Conservation of the Great Barrier Reef: is the Benefit worth the Cost?

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21st Feb 2019 Environmental Studies Reference this

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Introduction

The Great Barrier Reef has been an iconic part of Australia’s global image for decades. It is considered one of the seven natural wonders of the world, it has been a world heritage site since 1981 and it is considered a state icon of Queensland. This stunning and complex natural resource draws in more than two million visitors a year, and yet there is immense controversy surrounding the conservation of the reef. The Great Barrier Reef is a sensitive environment that relies on the costal ecosystems surrounding the reef to function. The costal ecosystems provide the aquatic terrestrial link that “…support[s] the physical, biological and biogeochemical process that underpin the ecosystem health of the Great Barrier Reef…” (Great Barrier Reef Marine Park Authority, 2012). The Great Barrier Reef provides Australians and people worldwide many social benefits such as agricultural production, commercial and recreational fishing, tourism, recreation and environmental values.

Total Economic Value of the Great Barrier Reef

The Great Barrier Reef provides economic benefits when either preserved or destroyed. Environmental and economic concerns tend to raise controversy, whether it be land rights, natural resources, pollution or any other variety of environmental concerns. Public opinion is heavily divided, some believe that the environment should come first at all costs while others believe the economy is of greater importance. There is no right or wrong answer. The truth is that economic benefits often conflict with environmental and social benefits. This effects the way that policy makers make decisions, therefore it is very important that there is a way to value environmental features within nature in monetary terms. “Valuing nature in monetary terms can effectively inform policy settings and help industry, government, the science community and the wider public fully understand the contribution of the environment to the economy and society.” (Total economic value of the Great Barrier Reef what you need to know, 2017). In a world that is continually growing more environmentally conscientious it is important that there is a way to assist with mutual understanding of environmental and economic costs and benefits. Using the Total Economic Value (TEV) framework a monetary value can be placed environmental features such as the Great Barrier Reef. The aim of this essay is to provide an analysis of the value of the Great Barrier Reef and provide a case for conserving the Great Barrier Reef and limiting or modifying the main activities or driving forces that are putting pressure of the Reef’s overall health.

What is Total Economic Value (TEV)?

TEV is a cost-benefit analysis framework used for valuing a natural resource and comparing the cost and benefit of having said resource to the cost and benefit of not having it. As represented in figure 1 below, there are many different types of values, the main two being use values and non-use values.


Figure 1: Total Economic Value Framework (Total economic value of the Great Barrier Reef what you need to know, 2017)

Putting a monetary value on a natural resource is a complex task and therefore all values must be reviewed and understood. For example the Great Barrier Reef is an iconic Australian image, as an icon the Great Barrier Reef holds icon value which is internationally influential on not only tourism but politics and business as well.

Identifying the Costs and Benefits of Great Barrier Reef Conservation

Cost Benefit analysis (CBA) is a process that attempts to measure the positive and negative consequences of something. CBA measures externality effects, social benefits and effects on both participants and non-participants.

Social Benefits of Great Barrier Reef Conservation

The Great Barrier Reef holds a significant number of social benefits that need to be reviewed when considering the TEV or a CBA of the reef. In a report of this size not all benefits can be reviewed, just the most major social benefits and costs will be briefly discussed. The Great Barrier Reef has been an important resource for thousands of years, stretching back to when the indigenous population lived within the coastal areas surrounding the Great Barrier Reef. Today the reef is used and valued as a place for people to visit and enjoy. The reef has provided over 54000 full time jobs for Australians through fishing and tourism (At what price? The economic, social and icon value of the Great Barrier Reef, 2017). The reef is also an important area for culture, recreation, scientific research and defence force training (McCook et al., 2010). Even through indirect use the Great Barrier Reef effects millions of people purely by existing. Having a pristine coastal and marine area to use for recreational activities promotes a healthier lifestyle, this is a social benefit that provides a healthier population and therefore in the long term decreases medical costs. There is a similar situation regarding air pollution. Having a healthy coastal environment and healthy marine environment would help to increase clean air and reduce air pollution, this again would cut medical costs in the long term and promote a healthy lifestyle.

Social Costs of Great Barrier Reef Conservation

It can be argued that the conservation of the Great Barrier Reef will have a negative effect on jobs due to the fact that reef conservation has a negative effect on coal mining and shipping routes. In order to protect the reef costal development must be regulated and minimised and this will have a significant effect on population growth and will economically effect coastal towns. Conservation of the reef does not necessarily mean removing all profitable practices from the reef. Conservation can mean that economic activity may continue but only in a way that is sustainable. Great Barrier Reef conservation will result in decreased growth rate for jobs within mining, fishing, agricultural and tourism sectors. Although growth rates for jobs would have to slow in the long term picture the jobs that are created would be created to last. As population size will continue to grow it must be determined if the conservation of the Great Barrier Reef will be enough to support many coastal and inland communities in north Queensland. The biggest driving force for the support of development of new coal mines and coastal ports in north Queensland is the promise of new jobs for the people living in proximity to the Great Barrier Reef.

