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

Table of Contents Background Three Methodologies 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

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  Background WRI Fisheries WRI Tourism Value Transfer Discussion

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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

Overview of Economic Valuation Techniques Coral Reefs Provisioning Services Food Medicine & Pharmaceuticals Ornamental Resources Building Materials Erosion Control Shoreline Protection Regulating Services Cultural Services Spiritual Values Knowledge Systems and Educational Values Recreation & Ecotourism Products obtained from Ecosystems Benefits obtained from regulation of ecosystem Processes -Nonmaterial benefits obtained from ecosystems Natural processes that maintain the other servicess Supporting Services Sand Production Primary Production WRI 2009 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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. Background WRI Fisheries WRI Tourism Value Transfer Discussion

Overview of Economic Valuation Techniques Total Economic Value Use Value Non-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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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

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

Site Background 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 Holetown Lagoon Heavy recreational use: >100,000 annual visitors Coastal Habitat: mangroves and 3 types of reefs (patch, fringing, bank) Nicholls 2008 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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

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) Background WRI Fisheries WRI Tourism Value Transfer Discussion

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

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) Background WRI Fisheries WRI Tourism Value Transfer Discussion

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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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

World Resource Institute Coral Reef Valuation Tool Fisheries Valuation

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) Background WRI Fisheries WRI Tourism Value Transfer Discussion

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) Fish species may be offshore pelagics, fishers could be landing at other sites. Unofficial landings sites heavily used. Background WRI Fisheries WRI Tourism Value Transfer Discussion

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

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

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

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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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

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

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

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

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

WRI Coral Reef Valuation- Total

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

Value Transfer: Spatial Distribution of Ecosystem Service Values

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

Background WRI Fisheries WRI Tourism Value Transfer Discussion This project, conducted by Kimberly Baldwin (PhD candidate) seeks to aid marine space use planning and management in the Grenadines by gathering information on marine space use particularly critical habitats; representative marine ecosystems; areas of high aesthetic value and cultural importance; areas important for livelihoods, fishing grounds and marine-based tourism; areas of highest human threat and space use conflict Background WRI Fisheries WRI Tourism Value Transfer Discussion

Value Transfer Methodology Background WRI Fisheries WRI Tourism Value Transfer Discussion

Results Comparison Background WRI Fisheries WRI Tourism Value Transfer Discussion

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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

Value Transfer Methodology Strengths 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) Background WRI Fisheries WRI Tourism Value Transfer Discussion

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

Value Transfer Methodology 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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

WRI Coral Reef Valuation 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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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

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

Other Case Study Sites Area of Study Sites Background WRI Fisheries WRI Tourism Value Transfer Discussion

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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

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 Background WRI Fisheries WRI Tourism Value Transfer Discussion

Questions?