Proposed Economic Valuation Methodology for Belize Daniel Prager and Lauretta Burke World Resources Institute Economic Valuation of Coastal Ecosystems Workshop Belize City June 7, 2007

World Resources Institute Method Overview 1.Background and Framework 2.Methods and Results  Fisheries  Local Use Survey  Tourism [Valuation Tool Demonstration]  Shoreline Protection 3.Inclusion of mangrove ecosystems

World Resources Institute Project Partners Trinidad and Tobago T&T Institute of Marine Affairs (IMA) Buccoo Reef Trust Tobago House of Assembly (THA) / Policy Research Development Institute (PRDI) T&T Central Statistics Office (CSO) T&T Environmental Management Agency (EMA) Saint Lucia Government of Saint Lucia Regional Partners University of the West Indies (UWI) / Sustainable Economic Development Unit (SEDU) Caribbean Natural Resources Institute (CANARI)

World Resources Institute Ecosystem Services from Coral Reefs Millennium Ecosystem Assessment Framework Provisioning Services -Food: Fish and Shellfish -genetic resources -natural medicines and pharmaceuticals -ornamental resources - building materials Regulating Services - carbon storage, climate regulation -erosion control -storm protection Cultural Services -spiritual and religious values -knowledge systems, educational values -inspiration -aesthetic values -social traditions -sense of place -Recreation Supporting Services -sand formation -primary production Direct Use Values Indirect Use Values Non-use Values Option Values

World Resources Institute Total Economic Value Use Values Direct Use Values Consumptive/Extractive Uses -Fisheries capture Non-Consumptive/Non- Extractive Uses -Tourism Indirect Use Values -Shoreline Protection Non-Use Values Existence Value Bequest Value

World Resources Institute Tenets of Our Methodology  Based off of existing data (when possible)  No expensive surveys used, local use survey included fisheries, beach and reef use  Replicable results  Cross-country comparisons  Be spatially explicit as possible  Not measuring non-use values

World Resources Institute Avoiding Pitfalls Use net benefits rather than gross benefits Include opportunity cost, where necessary Only use benefits transfer (data from other studies) in right circumstances Don’t use estimates of small changes for large changes

World Resources Institute Avoiding Pitfalls Be careful of double counting Only use national benefits when interested in national perspective Adjust price distortions Do a reality check

World Resources Institute Project Overview Main Components Fisheries Method: Revenues minus Costs Tourism Method: Revenues minus Costs Shoreline Protection Method: “Avoided Damages” approach

World Resources Institute Methodology Components Fisheries 1.Commercial Fisheries 2.Fish Processing 3. Local and Subsistence Fishing 4. Economy-wide Effects Tourism 1.Accommodations 2.Reef Recreation 3. Local Use 4. Cruise Ships 5. Economy-wide Effects Shoreline Protection --Avoided Damages Approach --Physical Vulnerability of shoreline with economic loss estimates

World Resources Institute Non-Valued Services Total Economic Value (TEV) would also include: Other Use Values: Research Values Option Values (e.g. pharmaceutical) Non-Use Values Existence Value Bequest Value Value estimates which are defensible and policy relevant

World Resources Institute Fisheries Fish Species Families of Holocentridae, Lutjanidae, Scaridae, and Serranidae (Squirrelfishes, soldierfishes, snapper, parrotfishes, grouper, sea bass) Lobster No pelagics Not all species fully dependent on reefs or mangroves

World Resources Institute Fisheries Commercial Fishing Revenue minus Costs Price of fish Amount of reef-related fish harvested

World Resources Institute Fisheries Commercial Fishing Revenue minus Costs Cost estimates per boat/outing Wage paid to employees Boat maintenance Other capital equipment costs (nets, fuel)

World Resources Institute Fisheries Fish Processing Revenues minus Costs. -Volume of fish processed -Volume of shellfish/lobster processed -Price per unit volume

World Resources Institute Fisheries Fish Processing Revenues minus Costs. -Capital costs -Equipment costs -Cost of inputs (fish, shellfish, preservatives) -Labor costs

World Resources Institute Fisheries Local Fishing Value of time spent fishing and fish caught -minus- Capital costs (nets, lines)

World Resources Institute Fisheries Economy-wide effects Value of employment Multiplier – boat builders/fixers Multiplier – general expenditures by fishers Social value – community building

World Resources Institute Fisheries Annual Value of St. Lucia Reef Fisheries: US$ 821,000 Commercial Fishing Net Revenue: US$ 474,000 Fish Processing Net Revenue: US$ 46,000 Economy-wide multiplier: US$301,000 Local Use: Additional Value (not yet calculated)

World Resources Institute Local Reef Use Survey Commissioned a survey through the University of West Indies / Sustainable Economic Development Unit / Government of St. Lucia, Department of Statistics 600 people surveyed in 12 locations in St. Lucia and Tobago Designed to measure local use of beaches and reefs as well as recreational and subsistence fishing