Measuring the costs and benefits of Great Barrier Reef conservation

Benefits of the Great Barrier Reef

Benefit

Benefit Type

Economic Value Type

Valuation Method

Recreational Benefits

Social Benefit

Direct Use

Both visitors and residents use the Great Barrier Reef for recreational activities. The travel cost method would be used to determine the amount of money that people spent travelling in order to use the reef for recreational activities.

 

“About 60 per cent of recreational visitors visit the Reef between one and 10 times in a year, but a small proportion (about 15 per cent) visit the area more than 50 times a year. Recreational use (including recreational fishing) contributed $153 million to the Australian economy in 2006/07. The exact contribution of the non-fishing component is not known.” (Gbrmpa.gov.au, 2017)

Economic Sustainability

Private Benefit

Direct Use

By maintaining the health of the Great Barrier Reef it will continue to be an asset and supply jobs to the local area. Economic Sustainability can be valued using the Damage Cost Avoided, Replacement Cost, and Substitute Cost Methods

Cultural Benefits

Social Benefit

Bequest Value

Altruist Value

Existence Value

Icon Value

Many Australians take pride in the natural phenomena within the country and are inclined to protect it for the use of future generations. Hedonic pricing would be used to determine the benefit of the reef in terms of cultural and aesthetic value.

Health Benefits

Social Benefit

Direct Use

Cleaner air and promotion of recreational activities will have health issues decrease and money will be saved on Medicare. Health Benefits would be measured using the contingent valuation method.

Scientific Research

Social and Private Benefit

Direct Use

The Great Barrier Reef can continue to be used for scientific research that may one day supply invaluable research.

Fishing industry

Private Benefit

Direct use

The use of the reef for commercial fishing can be valued using the market price method, as fish can be valued within a commercial market.

Tourism Industry

Social Benefit

Direct Use

The use of the reef for tourism can be valued using the productivity method or the contingent valuation method as the reef supplies many products and services within the tourism industry.

Costs of the Great Barrier Reef

Cost

Cost Type

Economic Value Type

Valuation Method

Employment opportunities

Social cost

Direct Use

Without the Great Barrier Reef there would be much less employment opportunity as the tourism and fishing sectors would be significantly affected.

Loss of Tourism

Private Cost

Direct Use

A large amount of money would be lost from tourism and effect the GDP of Australia. The cost of the loss of tourism can be measured using the productivity method or the contingent valuation method.

Coastal development

Private Cost

Direct Use

Coastal development would slow as the area surrounding the great barrier reef became less desirable to live in.

Increase in mining and shipping

Private Cost

Direct Use

The loss of the Great Barrier Reef would result in more coal mining and the development of new ports to ship the coal from Australia to other countries

Options for quantifying the costs and benefits of Great Barrier Reef conservation

It appears that the best way to determine a monetary value of the Great Barrier Reef is the total economic value (TEV) framework. This framework has been used many times by many different organisations and repeatedly appears to have consistent conclusions. Oxford Economics assessed the TEV of the Great Barrier Reef in 2009 and came to the conclusion that it is worth 51.4 billion dollars (Valuing the effects of Great Barrier Reef bleaching, 2017), and in 2017 Deloitte economists determined that the value of the Great Barrier Reef stood at 56 billion dollars (At what price? The economic, social and icon value of the Great Barrier Reef, 2017). The TEV framework effectively encompasses the greatest range of costs, benefits and values out of all other frameworks. When using cost benefit analysis (CBA) the indirect benefits are not considered in the same way that they are with the TEV approach. It was determined in the Deloitte economists report that the second most valuable aspect of the Great Barrier Reef was indirect or non-use value at 23.8 billion dollars, second to only tourism which was determined to be worth a staggering 29 billion dollars. It is clear that the TEV framework is the best system currently within use.

Conclusion

The final thoughts on the topic of evaluating the value of the Great Barrier Reef, one of the world’s greatest natural resources, is that currently the best and most effective way to put a monetary value on the reef is to use the TEV approach. This resource must preserved and Australia must not allow this resource to become abused and destroyed, it is one of the country’s greatest resources and is such an iconic image that represents Australia as a whole. The value that this brings through non-use value is irreplaceable and is in no way worth destroying for an economic trade off.

