Mapping marine economics (2): Economic value of coastal and marine ecosystems

How bad is our current state of coastal and marine resources?

This question may get you browsing the websites of IUCN, Wetlands International, or other NGOs, looking for data on historical trends in coral reefs, endangered fish species, and so on. But whether and how fast coral reefs disappear is only half the answer to this question. Note that the question asks: how bad is it? So when we know the rate at which coral reefs are disappearing, the next question should be: how bad is it that they are disappearing?

It’s what I call the nasty question: why do you want to protect the environment? The question sounds insulting, criminal even, as it seems to ignore a self-evident fact: surely the environment deserves protecting? But ‘protecting the environment’ can mean many things, ranging from eliminating emissions of substances that cause cancer (good) to saving the smallpox virus from extinction (not so good). I wrote in an earlier post that given the choice between tsetse flies and human beings, my sympathy is with the latter. In other situations, however, the choice is not so clear. Conserving sharks may sound like a laudable goal, but how many lethal shark attacks are we willing to accept? There are many such trade-offs in coastal and marine policy: mangrove conservation versus shrimp farming, wind energy versus fishing, port development versus tourism. We can’t escape making explicit in what ways, and to what extent, ecosystems are important to us.

That does not necessarily mean putting a price tag on everything. If you want to argue that coral reefs are sacred, or that whales have a right to exist, and you can convince a majority of voters in your country of that view, go ahead. I may not agree with you personally (I’m more of a humanist), but professionally I have just as little to say about that as my fiddle teacher can fix my car. However, if we are talking about economic importance – how much do ecosystems contribute to human welfare – then I can give you a number of reasons why conserving coastal and marine ecosystems may be a good idea after all:

And so on. (Edward Barbier has written a very nice overview of the goods and services provided by coastal ecosystems. Best of all, it is free!) What economists do in this kind of issues is estimating how much coral reefs, mangrove forests, marine fisheries systems, and so on, contribute to human welfare – and yes, we try to express that contribution in dollars, euros, or other currency. This is done for two reasons. The most-cited reason is that if we don’t make these estimates, policy makers may assume the economic value of such ecosystems to be zero. Although I see the merit in showing the importance of coastal ecosystems in a way that makes it possible to compare this value to the value of, say, laptop computers or refrigerators, I still see a danger that such ‘raising awareness science’ degrades into advocacy. In my view, the most legitimate reason to express the value of ecosystem goods and services in monetary terms is that big public projects, like development of ports or aquacultural areas, need to be appraised by the best information available. That means that a cost-benefit analysis of such projects should consider not only the costs of building the port and the income generated by using it, but also the effect it will have on, say, the damage suffered when the next tsunami comes along.

A lot of work has been done in this respect, and a lot of work still remains, as Barbier’s article demonstrates. But I’m not going to do it. I have done valuation studies in the past, and occasionally I supervise students doing valuation surveys. But if you want to really make your mark in this domain you need to do nothing else, and I’m too much of a modelling person to focus on surveys and the statistics that go with them.

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