ICES Journal of Marine Science: Journal du Conseil Advance Access originally published online on May 13, 2008
ICES Journal of Marine Science: Journal du Conseil 2008 65(5):775-780; doi:10.1093/icesjms/fsn078
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Economic value of damage caused by marine bio-invasions: lessons from two European case studies
1 Department of Economics, University of Venice, Venice, Italy
2 Fondazione Eni Enrico Mattei, Palazzo Querini Stampalia, 30122 Venice, Italy
Correspondence to P. A. L. D. Nunes: tel: +39 041 271 14 00; fax: +39 041 2711 14 61; e-mail: paulo.nunes{at}feem.it
Nunes, P. A. L. D., and Markandya, A. 2008. Economic value of damage caused by marine bio-invasions: lessons from two European case studies. – ICES Journal of Marine Science, 65: 775–780.We illustrate the use of alternative, non-market valuation methods to estimate the economic value of the social damage caused by marine bio-invasions. First, we present and discuss the motivation to perform an economic valuation of marine ecosystem quality in general and the protection of marine ecosystems against invasive species in particular. Second, we examine in detail two empirical applications of economic value assessment of social damage attributable to marine bio-invasions. One of these looks at ballast water management programmes in Rotterdam harbour, the Netherlands, and the second investigates management practices for the Manila clam in Venice Lagoon. Finally, we explore the relevance of this economic information for cost–benefit analysis and policy guidance.
Keywords: attribute-based valuation, contingent valuation, cost–benefit analysis, natural damage assessment, non-market valuation
Received 16 April 2007; accepted 4 April 2008; advance access publication 13 May 2008.
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Introduction |
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 Top Introduction Bio-invasions as a source...Methods for monetary valuation...ConclusionsReferences |
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In a democratic system, policy-makers need to consider the preferences of the citizens belonging to that system. Because we live in a world with scarce resources, one is asked to make the most efficient choice regarding the allocation of these resources. In this context, if policy-makers decide to invest in the protection of marine ecosystems against invasive species, fewer financial resources would be available for other policy areas, e.g. national public health. On the other hand, such a policy provides a wide range of benefits to humankind, many of which are not valued by current market prices. Given that most human activities are priced in one way or another, the temptation exists in some decision contexts to downplay or ignore these benefits based on the lack of prices. The simple and simplistic idea here is that a lack of prices is identical to a lack of value. In our view, this is a slightly biased perspective. The microeconomic theory of externalities teaches us that many values cannot be incorporated into conventional market transactions. The question then is how to translate such values into monetary dimensions. This challenging question is addressed here.
We articulate our discussion as follows. We first present and discuss the motivation to perform an economic valuation of marine ecosystem quality in general and the protection of marine ecosystems against invasive species in particular. Then, we illustrate the wide range of different valuation methodologies and the link to the different components of economic value. Following this, we examine in detail two economic valuation applications, illustrating their crucial role in policy guidance, and finally we draw conclusions about these economic valuations.
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Bio-invasions as a source of environmental–economic damage |
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TopIntroductionBio-invasions as a source...Methods for monetary valuation...ConclusionsReferences |
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Economists can perform a monetary value assessment of the damage caused by marine bio-invasions. This allows cost–benefit analysis for policy guidance and hence ranking of alternative prevention, restoration, and amelioration options. Additionally, monetary valuation allows economists to assess marine natural resource damage and to carry out proper pricing of marine living resources (Perrings et al., 2000; Davis and Gartside, 2001; van den Bergh et al., 2002). Monetary value assessment of the damage caused by marine bio-invasions has its foundations in welfare economics, because it establishes the concept of a marine bio-invasion value in terms of the impact on the welfare of human beings. For the sake of reasoning, if we associate a marine species invasion with an invasive and harmful algal species, we can map a set of impacts (Table 1). From an economic perspective, we can classify these impacts in terms of "use" and "non-use" value (Table 2). The use value component refers to the damage that arises from the actual use of or experience with the marine bio-invader under consideration, e.g. a harmful algal species. Such damage can be further divided into direct use, indirect use, and option use value. Direct use values of damage caused by marine bio-invasions include: (i) the loss of marine tourism and coastal recreation benefits; (ii) the loss of natural and cultured marine species with commercial value; and (iii) the value of risks to human health. Indirect use values of damage caused by marine bio-invasions refer to damage that relates to the functioning of the marine ecosystem and the survival of marine living resources, even if these have no direct commercial value. Finally, non-use values of damage caused by marine bio-invasions can be divided into a bequest value and an existence value. A bequest value refers to the benefit accruing to any individual from the knowledge that future generations might benefit from a marine ecosystem that is free of marine bio-invasions. An existence value refers to the benefit derived simply from the knowledge that marine species are protected without even being used.
