Transcript Economic Valuation of Marine Biodiversity for nonecon

PETER SCHUHMANN (UNCW)
JAMES CASEY (W&L)
JULIA HORROCKS (UWI)
HAZEL OXENFORD (UWI)
Roadmap
 Introduction
 Motivation
 Economic Value and…
 The Value of Non-Market Valuation
 Barbados and Biodiversity
 Methods
 The Choice Experiment
 Results
 Discussion
Motivation
 The economic valuation of ecosystem services is a key
policy tool in stemming losses of biological diversity
(Abson and Termanson, Cons.Bio. 2011).
 There is a growing recognition that conservation often
entails trade-offs (Hirsch et al., Cons.Bio. 2011).
 We are writing this paper for non-economists.
Specifically, we are targeting biologists, managers, and
policy-makers.
 Mismanagement of Natural Resources - The Commons
Problem Continues, (Stavins, 2011))
 biodiversity loss and habitat destruction(Shogren et al.,
1999; Holland et al., 2009)
 Striking a balance (Wunder, 2005)
Economic Value
 Economics: The “science” of understanding trade-offs.
The Economic Valuation of Natural Resources
“Public policy should reflect an understanding of the
public's values. This is especially true with respect to
the environment. Because public values about the
environment are not generally expressed in the
marketplace, nonmarket valuation has become an
important source of information for environmental
decision making”.
From: Champ, Boyle, and Brown, "A Primer on Nonmarket Valuation"
Some benefits of conducting a
valuation exercise.
The services provided by the natural environment directly
affect human welfare in myriad ways, but are often
overlooked by some policy makers who only focus on jobs
and revenues.
Valuation reminds everyone that although the
environment is “free”, this in no way implies that it is
not valuable.
Applications
What is the value of …
 Access to marine parks and protected areas (Bonaire, Dixon et al (1993),
Thur (2010); Jamaica, Spash (2000)).
 Polluted beaches and rivers in England (Garrod and Willis, 1999)
 Fish abundance, coral cover and encounters with specific species in
Turks & Caicos (Rudd, 2001).
 Viewing larger or more abundant Nassau groupers (Rudd and Tupper,
2002)
 Beach setbacks and tourism (Brau and Cao, 2006)
 Loss to SCUBA divers from a decline in coral quality in Bonaire
National Marine Park. (Parsons and Thur, 2008)
 Coral conservation in the Riviera Maya (Casey et al. 2010)
Barbados
Barbados
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Land area: 166 sq mi
Population = 260,000
98% literacy rate
Independence gained in 1966
Language: English
Ethnicity/race: black 90%, white 4%, Asian/mixed 6%
Economy: tourism and sugar
Per capita income approximately US $8,000
Coastal and Marine Issues
 Fishery management
 Coral reef degradation
 Land use / development
 Beach erosion
 Pollution runoff
 Turtle Nesting
Why a Choice Experiment?
 Unlike other valuation methods, CEs allow
multidimensional attribute changes to be valued
simultaneously, and can be used to generate estimates
of the relative value of multiple attributes (Huybers,
2004).
 Hoyos (2010) summarizes the advantages of CE relative
to other valuation methods and provides a
comprehensive review of the methodology.
Formal Model
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McFadden (1974) utility derived by an individual from a particular alternative (i) as containing a deterministic
component (Vi) and a random component (εi):
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(1)
Ui = Vi + εi
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if an individual chooses alternative (i) over another alternative (j) this implies that the utility from the former
outweighs that from the latter. i.e. choice of (i) over (j) implies Ui > Uj.
Since the utilities include a stochastic component, we can describe the probability of choosing alternative (i) as:
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(2)
P{i} = P {Vi + εi > Vj + εj}
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standard multinomial logit (MNL) model can be specified to facilitate estimation of the probability of choosing
alternative (i) (McFadden 1974; Ben-Akiva and Lerman 1985).
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(3)
P{i} = exp(Vi) /  exp (Vj)
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Specification of a functional form for the indirect utility function (1) requires the identification of quality variables
which are likely to influence the choice in question. By specifying Vi as linear in observable price and quality attributes
of the alternatives, willingness to pay for a given level of an attribute relative to a baseline level can be estimated as:
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(4)
WTP = - βA/ βP
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Where βA is the estimated coefficient on the attribute level, and βP is the coefficient on price, which can be considered
the marginal utility of income.
Dive trip choice attributes and levels
Attributes
Levels
Price ($US/2-tank dive)
$50, $100, $150, $200
Fish diversity
Up to 5, 15, 25 species, more than 25 species
Coral cover (photographic images)
5%, 15%, 25% 35% coral cover
Number of other divers at site
15, 10, 5, 0
Marine turtles encountered
0, 1, 2, 3 or more
Example of a single paired choice
ATTRIBUTES
OPTION A
OPTION B
US $150.00
US $100.00
Up to 25 fish species
More than 25 fish species
OPTION C
PRICE
(2 TANK DIVE)
FISH
DIVERSITY
I WOULD NOT
CORAL
COVER
CHOOSE EITHER
Coral Photo A
Coral Photo C
NUMBER OF OTHER
DIVERS AT SITE
OF THESE OPTIONS
No other divers
5 other divers
TURTLES
ENCOUNTERED
I prefer…
(check one box)
View 1 turtle
 OPTION A
Do not view turtles
 OPTION B
 NEITHER
Descriptive statistics (characteristics of
respondents’ most recent dive)
Variable
Mean
Median
Standard
deviation
Min
Max
n
Price paid (USD)
105.58
75.00
38.40
75.00
201.00a
154
Fish species
encountered
19.80
15.00
7.52
5.00
31.00b
157
Coral cover (%)
27.73
35.00
10.57
5.00
35.00
159
Other divers at
site
4.12
3.00
3.85
0
13.00
159
Turtles
encountered
1.73
2.00
1.52
0
5.00c
160
Who is this person?
 A 38 years old male from UK (46%) or the US (32%)
 As likely or not to be married
 Generally affluent and highly educated
 7 years of diving experience
 Most (81%) have been to the Caribbean before
 50% have previously been to Barbados
 Many divers in the sample rated the quality of diving
in Barbados as better than most places they had been
diving (42%) or of equal quality (30%).
Willingness to pay for quality improvements
relative to baseline attribute levels (US Dollars)
Variable
Mixed Logit with Interactions
15% coral
$93.84
25% coral
$158.14
35% coral
$195.23
Up to 15 fish species
$115.00
Up to 25
$133.02
More than 25
$157.21
10 other divers
$61.40
5 other divers
$102.44
0 other divers
$117.56
1 turtle
$94.77
2 turtles
$120.47
3 or more turtles
$143.49
Divers want to see more Coral
Divers want to see more turtles
Divers want to see fewer people
Policy Implications
 SCUBA divers have a clear appreciation of, and willingness to pay for,
lower levels of site crowding and higher levels of coral quality, species
diversity and sightings of marine turtles – SO…….
 Increase site-level user fees to restrict congestion, improve site quality,
and capture revenue for ….
 coral head transplanting, reef ball installation, mooring buoy systems,
enhanced conservation of sea turtles, and compensate fishers for
avoiding species rich areas
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