Q&A: The Economics of Coral Reefs

Coral reef in the Dominican Republic. Photo credit: Jose Alejandro Alvarez

WRI’s Lauretta Burke discusses her work on measuring the economic value of coral reefs in the Dominican Republic and other Caribbean countries.

Coral reefs are essential to fisheries, tourism, and protecting beaches from erosion. WRI’s coral reefs team recently released Coastal Capital: Dominican Republic, its fourth country-level economic valuation of coral reefs in the Caribbean.

What are the main discoveries of the recently-released economic valuation of coral reefs in the Dominican Republic?

This report looks at the economic and recreational value of the Dominican Republic’s coralline beaches, reef and mangrove fisheries, and ecotourism industry. We basically set out to quantify what the country stands to lose – in fishing, shoreline erosion, and tourism – if it does not take efforts to preserve its reefs.

For example, the Dominican Republic depends on its beaches to attract tourists, but it’s the reefs that keep the shoreline from eroding. Without reefs, you start to lose your beaches, and this can have a huge impact on tourism. Our analysis finds that for each meter of beach a resort loses, the average per-person hotel room rate drops by about $1.50 per night. So if beaches continue to erode at the current rate, the Dominican tourism industry stands to lose $52-100 million in revenue over the next decade.

It’s a similar story for fishing. The report estimates that the income from reef- or mangrove-dependent fisheries has decreased by 60 percent in the past decade – from USD $41 million to $17 million – because of pollution and overfishing. This trend endangers the livelihoods of many Dominican fishermen, and the country’s economy as a whole.

This is the fourth country-level economic valuation of reefs in the Caribbean. How do the countries differ?

We started our economic valuation work with pilot projects in Tobago and St. Lucia. Then we did Belize, the Dominican Republic, and we are currently working in Jamaica. At first, our intention was to work out a methodology that could be used everywhere. That was a good ambition, but in reality every country differs, the data differ, and the nature of tourism differs in each country, so it’s hard to make generalizations at a national level.

In the countries we have evaluated, there have been varying levels of awareness about reefs. In Tobago, people used to be allowed to walk right onto Buccoo Reef wearing rubber booties. That’s now changed, but the country still has trouble managing waste outflows around the reef. In Belize, there is a much larger diving community and more resorts that depend on the reefs to draw tourists. There are a lot of people and NGOs who are interested and engaged.

In the Dominican Republic and now in Jamaica, people are not as focused on eco-tourism and diving. Their reefs are pretty degraded already. But they do capitalize on beautiful beaches, which means that their reefs are very important.

Why is it in a country’s best interest to protect its reefs?

Shoreline protection by reefs is an important and valuable service in all the countries in which we have worked. Reef- or beach-related tourism is also of very high value in all five countries. In addition, there are the people whose livelihoods depend on the reefs and fisheries, and who have very few alternatives.

Reefs help project the shoreline from erosion and help maintain the beach. In many areas where you have beach erosion, there is a degrading reef as well. Countries are starting to invest a lot of money in beach replenishment, and they are going to have to do that over and over again if they don’t fix the underlying problem. Beach replenishment and engineering solutions are both very expensive. If you can prevent the reef from degrading in the first place, that’s the best solution.

The hotel and the eco-tourism industries definitely have a business case for protecting these ecosystems as well. Maintaining good water quality protects the reefs, but it is also important for swimmers, and important for the beach itself. It’s a whole package, and sometimes that realization can take a while to take hold.

What has the team learned from doing these valuations?

We have learned that you cannot just talk in general, abstract terms about risks and values. So, in the Dominican Republic, we looked at case studies of a few specific mega-tourism locations, and showed what the impact of coral reef damage will cost businesses there. It was no longer abstract, and resort owners showed up to our recent event and were definitely interested.

Reef valuation is not easy. It’s hard to get the data that you need to develop reliable values. And there are many assumptions you need to make in order to develop estimates. But I think the numbers we are developing are indicative of the reefs’ larger value, and can raise awareness about the important role that reefs play. The numbers help get people’s attention so you can have a more specific conversation about solutions and policies.

What can countries do to protect their reefs?

The countries in which we have worked typically have coastal regulations, but they are not always enforced. In the areas designated as “no-take,” enforcement of rules is very important, and benefits both the reefs and the adjacent fisheries. But in some marine protected areas [MPAs], the staff does not even have boats to go out and check the reefs.

In the Dominican Republic, the government could manage coastal development in a more farsighted way. The government could start honoring the EIA [Environmental Impact Assessment] process and enforcing restrictions on mangrove removal. They could also take a stronger stance when resorts want to flatten and remove sand dunes, since this exacerbates erosion.

What impact will the recent Gulf Coast oil spill have on reefs?

I’d say we don’t know yet. It is a dynamic situation and until the well head is capped, we won’t know how much oil is in the basin. Floating tar balls are unlikely to have much effect on reefs. Dispersed oil and dispersants themselves are a larger threat. I think the Deepwater Horizon incident really highlights the need to enforce environmental regulations and not just accept assurances from companies with large economic interests in an activity.