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Note that non-use values of damage caused by marine bio-invasions have a good public character, i.e. they do not have a market price. Moreover, some of the use values do not have a market price. As a consequence, market price evaluation of marine bio-invasions provides an undervaluation of the associated negative impacts. This can be interpreted as signalling a misallocation of financial resources in prevention, restoration, or amelioration programmes aimed at marine bio-invasions. An accurate and complete monetary assessment of the non-use values of the damage caused by marine bio-invasions requires the application of specific monetary valuation tools.
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Methods for monetary valuation of marine bio-invasion damage |
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TopIntroductionBio-invasions as a source...Methods for monetary valuation...ConclusionsReferences |
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In the absence of market prices, economists use specific monetary valuation techniques to measure use and non-use damage of marine bio-invasions. As the consequences of marine bio-invasions are multifaceted, the techniques must cover a broad range of effects, including economic, cultural, and ecological effects (Costanza et al., 1993; Nunes and van den Bergh, 2004). The tools that have been identified in the literature are hedonic pricing, aggregate market analysis, contingent valuation (CV), stated choice (SC), travel cost (TC) method, production functions, and the averting behaviour method (Nunes and de Blaeij, 2005). Most of these tools have not yet seen application to value exotic marine bio-invasions. Bearing in mind both the described marine bio-invasion damage categories and the scope and flexibility of each valuation technique, it is possible to suggest the most suitable valuation methodology for each value or damage type (Table 2).
Clearly, the TC method is the most suitable valuation method for monetary value assessment of marine bio-invasion damage that relates to the loss of tourism and recreational opportunities. The model is based on data on trips made by the sample population (Loomis and Walsh, 1997). Therefore, specific questionnaire surveys are used to collect data on the number of visits that the household makes to the site, as well as on the money spent in travel time and the costs of gaining access to clean beaches, free from marine bio-invasion foams and repellent odours. In addition, survey-based valuation methods, including both CV and SC methods, can fulfil an important potential role in the overall assessment of non-use of the damage caused by marine bio-invasions. CV is a survey-based approach that gives an immediate monetary estimate of the preferences for bio-invasion risk reductions. In short, CV makes use of a questionnaire that describes the environmental protection programme (e.g. the protection programme against marine bio-invasions) and the market where it is traded. Alternatively, the SC approach confronts respondents with a set of two or more survey-described alternatives that differ in terms of the respective attributes and their levels.
The respondents are asked to select their preferred alternative. Both CV and SC questionnaires contain important elements. The first is a clear description of the environmental good to be valued. For CV, this is the status quo and the proposed environmental changes, i.e. with and without the protection programme against marine bio-invasions. For SC, these are the attributes of the alternatives and the related attribute levels. The second element is the capability to shed light on bequest and existence values related to the damage caused by marine bio-invasions. Finally, both have the advantage that marine policies can be valued even if they have not yet been adopted (ex ante valuation) or lie outside the current institutional arrangements. Therefore, the method offers much scope and flexibility for specifying different restoration and amelioration programmes. For these reasons, here we pay particular attention to the analysis and discussion of two case studies focusing on the economic valuation of marine bio-invasions, using stated preference methods, including SC and CV. Further, we focus on the use of the TC method to assess marine recreational values.