World Resources Institute Local Use Survey St. Lucia (2006) Tobago (2006) Sample Size300 Respondents who fish 73 of 300 (24%) 20 spear fishing 23 of 300 (8%) 7 spear fishing Respondents who sell fish 13 (4.3%)2 (.7%) Fisheries

World Resources Institute St. Lucia Local Fishing Estimate EnjoymentOwn Consumption Informal Market Fishing Trips20 times / yr28 Times / yr52 times/ yr Annual ValueEC$ 700EC$ 1,232EC$ 9,512 Three Types of Local Fishing Use

World Resources Institute Local Use Survey

World Resources Institute Survey Trends Socio-Economic Majority valued leisure time same or less valuable than work time Large proportion of respondents were unemployed Beaches Average of 75% (Tobago) and 90% (St. Lucia) of respondents visited beaches Swimming, BBQ and beach sports most frequent activities

World Resources Institute Survey Trends Coral Reefs Most respondents had not visited a coral reef Of respondents visiting reef, about half noticed a change in reef quality and half did not Not all people making use of a coral reef were aware they were doing so

World Resources Institute Very Rough Beach Tourism Estimate Ballpark beach value (per household) –~125 hours/yr spent on beach (10.5 hrs/mth) –Annual wage ~ US$7,800/yr –~ US$ 510/household –Based on average beach use, leisure time same value as work time, average income, 40 hour work week

World Resources Institute Tourism Tourism Components 1.Reef-associated accommodations 2.Reef- and Mangrove-associated Recreation (snorkeling, diving, sport fishing) 3.Cruise ship expenditures 4.Local Reef Recreation 5.Multiplier effect on economy

World Resources Institute Tourism Accommodations Revenue minus Costs Foreign- vs. Local- owned (“Leakage”) Only reef-related stays

World Resources Institute Tourism Accommodations Revenues include: –Hotels * Occupancy Rates * Room rates OR –Guests * Guest Expenditure * Length of Stay Costs include: –Hours worked * Wage rate –Fixed Costs –Operation and Maintenance Costs

World Resources Institute Tourism Reef and Mangrove Recreation Revenue minus costs --Snorkeling --Diving --Glass-bottom boats --Fish charter --Sport Fishing

World Resources Institute Tourism Reef Recreation Revenues include: –Snorkeling fees –Diving fees –Reef recreation –Fees paid by cruise lines Costs include: –Equipment costs, labor costs, capital costs, taxes paid (recouped by state), referring fees, import duties

World Resources Institute Tourism Cruise Ships Revenue minus Costs --Number of ships per year --Docking fee (attributable to reefs) --Spending on island --MPA user fees --Snorkeling/Diving captured under that component (no double counting)

World Resources Institute Tourism Cruise Ships Revenue minus Costs --Maintaining ports --Environmental damages --Additional use of roads, etc.

World Resources Institute Tourism (Local) Reef Recreation Value to locals captured by: -Number of visits -Hours per visit -Population -Average wage rate Aggregated to total Local Reef Recreation

World Resources Institute Tourism Values Components currently included –Accommodation –Reef Recreation – Diving –Reef Recreation – Snorkeling –Misc. Expenses (e.g., departure taxes, visitor expenditure) –Marine Park Components to be addressed –Cruise ships –Yachts –Indirect economic effects –Local Use

World Resources Institute Estimated Reef Tourism Use Values St. LuciaTobago Accommodation Diving Snorkeling Marine Park0.05N/A Expenditures and Departure Tax * Total Use Value CTO Expenditures ** Unit: Millions US$ *Departure taxes only **Trinidad and Tobago

World Resources Institute Total Valuation Estimates St. LuciaTobago Fisheries0.82 ( )0.2 to 1.0 (2006) Tourism74.4 (2006)20.4 (2006) Shoreline Protection $100 over 25 years, $4 per annum $135 over 25 years, $5.4 per annum Total~79~26 vs. GDP619 (2000)141 (2000) Unit: Millions US$

World Resources Institute Valuation Tool Purpose: Guide the systematic, methodical estimation of the value of coral reefs Guidebook + Calculator = Valuation Tool How will this work? Fisheries and Tourism components Microsoft Excel based Tiers of input data Assumptions supplied with tool (but they must be verified) Calculates each component discretely

Shoreline Protection Services Evaluate economic value of shoreline protection provided by coral reefs and mangroves Involves physical and economic modeling and assumptions As there are many factors, there is a good deal of uncertainty around these estimates Preliminary framework Valuation method - “avoided damages”

Physical Factors Physical factors affecting the protection afforded by a coral reef: orientation of the coast (windward / leeward; high energy or low energy coast) bathymetry / shoreline profile shoreline shape (bay, headland) depth of the reef / geology (type of reef) distance the reef is from land

Risk Factors Storm categories and frequency –Associated wave height Elevation Coastal Vegetation (mitigation) Value of land and property in “at risk” areas –Homes, hotels, beach faciliites, etc.

