Translation: Will Pay $$$ to See Pretty Fish

$3.29. That’s the amount that I paid for a gallon of gas the other day. Of course, I didn’t buy just one gallon, I got close to twelve – and it doesn’t take long for $3.29 to add up. Hopefully by the time this is posted the price of gas won’t have gone up by too much (maybe it’ll go down – HA!). But, no matter the price, I’ll pay it because I can’t possibly bike everywhere that I need to go. Determining the value of gas – although dependent on many factors such as drilling, transportation, and demand – is straightforward compared to, say, putting a dollar value on keeping that oil in the ground and leaving the oil field an undisturbed desert. A desert home to cacti and scrub brush, lizards and kangaroo rats, dry arroyos that flood during infrequent rains, and campers and hikers that come to take it all in. How the hootin’ heck do you put a dollar value on that? It must be more than $3.29 per…acre…?

Perhaps my oil field/desert example wasn’t the best lead in (I’m just upset about the price of gas, to be perfectly honest), because what I’m about to dive into involves coral reefs and scuba divers in Guam. About 1,300 miles east of the Philippines, Guam is a US territory in the tropical Pacific that, like many tropical islands, hosts heaps of tourists each year. In 2010, tourism was responsible for 20% of the GDP. Of the visitors each year, 6% go scuba diving, and for 3% that’s the primary purpose of their visit. While those numbers may seem small, Guam’s GDP in 2011 was $4.5 billion, so we’re talking many millions of dollars flowing through dive tourism operators, as well as restaurants, hotels, and shops serving divers.

Now, speaking as a diver myself, we don’t travel to dive sites because they’re easy to get to (Guam is at least a 3.5 hour flight from Manila – and much farther from the US). No, we go because of the cool stuff underwater, and in tropical places like Guam, that means coral reefs, baby! It should be obvious that healthy coral reefs – lots of fish and corals (biomass), variety of species (biodiversity), and clear waters – are important to divers. But vibrant reefs are huge draws for non-divers too, many of whom will snorkel or at least enjoy the beauty from shore. So just how much are healthy, vibrant, beautiful reefs worth?

That’s exactly what Shanna Grafeld and her colleagues set out to answer. Their field is known as natural resource economics, and it differs from broader economics in a few ways. For one thing, natural resource economists typically attach values to things that are not bought, sold, or traded – like the experience of seeing a sea turtle. They also assign alternative values to things that are already valued in the traditional economy, such as the economic benefit of an intact reef ecosystem versus the dollar value of those fish in the supermarket. Pretty intuitively, this practice is called non-market valuation.

There are several ways to get at non-market valuation; Grafeld and co. used a random utility model to assess the importance divers place on reef attributes – like biomass and biodiversity – and their willingness-to-pay for positive changes in those attributes. I know that sounds like a lot, but bear with me, it’s actually fairly simple. The researchers devised a survey with each question being: “Which location would you choose to dive in?”, and then presented three options to choose from. The three options varied in the quality of six different attributes including biomass, diversity, and presence of sharks/turtles. The researchers also attached a fee to dive to most options, typically just a few dollars. Each diver who took the survey responded to eight different scenarios.

Through mathematical wizardry (AKA rigorous statistical analysis) the researchers could tease out which reef attributes are most important to divers in Guam and how much they’re willing to pay above and beyond normal dive expenses for a positive change in that attribute. I’m feeling like I may have lost you again, so let me give an example. Grafeld and co. calculated that the average diver surveyed was willing to pay $13.33 more per dive if fish biomass improved from low to high. More fish, and divers are happy to spend more money. But that’s nothing compared to shelling out a whopping $35.14 extra per dive if they see sharks and turtles. That’s as much as $15-20 million per year for sharks and turtles alone and, as the authors point out, sharks and turtles are also important indicators of good reef health.

Now, none of that is trivial – it’s great that divers in Guam are willing to contribute financially to improved reefs. But where this study really gets interesting (and important) is that divers indicated they were willing to pay for sedimentation control. Wait – what? It turns out that the number one threat to reefs in Guam is soil runoff from the island flowing onto reefs and, frankly, really screwing things up. The best way to fix the reefs is to control the sediment runoff, which is not a sexy, ocean-related thing that’s easy for divers to get behind. That’s why it’s so important that it is something the survey respondents said they can get behind. It means they understand that land and sea ecosystems are interconnected and interdependent, and that they are receptive to combined management of the two. This type of management scheme often doesn’t see it’s benefits realized for years, and previous studies have shown tourists, which are the majority of Guam’s divers, to be more interested in immediate payoff. Their willingness to lay down their dollars (or yen – many are Japanese) to fund long-term restoration is a significant shift from what’s expected and can generate an estimated $900,000 per year for that purpose alone.

The Grafeld and co. study in Guam, while insightful, is limited in scope – assessing only the value of coral reef resources from the perspective of dive tourism. A paper published by Rudolf de Groot and his sixteen (SIXTEEN!) co-authors incorporated data from over 300 other studies into a Voltron-like super-study of ecosystem values. They looked at 22 separate market and non-market value categories spanning basics like food and water resources, to air and water quality regulation, to medicinal resources and even cognitive development. They estimated the value of a hectare (100 meters x 100 meters or 0.01 square kilometers) of average coral reef to be $350,000 per year – and most of that is non-market, non-extractive value. For Guam that works out to $3.8 billion per year for its 108 square kilometers of reef. That’s 84% of the country’s $4.5 billion GDP. Whoa. Granted, it’s important to keep in mind that a lot of that value is in non-market ecosystem services like water quality and erosion control, but recreation (AKA scuba diving  ̶  $96,000 per hectare per year) is still potentially worth just over $1 billion per year when applying de Groot and co.’s numbers to Guam.

There are some caveats. All the values I presented above are estimates averaged from studies covering coral reefs in many places around the world – reefs are absolutely not accounting for 84% of Guam’s GDP. The estimates simply give a measure of potential, much of which would be lost if extractive activities were pursued. As well, non-market valuation is not easy, so information isn’t necessarily available for most places or ecosystems. But what research has been done shows how incredibly valuable it is to simply leave the fish, coral, tree, mineral, oil, water, or whatever where you found it. Once extracted, you only get value from that resource a single time. Undisturbed, value is generated year-after-year. Obviously, a certain amount of resource extraction is necessary, but it quite literally pays to examine the alternatives before you do.

Johnny Venger

References:

1. Grafeld, S. et al. Divers’ willingness to pay for improved coral reef conditions in Guam: An untapped source of funding for management and conservation? Ecol. Econ. 128, 202–213 (2016).
2. de Groot, R. et al. Global estimates of the value of ecosystems and their services in monetary units. Ecosyst. Serv. 1, 50–61 (2012).