Two conflicting documents have been presented at Sorrento that purport to demonstrate the economic benefits or otherwise of the whale watching industry.

IFAW's report, presented by Australia, claims that whale watching worldwide is now a $1 billion industry. According to the animal rights activists, it supposedly contributes US$220 million to the Australian economy.

But according to Kristjan Loftsson from Iceland, who has obtained the actual financial accounts of that nation's top whale watching companies, the picture is not so rosy. During the years 1999-2002, these companies made a combined loss of US$1, 087,321 and are being forced to invest new capital to keep their businesses afloat.

The IFAW figures focus on "economic value" to Australia and ignore the profitability of whale watching - even unprofitable businesses have an "economic value". Indeed, the report notes a decrease in the number of operators in some parts of Australia.

The actual estimate for direct expenditure on whale watching in Australia in 2003 is just US$21 million, suggesting that IFAW's claim for the size of the industry worldwide is greatly exaggerated. The Australian figures are also inflated because they include dolphin watching, which the report notes is much more common than whale watching.

The report states that most tourists only attend one whale watching event. This makes it difficult to make any reliable calculation on their indirect expenditure, which may be linked to a variety of other factors. Nevertheless, the report estimates it is 8.5 times higher than direct expenditure.

Our advice to whale watching investors: a clear sell. If IFAW really believes this is such a lucrative business, perhaps it should invest some of its $60 million annual income in bailing out the existing operators.