Complex Analysis Work with coastal geologists / coastal scientists at Institute of Marine Affairs (IMA) to: Define typology (categories / characteristics of reef / coastline settings) Develop rules for how much protection this reef affords this coastline situation. Work with economists to derive economic estimates

Shoreline Stability Factors (from IMA) 1.Coastal Type / Geology (Resistance) 2.Wave Energy 3.Storm/Hurricane Events (Effects) 4.Grain Size / Gradient 5.Coral Reef (Type, Reef Distribution, Distance from shore) 6.Coastal Protection (headlands, etc.) 7.Coastal Vegetation (type and distribution) 8.Anthropogenic Activities 9.Elevation

Shoreline Stability Evaluation Framework (from IMA) Factor Factor Weight Very High (A = 4) High (A = 3) Medium (A = 2) Low (A = 1) None (A = 0) Geology (Resistance) 3 Cliffed coastline consisting of igneous, metamorphic and volcanic rocks Limestone cliffs Sedimentary Rocks along coastline BeachesN/A Wave Energy2 N/A< 50 cm50 cm - 80 cm>80 cmN/A Storm/Hurricane Events (Effects) 2 Affected by 1-5 TS every 10 years Affected by at least 5 TS every 10 years Affected by at least a category 1 every 25 years Affected by at least a category 3 every 25 years N/A Reef Type1 N/ABarrierFringeAtollNo reef present Reef Distribution1 N/A ContinuousDiscontinuousNo reef present Reef Distance1 N/A<500 m500m m> 1000mNo reef present Grain Size / Gradient 3 N/A Coarse grained/ steep gradient Medium grained/Moderate gradient Fine-grained/gentle gradientFlat Coastal Protection1 Protected by 2 prominent headlands, Seawalls, Riprap or Breakwaters Protected by 2 prominent headlands Seawalls, Riprap or Breakwaters Protected by one or two small headlands No protection by headlands or coastal protection structures Coastal Vegetation Type 1 Mangroves Coastal wetlandsThicketRunnersNo Vegetation Coastal Vegetation Distribution 1 > 75 % length of coastline 50% - 75 % length of coastline 25% - 50 % length of coastline <25% length of coastlineNo Vegetation Anthropogenic Activities 2 N/A No sand mining, coastal development or Other Activities Either sand mining or coastal development Sand mining and coastal development N/A Elevation3 >3 m above msl1-3 m0-1 m = 0m< 0m

1. Identify shoreline protected by coral reefs and establish degree of protection provided by reef

Reef Protection 0Not protected by reef51% 2Within 100 m of fringing reef45% 3Protected by Barrier Reef4%

Extensive protection by coral reef or mangrove Source: Belize Coastal Threat Atlas

2. Identify land vulnerable to wave- induced storm damage

6% of Tobago’s land area rated “vulnerable.

3. Establish likely damage in vulnerable areas under current scenario & without reefs 1.Storm regime in area Future storm scenarios 2.Historic data on storm damage along coast (wave and surge associated) 3.Property Values Built structures Land value Loss of use

Net Protection Value in Tobago (over 25 years) Comparison of damage (loss) with and without reefs Avoided damages of US$135 million over 25 years –(about US$5 million per year) Net benefit from Buccoo reef alone is US$60 million over 25 years –(about $2.5 million per year)

Shoreline Protection Summary Tobago Belize Land Area (sq km)30, ,385 Vulnerable Land Area1,9006%??? Vulnerable Area Protected by reefs9103%most Shoreline length Protected by Reefs49% most Average Property Value (US$)$22 Property Damage over 25 yr period (US$ millions) Loss with reefs675 Loss without reefs810 Avoided Damages (25 years)135 Avoided Damages (annual average)5.4

Plans on Shoreline Protection Identify groups interested in collaborating –Government (NEMO, Hydromet, Forestry, Fisheries, CZMAI) –NGOs –Insurance companies? Add Mangroves Review Approach Gather data to refine damage estimates Implement analysis

Incorporating Mangrove Habitats Fisheries Tourism Shoreline Protection Other Goods and Services?

Seeking Partners to Collaborate on: 1.Shoreline Protection \ Vulnerability Analysis 2.National Coastal Fisheries Valuation 3.National Tourism Valuation 4.Partners for valuation of particular MPAs or atolls

World Resources Institute Questions for Breakout Groups 1.Does the methodology as presented adequately capture the value of Fisheries/Tourism/Shoreline Protection in Belize? 2.How have these ecosystem services changed over the last decade? Are these services expected to improve or degrade? 3.Are there expected changes in the laws or regulations governing these ecosystem services? 4.What are important data sources for valuing these ecosystem services?

World Resources Institute Questions for Climate Change Group 1.How will climate change affect the goods and services provided by coral reef and mangrove ecosystems in Belize? 2.What groups within Belize are currently working on reef related climate change issues? What role could they play in the project? 3.Do existing national or international laws ensure that the coral reefs are adequately protected from threats to climate change?