Oceans and Economic Value:An Introduction

Consortium for Ocean Leadership25 October 2012

Hauke Kite-Powell, Marine Policy Center, WHOI

Topics

• What does “economic value” mean?

• Economics & the ocean: different types of “economic value” questions

• Examples

The Nature of Economic Value

• Not absolute – depends on societal context and (changeable) human preferences– As opposed to, for example, temperature!

• Defined at the margin – limits of extrapolation– Economic value is meaningful only for something that

you can (realistically) “trade away”• Value vs. impacts– Jobs, research budgets, …

• Value over time – discount rates– Example: climate change

Economic Value & the Ocean• Flows (value added) generated by ocean-related

activities– GDP; the “cash flow” part of balance sheet

• Asset values of ocean resource stocks– “assets & liabilities” part of the balance sheet

• Value of research (information)

• Value at stake in ocean management (policy) decisions

Examples of Value Added Flows

• Commercial fishing– Fishing to the dock– Processing– Wholesale/distribution– Seafood markets– Restaurants

• National Ocean Economics Project (NOEP) data: GDP contributions from ocean industries

Examples of Asset Values

• Offshore minerals– Oil and gas in offshore reservoirs– Hard minerals (sand, gravel, gold, …)– Market price net of extraction costs

• Fish stocks– Discounted stream of landings (dockside value net

of capture costs)– Depends on management!

Examples of Value of Information

• Ocean observing systems (PORTS, IOOS)– Difference in outcomes of decisions with/without

• Ocean carbon cycle– Uncertainty about future C uptake, atmospheric C

concentration, climate costs• Ocean research infrastructure– Likely return on investments in infrastructure and

research activities

Examples of Policy Questions

• Beach closures– Human health costs from exposure to bacterial

contamination– Lost recreational benefits from unnecessary

closures• Investment in clean water– Fish, marine mammal populations– Recreational amenities– Human health implications