Preserving an Undervalued Treasure: a Healthy Marine Ecosystem

April 8, 2009

  • Coastal marine ecosystems are seriously threatened by manmade and natural pressures.
  • Goods and services that marine ecosystems provide are grossly undervalued, although estimates show they contribute more than $20 trillion to the global economy.
  • The Bank is helping countries develop systems to quantify the value of marine ecosystems.

April 8, 2009—Zanzibar is a small, densely populated archipelago off the coast of Tanzania, with a marine ecosystem teeming with corals, fish, seagrass, mangroves, and other flora and fauna. Its 1.1 million people are highly dependent on this ecosystem, which accounts for 30 percent of the country’s GDP.

Zanzibaris fish for both subsistence and trade, and welcome tourists to enjoy the sea life. They also depend on the protection that fringing reefs provide from tropical storms and erosion.

But this marine ecosystem is being seriously threatened by manmade and natural pressures. These pressures range from intensive tourism development and rapid population growth to overfishing, overharvesting of mangroves, and coral bleaching caused by stress from multiple sources, including climate change.

Zanzibar’s situation is emblematic of a global problem where critical wetlands and coral reefs are being lost at an alarming rate, says Katherine Sierra, the World Bank’s Sustainable Development Network vice president, in Environment Matters, a World Bank publication.

The poor, living in coastal areas in developing countries, depend most directly on the services oceans provide and are the least able to cope with this loss.

Quantifying the Value of Marine Ecosystems

According to Environment Matters, coastal and marine ecosystem goods and services are estimated to contribute more than $20 trillion to the global economy, which is more than a third of the gross world product.

Yet, the benefits that marine ecosystems provide are grossly undervalued when calculating development trade-offs and the investments countries are willing to make to preserve this natural capital.

Without accurate information about the economy’s dependence on an ecosystem, decision-makers lack a powerful tool, resulting in lost opportunities for economic growth and underinvestment in conservation.

The new issue of Environment Matters looks at valuing coastal and marine ecosystem services to give policymakers the knowledge they need to make difficult sustainable development decisions.

“Putting even rough numbers on these services can help make the case that governments, private enterprise, and international institutions must make investments in the sustainable management, protection, and restoration of such services,” says James Warren Evans, Director of the World Bank’s Environment Department.

Marine Ecosystem Benefits

  • Coral reefs provide critical spawning and nursing habitats for many fish of economic importance, like grouper and tuna.
  • Healthy mangroves in India acted like a shield and bore the brunt of the 2004 tsunami, saving lives and property of the mostly poor coastal fishing communities.
  • Mediterranean wetlands serve a number of important functions for both rich and poor, including water purification, nutrient reduction, sedimentation sink, flood management, and prevention of shoreline erosion.
    Coastal tourism is a major earner of foreign exchange for many developing countries, especially for small island states.

..and Examples of Degradation

  • Some 16 percent of the world’s coral reefs died in the wake of widespread coral bleaching tied to the El Nino events of 1997.
  • The UN Food and Agriculture Organization reports that 20 percent of the world’s mangroves were lost between 1980 and 2005.
  • Gross overcapacity in global fishing fleets reduces the annual economic benefits from global marine fisheries by about $50 billion per year.

Paying for Environmental Services

The World Bank is helping policymakers put quantifiable values on these services. Many countries are developing systems of payments for environmental services (PES), which addresses costs that traditionally aren’t accounted for on balance sheets.

For example, Zanzibaris who fish for subsistence have little incentive to restrict their fishing to benefit a tourism industry. Likewise, the tourism industry may not take into account the fragile nature of the more industrial fisheries it depends on to keep visitors fed or entertained.

As a result, policymakers don’t take these indirect factors into account when making development decisions. This often results in fisheries, or other natural coastal amenities tourism depends on, becoming degraded or lost.

Under the PES approach, those who benefit from a particular ecosystem service compensate those who manage the ecosystem to ensure that it continues to provide both services in a sustainable way.

“By demonstrating the links between sustainable coastal resources management and social and ecological resilience to climate change, the Bank is helping build the political will required for countries to invest in protecting their natural capital now as part of a no-regrets policy for the future,” says Marea Hatziolos, technical editor of Environment Matters and senior environmental specialist at the Bank.

Compensation or “payment” for these services can take many forms. For example, entry fees for tourists to visit a pristine reef or license fees for fishermen to access fishing grounds. In the case of fishermen, as well as other uses of coastal marine ecosystems, the fisheries industry is too fragmented, according to Stefano Pagiola, World Bank senior environmental economist in the Latin America and Caribbean Region.

“This creates a collective action problem, in which even though fishers as a group have a strong incentive to pay for conservation, every individual fisher has the incentive to try to avoid paying…In such cases, intervention by some governing body might be required to overcome the collective action problem,” Pagiola says.

Countries Establish Nationwide PES Programs

A few developing countries have established nationwide PES programs.

Costa Rica has the oldest PES program. Operated by the National Fund for Forest Financing, the program currently protects about 250,000 hectares of forest with beneficial consequences for the country’s marine ecosystem. Under the 1997 Forestry Law, land users can receive payments for specified land uses, including new plantations, sustainable logging, and conservation of natural forests. While similar problems affect marine coastal areas, no PES programs have been implemented for these ecosystems.

Shared incentives, such as PES programs, are needed to sustainably manage coastal marine ecosystems.

“Yet these vital ocean sources have been treated as free goods, and the marine and coastal ecosystems that provide them have consequently declined through overuse, pollution, and physical destruction.” says Hatziolos in her welcome letter to Environment Matters.

“Climate change now threatens to push many of these systems over the edge, with severe consequence for society, but especially the world’s poor.”