[Coral-List] Reply: Market-based approaches to conservation

Jos Hill joskhill at gmail.com
Tue Aug 2 00:22:37 EDT 2011

Thank you Francesca $ Rodel for your input. I agree that we need to nurture a multidisciplinary approach, however, Francesca raises some important points.


I agree that we need to incorporate more ecological principles into our dialogue with government and business. The field of ecological economics attempts to do just this.

There are three questions that tend to guide economic inquiry:

1.     What ends do we desire?

2.     What resources do we need to attain these ends?

3.    	What ends get priority over others and to what extent should we allocated resources to them?


In economics “utility” is used to describe human welfare. The problem with neo- classical economics is that it assumes that people only reveal their wants through market transactions – which means the utility derived from nature is not included. Humans are also assumed to be insatiable which means continued economic growth is a desired outcome.


Ecological economists estimate we have already met our growth limits for our economy and we are using renewable resources at a rate faster than they can regenerate. This means that if we create more physical wealth, we experience the “opportunity cost” of lost natural resources, also known as natural capital. This situation is problematic for politicians and economists who have promoted continued growth as a way to raise the standard of living of those living in poverty without impacting upon the wealth of the rich.


The paradigm shift we need is to move away from the “constant growth” model and instead focus on a “steady state” model where we strive for constant improvements in the efficiency with which we use resources and by incorporating non-tangible measures of human satisfaction into our measure of wealth and fully incorporate the opportunity cost of lost natural and social capital from our cost-benefit analysis. Ecologists and social scientists can help economists and businesses to understand the parts of the equation that they are currently leaving out.


To give a coral reef example about the importance of understanding the market value of an ecosystem: If a corporation that wants to build a hotel adjacent to a coral reef will expect to reap financial benefits from the coral reef through the fees that tourists will pay to visit it. The paradox is that building a hotel next to a coral reef can cause beach erosion by disrupting natural beach dynamics, damage to the reef through use of fertilizers or lack of sewage and overfishing to feed increased demand for fresh seafood. The damaged reef will not be so attractive to the hotel and so the hotel will incur a loss in revenue as a result – that arguably could have been avoided by taking a more sustainable approach to the development of the hotel.


If we can determine the value of the resources to different businesses, we can incorporate these costs into development decisions and hope to promote developments that are sustainable. In this way, determining the market value of these resources can help conservationists to make this argument to the business world and politicians. The World Resources Institute has done some excellent work on this front through their “Coastal Capital” Projects in the Caribbean and they are using the results to help to build support for policies that help to ensure healthy ecosystems as well as sustainable economies.


An example of a market-based approach to coral reef management is gaining popularity in fisheries management with the transfer from days-at-sea to introduction of individual transferable quota (ITQs). Days-at sea management regimes create a competitive environment where each fisherman is trying to maximize their own catch rather than the long-term value of their primary asset, healthy fish stocks. Under an ITQ system, fishermen are allocated a share of the total catch so their incentive changes to try to maximize the value of that share by taking care of the resource. Thus the incentives of conservationists and businesses are aligned. In this session it would be interesting to explore other ideas people have for creating alignment of business and conservation values to help to protect coral reef ecosystems.




Daly H. & Farley J. (2004). Ecological Economics: Principles and Applications. Washington, DC: Island Press.


EDF (2007). Sustaining America’s fisheries and fishing communities. Environmental Defense Fund. New York. Retrieved from http://www.edf.org/documents/6119_sustainingfisheries.pdf


Little, L.R., Begg, G.A., Goldman, B., Williams, A. J., Mapstone, B.D., Punt, A.E., Russell, M., Kerrigan, B., Officer, R., Slade, S., Muldoon, G., Penny, A., (2009). Modelling individual transferable quotas as a management tool in the Queensland Coral Reef Fin Fish Fishery. Report to FRDC, Project 04/030, 167 pp.


World Resources Institute (2011). Coastal Capital: Economic Valuation of Costal Ecosystems in the Caribbean. Retrieved from http://www.wri.org/project/valuation-caribbean-reefs

Jos Hill

Presidio Graduate School

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