Methods of economic valuation - with a focus on marine ecosystems

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Rolf Willmann
FAO Fisheries and Aquaculture Department
Presentation at the 2nd Targeted Workshop for GEF IW Projects in Africa on Economic Valuation in November 2012 in Addis Ababa.

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Methods of economic valuation - with a focus on marine ecosystems

  1. 1. Methods of economic valuation - with a focus on marine ecosystems Rolf Willmann FAO Fisheries and Aquaculture Department
  2. 2. Main references Nunes P.A.L.D., Ding,H., Markandy.2008. The economic valuation of marine ecosystems – lessons from the Millenium Ecosystem Assessment. Presented at conference on economic valuation of coastal and marine ecosystems, Bodrum, 22-25 October 2008. World Bank. 2008. Valuation of Marine Ecosystem Services: Gap Analysis. Environment Department. Washington, DC: World Bank. World Bank. 2008. Environment Matters. De Young, C. Charles, A., Hjort,A. 2008. Human dimensions of the ecosystem approach to fisheries: an overview of context, concepts, tools and methods, FAO Fisheries Technical Pepr No 489. Department for Environment, Food and Rural Affairs, UK, 2007. An introductory guide to valuing ecosystem services. UNEP-WCMC. 2011. Marine and coastal ecosystem services: valuation methods and their practical application. World Bank and FAO. 2009. The Sunken Billions. The Economic Justification for Fisheries Reform. Agricultural and Rural Development Department. The World Bank. Washington. DC. United Nations Statistics Division and FAO. 2004. Integrated Environmental and Economic Accounting for Fisheries. White Paper Handbook. Wikipedia
  3. 3. 3 Contents  Framework to evaluate natural resources and ecosystems with focus on marine resources  Methods to assess the value of ecosystems to human well- being as well as examples from marine ecosystems to illustrate the different concepts and methods  System of integrated economic and environmental accounting as a means to keep a continuous record of the use and status of environmental resources of society  Critical valuation issues (scientific understanding of ecosystems; variability and thresholds; income and wealth distribution)
  4. 4. 4 Some basics • The use (and mis-use) of ecosystems is governed by human behaviour expressed in individual and societal choices.  Choices are reflected in the allocation of scarce resources in response to individual and societal preferences and needs.  There are different means through which coordination in the allocation and use of scarce resources can be achieved (i.e. price mechanism; regulatory and incentive policies that ideally are based on best scientific analyses and democratic decision-making processes)
  5. 5. 5 Features of natural resources (adapted from Nunes)  Typically resources are materials or other assets that are used and/or transformed to produce benefit.  Resources have three main characteristics: utility, limited availability, and potential for depletion or consumption.  From a human perspective, a natural resource is anything obtained from the environment to satisfy human needs and wants => distinguish renewable and non-renewable resources  Concepts of competition, sustainability, conservation and stewardship are linked to natural resources and their management => distinguish flows and stocks  Natural resources have typically common-pool or public goods characteristics that cause the market-mechanism to perform poorly or not at all.  Natural resources that have public (or global) goods characteristics are also referred to as environmental resources
  6. 6. 6 Categories of goods => consequences for management Excludable Non-excludable Rivalrous Private goods food, clothing, cars, personal electronics Common goods (Common-pool resources) fish stocks, timber, coal Non-rivalrous Club goods cinemas, private parks, satellite television Public goods free-to-air television, air, national defense
  7. 7. 7 Africa’s marine ecosystems (Source: WB Environment Matters)
  8. 8. 8
  9. 9. 9 Macro-economic contribution of marine ecosystems – example Zanzibar (Source: World Bank. Environment Matters )
  10. 10. 10 Relative values of marine ecosystem services
  11. 11. 11 Components of total economic value
  12. 12. 12 Total value of a fisheries ecosystem (Source: Taken from Human Dimension of EAF)
  13. 13. 13 Steps in Valuation
  14. 14. 14 Economic valuation methods (Source: UNEP-WCMC)
  15. 15. Economic valuation methods
  16. 16. Marine ecosystem goods and services Market priced benefits Un-market priced benefits Fisheries products CO2 Recreation Nonuse valuesEco-tourism 16 Provisioning services Regulating services Cultural services Market price analysis Cost Assessments Applicability of different valuation methods Contingent valuation methods
  17. 17. 17 Economic consequences of coral reef degradation (Source WB Environment Matters)
  18. 18. 18 Economic valuation of a fishery – estimating resource rent
  19. 19. 19 Changes in productivity in global marine fisheries
  20. 20. 20 Estimated resource rent loss, 1974-2007 (Source: WB&FAO)
  21. 21. 21 Estimating the asset value of a natural resource: projecting future resource rent (Source: UNSD & FAO)
  22. 22. 22 Framework for Integrated Environmental & Economic Accounts for Fisheries (SEEAF) (Source: UNSD & FAO)
  23. 23. 23 The influence of income and wealth distribution
  24. 24. 24 Moving forward  Improve understanding of the consequences of human actions on natural resources and ecosystems and their ability to provide goods and services  Expand efforts to assess the impacts on human welfare of changes in natural resources and ecosystems  Link better understanding of impacts and values to: • Everyday decisions of individuals, firms and communities • Societal policy and management decisions Failing to make sound decisions the economic, social and cultural costs will be huge.

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