recreation fee to the willingness to pay a visitor

of Pangandaran Beach.

6. To know the influence of the frequency of visit to the willingness to pay a

visitor of Pangandaran Beach.

E. Research Benefit 1. Theoretical benefit.

a. For researcher

To increase knowledge and insight and apply knowledge that gained in

college with the condition of environment.

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This research is hopefully useful as reference material for research studies

related to the willingness to pay (WTP) visitor of Pangandaran beach or

related about willingness to pay.

2. Practical Benefits. a. For government

This research is expected to be material information for the government

and as consideration for government to take development planning on

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CHAPTER II

LITERATURE REVIEW

A. Theory

1. The Meaning of Tourism.

Tourism is came from Sansakerta language that is “pari” means

smooth, the means of word smooth is had a high manners and “tourism” is a

visit or a trip to see, hear, and enjoyed, and learn something. So the meaning

of tourism is something that presents visit that had a manners and virtuous.

Based on Law Number 10 Year 2009 in Kartika (2010) about tourism,

tourism is a wide range of tourist activities and supported a variety of

facilities and services provided by communities, businesses, governments, and

local governments. Based on tourist motivation and attractions of the region

so travel destination tourism activities can be divided into two major groups,

they are bulk tourism and special interest tourism. If the first type of tourism

is more emphasized on the aspect of pleasure, then the emphasis on the

second type is for experience and knowledge aspects.

A trip is considered as sightseeing trips if they meet three they are

temporary, voluntary not imposed, and it does not work that are generating

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Tourism is a temporary movement with the purpose is to break from

the routine work activities and out of his or her place. Based on Fandeli

(2000) in Yuningsih (2005) tourism is the embodiment of human life layout

creation, art, history of the nation and place natural or condition that would

have appeal to tourist. While the natural attraction that are the attraction from

the tourist appeal of natural beauty and resources and enviromental system.

Definition of tourism according to the WTO (World Tourism

Organization) in Pitana (2009) are the various activities performed by people

who travel to stay out of the ordinary environment and not more than one

consecutive year for pleasure, business and other purposes.

There are important factors in terms of tourism that must be met in a

definition of tourism. The factors that mean according Yoeti (1995) in

Selviana (2012), are :

1) The trip is done temporary.

2) The trip was carried from one place to another place.

3) the journey must should always be associated with recreation.

4) A person who made the journey does not aim to make a living or

make something to work in a place that she or he visited and the

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2. The Kind of Tourism.

Every tourists has different motives in travel. The difference purpose

resulted various types of Tourism. According Spillane (1985), in particular,

the type of tourism can be classified as follows:

a. Pleasure Tourism

This form of tourism is done by people who leave their homes

to tour, looking for a new fresh air, to calm nervous tension, to see

something new, enjoy the beauty of nature and to know the history of

the local people. This type of tourism involves many elements

gratification levels based on the character and nature that different.

b. Recreation Tourism

This kind of tourism is done by people who want to take

advantage of his day of rest, to recover the physical and spiritual

freshness and want to refresh physical fatigue and they stay as long as

possible for the enjoyment of the necessary (such as, in the beach or

in the mountains).

c. Cultural Tourism

Cultural Tourism is usually characterized by a series of

motivations, such as the desire to learn the centers of teaching and

research, to learn the customs, institutions, and ordinances of life of a

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d. Sport Tourism

This kind of tourism is aimed for those who want to practice by

her or his self for many kinds of sports. This type of tourism is

conducted in the presence of major sporting events like the Olympic

Games, World Cup, and others.Where these events not only attract

the athlete but also the audience.

e. Business Tourism

This type of tourism is a trip for something that related to the

job or position that does not give the tourists a choice selection of

destinations and travel time.

f. Convention Tourism

Conventions are often attended by hundreds and even

thousands of participants who usually stay a few days in the city or

the host country.

Mappi (2001: 30-33) in Ermayanti (2012), the object of tourism is

devided into three catagories, they are:

a. Natural attractions, for example: sea, beaches, mountains, lakes,

rivers, fauna, flora, nature reserves, protected areas, and others.

b. Cultural attractions, for example: traditional music, traditional

clothing, ceremonies of birth, traditional dances, marriage customs,

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heritage, cultural festivals, traditional performances, local customs,

museums and others.

c. Artificial attractions, such as: facilities for sports games (kites),

entertainment (comedy, magic or acrobatics), recreation parks,

shopping centers and others.

