Copyright of Full Text rests with the original copyright owner and, except as pennitted under the Copyright Act 1968, copying this copyright material is prohibited without the pennission of the owner or its exclusive licensee or agent or by way of a licence from Copyright Agency Limited. For infonnation about such licences contact Copyright Agency Limited on (02) 93947600 (ph) or (02) 93947601 (fax) 200105088 Economic Analysis & Policy Vol.30 No.2. September 2000 133 ECONOMIC IMPACT OF HAZE-RELATED AIR POLLUTION ON THE TOURISM INDUSTRY IN BRUNEI DARUSSALAM' Kwabena A. Anaman and Chee N. Looi Department of Economics University of Brunei Darussalam Bandar Seri Begawan BE1410 Brunei Darussalam The impact of the 1997 and 1998 haze-related air pollution episodes on the tourism industry in Brunei Darussalam has been analysed usingmultiple regression analysis and monthly arrival data of tourists from January 1995 to September 1999, a sample of 57 monthly observations. The analysis is fIrst undertaken using ordinary least squares (OLS) regression. Count data models based on Poisson regression are then used to estimate the impact of the haze-related air pollution. Conservative estimates of impact of the haze-related air pollution using OLS regression are a reduction of 3.75 per cent in the number of tourists and direct economic loss to the tourism industry of about one million Brunei dollars (B$). Using the Poisson regression analysis, monthly arrivals are estimated to be reduced by about 28.7 per cent resulting in total direct loss of about B$8 million. 1. INTRODUCTION AND PROBLEM STATEMENT Haze-related air pollution originating from forest fires in Indonesia engulfed much of Southeast Asia from July to September 1997, creating a major international environmental problem. By the end of 1997, weather conditions had returned to normal. However from mid-January 1998 to the end of April 1998, another series of major fires in Indonesia caused the return of haze-related air pollution. Brunei Damssalam (hereinafter referred to as Brunei) was mildly affected by the July- September 1997 episode, but was seriously affected by the January-April 1998 event in terms of human health effects, impacts on economic sectors and closure of schools and nursery centres for several weeks. The Economy and Environment ProgrammeforSoutheastAsia (EEPSEA,1998) undertook a study on the economic impact of the 1997 haze-related pollution episode on the economies ofIndonesia, Malaysia and Singapore, but not Brunei. While the health impacts of the 1997 haze-related episode were relatively minor in This study was sponsored by the University of Brunei Darussalam (UBD). We thank Kevin Ford and John Odihi for their comments of an earlier draft of this paper and the Academy of Brunei Studies. UBD, for granting pennission to publish this paper.