Having just returned from a holiday in Vanuatu (which, by the way, is an amazingly beautiful place to visit) I thought I would share some economics I picked up on the trip. Now, I’m not talking about facts like the percentage of GDP represented by tourism. I’m talking about a classic case of prisoner’s dilemma.
Part of the trip included a visit to Million Dollar Point on the largest of Vanuatu’s 83 islands, EspirituSanto. During World War II, Vanuatu was used as a military base by the Americans. After the conclusion of the war, the American forces had accumulated (as you can imagine) a lot of stuff – jeeps, tanks, weapons, and building materials like bulldozers and excavators used to build military facilities (including four airstrips).
The Americans didn’t have room on their ships to bring all their gear back (instead, they – rightfully – used available space to bring home the troops). Furthermore, many of their manufacturers at home had included clauses in their contracts preventing the American military from bringing home the products; fearing that flooding the market with cheap, ex-military goods would be detrimental to their business. These manufacturers wanted to protect their post-war domestic market.
So the Americans were left to wonder: what should they do with all this equipment?
It was offered to the Allies at a largely reduced price. Seems like a fair deal, right? The Allies, however, realized that the Americans couldn’t take it home, and thought they would be able to take it for free when the Americans inevitably left it behind. They tried to call the Americans’ bluff.
The American military loaded up all their vehicles with their equipment, placed bricks on the accelerators, and drove their gear into the ocean where it remains in up to 40m of water. Million Dollar Point was given its name for the [then] value of the dumped equipment and refuse. Luckily it’s not renamed for inflation each year (or it would have been about Thirteen Million One Hundred and Fifty-Seven Thousand Dollar Point in 2014).
Both parties tried to do what they thought was best for them but ended up worse off .The Allies didn’t get their gear, and the Americans didn’t get any money for their equipment, due to their lack of cooperation.
The only winner in this situation has been the tourism industry in Vanuatu. In the shallower waters, a beautiful reef is growing over the top of large guns, bulldozers and excavators. There’s a huge variety of marine life swimming around the rusting chassis of jeeps and smooth remains of thousands of Coke and beer bottles. Snorkelers pay 500 Vatu (a little over $5) to enter the beach.
There is also a thriving dive industry, taking tourists out to deeper waters where the equipment is almost perfectly preserved; so much so that divers can sit in the driver’s seat of a bulldozer from the1940s.
So it is possible that, despite the enormous initial waste in 1942, a positive externality has been created. The Americans certainly could not have envisaged the benefit brought to the island’s tourism, and additional visitors to the country that their actions have resulted in.