Proposed Economic Valuation Methodology for Belize

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

• Background and Framework
• Methods and Results
• Fisheries
• Local Use Survey
• Tourism
• Valuation Tool Demonstration
• Shoreline Protection
• Inclusion of mangrove ecosystems

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Project Partners

• Trinidad and Tobago
• TT Institute of Marine Affairs (IMA)
• Buccoo Reef Trust
• Tobago House of Assembly (THA) / Policy Research
  Development Institute (PRDI)
• TT Central Statistics Office (CSO)
• TT 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)

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Ecosystem Services from Coral Reefs
Option Values
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Total Economic Value
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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

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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
• Dont use estimates of small changes for large
  changes

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Avoiding Pitfalls

• Be careful of double counting
• Only use national benefits when interested in
  national perspective
• Adjust price distortions
• Do a reality check

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Project Overview

• Main Components
• Fisheries
• Method Revenues minus Costs
• Tourism
• Method Revenues minus Costs
• Shoreline Protection
• Method Avoided Damages approach

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Methodology Components
Shoreline Protection --Avoided Damages
Approach --Physical Vulnerability of shoreline
with economic loss estimates

• Fisheries
• Commercial Fisheries
• Fish Processing
• 3. Local and Subsistence Fishing
• 4. Economy-wide Effects

• Tourism
• Accommodations
• Reef Recreation
• 3. Local Use
• 4. Cruise Ships
• 5. Economy-wide Effects

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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
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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

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Fisheries

• Commercial Fishing
• Revenue minus Costs
• Price of fish
• Amount of reef-related fish harvested

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Fisheries

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

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Fisheries

• Fish Processing
• Revenues minus Costs.
• -Volume of fish processed
• -Volume of shellfish/lobster processed
• -Price per unit volume

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Fisheries

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

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Fisheries

• Local Fishing
• Value of time spent
• fishing and fish caught
• -minus-
• Capital costs (nets, lines)

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Fisheries

• Economy-wide effects
• Value of employment
• Multiplier boat builders/fixers
• Multiplier general expenditures by fishers
• Social value community building

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Fisheries
Annual Value of St. Lucia Reef Fisheries US
821,000
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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

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Local Use Survey
Fisheries
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St. Lucia Local Fishing Estimate
Three Types of Local Fishing Use
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Local Use Survey
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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

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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

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Very Rough Beach Tourism Estimate

• Ballpark beach value (per household)
• 125 hours/yr spent on beach (10.5 hrs/mth)
• Annual wage US7,800/yr
• US 510/household
• Based on average beach use, leisure time same
  value as work time, average income, 40 hour work
  week

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Tourism

• Tourism Components
• Reef-associated accommodations
• Reef- and Mangrove-associated Recreation
  (snorkeling, diving, sport fishing)
• Cruise ship expenditures
• Local Reef Recreation
• Multiplier effect on economy

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Tourism

• Accommodations
• Revenue minus Costs
• Foreign- vs. Local-
• owned (Leakage)
• Only reef-related stays

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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

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Tourism

• Reef and Mangrove Recreation
• Revenue minus costs
• --Snorkeling
• --Diving
• --Glass-bottom boats
• --Fish charter
• --Sport Fishing

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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

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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)

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Tourism

• Cruise Ships
• Revenue minus Costs
• --Maintaining ports
• --Environmental damages
• --Additional use of roads, etc.

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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

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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

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Estimated Reef Tourism Use Values
Departure taxes onlyTrinidad and Tobago
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Total Valuation Estimates
Unit Millions US
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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

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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

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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

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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.

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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

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Shoreline Stability Factors (from IMA)

• Coastal Type / Geology (Resistance)
• Wave Energy
• Storm/Hurricane Events (Effects)
• Grain Size / Gradient
• Coral Reef (Type, Reef Distribution, Distance
  from shore)
• Coastal Protection (headlands, etc.)
• Coastal Vegetation (type and distribution)
• Anthropogenic Activities
• Elevation

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1. Identify shoreline protected by coral reefs
and establish degree of protection provided by
reef
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Extensive protection by coral reef or mangrove
Source Belize Coastal Threat Atlas
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2. Identify land vulnerable to wave-induced storm
damage
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6 of Tobagos land area rated vulnerable.
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3. Establish likely damage in vulnerable areas
under current scenario without reefs

• Storm regime in area
• Future storm scenarios
• Historic data on storm damage along coast (wave
  and surge associated)
• Property Values
• Built structures
• Land value
• Loss of use

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Net Protection Value in Tobago (over 25 years)

• Comparison of damage (loss) with and without
  reefs
• Avoided damages of US135 million over 25 years
• (about US5 million per year)
• Net benefit from Buccoo reef alone is US60
  million over 25 years
• (about 2.5 million per year)

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Shoreline Protection Summary
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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

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Incorporating Mangrove Habitats

• Fisheries
• Tourism
• Shoreline Protection
• Other Goods and Services?

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Seeking Partners to Collaborate on

• Shoreline Protection \ Vulnerability Analysis
• National Coastal Fisheries Valuation
• National Tourism Valuation
• Partners for valuation of particular MPAs or
  atolls

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Questions for Breakout Groups

• Does the methodology as presented adequately
  capture the value of Fisheries/Tourism/Shoreline
  Protection in Belize?
• How have these ecosystem services changed over
  the last decade? Are these services expected to
  improve or degrade?
• Are there expected changes in the laws or
  regulations governing these ecosystem services?
• What are important data sources for valuing these
  ecosystem services?

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Questions for Climate Change Group

• How will climate change affect the goods and
  services provided by coral reef and mangrove
  ecosystems in Belize?
• What groups within Belize are currently working
  on reef related climate change issues? What role
  could they play in the project?
• Do existing national or international laws ensure
  that the coral reefs are adequately protected
  from threats to climate change?