References

Deloitte Access Economics 2013, Economic contribution of the Great Barrier Reef, Great Barrier Reef Marine Park Authority, Townsville.

Ecosystemvaluation.org. (2017). Market Price Method. [online] Available at: http://www.ecosystemvaluation.org/market_price.htm [Accessed 5 Aug. 2017].

Gbrmpa.gov.au. (2017). Coastal development and protecting the Great Barrier Reef – GBRMPA. [online] Available at: http://www.gbrmpa.gov.au/managing-the-reef/threats-to-the-reef/coastal-development-and-protecting-the-great-barrier-reef.

Gbrmpa.gov.au. (2017). Recreation – GBRMPA. [online] Available at: http://www.gbrmpa.gov.au/managing-the-reef/how-the-reefs-managed/Managing-multiple-uses/recreation [Accessed 5 Aug. 2017].

Great Barrier Reef Marine Park Authority (2017). Ports and Shipping information sheet. pp.1-7.

Great Barrier Reef Marine Park Authority (2012). Informing the outlook for Great Barrier Reef coastal ecosystems. Townsville: Great Barrier Reef Marine Park Authority, pp.1 – 18.

Great Barrier Reef Marine Park Authority (2009). Coastal development. pp.1-2.

Great Barrier Reef Marine Park Authority (2004). Environmental Impact Management Policy. pp.1-10.

Great Barrier Reef Marine Park Authority (2014). 2014 Great Barrier Reef Outlook Report. Great Barrier Reef Outlook Report. [online] Great Barrier Reef Marine Park Authority, pp.5-18. Available at: http://www.gbr.qld.gov.au/documents/gbr-outlook-report-2014-full.pdf.

Great Barrier Reef Marine Park Authority (2009). 2009 Great Barrier Reef Outlook Report. Great Barrier Reef Outlook Report. [online] Great Barrier Reef Marine Park Authority, pp.1-12. Available at: http://www.gbrmpa.gov.au/__data/assets/pdf_file/0018/3843/OutlookReport_Full.pdf.

Greenpeace. (2017). Boom Goes the Reef. [online] Available at: http://www.gbrmpa.gov.au/__data/assets/pdf_file/0019/6607/gbrmpa_EIM_Policy_2010.pdf.

McCook, L., Ayling, T., Cappo, M., Choat, J., Evans, R., De Freitas, D., Heupel, M., Hughes, T., Jones, G., Mapstone, B., Marsh, H., Mills, M., Molloy, F., Pitcher, C., Pressey, R., Russ, G., Sutton, S., Sweatman, H., Tobin, R., Wachenfeld, D. and Williamson, D. (2010). Adaptive management of the Great Barrier Reef: A globally significant demonstration of the benefits of networks of marine reserves. Proceedings of the National Academy of Sciences, 107(43), pp.18278-18285.

Moore, T. (2017). International concern about LNG industry’s impact on Reef. [online] Brisbane Times. Available at: http://www.brisbanetimes.com.au/queensland/international-concern-about-lng-industrys-impact-on-reef-20111106-1n2fx.html.

Queensland Department of Environment and Heritage Protection (2013). Draft report on the economic and social impacts of protecting environmental values in Great Barrier Reef catchment waterways and the reef lagoon. Marsden Jacobs, pp.38-117.

Total economic value of the Great Barrier Reef What you need to know. (2017). 1st ed. [ebook] Deloitte Access Economics, pp.4 – 9. Available at: https://barrierreef.org/uploads/Total%20economic%20value%20of%20the%20Great%20Barrier%20Reef%20-%20Need%20to%20know.pdf [Accessed 9 Aug. 2017].

Valuing the effects of Great Barrier Reef bleaching. (2017). 1st ed. [ebook] Saint Aldates: Oxford Economics, pp.1 – 80. Available at: https://www.oxfordeconomics.com/Media/Default/economic-impact/sustainability-and-climate-change/gbrfoxford.pdf [Accessed 13 Aug. 2017].

Stoeckl, N., Hicks, C., Mills, M., Fabricius, K., Esparon, M., Kroon, F., Kaur, K. and Costanza, R. (2011). The economic value of ecosystem services in the Great Barrier Reef: our state of knowledge. Annals of the New York Academy of Sciences, 1219(1), pp.113-133.

At what price? The economic, social and icon value of the Great Barrier Reef. (2017). [online] Deloitte Economics. Available at: https://www2.deloitte.com/content/dam/Deloitte/au/Documents/Economics/deloitte-au-economics-great-barrier-reef-230617.pdf [Accessed 14 Aug. 2017].

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