Rolf Willmann FAO Fisheries and Aquaculture Department Presentation at the 2nd Targeted Workshop for GEF IW Projects in Africa on Economic Valuation in November 2012 in Addis Ababa.

1. Methods of economic valuation -
with a focus on marine ecosystems
Rolf Willmann
FAO Fisheries and Aquaculture Department

2. Main references
Nunes P.A.L.D., Ding,H., Markandy.2008. The economic valuation of marine ecosystems –
lessons from the Millenium Ecosystem Assessment. Presented at conference on economic
valuation of coastal and marine ecosystems, Bodrum, 22-25 October 2008.
World Bank. 2008. Valuation of Marine Ecosystem Services: Gap Analysis. Environment
Department. Washington, DC: World Bank.
World Bank. 2008. Environment Matters.
De Young, C. Charles, A., Hjort,A. 2008. Human dimensions of the ecosystem approach to
fisheries: an overview of context, concepts, tools and methods, FAO Fisheries Technical Pepr
No 489.
Department for Environment, Food and Rural Affairs, UK, 2007. An introductory guide to
valuing ecosystem services.
UNEP-WCMC. 2011. Marine and coastal ecosystem services: valuation methods and their
practical application.
World Bank and FAO. 2009. The Sunken Billions. The Economic Justification for Fisheries
Reform. Agricultural and Rural Development Department. The World Bank. Washington. DC.
United Nations Statistics Division and FAO. 2004. Integrated Environmental and Economic
Accounting for Fisheries. White Paper Handbook.
Wikipedia

3. 3
Contents
 Framework to evaluate natural resources and ecosystems with
focus on marine resources
 Methods to assess the value of ecosystems to human well-
being as well as examples from marine ecosystems to illustrate
the different concepts and methods
 System of integrated economic and environmental accounting
as a means to keep a continuous record of the use and status of
environmental resources of society
 Critical valuation issues (scientific understanding of
ecosystems; variability and thresholds; income and wealth
distribution)

4. 4
Some basics
• The use (and mis-use) of ecosystems is governed by
human behaviour expressed in individual and societal
choices.
 Choices are reflected in the allocation of scarce
resources in response to individual and societal
preferences and needs.
 There are different means through which coordination
in the allocation and use of scarce resources can be
achieved (i.e. price mechanism; regulatory and
incentive policies that ideally are based on best
scientific analyses and democratic decision-making
processes)

5. 5
Features of natural resources (adapted from Nunes)
 Typically resources are materials or other assets that are used
and/or transformed to produce benefit.
 Resources have three main characteristics: utility, limited
availability, and potential for depletion or consumption.
 From a human perspective, a natural resource is anything
obtained from the environment to satisfy human needs and
wants => distinguish renewable and non-renewable resources
 Concepts of competition, sustainability, conservation and
stewardship are linked to natural resources and their
management => distinguish flows and stocks
 Natural resources have typically common-pool or public goods
characteristics that cause the market-mechanism to perform
poorly or not at all.
 Natural resources that have public (or global) goods
characteristics are also referred to as environmental resources

6. 6
Categories of goods => consequences for management
Excludable Non-excludable
Rivalrous
Private goods
food, clothing, cars, personal
electronics
Common goods (Common-pool
resources)
fish stocks, timber, coal
Non-rivalrous
Club goods
cinemas, private parks, satellite
television
Public goods
free-to-air television, air,
national defense

7. 7
Africa’s marine ecosystems
(Source: WB Environment Matters)

8. 8

9. 9
Macro-economic contribution of marine ecosystems – example Zanzibar
(Source: World Bank. Environment Matters )

10. 10
Relative values of marine ecosystem services

11. 11
Components of total economic value

12. 12
Total value of a fisheries ecosystem
(Source: Taken from Human Dimension of EAF)

13. 13
Steps in Valuation

14. 14
Economic valuation methods
(Source: UNEP-WCMC)

15. Economic valuation methods

16. Marine
ecosystem goods
and services
Market priced
benefits
Un-market priced
benefits
Fisheries
products
CO2 Recreation Nonuse valuesEco-tourism
16
Provisioning
services
Regulating
services
Cultural
services
Market price
analysis
Cost
Assessments
Applicability of different valuation methods
Contingent valuation
methods

17. 17
Economic consequences of coral reef degradation
(Source WB Environment Matters)

18. 18
Economic valuation of a fishery – estimating resource
rent

19. 19
Changes in productivity in global marine fisheries

20. 20
Estimated resource rent loss, 1974-2007 (Source: WB&FAO)

21. 21
Estimating the asset value of a natural resource:
projecting future resource rent (Source: UNSD & FAO)

22. 22
Framework for Integrated Environmental & Economic
Accounts for Fisheries (SEEAF) (Source: UNSD & FAO)

23. 23
The influence of income and wealth distribution

24. 24
Moving forward
 Improve understanding of the consequences of human actions on
natural resources and ecosystems and their ability to provide goods
and services
 Expand efforts to assess the impacts on human welfare of changes
in natural resources and ecosystems
 Link better understanding of impacts and values to:
• Everyday decisions of individuals, firms and communities
• Societal policy and management decisions
Failing to make sound decisions the economic, social and
cultural costs will be huge.