[Coral-List] Economic Valuation and market based conservation

John McManus jmcmanus at rsmas.miami.edu
Thu Aug 18 13:41:51 EDT 2011

I would like to see coral reef valuation efforts restricted to cautious
assessments of income generation per unit time, rather than the assessment
of a fixed value per unit area. Attempts to assess a value per unit area
usually involve setting a  positive rate of discounting. The value one comes
up with is strongly dependent on the chosen rate of discounting. And yet,
the choice of discounting rate as applied to ecosystems is highly
controversial (Norgaard and Howarth 1991). As mentioned by others in
previous posts, there are strong arguments for using a negative rate of
discounting with regard to particular ecosystems, particularly if one is
concerned about intergenerational transfer of the resource and if one
accounts for the increasing value of remaining high quality coral reefs as
others decline in quality (Hellweg et al. 2003). In some sense, the value of
a coral reef which exists over long periods of time in the future may be
essentially infinite. 

The assessment of annual income from a natural resource is a little more
tractable. However, as Hector Reyes pointed out, it makes a huge difference
as to who gets the income. This is a general problem with many bioeconomic
models and concepts derived from them (including many fisheries models such
as the Gordon-Schaefer Model). There is often an assumption that one should
maximize the total net income available from a natural resource (social
rent), as if it did not matter whether the income goes to local coastal
dwellers or wealthy corporations based in other countries. As anyone
involved in participatory coastal management can tell you, success is often
strongly linked to ensuring that local resources benefit local people.   

Hellweg S, Hofstetter TB, Hungerbuhler K (2003). Discounting and the
environment: should current impacts be weighted differently than impacts
harming future generations? The International Journal of Life Cycle
Assessment 8(1): 8-18.

Norgaard RB, Howarth RB (1991) Sustainability and the problem of valuation.
Pages 58-74 in Costanza R. Ecological Economics, Columbia Press, NYC.

Note: though aging a bit, the latter book lays out the foundations and
challenges of Ecological Economics very clearly in simple terms, and these
have not changed much. I recommend in particular the chapters by Daly and



John W. McManus, PhD
Director, National Center for Coral Reef Research (NCORE)
Professor, Marine Biology and Fisheries
Coral Reef Ecology and Management Lab (CREM Lab)
Rosenstiel School of Marine and Atmospheric Science (RSMAS)
University of Miami, 4600 Rickenbacker Causeway, Miami, 33149
jmcmanus at rsmas.miami.edu      http://ncore.rsmas.miami.edu/
 Phone: 305-421-4814   

"Far better an approximate answer to the right question, which is often
   than an exact answer to the wrong question, which can always be made
     --John Tukey, Statistician, National Medal of Science and IEEE Medal of

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