Economic Valuation of Coral Reefs towards Monitoring for Climate Change Impacts

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Economic Valuation of the Coral Reefs in the
Caribbean
Presentation Nassau (Bahamas) August 12, 2002
Herman Cesar (ARCADIS, CEEC, IVM) Pieter van
Beukering (IVM, CEEC) in collaboration
with Renata Goodridge (UWI) Project under CPACC
with World Bank funding
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Objectives and tasks
to assess the economic value of coral reefs and
the economic costs of reef degradation in the
Caribbean
Specific tasks

• Identify the economic benefits of coral reefs
• Develop an ecological-economic model (SCREEM) to
  assess the interrelationships between
  bio-physical and socio-economic variables
• Assign a monetary value to various types of reefs
• Evaluate costs and benefits of management and
  policy
• Evaluate physical planning issues
• Apply model to 3 case sites (Grand Anse, Negril,
  Hol Chan)

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Content

• Part I. Methodological framework
• Dynamic ecological economic simulation model
  (SCREEM)
• Ecological valuation
• Economic valuation

• Part II. Case studies
• Grand Anse Grenada (Sewerage Climate Change)
• Negril Jamaica (Tourism Climate
  Change)
• Hol Chan Belize (MPA Fisheries,
  Climate Change)

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(No Transcript)
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Uses of the Model

• Policy
• Management
• Physical planning

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Structure of ecological-economic model
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Structure of ecological sub-model
Ecological threats
Ecological threats
Nutrients
Sedimentation
Climate Change
Fishing
Ecological indicators
Ecological indicators
Coral biodiversity
Fish biodiversity
Resilience Coral
Reproductive Capacity
Turbidity
Coral cover
Algae cover
Fish stock
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Resilience of coral reefs
Nutrients
Sedimentation
Climate Change
Resilience Coral
Coral cover
Algae cover
Gradual change in conditions such as human
induced eutrophication and global warming may
have little apparent effect on the state of coral
reefs, but still alter the stability domain or
resilience of current state and hence the
likelihood that a shift to an alternative state
occurs in response to natural or human induced
fluctuations.
Coral cover
Environmental pressure
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Ecological Valuation
Example
Steps
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Composition of economic value
Total Economic Value (TEV)
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The Economics of MPA management
Net benefits
Net benefits
from coastal
from coastal
Benefits with MPA
ecosystem
ecosystem
Benefits without MPA
Cost of MPA
Costs of management
Time
Time
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Preliminary outcome Recreational survey in
Grenada

• On the basis of interviews at the airport and in
  dive shops, the following conclusions can be
  drawn
• 12 of respondents snorkel, 14 were scuba
  divers
• Expenses are low (average around 28 and 104)
• Perceived cause of degradation (27 everyone 24
  sewage treatment 18 fishermen 12 developers)
• Perceived problem solver (36 everyone 27
  govt)
• WTP for experience (average 4)
• WTP for conservation (average 18 per year)

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Climate Change in Grand Anse (Grenada)

• Two impacts were modeled
• Sea Surface Temperature (SST)
• Frequency of hurricanes

SST ? Coral bleaching mortality ?
Socio-economic impacts
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Bleaching and Coral Cover (Grenada)
Coral Cover (in percentage)
coral cover no bleaching and low resilience
coral cover no bleaching and medium resilience
coral cover bleaching and medium resilience
coral cover bleaching and low resilience
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Bleaching and Tourism (Grenada)
Recreational Value (in MUS)
50
recreational value bleaching and high growth
recreational value bleaching and low growth
recreational value no bleaching and low growth
recreational value no bleaching and high growth
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Hurricanes and their costs (Grenada)
Decrease in total benefit (US)
Infrastructural damage (US)
200 M
80 M
150 M
60 M
100 M
40 M
50 M
20 M
0
0
0
5
10
15
20
25
30
35
40
45
50
0
5
10
15
20
25
30
35
40
45
50
Time (Year)
Time (Year)
total benefit no hurricane
infrastructural damage no hurricane
total benefit hurricane
infrastructural damage hurricane
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Sewage Treatment in Grand Anse (Grenada)

• Two impacts were modeled
• Impact on corals and algae (inside coral reef
  model)
• Health and other impacts (outside coral reef
  model)

Health impacts/cost savings/etc. ?
socio-economic impacts
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Improvement of sewage in Grand Anse Direct effects
Direct costs
Direct benefits
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Improvement of sewage in Grand Anse Indirect
ecological effects
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Improvement of sewage in Grand Anse Indirect
economic effects (2)
Ecological effects
Indirect benefits
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Improvement of sewage in Grand Anse Indirect
economic effects (3)
8.0
7.0
Benefit Cost Ratio
6.0
Extended Benefit
Cost Ratio
5.0
4.0
Benefit cost ratio
3.0
2.0
1.0
0.0
5
10
15
20
25
30
35
Discount rate
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Future activities

• Fine-tuning the model
• Finalizing Grenada case study
• Data collection Negril
• Data collection Hol Chan
• Economic valuation Negril Hol Chan
• Mainstreaming activities (G. d.Romilly)
• Final report (November 2002)