3. Element of Tourism.

They are five element of industry tourism that are important

(James.J.Spilanne,1987) they are :

a. Attractions

Attraction can be classified into two parts, they are site

attraction and event attraction. Site Attractions is a permanent

attraction and the location is permanent that is the tourist places in

tourist destinations such as the zoo, museum and palace. While the

event is attractions that are temporary, and location can be changed

and moved as easily as fairs, festivals, or performing arts area.

b. Facilities

Facilities tend to be oriented on the appeal at a location

because the facility must close from tourism location. During his or

her stay in the tourist areas, tourists need a place to sleep, food and

drink. Therefore, it is necessary lodging facilities and support industry

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c. Infrastructure

If attractive tourist destination more interesting it will raise the

number of tourists that visiting, then by itself will encourage the

development of infrastructure.

d. Transportations

Advances in the field of transport is very important in

supporting the growth of tourism, because it determines the distance

and time of journey some travel, transportation either by land, air and

sea transport.

e. Hospitality

Tourists who were there in tourist areas require assurance of

security especially for foreign travelers who require an overview of

destinations that they will visit.

4. Forms of Tourism.

Based on Pendit (1999) forms of tourism are classified into five

catagories, they are:

a. Based on the origin of tourists

If tourists come from domestic tourists means that only moved

temporarily within the territory of his own country for traveling is

called domestic tourists. Meanwhile, if the tourists come from abroad

its called international tourists.

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Tourist that comes from abroad will bring foreign currency.

Where foreign exchange revenue has positive effect on the balance of

foreign payments of a country that is visited by tourists, this is called

active tourism.

While the journey of a citizen to abroad will negatively affect

the country's balance of foreign payments and its called passive

tourism.

c. Based on Period

The arrival of tourists in a region or country are also calculated

according to the length of stay in the area or the country that

concerned. This raises a term that called the short-term tourists and

long-term tourists.

d. Based on The Amount of Tourists

This form of tourism is distinguished by the number of tourists

who come, whether tourists come alone or with a group. So it is

appears the term that called single tourism and group tourism.

e. Based on instruments measuring used

Tourism is divided into air tourism, marine tourism, tourist

train and car, depending on travelers using any vehicle.

5. Benefits of Tourism.

Tourism give a positive impact on development sectors, they are:

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Tourism can stimulate economic growth with the growth of

some particular economic efforts that support each other, it can expand

the basic economy of a country.

b. Maintenance and Utilization of the Environment Side

Development of tourism if developed properly and efficiently

and see the effects on the environment so it will make the environment

or local tourism good or environmentally friendly. Because tourists

who visit the area want the new atmosphere and clean and healthy

environment. Conversely, tourism development that has less organized

and not efficient will destroying the environment. If it happens, it will

have an impact to tourists who want to visit these tourist areas.

c. Cultural Side

One of the factors that tourists visited some area of tourism is

to explore or admire the art and culture of the areas visited and satisfy

curiosity.

d. Expanding job competence

The tourism industry is the industry that are labor intensive.

When a series of labor in the industry it is supporting tourism industry

such as souvenir stores, hotels, handicrafts and so on, then the amount

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e. Extending the values of social life and knowledge

The relationship between visitors and the society around

attractions tourism will create new values in the sense of expanding

the horizon of personal views on values of other life, fiber absorption

of new knowledge.

f. Supporting the improvement of health and work performance

Perceived busyness of everyday can lead boredom, of course it

raises the desire crave a new atmosphere, a new environment even if

only for a while. Because people want regardless of saturation.

6. Concept Willingness To Pay.

Willingness to pay is a method to measure how much the price of

losses incurred due by population, but we can not directly determine the

market price (Suparmoko 2008 in Damar 2015). Willingness to pay is the

maximum amount that are willing to be paid by someone to obtain good

quality services.

Environmental economic assessment is to obtain the benefits and

costs of an activity that is impacting on the environment. The benefit is an

incredible word which economists provides technical sense. When the

quality of the environment is good so the people can take a benefit,

otherwise when the environment becomes worse in quality so the value or

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Willingness to pay is also referred to as the maximum price

consumers are willing to pay for goods and services and measure the

consumers value to pay for goods and services, in other words can be

defined to measure the marginal benefit from consumer (Fembriantyerry

P in Prasetyo 2012).

