Valuation of Coastal and Marine Resources: Adaptation to Global Climate Change

1. Valuation of Coastal and Marine Resources: Adaptation to Global Climate Change CPACC Component 7 Leisa Perch, Technical Coordinator, CPACC Organization of American States

2. Coastal Management in the Caribbean: Some Challenges • Major Challenge: Balancing economic imperatives and environmental reality • Development and maintenance of coastal structures • Water quality – pollution levels • Public access to the beach • Dredging • Removal of beach rock, beach rubble and sea grass – for construction or for souvenir value • Sand mining • Coral reef health Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

3. Command-and control Laws Regulations Plans Guidelines Planning restrictions EIAs Market-Based Instruments (limited use thus far) Fiscal Incentives Tax holidays Reduced duty on equipment Traditional Approaches to Coastal Management in the Caribbean Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

4. Traditional Approaches cont’d • Traditionally not always environmentally sound or effective • Characterized by fragmentation of laws and responsibilities • Fines are often antiquated and not significant to discourage likely offenders • Limited financial mechanisms Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

5. Direct Mechanisms Coastal setbacks Recreation water use management planning Mitigation Critical areas protection Adopt-a-Beach programmes In-direct Mechanisms Restrictions on property rights Building codes Deposit-refund mechanism Integrated Small Island Management Approach Shifting Focus: A new Dynamic in Coastal Management Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

6. Economic Valuation: Informing Policy Direction • Challenge of defining a dollar value for resources or their environmental services • To protect resources, though, we need to have some concept of these “values” • Cannot be a precise science – as values change according to access, quantity and quality • Defining costs/benefit of one action vs. another or actions vs. inaction Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

7. Component 7 of CPACC Aim • Component 7 (Economic Valuation of Coastal and Marine Resources) aims to: “assist countries in applying the tools of resource valuation, environmental accounting and environmental decision-making for use in the development of policies and economic ad regulatory approaches”. Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

8. Component 7 Framework Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

9. The Pilot Project • Three countries participating – St. Lucia, Dominica and Trinidad and Tobago • A geographic area or pilot site was selected based on criteria including environmental features, economic and social significance, likely to be impacted by coastal impacts and extreme events • An Implementation Strategy designed including data requirements Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

10. Focus of the Pilot • Looking at estimated gains from policy action so as to highlight them with regard to climate change adaptation in the Caribbean • Informing policy and showing that the early costs can be easily met by gains later on Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

11. Issues addressed • Impacts on tourism industry • Potential Impacts on coastal and marine resources • Change in productivity of fisheries • Potential impacts on industry and from industry • Vulnerability of cultural and heritage sites • Change in residential and commercial property value Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

12. Types of Methods being used • Hedonic Model (Dominica) • Defensive Expenditures (coastal structures in St. Lucia; cultural heritage site in Trinidad) • Contingent Valuation (tourism in St. Lucia) • Change in Productivity (fisheries in St. Lucia) • Random Utility Model (tourism in Dominica) Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

13. Aspects being considered • A number of aspects were examined in the pilot project • Because of the dependence on tourism, in St. Lucia and Dominica changes in that trade after major hurricane events • Change in tourism expenditures as a result of such change is also looked at • Implications for the use of beaches due to such events • Economic value of beach loss Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

14. Aspects being considered cont’d • Using a time-series approach defining how fisheries production might be influenced by mangroves – change in size (CIP) • Using WTP looking at the use and non-use value of a cultural heritage site in Trinidad and Tobago (CVM) • How property values are influenced positively and negatively by proximity to the shore-line (hedonic price model) • The expenditures undertaken by government to protect property (DEM) Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

15. Expected Outputs from C7 • Assessment of data availability in each country and recommendations for collection for economic valuation • A picture of how climate change will impact on coastal and marine resources, possibly affecting their value • A picture of the value of adverse impacts of CC and their likely economic impacts on Caribbean SIDS • Enhanced capacity in country and in the region regarding economic valuation and its role in decision-making Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

16. Expected Outputs of C7 continued • A methodological framework for economic valuation of coastal and marine resources in the Caribbean Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

17. Some Issues to be considered • The economic costs in most cases are the expenditures on the resources used to implement policy • The existence of high unemployment in the construction industry might lower the opportunity costs of building coastal defenses Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

