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Proposed Economic Valuation Methodology for Belize Daniel Prager and Lauretta Burke

World Resources Institute. Proposed Economic Valuation Methodology for Belize Daniel Prager and Lauretta Burke. Economic Valuation of Coastal Ecosystems Workshop Belize City June 7, 2007. Method Overview. Background and Framework Methods and Results Fisheries Local Use Survey

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Proposed Economic Valuation Methodology for Belize Daniel Prager and Lauretta Burke

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

  2. Method Overview • Background and Framework • Methods and Results • Fisheries • Local Use Survey • Tourism [Valuation Tool Demonstration] • Shoreline Protection • Inclusion of mangrove ecosystems

  3. 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) Project Partners

  4. Direct Use Values Non-use Values Indirect Use Values EcosystemServices from Coral Reefs Option Values

  5. Total Economic Value

  6. 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

  7. 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

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

  9. Project Overview Main Components Fisheries Method: Revenues minus Costs Tourism Method: Revenues minus Costs Shoreline Protection Method: “Avoided Damages” approach

  10. 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

  11. 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

  12. 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

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

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

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

  16. Fisheries Fish Processing Revenuesminus Costs. -Capital costs -Equipment costs -Cost of inputs (fish, shellfish, preservatives) -Labor costs

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

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

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

  20. 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

  21. Local Use Survey Fisheries

  22. St. Lucia Local Fishing Estimate Three Types of Local Fishing Use

  23. Local Use Survey

  24. 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

  25. 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

  26. 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

  27. 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

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

  29. 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

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

  31. 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

  32. 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)

  33. Tourism Cruise Ships Revenueminus Costs --Maintaining ports --Environmental damages --Additional use of roads, etc.

  34. 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

  35. 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

  36. Estimated Reef Tourism Use Values *Departure taxes only**Trinidad and Tobago

  37. Total Valuation Estimates Unit: Millions US$

  38. 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

  39. 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”

  40. 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

  41. 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.

  42. 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

  43. 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

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

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

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