The consumer surplus is the difference between the amount paid by

the buyer for the product and willingness to pay. Consumer surplus arises

because consumers received more than they paid and this bonus is rooted

in the law of diminishing marginal utility. The emergence of consumer

surplus it is because of consumers pay for each unit based on the value of

the last unit. The consumer surplus reflects the benefits because they

could buy all the units of goods at the same low price level. In simple

terms the consumer surplus can be measured as an area located between

the demand and the price line (Samuelson and Nordhaus in Prihadi,

2015).

7. Economic Valuation.

Most of the economic value associated with the tourism service is

what economists call non-market value. There are no formal markets for

such things as recreation opportunities, clean air, and wildlife habitat so

there are no clear “prices” for these goods as there are for market goods

like clothing and cars. Economists must measure the value of non-market

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done either indirectly or directly. Indirectly measures of non-market value

offer the value of the good in question by using the expenditure as an

approximation such as travel cost method. A direct method to measure

non-market values are also called stated preference because these

techniques involve directly asking survey respondents about their

willingness to pay or their preferred alternative such as contingent

valuation method. CVM is a method whereby survey respondents are

asked to indicate their willingness to pay for a non-market good like a

recreation experience or passive use values such as existence value, option

value or bequest value (Haefele, et al., 2012).

Economic value is a measure of what the maximum amount an

individual is willing to forego in other goods and services in order to

obtain some good, service, or state of the world. This measure of welfare

is formally expressed in a concept called Willingness to Pay (WTP). A

common difficulty in understanding economic valuation is distinguishing

between what something is valued by individuals and what its economic

value really is (Lipton, et al. 1995).

According to Lipton (1995), the characteristics of Economic Value

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a. Products or services have value only if human beings value them

directly or indirectly.

b. Value is measured in terms of trade-offs and therefore relative.

c. Typically, money is used as a unit of account.

d. To determine values for society as a whole, values are aggregated

from individual values.

Total economic value, the most common and most appropriate

framework for aggregating the value of ecosystem goods and services

(including non-market goods and services) is total economic value

(TEV). This approach does not necessarily assess the total value of an

ecosystem, but rather allows changes to be calculated for all values (use

and no-use values) as sociated with one or several ecosystem functions.

TEV can be assessed as willingness to pat (WTP) or willingness to

accept (WTA) payment. WTP is a more common method, as more tools

for estimating economic value are relevant to this approach (Horowitz

(44)

Source: Pearce, Atkinson and Mourato (2006)

FIGURE2.1 Total Economic Value

Direct use value refers to the value derived from the direct use

or interaction with ecosystem-based provisioning services, for

example food and water, and some cultural services for example is

recreation. Indirect use value refers to the value derived from

regulating services for example is climate control, waste assimilation,

water quality, and supporting services for the example is nutrient

cycling. Option value refers to the value derived from the option to

make use of a resource in the future. Non-use (also referred to as

“passive use” values) are derived from benefits associated with a

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value (sometimes referred to as intrinsic value), which is the value

derived from knowing something exists; bequest value, which is the

value derived from being able to pass something on to another

generation; and altruism value, which is derived from giving

something to somebody else. There is a great deal of debate regarding

the validity and accuracy of non-use values, but few economists would

deny their existence (Cummings 1995); (Johansson 1992); (Loomis, et

al. 2000).

Economic valuation of environmental goods and services arise

from increased demand for environmental goods and services due to a

decrease in the availability of resources and the natural environment

from time to time.

Economic valuation related to specific analytical methods to

obtain a quantitative value of goods and services produced by natural

resources and the environment both based on the market value and

non-market value.

Economic valuation is defined as an attempt to provide a

quantitative value of goods and services produced by natural resources

and the environment, as well as the market value and non-market

value. Economic assessment of economic resources is an economic

tools that uses standard valuation techniques to estimate the monetary

(46)

purpose of economic assessment is used to indicate the relationship

between natural resource conservation and economic development.

Hence, economic valuation can be an important equipment to increase

an appreciating and public awareness of the environment Fauzi (2005).

Economic valuation method estimates the economy of a nature

tourism based on ratings given to each individual or society to the

costs incurred to visit a natural tourism, whether it’s an opportunity

cost and direct cost incurred such as transportation, accommodation,

consumption and others. These valuation techniques were attempted in

this research to estimate the economic value of Pangandaran Beach,

West Java.

