Marine ecosystems provide humans with a broad range of goods and services, including seafood and natural products, nutrient cycling, protection from coastal flooding and erosion, recreational opportunities, and so-called “nonuse values” such as the value that people ascribe to continued existence of various marine species. As outlined in previous chapters, many of these goods and services may be affected by ocean acidification (Cooley et al., 2009), and measuring and valuing these impacts on society can help guide policy and management decisions. For example, understanding the overall economic impact of ocean acidification can enhance the discussion of national and international climate change mitigation options (e.g., reducing CO2 emissions). However, it may be even more useful to provide information that empowers stakeholders and enables decision makers to respond constructively to ocean acidification. To provide such information, one must determine who will be affected, when, and by how much, and how those impacts might be anticipated, prepared for, or mitigated.
As with the ecological effects, the economic implications of ocean acidification are presently not well understood. Potential economic harms as well as opportunities are only now being identified (Cooley and Doney, 2009). This chapter first presents a brief,1 general discussion of how the impacts can be measured and valued. It then considers three sectors—
1 Holland et al., 2010 provide a more detailed discussion of how economic evaluation frameworks and economic modeling and valuation methods can be applied to evaluating impacts on ecosystems and ecosystem services.
fisheries, aquaculture, and tropical coral reef systems—for which socioeconomic impacts appear most probable based on currently available data and which have attracted the most public attention and concern (e.g., Pew Center for Global Climate Change, 2009).
5.1 EVALUATING IMPACTS ON SOCIETY
Economic methods and models can be used to estimate how net benefits to society may be affected by expected changes in marine ecosystems due to ocean acidification (see previous chapters) and to assess the value of responses to those changes. Economic analysis can provide information on how best to reduce economic harm or to capitalize on opportunities brought on by ocean acidification. While economic values are not the only, or even necessarily the most important, criteria for informing decisions on responses to ocean acidification, they do provide a means to compare alternative uses of society’s resources with a framework that relates value to human welfare in terms of individuals’ assessments of their personal well-being (Bockstael et al., 2000). The strong theoretical and empirical foundation of economics enables the measurement of quantitative, logically consistent, and directly comparable measures of human benefits and costs, whether realized through organized market activity or outside of markets. Like other natural or social sciences, the accuracy of these and other economic predictions is generally highest for small (marginal) or localized changes. As one moves further from the current condition, expected accuracy declines. Hence, it may not be practical or meaningful to quantify the value of the loss or restructuring of an entire ecosystem, but it is possible to quantify the value of discrete changes in the ecosystem services relative to a specific baseline.
Economic valuation methods can be applied both to market goods (e.g., seafood) and non-market goods (e.g., protection from coastal flooding and erosion). Many of the economic effects of ocean acidification will be on ecosystem services that are not traded in markets but still have substantial economic value. A variety of different non-market valuation methods can be used to quantify these benefits, each suited to the measurement of specific types of values (Box 5.1).
These measures of value can be incorporated into economic decision support frameworks such as cost-benefit analysis (CBA) or cost-effectiveness analysis (e.g., Boardman et al., 2006) to help evaluate potential adaptation or mitigation responses. When using a CBA to compare costs and benefits of projects or policies with long-term effects, it is common practice to reduce, or discount, future costs and benefits. This is particularly relevant and problematic for ocean acidification because outcomes much further in the future than are typical of economic analysis will need to be considered.
BOX 5.1
Quantifying the Net Benefits Associated with Non-market Goods
There are two major types of non-market values: use values and non-use values. Use values are related to observable human use (though not necessarily consumption) of a resource. Examples in the marine environment include recreational use such as beach use or scuba diving to view ocean life. Non-use values are those not related to present or future use. Examples include the value people place on the continued existence of something (existence value) or on ensuring the continued existence or availability of something for future generations (bequest value).
There are a number of common methods to quantify use values. Revealed preference methods—observing and analyzing actual human behavior—can be used to measure certain types of use values; for example, by studying the choices people make about recreation. Defensive behavior methods can also approximate non-market use values based on analysis of expenditures to avoid or mitigate environmental damage; for example, the costs associated with building groins or sea walls to prevent property damage that might otherwise have been prevented by salt marshes. However, the costs of avoiding or mitigating losses do not necessarily equate with the value of what is or would be lost, so care should be taken in using these methods to quantify value. Stated-preference methods that utilize surveys can by used to estimate non-use values. Stated preference methods such as choice experiments can also be used to evaluate the relative value of alternative policies or outcomes without necessarily monetizing them. Benefit-transfer methods, which transfer value estimates from studies in other locations, are among the most commonly applied methods for non-market valuation by government agencies (e.g., see U.S. EPA, 2002 and Griffiths and Wheeler, 2005).
