- Koh Tao is one of the islands in Thailand with the highest tourist potential. At the same time, similar to other major island tourist destinations around the world, Koh Tao is facing a problem of deterioration of both terrestrial and marine environment. It is because of the foreseeable worsening of the state of the environment of the island that this study has been undertaken to explore the legal and institutional structures which is related to the use of economic instruments to manage coastal and marine resources of the island at the local level as well as assess the potential for wider replication at the national level. The objective of this study was also to revisit economic valuation studies of the marine resources of Koh Tao and propose the principle and approaches to introducing economic instruments such as user charges and pollution charges. From the review of ranges of economic instruments that have been used in other countries, 3 instruments have been identified as having the highest potential. These were i) island visitation fees, ii) room surcharges, and iii) scuba diving fees. Among these, collection of island visitation fees was considered as having the highest potential to be launched in the short run. The remaining two economic instruments, while feasible, should only be considered in the medium and longer time frame after sufficient experiences have been generated and lessons learnt from the adoption of the island visitation fees. In estimating the potential revenue from collecting island visitation fees, calculations were made assuming that the number of tourists in 2012, which reached 352,209, would increase at a constant rate of 3% per year. If Koh Tao were to start collecting island visitation fees in 2014 and if the island visitation fee is set at 50 Baht/tourist, the revenue generated would be 14.04 million Baht. The potential revenue would be 28.07 million Baht if the rate were set higher at 100 Baht/tourist. If such fees were to be collected, the pieces of legislation that should be referenced are those that are related to the use of state land Act and authorities of Local Governments. The latter will specify the types of revenue that Koh Tao Municipality is authorized to collect. While, issues concerning land rights and activities that might cause negative environmental impacts are not included in these laws, it is possible for Koh Tao Municipality to incorporate these into the Municipal Act as part of the list of activities which might create health risks. Collection of fees can be considered as part of the Municipal’s mandate to provide public services. However, since the law does not clearly authorize the Municipalities to collect fees, the recommended approach would be to collect fees in the form of voluntary contributions. For this purpose, a Koh Tao Conservation Trust Fund Foundation should be established to ensure that management of the revenues collected and channeled to the Koh Tao Trust Fund is transparent and that it is used to support marine resources conservation activities in accordance to principle of introducing this economic instrument.