8. Contingent Valuation Method (CVM).

In general, economic valuation of resources techniques that are

not marketable (non-market valuation) can be classified into two groups.

The first group is a valuation technique that relies on implicit price

where the willingness to pay (WTP) is revealed through the developed

model. This technique is often referred as revealed WTP. Some

technique that included in this first group is the Travel Cost Method and

Hedonic Pricing. Travel Cost Method is commonly used to analyze the

demand for tourist facilities. By knowing the pattern of costs incurred by

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given values by visitors to the tourism or attractions sites. The average

tourist spot that can be evaluated is related with nature and the

environment. Hedonic Pricing assumes that the worse an environment

can affect a property's value. A simple example is the price of land in a

district or region can decrease because the land in that area is prone to

flooding or landslides.

The second group is a valuation technique that is based on a

survey in which the willingness to pay or WTP is obtained directly from

respondents, which the respondents directly expressed orally or in

writing. The popular technique is Contignent Valuation Method

technique and dichotomous.

a) Concept Contingent valuation Method

Contingent Valuation Method (CVM) is a method of

that use survey technique to ask people about the value or the

price that they give for commodities that do not have market

such as environmental goods (Yakin, 1997 in Annisa

Merryana, 2009). CVM is used direct approach that basically

asking the community how much Willingness to Pay (WTP)

for additional benefits or how much Willingness to Accept

(WTA) as compensation for environmental damage to the

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WTP.CVM approach first introduced by Davis (1963) in the

study of the behavior of hunting in Miami. This approach can

technically be done in two ways, first by experimental

techniques through simulations and games. Second, the survey

technique.

In economics knowledge, the willingness to pay (WTP)

is the maximum amount that someone would be willing to pay,

sacrifice or exchange to receive good or to avoid something

undesirable, such as pollution. This term is in contrast with

willingness to accept payment (WTA), which is the minimum

number of individuals are willing to accept and deliver the

goods or to accept something undesirable (Turner et al, 1994 in

Sasmi, 2016).

b) Advantages and disadvantages Contingent Valuation Method

According to Hanley and Spash in Prihadi, 2015, the

advantages possessed by CVM approach in estimating the

economic value of an environment are as follows:

1. Can be applied forced in all conditions and has two

important things are often the only technique for estimating

the benefits and can be applied to a variety of

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2. Can be used in a wide variety rating of environmental

goods around the community.

3. Compared with another environmental technique

assessment, CVM has ability to estimate the value of

non-users, with CVM, someone might be able to measure the

utility from environmental users, even though it is not use

directly.

4. Although the CVM technique need competent analysis, but

the result of studies is not difficult to be analyzed and not

difficult to elaborated or explain.

And the weaknesses by using CVM technique is the

emergence of bias in data collection. Bias in the CVM

according to Hanley and Spash in Amanda, S. (2009) are as

follows:

1. Bias strategic because of respondent relatively gave a small

value of WTP because the reason that there were other

respondents who would pay for efforts to improve

environmental quality at higher prices can occur.

Alternative to reduce this bias strategy is through the

explanation that everyone would pay the average bid value

or emphasis hypothetical nature of the treatment. This will

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2. Bias design of CVM study includes the way information is

presented, the instructions given, the question format, and

the number and type of information presented to

respondents.

a. of survey.

3. Bias that related to the condition of the obligation of

respondents (Mental Account Bias) this bias is related to

decision-making step process of an individual in deciding

how big the income, wealth, and the time that can be spent

on specific environmental objects within a certain time

period.

4. Hypothetical market error occurs when the facts are asked

to respondents in a hypothetical market make the responses

of respondents different from the concept that.

c) The Stage Study of Contingent Valuation Method

There are several stages in the application of CVM

analysis according to Hanley and Spash in Amanda, s. (2009),

they are:

1. Make Hypothetical Market

The initial stage in the running CVM is create

hypothetical market and questions about the value of

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construct a reason why the public should pay for a good or

service environment where there is no currency value in

determining the price of goods or services and

environment. In the hypothetical market must describe how

the mechanism of payments made. Scenario activity must

be clearly outlined in the questionnaire so respondents can

understand about environment and community's

involvement in the plan. Moreover, in the questionnaire

also need to explain the changes that would occur if there

is a public desire to pay.

