Suppose you are tasked to estimate the benefits of preserving a mangrove area

Answer :

The total economic value (TEV) approach is probably the most commonly used methodology in economics to measure the economic value of the environment and natural resources (R. Rosales, 2005). Conceptually, the total economic value (TEV) of a resource consists of its use value (UV) and non-use value (NUV). Use values are further classified into direct use values (DUV), the indirect use values (IUV) and the option values

Mangrove ecosystems in Sri Lanka are increasingly under threat from development projects, especially aquaculture. An economic assessment is presented for a relatively large (42 ha) shrimp culture development proposed for the Rekawa Lagoon system in the south of Sri Lanka, which involved an extended cost–benefit analysis of the proposal and an estimate of the “total economic value” (TEV) of a mangrove ecosystem. The analysis revealed that the internal benefits of developing the shrimp farm are higher than the internal costs in the ratio of 1.5:1. However, when the wider environmental impacts are more comprehensively evaluated, the external benefits are much lower than the external costs in a ratio that ranges between 1:6 and 1:11. In areas like Rekawa, where agriculture and fisheries are widely practiced at subsistence levels, shrimp aquaculture developments have disproportionately large impacts on traditional livelihoods and social welfare. Thus, although the analysis retains considerable uncertainties, more explicit costing of the environmental services provided by mangrove ecosystems demonstrates that low intensity, but sustainable, harvesting has far greater long-term value to local stakeholders and the wider community than large shrimp aquaculture developments.

The Total Economic Valuation (TEV) framework below highlights the full range of economic goods and services that mangroves provide.

DIRECT VALUES Production and consumption goods such as: Forest Resources Wildlife resources Fish resources Agricultural resources Forage resources Medical resources Genetic resources Energy resources Water supply Water transport Recreation Landscape Research Education etc.

INDIRECT VALUES Ecosystem functions and services such as: Shoreline protection Storm protection Sediment regulation Nutrient retention Treatment of pollutants Water quality maintenance External support of fish and habitat Provision of migration habitats Groundwater discharge Micro climatic stabilization Carbon sink etc

OPTION VALUES Premium placed on possible future uses or applications, such as: Agricultural Industrial Leisure Pharmaceutical Water use Habitat Species etc

NON-USE VALUES Intrinsic significance of resources and ecosystems in terms of: Biological and genetic diversity Uniqueness Cultural value Aesthetic value Heritage value Bequest value etc.

Calculation procedure

Valuation of mangrove forest for fuel wood and timber uses is based on benefit valuation on using market prices and quantities of fuel wood and timber collected. The value of fuel wood was calculated using market prices outside the location. Valuation of mangrove related fish and shellfish species was done using local market prices and by calculating the gross benefits. A range of values of near shore fish was calculated assuming the dependence of the near shore fish catches on South-eastern coast mangroves of Sri Lanka is in average range of 30% to 80%. The market value of the change in production was estimated. The net value was derived by deducting the cost of effort for fish harvest. Comparing actual damage between the panama site and the control site the shoreline protection value of mangroves was calculated. A village namely Medilla located in southern coast without a mangrove cover, where a huge damage is reported in the Tsunami was taken as the control. The data revealed in valuation study conducted by IUCN was used in calculations (Ranasinghe T and Kallesoe, 2006). The economic value of mangroves being measured refers to direct and a component of indirect use values only. The report does not try to capture option and non-use values, due to limitations such as funds and time. The value of mangroves derived in this study captures only a part of the total economic value of mangroves. The TEV of mangrove ecosystems is higher than the estimate if full range of value components is covered in a comprehensive valuation.