Case studies
Study 1: ballast reception facility in Rotterdam harbour, the Netherlands. Details of the CV questionnaire design, survey execution, and the underlying econometric estimation procedures for this case study are provided by Nunes and van den Bergh (2004). That study offers an economic value assessment of the non-market benefits of a ballast reception facility in Rotterdam harbour. The programme focuses on the prevention of harmful algal blooms (HABs), the term "harmful" covering a set of invasive species that share a single characteristic: they are responsible for causing damage to the marine ecosystem, as well as beach recreation (van den Bergh et al., 2002). The most common pathway through which (harmful) microalgae are introduced is through the uptake, transport, and subsequent discharge of ballast water and associated sediments by ships. Introductions of harmful algae by ballast water may be prevented through: (i) ballast water exchange at sea; (ii) minimal or no release of ballast water in coastal waters and ports; or (iii) discharge of ballast water to appropriate reception facilities. The last of these involves the use of alternative, often expensive, technologies for treating ballast water. Nowadays, there are many technologies available for on-board treatment, because these are considered more economically feasible than a land-based facility. In contrast, the welfare gains associated with the introduction of such an infrastructure are often unknown because most benefits have non-market characteristics.
For this same reason, our study explores the use of a non-market economic valuation study based on a questionnaire undertaken at Zandvoort, a well-known beach resort situated on the coast of North Holland. An interviewer with fieldwork experience conducted the survey. According to the TC model estimates, if the beach area of Zandvoort were to be closed to visitors for an entire year, the total recreational welfare loss would be 
55 per person per year. In addition, the CV estimates indicate that the annual willingness to pay would amount to 76 per respondent per year. Comparison of the TC and CV estimates indicates the importance of marine ecosystem non-market benefits, even if we admit the presence of double-counting in the CV estimates. Against this background, if no policy action were taken to prevent HABs, a marine pollution event along the coast of the Netherlands could result in a significant welfare loss. An estimate of the total welfare loss amounts to 326 190 000 or 0.08% of the Dutch GDP measured at market prices for the year 2000. This value is obtained by multiplying the sum of the recreational use benefits, which are derived from the TC model and amount to 55, and the marine ecosystem benefits, which are assessed with the CV exercise and amount to 76, by the total number of visitors to the North Holland coast. Note that, although in this case the CV and TC methods are measuring different things, they can and have been used to measure the same impacts. Studies that compare CV and TC typically find that the CV estimates are marginally smaller than the TC equivalents (Garrod and Willis, 1999). A comprehensive meta-analysis of 83 methodological comparison studies by Carson et al. (1996, p. 89) finds that CV estimates are typically 30% lower than estimates from multi-site TC models. We cannot conclude, however, that CV estimates are always lower than TC estimates, as demonstrated by Fix and Loomis (1997).
If we assume that the costs of cleaning seawater and coastal beaches are similar in magnitude to those of a clean-up programme for polluted water soils in the Netherlands, which annually cost 0.03% of the Dutch GDP over the period 1994–1998, then we can conclude that the benefits from such a marine protection programme far exceed the costs and would therefore be recommended from a cost–benefit perspective (for more discussion, see Nunes and van den Bergh, 2004). More recently, a Ballast Detention Centre was designed for Rotterdam harbour. Detention Centre Rotterdam is the first custodial institution in the Netherlands to be contracted to a public–private partnership in Government spending on aquatic invasives, and it involved a transaction of some 100 million (Ballast Nedam, 2008).
Study 2: clam management practice in Venice Lagoon, Italy. Details on the SC questionnaire design, survey execution, and the underlying econometric estimation procedures are given for this case study in Nunes et al. (2004). The level of fishing effort for clams in Venice Lagoon has increased since 1983, coinciding with the invasion of the Manila clam (Tapes philippinarum). This exotic species originated in the Indo-Pacific and rapidly adapted to the lagoon environment of Venice. It is now responsible for colonizing large shallow areas and competing directly in an ecological niche with the endemic clam. Moreover, the relatively high market price of the clam has contributed to its commercial profitability. Because of the open access situation in the lagoon, many have taken up this activity. Most have adopted mechanical equipment, such as the vibrating rake technology (Pelizzato et al., 2000), and the adoption of such technologies has caused unavoidable negative environmental impacts on the morphological processes and marine life functions of the Lagoon. The consequence has been a reduction of the clam stock and the destruction of nursery areas and feeding grounds for many Lagoon species, including commercial fish. Following the well-known steps of an SC experiment, we identified a list of relevant attributes with important linkages to current fishery management practice in Venice Lagoon: (i) size of the fishing area; (ii) fishing regime; and (iii) cost of the annual permit. We consider three fishing regimes for analysis, the "traditional" system, the "present situation" system, and the "vibrating" system. The traditional system is