2. Obtain the deals value of WTP

In determining the value of supply, they’re several

methods to determine the value of supply, those are:

(a) Bidding Game, that is bargaining method

(b) Open-Ended Question, that is open question method

(c) Close-Ended Question, that is close question

(d) Payment Card, a payment method as determining the

value.

(e) Referendum, the referendum, this method is use some

payment suggested to respondents. When the

questionnaire is completed made, than do a sampling.

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the intermediary telephone, or mail. Interview with the

telephone has become the last option considering the

collection of information by telephone about some

goods is quite difficult, related to time constraints. An

interview by letter quite often do but has a bias in the

form of no response (non-response bias) or a low

response rate (low response rates). Interviews using

trained staff allows for more detail questions and

answers but there is possibility of bias that made by

official.

3. Estimate value of WTP

After the data of WTP collected, the next stage is

determining middle value (median) and the average (mean)

of the WTP. The median value is used when the range

value supply is far away, for example from 30 respondents,

29 respondents have a value of deals IDR.15000 but there

is one respondent that has a deal value IDR.1.000.000, if

the calculation of the deals value using average, then the

value will be higher than actual, because of that so use

middle value because not affected by a large range of deals.

The median value deals is always smaller than the average

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The average value is intended to determine how much

the value of WTP of individuals in the survey. Alleged

average of WTP can be calculated by the formulation:

EWTP =

Where :

EWTP = Average Estimate

Wi = The value of WTP to-i

N = Total Respondents

I = Respondents to-I that willing to pay

(==1,2,…n)

9. Local Revenue.

Local revenue is all revenue received by the region from sources

within its own territory which are levied according to local regulations in

accordance with the prevailing laws and regulations (Halim, 2004: 96).

Local revenue sector plays a very important role, because through this sector

can be seen how far a region can finance government activities and regional

development. Source of local revenue, are:

Increased Local Revenue must be done by the local government in

order to be able to finance its own needs, so the dependence of local

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can be independent. In Act No. 33 of 2004 on the financial balance between

the central government and regional governments in chapter V (five)

number 1 (one) it is mentioned that the original revenues are sourced from:

a. Local tax

According to Law No. 28 of 2009, Regional Tax, hereinafter referred to

as Tax, is a compulsory contribution to the Region owed by an

individual or a coercive body under the Act, without obtaining direct

remuneration and used for the purposes of the Region for the greatest

possible prosperity people. Based on Law 28/2009, district / city taxes

are divided into the following, Hotel Taxes, Restaurant Taxes,

Entertainment Taxes, Advertising Taxes, Street Illumination Taxes,

Non-Metallic and Rock Mineral Taxes, Parking Taxes, Ground Water

Tax, Swallow's Nest Tax , Land and Rural Land and Urban Tax, and

Tax on Land and Building Rights Acquisition. As with most taxes, local

taxes have a dual role: As a source of regional income (budegtary), As a

regulator (regulatory).

b. Levy Area

The central government re-issued regulations on Regional Taxes and

Levies, through Law No. 28 of 2009. With this Law revoked Law No.

18 of 1997, as amended by Law No. 34 of 2000. The application of new

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income, but on the other hand there are some sources of local revenue

that must be removed because it can not be again collected by the

region, especially from local levies. According to Law Number 28 Year

2009 as a whole there are 30 types of user charges that can be collected

by regions that are grouped into 3 classes of levies, namely general

service levies, business service fees, and certain licensing fees.

Public Service Levies are services provided or provided by the local

government for the purpose of interest and general benefit and can be

enjoyed by individuals or entities.

Business Service Levies shall be local levies as payment for business

services specifically provided and / or provided by the local government

for the benefit of individuals or bodies.

Certain Licensing Levies are regional levies as payment for the granting

of certain licenses specially granted by local governments for the

benefit of individuals or bodies.

c. The result of separated property management of the property

The result of the management of separated property of the region is the

regional revenue derived from the separated area wealth management.

Law No. 33 of 2004 classifies types of regional wealth management

results that are disaggregated, broken down according to the income

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regional / local-owned enterprise, share of profits on capital

participation in state-owned enterprises / SOEs and the share of return

on Investments in private-owned companies and community groups.

d. Other Original Regional Original Revenue

Law Number 33 Year 2004 describes the Original Regional Original

Revenue, provided for budgeting of regional revenue not included in the

type of tax and the result of separated regional wealth management.