18. Issues/Models • Residential And Commercial Properties: Hedonic Model • Fisheries: Change in Productivity Method • Visitor (Stay-over and Cruise Ship) Use of Natural Features: Contingent valuation • Residential, commercial and public properties: Defensive expenditure Method Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

19. Some of the Data Requirements • Residential, Commercial and Public • Number of defensive structures in pilot/study area • Original costs of construction or reasonable engineering estimates • Maintenance/repair costs • Life-span of defensive expenditures • Value of properties protected Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

20. Addressing Data Gaps • Through C7 some innovative ways were conceived to obtain data: • Trinidad – used a student for part of the surveys; developed surveys as a group to benefit from gov’t department experience, gov’t departments executed the surveys • Dominica – government executed the surveys; Component collected data based on discussions with consultant; when one department would not hand over we went to them and obtained estimated values Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

21. Addressing Data Gaps • In St. Lucia – a combination of government executed surveys, development of surveys at team level and team members/coordinators carrying out data collection e.g. on sea level walls and other existing engineering works, cost, their lifetime and any assessments of their success Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

22. Findings: Highlights • Through measuring the extent of economic loss and tying it to specific attributes such as infrastructure for tourism that have experienced damage, it becomes possible to measure the potential economic damage that may be caused by climate change, and direct efforts for mitigation toward those attributes that are deemed vulnerable. Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

23. Findings: Highlights • Another possibility is to link effects on ecosystems to decreases in productivity values. In this instance, a decrease in the productivity of shrimp fisheries (using the shrimp catch as a proxy) is related to the decrease in the area of neighboring mangroves in Trinidad, a coastal ecosystem highly vulnerable to climate change. Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

24. Findings cont’d • Property values were influenced after an extreme event such as a hurricane based on proximity to shoreline– whether this is permanent or temporary is yet to be determined • In some areas, clearly vulnerable, defensive measures appear at a minimum. In one case, there was approx. 2.8 km of defensive sea walls compared to 15m coastline in area – is this enough to avoid loss? • In one instance – the annual economic loss of one beach was estimated at between US$1 and US$1.25 million and this was based on resident use of the beach Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

25. Findings cont’d • Diving: between 80-90% of clients were stay-over visitors and between 10% cruise-ship. About 10% or less were local residents, in some cases less than 1% - decline in tourism causes a direct affect on this business • Busiest periods November – April and worst mid year – their busy period coincides with the end tail of the hurricane season which has proven to be also when some of the harshest storms have hit the region • Costs varied from $225/5 trips (4-5 hours) to $45 per diving trip of 1.25 to 1.50 hrs. If businesses were closed on average 1-2 months after Lenny then the economic loss to the sector was quite significant Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

26. Findings cont’d • Vulnerability of a sector is not then a function simply of the loss at the time but also considered should be the timing of the loss in the business cycle and other factors Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

27. Challenges and Constraints • Limited resources – financial • Limit to contact and real-time collaboration between consultants and consulting teams • Limited direct training • Demands on the time of the component coordinators and country teams Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

28. Some Keys to Success • Commitment of country teams and willingness to put in the time • Ability to develop questionnaires as a group provided invaluable opportunities for capacity-building • Discussions at every stage of development • Execution of surveys by the team members, students or government departments • Opportunities to link up with Comp 8 • Regular coordination meetings developed links between the countries • A broad based group makes for a more rewarding activity and output Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

29. Project: Lessons Learnt • Already it is clear that: • Without some indication of the value of action vs. inaction or of one action vs. another, governments in the region are fated to continue to look for short-term solutions • Climate variability has impacted on the value of coastal and marine resources and climate change could change some of these permanently. This has serious implications for the use of coastal resources by locals and for tourism purposes in the region. Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

30. Lessons Learnt cont’d • Economic valuation should form part of environmental and macro-economic policy development – the exercise often highlights often unclear linkages between sectors and aspects of economic development Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002

31. An Integrated Approach: the CPACC model • CPACC a model for policy development which we believe can be used to address any policy: • Based on the foundations of: • Good data • Effective monitoring • Good science • Tried and tested tools • Developing the capacity to use and improve on the above Focal Point Meeting CPACC/MACC Preparation Workshop Nassau, Bahamas August 12-14th, 2002