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Biology

The Great Barrier Reef is worth $15 billion – $20 billion AUS a year: A quick lesson in ecosystem economics

Paper: N. Stoeckl et al. (2014). A new approach to the problem of overlapping values: A case study in Australia’s Great Barrier Reef. Ecosystem Services 10: 61-78.

When discussing the value of an ecosystem, tensions run high. Some people evaluate ecosystems with heavy emphasis on non-use values, like aesthetics and spiritual appreciation. Other people value ecosystems based on things like natural resource availability and the potential for direct monetary revenue. It is difficult to assess the relative importance (or value) of these differing goals because the economic benefits of one are easily quantified while the other is more difficult to assess.

In this paper, Stoeckl et al. make an valiant attempt at a new method to determine the monetary values of ecosystems and use the Great Barrier Reef World Heritage Site as a case study. It is a complex problem that offers many challenges, but it is important and there is much more work to be done.

 

How do you determine the value of an ecosystem?

To determine the monetary value of an ecosystem, the services it provides to humans must be analyzed.

Ecosystem services are comprised of the various benefits that support sustainable human well-being as provided by that ecosystem; therefore, the value of those services is relative to how much an ecosystem is perceived to contribute to sustainable human well-being.

 

How do you determine the contribution of an ecosystem?

To assess the contribution of an ecosystem, you evaluate the benefits to individuals that are both easily perceived (eg. making $100/day on SCUBA tours) and those that are not well perceived (eg. cultural services). Additionally, you take into account the benefits to whole communities, and benefits to sustainability (eg. assurance the ecosystem will be fully available in the future). Then, by summing all of these benefits together, you can determine the total economic value (TEV) of the ecosystem.

This approach of adding together different pieces to create a whole evaluation makes many assumptions. One of these major assumptions is that total values can be estimated by adding the value of services without the risk of double counting. What if one benefit contributes to both an individual AND the whole community? How do you weight that value to properly represent it in the TEV?

Ecosystems, by definition, are complex systems composed of non-linear, interdependent components. Because of this complexity, there is often a problem in economic evaluations double counting and that is what Stoeckl et al. focuses on:

Those interested in estimating the value of an entire ecosystem, may need to approach the problem from a ‘whole ecosystem’ perspective… unless it is possible to first establish that individual ecosystem services are separable (in consumption or use) and thus additive.

 

Enter, the Great Barrier Reef World Heritage Site

Stoeckl uses the Great Barrier Reef World Heritage Site (GBRWHS) off the eastern coast of Australia as a case study to test a new approach to valuing the whole ecosystem. Data was collected from over 1500 residents who provided insight to people’s perceptions of the importance of 18 different community defined benefits to their overall quality of life.

Some of the items had ‘inseparable’ or ‘overlapping’ components. These components were grouped together, generating composite benefits that could be validly compared, thus providing information about the likely value of these benefits relative to one another and allowing the authors to generate an estimate of the collective value of all community-defined benefits associated with the GBRWHS that are examined for the paper. The authors’ approach to determine the total economic value of the GBRWHS required the following:

  1. Identify ecosystem benefits
  2. Quantify the relative importance of the benefits using the conceptual framework of life satisfaction
  3. Assess the seperability of those benefits
  4. Calculate the total value of benefits relative to benchmark market values

Stoeckl et al. assign value using the life satisfaction (LS) method rather than traditional valuation (TV) method because TV methods do not look for direct and measurable links between ecosystem services and utility. Stoeckl et al. explain TV by describing a $100 lunch at a restaurant with a view, vs. a $300 lunch at a restaurant sans view. If you are indifferent between the options, the view can be valued at $200.

Unsatisfied with the TV method, Stoeckl et al. use the LS method to ask people to indicate how important various goods and services are to their overall quality of life and compared ratings. Importantly, Stoeckl et al. elaborate on the widespread consensus that self-reported measures of LS are valid, replicable, and reliable.

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Figure 1. Results of data collection concerning the importance of different ecosystem services.




 The group uses statistical analysis to determine the separability of groups of benefits and the collective value of the benefits. Then, the mean importance of each separable group of community defined benefit as a contributor to overall quality of life is determined and an inferred value is assigned.

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Figure 2. The ways in which community derived benefits contribute to the overall quality of life of residents.

The monetary range for the study involved choosing different market bench marks with which to value the importance of a community defined benefit. Figure 3 shows the inferred monetary value if reef tourism is chosen as the market benchmark, while Figure 4 shows the inferred monetary value if mining and agriculture are chosen as the market bench mark.

Figure 3. Inferred values with reef tourism as the market benchmark.

 

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Figure 4. Inferred values with mining and agriculture as the market benchmarks.

Considering these two benchmark values, this suggests a potential total economic value for the Great Barrier Reef of $12 – $20 billion AUS per year. This is lower than using other methods for separability, and may be a substantially conservative number.

To learn more about the many resources the study references and the complexities of the methodology, it is best for you to examine the article yourself. The authors consider many previously published studies and address why they choose their particular sets of valuation.

 

Final Word

Figuring out how much an ecosystem is worth is not easy. The authors admit this study is not comprehensive coverage of all ecosystem services and they only considered views of the residents in the region. For instance, the millions of tourist opinions were not considered, nor were perceived values of poorly understood topics like storm protection and nutrient cycling. However, they did account for financial estimates of benefits like uncrowded beaches for the first time.

The take home message is that there is a new way to assess the value of an ecosystem that considers duplication of assets and different market benchmarks to assign inferred values. While the methodology still needs some fine-tuning, it critically addresses resident recognition that “having a healthy ecosystem is important by and of itself, but it is also a precondition for being able to use the ecosystem for recreation and/or livelihoods.”

Sarah Fuller
With academic backgrounds in oceanography, geology, and environmental education, Sarah has traveled to far reaches of the planet to learn everything she can about our natural world. While exploring, she dabbles in photography and is rarely found without a book. She has no plans to stop any time soon.

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