characterized by small boats and the exclusive use of manually operated fishing nets. For this reason, it is not associated with significant environmental damage. Alternatively, the vibrating fishery system, as the name suggests, makes intensive use of vibrating and scraper equipment. This system is responsible for significant damage to the marine ecosystem. The present situation system is characterized by a mix of both regimes, and therefore interpreted as a mixed system (see Markandya and Nunes, 2007). The SC estimation results are revealing in terms of fisher perceptions of the sustainability of clam fishing. The most important estimate is the 5904 that an individual fisher is willing to accept for the first year to move from the present system, the mixture of vibrant and manual rakes, to a system based on a manual rake. If we assume that the manual system supports an individual annual income of 26 000 (following the economic study on the supply chain of the clam T. philippinarum by Boatto et al., 2002), then the present system would be valued at 31 904 (26 000 + 5904). The other important estimate is the difference in current values between the mixed system and one based exclusively on vibrating rakes. The latter system is valued as yielding an additional 2456 per year at present and is therefore valued at 34 360 (31 904 + 2456). Table 3 presents the net present value returns for discount rates of 7% and 3%, which constitute, respectively, the average interest rates used for private and social investment decisions. Table 3 shows relative yields from the three systems. The following assumptions have been made in deriving these figures: (i) the current fleet has 
600 vessels, of which 84 use a vibrating rake, and this was associated with an annual decline in catch of 40%; (ii) to capture the sensibility of the valuation results, we consider a situation where the current system would result in declining yields at a rate of 22% and 20% per year; and (iii) the vibrating system causes a rate of decline in catch of at least 60% per year. If the whole fleet moved to vibrating rakes, the decline would certainly be >40% and could easily reach 60%. Against this background, Table 3 shows that with a 22% decline in the catch with a manual system, the private preference at 7% is for the current system, followed by the manual system, followed by the vibration system alone. However, with a 3% discount rate, the order changes to the manual system being the most preferred, demonstrating that with a lower discount rate, it is possible to have a sustainable solution with private decision-making.
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As it is socially in one's interest to move to a sustainable solution, it would be desirable for fishers to adopt a 3% discount rate, but in practice, this is unlikely, so the authorities would need to offer an incentive to the private decision-makers encouraging them to adopt a sustainable fishing practice in this sector. In particular, according to our estimates, the authorities might wish to compensate fishers for 2 or 3 years, depending on the conditions. If compensation rates were based on ensuring no loss of income to fishers in each year as a consequence of a change from current practice to manual clam fishing, then the following rates would apply: (i) 2-year compensation, where the decline under the manual system is 20% per year, at
5904 in year 1 and 1911 in year 2; (ii) 3-year compensation, where the decline is 22% per year, at 5904 in year 1, 2509 in year 2, and 460 in year 3. |
Conclusions |
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TopIntroductionBio-invasions as a source...Methods for monetary valuation...ConclusionsReferences |
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Here, we convey two crucial messages. The first is of a methodological nature, that economic valuation of marine bio-invasion damage is a useful approach. As most marine bio-invasion protection damage is not market priced, we have identified and described a wide range of valuation tools that an economist must have access to when deciding to run an economic valuation exercise in this area. The second message is of an empirical nature, advanced by presenting and discussing two case studies. Each study demonstrated how different economic, non-market valuation methodologies, including TC, CV, and SC, can be applied to the economic valuation of marine environmental benefits. However, they also emphasized the link between the valuation results and policy guidance. Needless to say, the discussion here does not attempt to assess the total economic value of damage by marine bio-invasions. As we have seen, for monetary assessment of the damage caused by marine bio-invasions on the health of marine ecosystems, CV and SC do not emerge as the most suitable valuation techniques. This is because the effects involved cannot be easily described in a questionnaire (e.g. toxicity accumulation through the food chain) and are often related to complex issues with which the general public is unfamiliar. All in all, the present estimates can be interpreted as the lower bound of the total, unknown economic value of damage by marine bio-invasions and represent crucial information needed to design an efficient, accepted management policy. Moreover, we need to acknowledge the presence of uncertainty and its influence on the interpretation of economic valuations. In fact, policy-makers may be willing to make relatively small annual investments in protection programmes as a basis for avoiding future large marine bio-invasions, even if the probability of such occurrences is low. In short, the present results can be interpreted as motivating the establishment of precautionary protection programmes against marine bio-invasions.
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References |
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