The choice of discount rate in such analyses is thus likely to be both critical to the valuation and highly controversial (Box 5.2).
There is considerable uncertainty regarding the potential impacts of ocean acidification and how those impacts might be mitigated or changed by future human actions. When outcomes from different courses of action are uncertain but the probabilities of discrete alternatives occurring can be quantified, economists often apply an expected value or expected utility framework to provide a single measure of value that can be compared with the value of some other course of action (Box 5.3).
There are a number of methods beyond those outlined in Box 5.3, such as using expert panels or multi-attribute utility theory (Kim et al., 1998), that can be used to assist in determining appropriate investments in acidification research and devising policies. Each of these methods has strengths and weaknesses, and care must be taken to choose the most
BOX 5.2
Discounting
Cost-benefit analysis of policies or projects that involve costs and benefits occurring over an extended period of time will generally apply a discount rate to both future benefit and future costs. Discounting reflects the actual preferences of people for earlier consumption or delayed costs, as well as the expected growth in real consumption for future generations (Ramsey, 1928); it is generally accepted as a means of aggregating benefits and costs over time. In private investment decisions the discount rate may reflect the opportunity cost of capital. However, discounting may lead to unintended consequences when used to assess outcomes over very long time horizons. For example, in a cost-benefit analysis of a program designed to avoid a loss of $100 billion one hundred years in the future, it would be worth spending up to $24.7 billion on that program today using a discount rate of 1.4%. However, applying a discount rate of 6% would suggest it is only worth spending $247 million today on that program. Consequently, the choice of a discount rate can be extremely important in analyses of decisions with very long term implications, and can greatly alter how policies are designed and ranked (e.g., see reviews of Stern [2006] by Nordhaus [2007] and Weitzman [2007]). The discount rate is particularly critical when evaluating actions that may require large up-front costs to forestall undesirable outcomes far in the future. Some economists have proposed using low discount rates (e.g., Stern, 2007) or alternative discounting approaches for projects with long-duration effects (see Boardman et al., 2006 for a discussion of these). However, there is a lack of consensus on what discount rates or approaches should be used to evaluate decisions and design policies that will impact future generations. Therefore, it may be desirable to present policy makers with estimates of net present value reflecting alternative discount rates so that the sensitivity of the result to the discount rate is clear.
appropriate method for the assistance required and the available data. It is also important to note that performing long-time frame analysis presents difficulties for all of these analysis methods because of the challenges in weighting changes that occur far in the future.
There are a variety of important factors that determine how easily and how quickly (human) communities may cope with and adjust to the impacts of ocean acidification. These include the formal and informal institutions that determine how responses are carried out, the education and training of the affected individuals, cultural values, and alternative employment availability (Kelly and Adger, 2000; Adger, 2003; Tuler et al., 2008).2
2 The range of issues and research questions associated with vulnerability and adaptation is broad. Though their focus is on climate change, the compiled papers in Adger et al. (2009) cover many of the issues that may be relevant to vulnerability and adaptation to ocean acidification.
BOX 5.3
Decision Making Under Uncertainty
Expected value is simply a weighted average of the values of the potential alternative outcomes where the weights represent the probabilities that certain states of nature will occur. For example, if a particular policy has a 20% chance of providing a benefit of $120 million and an 80% probability of accomplishing nothing, and the cost of the policy is $20 million (e.g., a net benefit of −$20 million) the expected value of the policy is $4 million (0.2*(120−20) + 0.8*(0−20) In an expected value framework bad outcomes are not given more weight than good ones, but an expected utility framework may weight losses more heavily than gains reflecting risk aversion. Additional value or alternative decision criteria should be considered in evaluating policies that prevent irreversible losses of uncertain value. The loss of the opportunity to learn more before making a decision represents an added cost that is called quasi-option value (Arrow and Fisher, 1974). In some cases policy makers may choose to use a safe minimum standard approach. Rather than attempt to value the loss, policies believed sufficient to ensure that the loss is not incurred are implemented unless the costs of doing so are catastrophic. Ciriacy-Wantrup and Phillips (1970) explained that “here the objective is not to maximize a definite quantitative net gain but to choose premium payments and losses in such a way that maximum possible losses are minimized.” Though somewhat flawed from an economic logic and philosophical perspective, the safe minimum standard approach is reflected in numerous policies, including the Endangered Species Act.