Conclusions And Policy Implications

Coastal wetlands-mangroves are particularly under severe threat and remain under valued despite their economic and ecological importance. Under valuing of mangroves is a serious problem where outright conversion of the mangrove area is at stake at present in Sri Lanka under severe pressure from anthropogenic activities. Loss and degradation of these vital ecosystems impact heavily on the coastal population traditionally dependent on mangroves for food production such as fish, vegetables, fuel wood, medicines, and construction materials etc. as well as through the provision of vital life support and protection services. The results derived in this rapid mangrove valuation study undertaken in the context of post Tsunami in Panama, southeastern coast of Sri Lanka shows the importance of mangroves to the mangrove associated communities including coastal protection. As revealed in this study, the coastal community in the location depends on range of products. Fish, shrimp and fuel wood are the main mangrove products providing cash income and subsistence requirements of the community in the area. Timber and poles, herbs and vegetables and fuel wood are important for almost all income categories for their subsistence use. In this study, the economic value of mangroves was estimated to be Rs. 119,438 (US$ 1,171) per household per year. The local people tend to experience loss of mangrove degradation or conversion, in terms of the net foregone of above benefits. The results further justify the need for mangrove protection for the benefit of the mangrove-associated communities. According to estimated benefits, the direct use benefit of mangrove products (Gross Value) per household is Rs. 9,953 per month, which is significantly high in comparison to mean household income per month in the Eastern province7 , (Rs. 7,640 per household per month). Protection of mangrove forest ensures food security of the coastal dependent vulnerable community even during difficult periods such as droughts, marine fisheries off-season. It provides seafood needs, wild vegetables and fuel wood for cooking purposes for the local community. This may reduce the burden on the government and pressure on other natural resources like corals, sand dunes and terrestrial forests. Households of all income categories poor, medium and high-income groups are dependent on mangrove products. However, according to results of the study of Panama Village, highest foregone benefits accrued to poor in conversion or degradation of mangroves. As revealed in the study, mangroves provide higher proportion of benefits to the poor income households. Total benefits to income groups poor, medium and high are 42 %, 37% and 21% respectively. Mainly poor and middle income categories depend on fish, timber and wooden poles and vegetables derived from mangroves. The high-income category depend more on high valued shrimps and crabs. Mangroves supply us with a number of important resource outputs (fish, fuel wood, timber and poles etc.), but they also perform a large number of regulatory ecological functions, which support economic activity. Nutrient retention, flood control, ground water recharge, microclimate stabilization and shoreline stabilization etc. are the important ecological functions of mangroves that are largely unrecognized. The estimation of the value in terms of ecological benefits is a difficult task due to insufficient technical data on such ecological relationships and the resource and time limitations. Due to this fundamental issue, the value of mangroves is always underestimated. Therefore, the decisions regarding the coastal zone activities and mangrove forests, which may be taken based on limited information on mangrove ecosystems could end up with irrational decisions creating externalities in terms of mangrove destruction, water pollution and also further aggravating the problem of income distribution. This is especially true when the forest in focus is located along the coast and serves as a nursery ground for small fish and marine life. The study attempted to derive indirect use value in terms of mangrove fishery linkages and the value in terms of coastline protection based on the tsunami impacts on coastal ecosystems and the community. The study estimated that mangroves generate value ranging between US$ 1,77.9 to US$ 474. 3 per hectare of mangroves per year,for fish breeding functions and the estimated value of US$ 392.5/ha for mangroves acting as a protective barrier. The study being a rapid assessment, has certain limitations. Moreover, there is a tendency towards an under or over estimation of the economic value of mangroves in terms of fishery linkages with mangroves providing nursery ground for fish breeding. All the fish species may or may not directly be associated with mangroves. The results are valid only with the assumption that 30-80% of all fish species are in someway attributed to mangroves. In terms of coastline protection, the assumption is that the damage avoidance from tsunami was provided only from mangroves. It is also observed that the sand dunes and mangroves have acted in varying degrees as barriers in minimizing the effects of Tsunami in the country. The effects also vary depending on the other geographical factors as well. The estimated value of mangroves in terms of coastal protection in the context of tsunami could be an over estimation since the coastal protection benefits could be a combined effect of sand barrier, other geographical factors and the mangrove forest present in the area. In the assessment, the tendency towards an underestimation of the economic value of mangrove may come about because the study ignores other potential direct use value such as tourism and indirect use values such as the ecological functions of nutrient retention flood control, ground water recharge, microclimate stabilization and shoreline stabilization etc. In the assessment, nonuse values are completely neglected. Moreover, the results from the analysis also indicate that when coastal fisheries are well managed by local communities, the foregone benefits of mangrove in terms of support for coastal fisheries will be even greater considering the mangroves functioning as breeding grounds for near shore fish. Under the locally managed coastal fishery regime, converting mangrove forests into other options such as commercial shrimp farms is even less economically viable if the true values of mangroves are taken into consideration. According to results, there also seems to be an incentive for the local villagers to protect mangrove forests especially where the fisheries are well managed by local communities.