Lembeh strait in the north Sulawesi is not only home to thousand traditional fishermen whose livelihood dependent upon fishing, but also located within the region’s busiest seaport. The strait also known for its high marine biodiversity and has been an alternative tourist destination beside the famous Bunaken National Park. Determine to protect the marine habitat and high expectation of revenue generation from tourist industry, the local government has decided to allocate part of the strait as a marine protected area or no fishing zone. The decision has sparked controversies over use of and access to resources among user groups in the area. Using economic valuation approach and simple modeling, this paper analyzes the economic impact of various mechanism associated the resource allocation issues as well as policy implication for the local government.