This revenue is also a regional revenue derived from others belonging to

the local government. Law number 33 of 2004 classifies that included in

the original revenues of legitimate areas include ;The proceeds from the

sale of regional assets are not separated. Current account service.

Interest income. Profit is the rupiah exchange rate against foreign

currency.

Commissions, deductions, or other forms as a result of the sale,

procurement of goods or services by the government

B. Literature Review

This previous study include studies that have been conducted by other

researcher in the form of regular studies, thesis and journal this existing

research has underpinned the writer in the preparation of the thesis, while the

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The research that has been done by Sasmi (2016) with the title “The

Factors that influence Willingness to Pay the Visitor of Goa Cemara with

Contingent Valuation Method Approach”. The purpose of this research is to

analyze the influence of level of income, age, education and cost of vocation

on Willingness to Pay the visitor of Goa Cemara beach. This research is use

primary data that spread to 146 respondents with random sampling technique.

The Willingness to Pay is predicted by Contingent Valuation Method (CVM)

in Goa Cemara beach. Based on the result of this research found that age is

positive influence and has a significant on Willingness to Pay (WTP), the

education variable is negative influence and significant on Willingness to Pay,

and level of income variable is positive influence and significant on

Willingness to Pay (WTP).

The research that has been done by El-Bekay andMoukrim (2013)

with the title “An economic Assessment of the Ramsar Site of Massa

(Morocco) with trevel cost and contingent valuation method” .As the only

protected area in the whole south west of Morocco, the Souss Massa National

Park (SMNP) is characterized by a remarkable biodiversity, with more than

300 plants species, 250 bird species, 20 mammal species and also by the high

diversity of its ecosystems, such as the Aragniaspinosa forest, steppes, dunes

and coastal wetlands. This park can play a leading role in the region by

enhancing its ecotourism potential and therefore contributing to its economic

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recreational value, one popular area, the RAMSAR site of the Estuary of

Massa River (EOM). It is located 50 km from the urban center of Agadir City

and it attracts about 30,000 visitors a year. To determine its recreational value,

the contingent valuation method and travel cost method were applied. The

results from 480 surveys, conducted during 2010, showed that the consumer

surplus per person per visit is estimated at DH 490,196 ($US 65.36) and the

willingness to pay per visitor is about DH 46,523 ($US 6.20). According to

this economic valuation, any future local development must take into account,

the opportunity that EOM offers as a recreational site, with high eco tourism

potential.

The research that has been done by Dewi (2016) with the title “The

Analysis of willingness to Pay (WTP) the Community of Special Region of

Yogyakarta on Gembira Loka Zoo Tourism”. The purpose of this research is

to measure the value of Willingness to pay ticket of entrance Gembira Loka

Zoo and factors that influence willingness to pay. This study analyzed by

Contingent Valuation Method (CVM), this study is use primary data by giving

questionnaires to 114 repondents, sampling was done by purposive sampling.

The tool analysis is using SPSS 16. The result of this research showed that the

age variable has no effect on willingness to pay, the income level has affect on

willingness to pay, the education variable has affect on willingness to pay, and

the distance variable has affect on willingness to pay. The value of

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The research that has been done by Prihadi (2015) with the title “ The

Factors that Influencing The Willingness To Pay For Quality Improvement in

Dieng Tourist Attraction of Wonosobo Regency and Banjarnegara Regency A

Case Study of Kaliasa Archeological Museum Contingent valuation Method”.

This research aims to discover whether gender, frequency of visits, length of

visits, length of education, age and icome influence willingness to pay in the

effort to improve environment qualiy of tourist attraction of Kaliasa

Archeological Museum in Wonosoboand banjarnegara Regency. This research

used primary data with interview method of 77 respondents. The calculation

of the fees that visitor were willing to pay for environment quality

improvement of kaliasa Archeological Museum was conducted using

Contingent valuation Method approach. Multiple regression model was used

to analyze the research. The result of this research showed that gender,

frequency of visits, length of visits, length of education, age and income are

influence willingness to pay in the effort of improvement environment quality

of tourist attractions of Kaliasa archeological Museum in Wonosobo and

Banjarnegara Regency.

The research that was conducted by Suja et.al.,(2007) with the title “ The

Economic Value of The Lake Buyan-Tamblingan Area as A Place Interest

Bali An Enviromental Economic Study”. Research was conducted at

Buyan-Tamblingan lake natural tourism area in Sukasada sub-district,Buleleng