Access to capital or other resources is also likely to be important. It has been noted that strategies to cope with and adapt to impacts of climate change in the short run may not necessarily facilitate proactive adaptation and enhancement of social welfare in the longer term (Dasgupta, 2003) and may even be counterproductive (Scheraga and Grambsch, 1998). For example, emergency aid that allows a fishery-dependent community to sustain itself and maintain fishing infrastructure during a fishery collapse may be counterproductive if collapses are expected to be more frequent and severe in the future. In such cases investing in developing alterative economic opportunities may be more useful. The importance of focusing on long-run adaptation may be particularly important for ocean acidification because it is a slow driver of change with long-term effects and the potential for ecological regime shifts. Notwithstanding the potential for conflicts between different adaptation strategies, a great deal of synergy may occur among actions to facilitate adaptation to ocean acidification and other changes such as climate change, both cyclic and secular. However, in light of the variability in these factors, socioeconomic analysis should not be a one-time event but an iterative process that adjusts with the identification of stakeholders
and the impact of ocean acidification upon them. As research is performed and the effects of ocean acidification are better defined, the results of the socioeconomic analysis may change, and as a result, the research needs and adaptation policies may also need to be adjusted.
It may be nearly impossible to predict how acidification will affect some ecosystem services. Indeed, the objective of prediction itself may, by necessity, be set aside for something far less ambitious—such as general understanding of basic trends or improved appreciation of risks and thresholds. Since many impacts may be hard to predict with accuracy, the development of adaptation strategies that are robust to uncertainty will be an important task for decision support (Edwards and Newman, 1982; Keeney, 1992; National Research Council, 1996; von Winterfeldt and Edwards, 1986; Kling and Sanchirico, 2009). Even when we do not fully understand the processes through which ocean acidification will effect changes in ecosystems and ecosystem services, it is useful to develop models to test the implications of alternative plausible hypotheses to provide insight into the range of possible outcomes. Sensitivity analysis can then be used to identify the assumptions and parameters of the models that most heavily impact predictions which can help target limited resources toward research aimed at the information that is likely to be of greatest value.
5.2 MARINE FISHERIES
United States wild marine fisheries had an ex-vessel value of $3.7 billion in 2007; mollusks and crustaceans comprised 49% of this commercial harvest (National Oceanic and Atmospheric Administration, 2008; Cooley and Doney, 2009). Ocean acidification may affect wild marine fisheries directly by altering the growth or survival of target species, and indirectly through changes in species’ ecosystems, such as predator and prey abundance or critical habitat. This may lead to changes in abundance or size-at-age of target species, which could ultimately result in changes to sustainable harvest levels. Several experimental studies have observed the effects (positive and negative) of ocean acidification on calcification in commercially important species (e.g., Green et al., 2009; Miller et al., 2009; Ries et al., 2009; Gazeau et al., 2007). Shellfish fisheries are presumed to be particularly vulnerable to ocean acidification because of the effect on shell formation especially during early life stages (Kurihara, 2008). Many important plankton species are calcifiers, and their decline or collapse could adversely affect target species through changes in food web interactions. Fisheries could also be affected by changes in critical habitat. This could include disruption or degradation of biogenic habitat structures formed by marine calcifiers such as corals and oysters, but could
also include increases in seagrass and mangrove habitats with increased CO2 (Guinotte and Fabry, 2009). There may also be synergistic effects of increased acidification and other stressors, such as changes in water temperature associated with global climate change.
The impacts of ocean acidification on marine fisheries are likely to vary greatly over time and across species and locations, and there may be localized impacts in areas with upwelling or large freshwater input before average ocean pH falls. Studies to date have been limited to only a few commercially relevant species and have been focused on individual organisms, not on predicting the overall impacts for a target stock or species.
Ocean acidification may result in substantial losses and redistributions of economic benefits in commercial and recreational fisheries. Although fisheries make a relatively small contribution to total economic activity at a national and international level, the impacts at the local and regional level and on particular user groups could be quite important. Further, the net impact on social benefits will depend on whether adequate projections are available to allow affected fisheries to plan for change, as well as the ability of those fishery participants and communities to adapt.
The expected long lead time of acidification impacts relative to the time scales of fisheries investments makes present day valuation a challenge. For example, a snapshot of producer surplus today may substantially underestimate future producer surplus because of the likely increase in seafood demand associated with increased population and income. Rebuilding depleted fish stocks, now mandated by law, could lead to increased catches and reduced costs (Worm et al., 2009). Furthermore, many fisheries today are overcapitalized and inefficiently regulated. New “catch share” management systems being implemented in a number of U.S. fisheries provide fishermen with incentives and more flexibility to reduce harvest costs and increase the quality and value of catch (and thus net value of fisheries) as well as promote rebuilding (Worm et al., 2009; Costello et al., 2008). Taken together, these factors suggest that the potential losses from ocean acidification could be higher than projected on the basis of the current value of fisheries.
