Accounting for Environmental Sustainability of the Tourism Industry: The Case of Perhentian Island

Abstract

The study is undertaken to account and measure externalities that have crossed beyond its environmental limit due totourism activities. These measurements later integrated into thetourism revenue estimates.Hence, the study’s objectives include estimating tourism revenue, quantifyingand monetizing environmental degradations and presenting the Environmentally Sustainable Tourism Revenue (ESTR) statement.Visitors spending served as proxies to tourism revenue estimates. Data were collected from 923 tourists of Perhentian Island and analysed using two-steps decision tree analysis through Chi-Square Automatic Interaction Detection (CHAID) procedure in SPSS 22.0 software. The costs of the environment were measured loosely based on the concept of ecological footprint, tourism carrying capacity, and economic valuation techniques.The findings suggest that the cost of the environment which comprised of overshoot of environmental resources, overcapacity of environmental services and overuse of environmental asset were RM5,446,563.00, RM506,576.00 and RM1,612,160.94 – RM3,626,722, respectively.Perhentian Islands’ total cost of degradation was recorded at RM9,579,861.00 (upper limit) with net tourism revenue of RM124,724,324.00. The implication of the study suggests that Perhentian Islands tourism externalities has exceeded between5.5% to 7.1% of its environmental limit and therefore, tourism activities on the islands incline towards unsustainability. Several steps need to be taken to rectifythe environmental issues identified in the study to ensure the sustainability of the islands.