Economic Valuation of Goods and Services Derived from Coral Reefs

Results from the

South Coast of Grenada ReefFix Exercise

Jerry J. Mitchell

Presentation Outline

• Project Background• Overview of Economic Valuation Techniques• Site Background• Methodology • Results

– Coral Reef Valuation- Tourism & Recreation– Coral Reef Valuation- Fisheries– Benefits Value Transfer

• Discussion• Conclusion & Way Forward

Project Background

• Inter-American Biodiversity Information Network (IABIN)– to promote sustainable development and the

conservation and sustainable use of biological diversity in the Americas

• ReefFix is an ICZM tool that trains participating countries in ecosystem valuation methodologies and management techniques to conserve marine ecosystems and the associated watersheds through integrated park management 

Overview of Economic Valuation Techniques

• Economic valuation assesses the goods and services provided by an ecosystem which contribute to the wellbeing of human life (financial, social, biophysical, etc)

• By attributing a dollar value to natural resources, the benefits of conservation and some of the unforeseen “costs” of mismanagement are realised

Overview of Economic Valuation Techniques

• Thus coral reefs health influences the main economic activity of the region however are not taken into account when major policy decisions occur

• By assessing the ecosystem services, the tangible benefits provided by coral reefs to sustain and improve human life can be quantified.

Overview of Economic Valuation Techniques

Provisioning Services

Regulating Services

Cultural Services

Food

Medicine & Pharmaceuticals

Ornamental Resources

Building Material

Erosion Control

Shoreline Protection

Spiritual Values

Knowledge Systems and

Educational Values

Recreation & Ecotourism

Supporting ServicesSand Production

Primary Production

Overview of Economic Valuation TechniquesTotal Economic Value

Non-Use Value

Existence Value

Future Use(option/bequest value)

Indirect Use(shoreline protection)

Direct Use

Non-Consumptive Use(tourism & recreation)

Consumptive Use(food)

Use Value

Overview of Economic Valuation Techniques

Total Economic Value

Non-Use Value

Existence Value

Future Use(option/bequest value)

Indirect Use(shoreline protection)

Use Value

Direct Use

Non-Consumptive Use

(tourism & recreation)

Consumptive Use

(food)

Overview of Economic Valuation Techniques

Direct Use

Non-Consumptive Use

(tourism & recreation)

Consumptive Use

(food)

Fishing Tourism Recreation

Site BackgroundSouth/southwest coast of Grenada

• Coral reef extent 8400 ha• Extensive mangrove forest• Seagrass meadows• Bounds coastline of two

parishes – St George– St David

• In-cooperates two marine protected areas– Moliniere/Beausjour Marine

Protected Area– Clarkes Court/ Woburn

Marine Protected Area

Site Background•Fishing (Recreational and commercial)•Recreational SCUBA Diving•Recreational Beach Activities•Yachting/yachting services- marina’s /haul-outs •Maritime Transport

Site Background

Threats to resources

• Algal overgrowth

• Coastal development

• Overfishing

• Seasonal storms/hurricanes

• Physical damage (anthropogenic)

– Diving

– Improper fishing methods

– Improper boating practices

Methodology

WRI Coral Reef Valuation- Benefits Value Transfer

• ArcGis shape files• Satellite Images

• Identify, define and measure area of significant land cover types

• Using values from other study sites, apply economic values to current site by unit area (hectares)

WRI Coral Reef Valuation- Benefits Value Transfer

Identify Features

Import & Re-Project Features

Outline Features

Calculate Areas & Apply Economic Value

Land CoverAve.$/ha/

yrLower Bound

Upper Bound Area (ha)

Total ESV Flow (US Dollars)

Disturbed and Urban Beach $0Beach 88,000 77,000 99,000 8.71788699 $767,174Beach near dwelling 117000 140,000 94000 0 $0Coastal & Riperian Forest 1826 5542 13,000 0 $0Freshwater Stream 1595 1231 939 0 $0Freshwater Herbaceous Swamp 72,787 32000 96000 5.362221 $390,300Grassland/pasture 118 118 118 0 $0Near shore aquatic habitat 16,283 4630 27935 365.2 $5,946,552Coral Reef environ 100,000 1335.694061 $133,569,406Mangrove 37500 4.339961 $162,749Mangrove 500000 200000 900000 0 $0Mangrove restoration 225 216000 0 $0TOTAL $140,836,180

WRI Coral Reef Valuation

• Utilize data available from:• Fisheries Division• Land Use Division• Grenada Board of Tourism• Statistics Division• Previous Studies• Expert Opinion

• Input values into tool – Estimate of Total Economic Impact is generated

• Values reviewed and adjusted with new data

WRI Coral Reef Valuation- Fisheries

• Commercial Fishing• Fish Processing • Local Fishing (consumption,

sale, enjoyment)

