Economic Valuation of Goods and Services Derived from Coral Reefs

1. Economic Valuation of Goods and Services Derived from Coral Reefs Results from the Folkestone Park & Marine Reserve Reeffix Exercise

2. Table of Contents • Background • Project Background • Overview of Economic Valuation • Site Background • Three Methodologies • Coral Reef Valuation: Fisheries • Coral Reef Valuation: Tourism & Recreation • Value Transfer Methodology • Discussion & Way Forward

3. WRI Tourism Value Transfer Discussion Background WRI Fisheries 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 • 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

4. WRI Tourism Value Transfer Discussion Background WRI Fisheries 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

5. Provisioning Services Regulating Services Cultural Services Food Medicine & Pharmaceuticals Ornamental Resources Building Materials Spiritual Values Knowledge Systems and Educational Values Recreation & Ecotourism Erosion Control Shoreline Protection WRI Tourism Value Transfer Discussion Background WRI Fisheries Overview of Economic Valuation Techniques Coral Reefs Supporting Services Sand Production Primary Production WRI 2009

6. WRI Tourism Value Transfer Discussion Background WRI Fisheries Overview of Economic Valuation Techniques • Much of the Caribbean tourism plant exists due to the presence of coral reefs (and associated ecosystems) • Thus the profitability of the tourism industry is impacted by coral reef health however this is 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.

7. WRI Tourism Value Transfer Discussion Background WRI Fisheries Overview of Economic Valuation Techniques Total Economic Value Non-Use Value Use Value Indirect Use (shoreline protection) Future Use (option/bequest value) Direct Use Existence Value Consumptive Use (food) Non-Consumptive Use (tourism & recreation) WRI 2009

8. Direct Use Consumptive Use (food) Non-Consumptive Use (tourism & recreation) WRI Tourism Value Transfer Discussion Background WRI Fisheries Overview of Economic Valuation Techniques Total Economic Value Non-Use Value Use Value Indirect Use (shoreline protection) Future Use (option/bequest value) Existence Value WRI 2009

9. Direct Use Consumptive Use (food) Non-Consumptive Use (tourism & recreation) Tourism Recreation WRI Tourism Value Transfer Discussion Background WRI Fisheries Overview of Economic Valuation Techniques Fishing

10. Folkestone Park and Marine Reserve Reserve Area: 2.1km2 11% of West coastline Established in 1981 No-take zone Management under the National Conservation Commission Heavy recreational use: >100,000 annual visitors Coastal Habitat: mangroves and 3 types of reefs (patch, fringing, bank) WRI Tourism Value Transfer Discussion Background WRI Fisheries Site Background Holetown Lagoon Nicholls 2008

11. WRI Tourism Value Transfer Discussion Background WRI Fisheries Site Background • West Coast Reefs significantly impacted by: • Land Based Pollution • Coastal Development • Physical Damage • Overfishing • Disease

12. WRI Tourism Value Transfer Discussion Background WRI Fisheries Site Background • Significant declines on all reefs along the coasts, pollution appears to be the main factor • some Folkestone reefs lost more than half their coral cover in the past 20 years • Doubling of algae cover (indicator of pollution)

13. WRI Tourism Value Transfer Discussion Background WRI Fisheries (Brian Zane)

14. WRI Tourism Value Transfer Discussion Background WRI Fisheries Value Transfer: Spatial Distribution of Ecosystem Service Values • Use available Satellite imagery (Google EarthTM) • Identify, define and measure area of significant land cover types • Using values from heavily researched study site, apply values to current site by unit area (hectares)

15. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation Methods: Fisheries & Tourism DATA COLLECTION • Utilised data available from: • FPMR Staff • BHTA • Fisheries Division • Previous Studies • Expert Opinion DATA INPUT • values inputted into tool – Estimate of Total Economic Impact is generated DATA VALIDATION • Values reviewed and adjusted with new data • Application of scenarios

16. WRI Tourism Value Transfer Discussion Background WRI Fisheries Sensitivity Analysis Percent of gross profit spent on non-labour expenses 45% 25%

17. World Resource InstituteCoral Reef Valuation Tool Fisheries Valuation

18. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Fisheries Commercial Fishing Total Estimated Landings (weight x price) - cost of fishing (wages, operating costs) TOTAL ECONOMIC IMPACT OF FISHING Fish Processing Total Estimated Processing Revenue (processing, cleaning) - cost of operations (wages, operating costs) Local Fishing Fishing for (sale, enjoyment, consumption) Multipliers Additional expenditures (re-sale only)

19. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Fisheries • Case study assumes Folkestone reefs provide supporting services to target species directly (habitat) or indirectly (prey habitat) • + 20% landings used • Quality data was limited • Aggregated landings data from separate sources (overlap, gaps unknown) • No data available on local fishing ([occasional] sale, consumption, enjoyment) • Prices vary depending on many factors: seller, customer, supply (average values used)

20. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Commercial Fisheries Results Flyingfish Mahon et al. 2007

21. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Fisheries

22. World Resource Institute: Coral Reef Valuation Tool Tourism & Recreation Valuation

23. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Tourism & Recreation Accommodation Total Estimated Revenue (occupancy rates, room rates, # rooms, % visitors using reef) • labour, operating costs, tax rates, service charges, leakages MPA Revenue TOTAL ECONOMIC IMPACT OF TOURISM & RECREATION N/A Snorkeling and Boating Total Estimated Revenue (prices, # snorkelers, equipment rentals, # all inclusive trips) - labour, operating costs, taxes, service charges Diving Total Estimated Diving Revenue (prices, # divers, # certifications, equipment, all inclusive trips) - labour, operating costs, taxes, service charges Local Use Other Revenue Beach use, reef-associated use rentals, souvenirs

24. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Tourism and Recreation Quality data was limited • occupancy rates were rough estimates based on averages of the class of accommodation (A-class, luxury, etc) • No value of total beach use • Difficult to isolate benefits from certain recreational user • No data available from number of resource users from all-inclusive properties • other recreational activities not accounted for (e.g. waterskiing) • No data on local use

25. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Accommodation

26. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Recreation

27. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Tourism and Recreation Totals

28. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Government Revenue Total ~ US$ 6 million

29. Fishing Recreation Tourism WRI Coral Reef Valuation- Results • US$485,835 - US$691,313 • US$29,328,561 – US66,050,239

30. WRI Coral Reef Valuation- Total

31. Diving Snorkeling www.geocaching.com/trackdetails.aspx?id=126781 WRI Coral Reef ValuationHypothetical Reserve User Fee US$5.00 voluntary fee (1 in 2) US$5.00 mandatory fee US$10.00 mandatory fee US$3.00 voluntary fee (1 in 3) US$116,000 – US$883,000 US$34,000 – US$70,000 US$150,000 – US$953,000

32. Value Transfer: Spatial Distribution of Ecosystem Service Values

33. Outline Features Identify Features Calculate Areas & Apply Conversion Factors for Associated Values Import & Re-Project Features WRI Tourism Value Transfer Discussion Background WRI Fisheries Value Transfer Methodology

34. WRI Tourism Value Transfer Discussion Background WRI Fisheries

35. WRI Tourism Value Transfer Discussion Background WRI Fisheries Value Transfer Methodology

36. WRI Tourism Value Transfer Discussion Background WRI Fisheries Results Comparison

37. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Strengths • Facilities dynamic data (allows updating and expansion) • Detailed and allows for categorisation of results • When new data is added, outputs of results & corrections are generated instantaneously • Sensitivity analysis as response to potential errors in data • Accounts for often overlooked value of local use • Some level of adaptability • can be applied to sites where data availability is basic or exhaustive • More data improves applicability of results (site-specific output) • Potential for future development: inclusion of other values such as shoreline protection

38. WRI Tourism Value Transfer Discussion Background WRI Fisheries WRI Coral Reef Valuation- Weaknesses • Data gaps increases reliance on 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 data quality is ignored. • Currently no valuation of economic impact of cruise ships and shoreline protection • Results are not visual and not as easy to communicate as the Value Transfer method

39. WRI Tourism Value Transfer Discussion Background WRI Fisheries Value Transfer MethodologyStrengths • Availability of data source (Google EarthTM) • Rapid results • No extensive data collection required from multiple agencies • Results are visual (maps) and can be easily communicated • Resulting dataset has wide applications for management (e.g. changes in forested area and associated value over time)

40. WRI Tourism Value Transfer Discussion Background WRI Fisheries Value Transfer MethodologyWeaknesses • Results are static • Dependent on quality of aerial/satellite data (if absent requires intensive ground-truthing) • Requires knowledge of mapping software (not ubiquitous) • Economic values not developed in the Caribbean • Some values (e.g. coral reefs) vary greatly by site and use of recommended values can be misleading.

41. WRI Tourism Value Transfer Discussion Background WRI Fisheries Other Case Study Sites Montego Bay Marine Park (Brian Zane) Value Transfer Methodology Pros • Produces both graphic and numeric results • Low dependence on external/hard to locate data sources Cons • Challenging to develop local values, which are critical to the accuracy and validity of the tool • Some values developed in NE United States

42. WRI Tourism Value Transfer Discussion Background WRI Fisheries Other Case Study Sites Montego Bay Marine Park (Brian Zane) WRI Coral Reef Valuation Strengths • 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

43. WRI Tourism Value Transfer Discussion Background WRI Fisheries Other Case Study Sites

44. WRI Tourism Value Transfer Discussion Background WRI Fisheries Other Case Study Sites(excluding Grenada Value Transfer)

45. WRI Tourism Value Transfer Discussion Background WRI Fisheries Other Case Study SitesArea of Study Sites

46. WRI Tourism Value Transfer Discussion Background WRI Fisheries Further Research Options • Fill necessary data gaps to reduce errors from assumption (e.g. local recreation use and local fishing) • More accurate values for snorkelling and diving usage • Quantification and inclusion of other major revenue generating activities, namely waterskiing and jet ski rentals • Assessment of spear fishing catch and effort • Assessment of coastal protection value • Quantifying reefs by type (fringing, bank reefs) • Expansion to West Coast or entire island • Compare resource value with cost of management • Willingness to pay study on user fees for the Folkestone reserve

47. WRI Tourism Value Transfer Discussion Background WRI Fisheries Conclusion • Folkestone coral reefs and associated ecosystems likely contribute over US$29 - US$66 million annually to the economy of Barbados (based on current market values) • Likely a gross undervaluation as most tourists use the beach and WRI values do not count shoreline protection (existence , bequest values not included but important) • Shoreline protection may increase the value to hundreds of millions due to land and property values in the area

48. WRI Tourism Value Transfer Discussion Background WRI Fisheries Conclusion • Many assumptions in fisheries model, however variations not likely significant (pelagics ~ 20% of revenue) • Comparison between methods: Large variation in the results between methods likely due to the low value assigned for coral reefs in the Value Transfer Methodology • Comparison to other sites: low values likely due to size of study area • Results not entirely comprehensive but reveals a portion of the value of coral reefs to the economy. • Able to highlight the potential loss to the economy if the already threatened reefs not protected

49. Questions?