The decision to close Boracay and the merger of Grab and Uber are recent events that have brought about the need to understand the costs and benefits of such decisions from the perspective of ordinary citizens. Without a “laymanized” standard assessment, every stakeholder will have his or her own perspective of how such decisions will benefit or negatively affect him or her.
Let us consider Boracay; according to the estimates of the National Economic and Development Authority (Neda), the six-month closure of the island will “only have a 0.1- percent impact on the GDP growth.” By saying there is a 0.1-percent impact, it means that the economy will be affected negatively. But how big is 0.1 percent of GDP growth? The GDP growth of the economy in the last six years roughly averaged to about 6.5 percent. So, closing Boracay means that instead of 6.5 percent, the economy will post a growth of only 6.4 percent in 2018. According to Boracay Foundation, about 17,000 jobs will be directly affected and another 19,000 tourism-related jobs. Furthermore, the hotels and tourism-related establishments will not have revenues for six months. The foundation estimates that of the total tourism receipts of the country, 20 percent is generated by Boracay. The total tourism receipts for 2017 is P335 billion, growing by more than 45 percent. Total international tourist arrivals reached 6.6 million, or a growth of 11 percent. If we are to follow the trend of Boracay tourist arrivals, there were about 1.9 million tourists in 2017 and about half of these were foreign tourists. This closure will cut an estimated 800,000 international tourists. Department of Tourism data also showed that Kalibo, the international gateway to Boracay, is the third international tourism gateway with about 7.5 percent of total inbound international tourists. This is of no surprise considering that 13 international airlines mount flights through that airport. With this information, it may not be easy to say that the negative impact is only a 0.1 percent deduction from expected growth. With the significant relationship of inbound tourism to accommodations, food and beverages, souvenir items, shopping, transportation and entertainment, the impact could be higher. This may be one way of looking at the costs—from the production side. This, however, is incomplete. It only looks at the perspective of today.
Closing Boracay is similar to a situation wherein one is deciding whether to book that air ticket now and enjoy all its perks even if the resources are not enough, or delay the enjoyment when one is ready to financially cover all the expenses. Many people actually play cost- benefit analysis in their minds in working decisions like this. Often, the value for today is given higher importance than tomorrow. This behavior, if left unchecked, will lead to serious financial repercussions in the future. Therefore, personal financial planning is crucial and serious budgeting is a virtue in a time of real-time, social-media consumerism. People are living longer and, therefore, need to understand that we need to balance our resources for our needs today and for the future. This also applies to how we behave in relation to the use of resources like public resources, such as water, power and our own private resources. The tragedy of the commons, as it is known in the Economic Literature, says that when a resource is overly used, such that demand outweigh supply, then everyone eventually lose the resource. Boracay and similar tourist sites, water resources, waterways, land and other resources that we commonly benefit from are in danger of the tragedy of the commons. In this context, the costs of today are outweighed by the costs of tomorrow.
For this reason, cost-benefit analysis must be the norm for everyone in relation to daily spending and particularly, those involved in regulation and policy-making. It requires that the standing or prioritization of stakeholders is clear for both the needs of the present and of the future. Boracay is an example of a clear overused system that was left unchecked. It has reached overcapacity years ago and yet the government even targeted higher tourism arrivals. Similar challenges are now being faced by many tourist spots around the country as we desire to increase the number of inbound tourists both locally and internationally. With the cost of air travel falling significantly, movement of people naturally follows mostly to places like Boracay. What needs to be done is clearly for both national and local governments to undergo capability enhancements in determining capacity limits and the science and art of cost-benefit analysis. The affected people and business need to be supported and provided safety nets partly because government allowed the Boracay expansion. Needless to say, we, as individuals, too, should have a clear understanding of the needs of today and tomorrow. If people will not allow emotions to get in the way, a majority will start thinking about the future. Because people who have better days ahead will always invest in thinking about the future.