Sum of revenue generated from:

Fishing

WRI Coral Reef Valuation- Tourism & Recreation

Tourism

Recreation

• Accommodation Sector

Sum of revenue generated from:

• Snorkeling & Boating• Diving• Local Use

WRI Coral Reef Valuation- Fisheries

WRI Coral Reef Valuation- Fisheries

Total Estimated Landings- cost of fishing (wages, operating costs)

Commercial Fishing

Total Estimated Processing Revenue(processing, cleaning)- cost of operations (wages, operating

costs)

Fish Processing

TOTAL ECONOMIC IMPACT OF

FISHINGLocal Fishing

Fishing for (sale, enjoyment, consumption)

WRI Coral Reef Valuation- Fisheries

WRI Coral Reef Valuation- Tourism & Recreation

Total Estimated Revenue (occupancy rates, room rates, # rooms, % visitors using reef)

- labour, operating costs, tax rates, service charges, leakages

Accommodation

Total Estimated Diving Revenue (# divers, certifications, equipment, all inclusive trips)

- labour, operating costs, tax, service charges

DivingTOTAL

ECONOMIC IMPACT OF TOURISM &

RECREATIONLocal Use

Beach use, reef-associated use

WRI Coral Reef Valuation- Tourism & Recreation

Value Transfer

Benefits Value Transfer

WRI Coral Reef Valuation- Fisheries

• Case study assumes that the South/southwest coast nearshore reefs provide supporting services to the fished reefs

• No known multipliers • Quality data was limited

– Exact location of catches are not known– Unknown # of local fishers – Non-labour operating costs unknown– No data on fish cleaning activities

WRI Coral Reef Valuation- Commercial Fisheries Results

WRI Coral Reef Valuation- Tourism and Recreation

• Quality data was limited– occupancy rates were rough estimates

(high room rate properties can skew data)– Tax revenue dependant on accountability

of operators– Recreational dive data out dated– No snorkel data

Results Comparison

WRI Coral Reef Valuation- Strengths

• Facilities dynamic data (allows updating and expansion)

• Detailed and allows for categorization of results• When data is available, outputs of results &

corrections are generated instantaneously • Sensitivity analysis as response to

errors in data

• Accounts for often overlooked value of local use • More data improves applicability of results (not

general output)

WRI Coral Reef Valuation- Weaknesses

• Data gaps increases reliance of local expert opinion• Requires full cooperation of relevant agencies and is

dependent on the quality of their data• Errors are magnified with some calculations (e.g.

fisher surveys)• Can encourage overconfidence in results if

warnings about possible error ignored. • Results are not visual and not as easy to

communicate as the Value Transfer method

Benefits Transfer Valuation- Strengths

• Availability of data source

• No data collection required; not dependent on quality of data from various sources

• Results are visual and can be easily communicated

Benefits Transfer Valuation- Weaknesses

• Results are static• Dependent on quality

of aerial/satellite data (if absent requires intensive ground-truthing)

• Requires knowledge of mapping software

•

Other Case Study Sites

Benefits Transfer ValuationPros• Produces both graphic and numeric results• Low dependence on external/hard to locate

data sourcesCons• Multipliers (values) developed for NE United

States• Challenging to develop local values, which

are critical to the accuracy and validity of the tool

Montego Bay Marine Park (Brian Zane)

Other Case Study Sites

WRI Coral Reef ValuationStrengths• Highly detailed results• Triangulates ESV of coral reefs• Tools – MS Excel

Weaknesses• Data - Heavily dependent upon external data

sources• Aspects not yet developed (Coastal Protection)• Dependencies/Assumptions (built into formulas)• Complexity reduces probability of widespread

adoption

Montego Bay Marine Park (Brian Zane)

Other Case Study Sites

WRI Coral Reef ValuationStrengths• Highly detailed results• Triangulates ESV of coral reefs• Tools – MS Excel

Weaknesses• Data - Heavily dependent upon external data

sources• Aspects not yet developed (Coastal Protection)• Dependencies/Assumptions (built into formulas)• Complexity reduces probability of widespread

adoption

Tobago Cays Marine Park( David Gill)

Other Case Study Sites

Conclusion

• The results from this exercise indicate the value of Grenada’s coastal and marine resources

• The significance of the results only emphasize the need for proper management, sustainable use of these resources, and effective management would ensure the longevity of these resources

Further Research Options

• In order for this tool (WRI) to be more effective, an assessment should be carried out on the study to find gaps in the data set.

• A short term data gathering exercise should be carried out to collect necessary data, and implement a data collection program.

• The development of a comprehensive habitat map for Grenada and update existing maps.

• Expand data collection within the various government entities.

Questions?

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Donald Rumsfeld