Cost-Benefit Assessment of Marine and Coastal Resources in the Western Indian Ocean (Regional - Draft)

The Agulhas and Somali Current Large Marine Ecosystems (ASCLME) is one of the 66 identified Large Marine Ecosystems of the world. The countries of the ASCLME region benefit from the goods and services supported by the ASCLME. Coastal and marine ecosystem goods and services play a crucial role in supporting the livelihoods of the people and national economies that use this ecosystem. Yet, the Millennium Ecosystem Assessment (2005) reports that these ecosystems are deteriorating worldwide, and with them the capacity to support human well-being. This deterioration in turn is estimated, by the World Bank (2009), to have resulted in economic losses of about US$50 billion anually, a result which is reinforced by data from the FAO (2011). In this regard, the GEF IW is supporting the countries of the region in implementing an ecosystem-based management approach so as to optimize and sustain the benefits for meeting Millennium Development Goals (MDGs) and the targets reached during the World Summit on Sustainable Development (WSSD).

A phased approach is used in the implementation of the ASCLME project, which progressively builds the knowledge base and strengthens technical, managerial and decisionmaking capabilities at the national and regional scales so as to address environmental concerns and transboundary developments in all relevant sectors. The project aims to build political will to undertake threat abatement activities while leveraging finances proportionate to management and governance needs.

The activities within the ASCLME Project, for the first phase, are focused on the collection of coastal and offshore data and information and capacity building. The overall objective of this data capture is to deliver, in the first instance, national Marine Ecosystem Diagnostic Analyses (MEDAs) that feed into national policy and governance, regional Transboundary Diagnostic Analyses (TDAs), and a comprehensive Regional Strategic Action Programme (SAP). To help support decision making in the sustainable use and management of the resources of the ASCLME region, it is very important that the economic value of all ecosystem goods and services is recognized, and their contribution to sustainable economic welfare estimated.

In this regard, the ASCLME Steering Committee commissioned the current report to undertake a cost benefit assessment (or economic valuation) of marine and coastal resources in the ASCLME. Through this analysis, policy and decision makers would be appraised and engaged in the decision with regards to the outcomes of the MEDAs and the SAP, and that this will result in their support for the leveraging of finances considered critical for the sustenance of the resources.

This report seeks to promote sustainable development in the coastal areas of the ASCLME by providing stakeholders with a powerful economic analysis for decision-making based on the economic value of the ASCLME. The overall objective of this contribution is to promote sustainable use by identifying the contribution of coastal and marine ecosystem goods and services to the economy of the countries of the ASCLME.

To achieve this, we (i) collect, compile and measure the economic value of ASCLME’s key ecosystem goods and services (fishing, fish farming, tourism, etc.); (ii) measure the incomes and other benefits generated by these goods and services and their distribution among ASCLME countries; and (iii) undertake an economic risk assessment on marine and coastal resources of the region. These are then used to carry out economic analyses of major policy issues related to the coastal and marine ecosystem management of the ASCLME.

Specifically, we carry out a cost benefit assessment on the resources of the Western Indian Ocean Region by: (i) providing a broad overview of the total economic value of the ASCLME and the resources it supports, and their contribution to the economy; (ii) analysing the distribution of economic benefits among different regions/countries of the ASCLME; (iii) assessing the contribution of the marine and coastal resources towards poverty alleviation in the countries of the region; (iv) using the economic results, provide local resource managers with indicators and policy analyses about the economic impact of different options for the sustainable use of the ASCLME and the economic trade-offs among different uses of the marine ecosystem (e.g., tourism-fish farming, fishing tourism); (v) developing appropriate indicators to track any changes or anomalies within the cost benefits and values of ecosystem services in order to better advice any need for alterations in management practices and/or policy. A final and important component of this work is the goal of increasing capacity for government and other stakeholders in the ASCLME region to use environmental economics effectively in their decision-making.

We focus on valuation of the major ecosystem goods and services: fishing, fish farming, and tourism, and thus estimate 1) value of ecosystem goods and services; and 2) net benefits generated by these goods and services both regionally and nationally. Data about the number of fishers, boats and gear of different types for each ASCLME country is compiled and analysed from the Coastal Livelihoods Assessment reports and counterpart cost benefit reports (Turpie and Wilson, 2011; Tovondriaka, 2011, Razack, 2011). Supplementary data are collected to fill in the gaps. Such data include the catch/volume of production of fishing, fish farming and tourism; data on prices, costs, wages to fishers, etc. The benefits to be analysed here include total revenues, profits and wages that are made from each of these activities.

The integration of policy analysis with economic valuation is an essential part of this work as it would ensure that the project has an impact on stakeholders responsible for, and affected by, coastal and marine management, from government officials to the general public. I identify policy priorities where economic valuation can make the greatest contribution and develop indicators and analyses to support these priorities. For example, quantify the economic trade-offs among different uses of the marine ecosystem (e.g., tourism-fish farming-fishing), or the impact of promoting different segments of the tourism market. This assessment should be able to directly inform and contribute to the finalization of MEDA (at country level), TDA and SAP.