For recreational fisheries, net “consumer surplus” values must be estimated with non-market valuation techniques. As with commercial fisheries, long-term projections are likely to be highly uncertain since the number of recreational fishermen will change. Understanding likely trends in future participation in a particular fishery may help increase the accuracy of longer-term predictions.
A change in the production of a particular commercial fishery as a result of ocean acidification can be expected to result in a change of income and jobs for sellers of inputs (e.g., commercial fishing gear), pro-
cessors, retailers, recreational fishing outfitters and so on. Secondary impacts such as income and job losses for sellers of inputs or fish processors are generally excluded when determining the change in net benefits, especially from a longer-term perspective, since the affected labor and capital resources can be redeployed. However, these economic impacts may be minimized and the ability of communities to adapt improved if there is good information available with sufficient lead time to allow for planned adjustments to impacts.
Beyond the value of commercial or recreational shellfish harvests, shellfish resources such as oyster reefs and mussel beds provide valuable ecosystem services. These include augmented finfish production (Grabowski and Peterson, 2007), improved water quality and clarity that can benefit submerged aquatic vegetation (Newell, 1988; Newell and Koch, 2004) and increase recreational value by improving beach and swimming use (Henderson and O’Neil, 2003). Shellfish beds can also reduce erosion of other estuarine habitats such as salt marshes by attenuating wave energy (Meyer et al., 1997; Henderson and O’Neil, 2003).
Individuals, companies, and communities involved in fisheries may be able to adapt to changes in allowable catch levels caused by ocean acidification in a variety of ways. Timely information could improve their decisions about long-term investments, including reallocation to different fisheries, diversification into multiple fisheries, or choosing a non-fishing occupation. All of these choices are strongly influenced by the culture, values, and social institutions surrounding fishing communities; therefore, adaptation responses must take these factors into consideration if they are to be effective (Coulthard, 2009). Since accurate predictions of what fisheries will be impacted when are unlikely, it is also important to identify management strategies that are robust to uncertainty and unexpected change. The potential consequences of ocean acidification may take many years to be realized but will persist for a very long time. To determine the appropriate responses to ocean acidification it is important to reduce uncertainty about when the impacts of ocean acidification will occur. Individuals and businesses involved in fisheries are likely to be interested primarily in impacts expected to occur within 20 years or less. Because of customary practices and typical discount rates applied to capital investments, projections of changes 5 to 10 years in the future are likely to be of greatest interest.
Many of the critical decisions for fisheries are made by fishery managers who must design harvest strategies and management systems. Current U.S. law requires fishery managers for federal fisheries to set reference points for biomass and exploitation rates in relation to maximum sustainable yield (MSY). These reference points, based on long time-series that reflect past conditions, will overestimate the productivity and target
biomass for some species that are negatively affected by ocean acidification (i.e., lower MSY), resulting in unrealistic rebuilding requirements. The reverse may be true for other fish stocks that are positively affected by ocean acidification. In both cases, the benefits from the fishery will be reduced if reference points are not adjusted to reflect changes in a fishery’s productivity. Fisheries in state waters are not subject to the Magnuson-Stevens Fisheries Conservation and Management Act (the primary U.S. law regulating marine fisheries), and guidelines on controlling overfishing or rebuilding fish stocks vary, but managers of state fisheries face the same forecasting and planning challenges as their federal counterparts.
5.3 MARINE AQUACULTURE
Since 2005, there have been many failures in oyster hatcheries along the U.S. west coast. While the cause is unknown, some attribute the failures to ocean acidification and the oyster industry has already begun to make investments in water treatment and monitoring (Welch, 2009). This underscores the urgent need for decision support for the marine aquaculture industry. It is presently unclear which aquaculture species will be impacted by ocean acidification; however, as the previous discussion of wild fisheries suggests, shellfish appear at greatest risk. Impacts on crustaceans or finfish aquaculture are presently less clear.
Many issues confronting wild fisheries also affect marine aquaculture. Estimates of the gross value of aquaculture at risk from ocean acidification (e.g., $240 million for U.S. marine aquaculture in 2006, of which $150 million was for shellfish) provide some sense of the scale of potential harm, but do not provide a measure of the net benefits that may be lost. Those can be measured through standard market-based analyses of producer and consumer surpluses (see Box 5.4) (from imported as well as domestic aquaculture) to the extent data are available. Because U.S. production has been limited mainly by markets and regulatory requirements, it is hard to forecast the level of aquaculture production a few decades from now. If aquaculture production increases significantly, the potential losses in net benefits from ocean acidification could be much higher.
Even though aquaculture faces some of the same threats as wild fisheries, the research and monitoring needs and ability to respond to threats is much different. Aquaculturists can protect against ocean acidification by changing the species or broodstock they raise, relocating operations and, in some cases, by altering seawater chemistry (e.g., in intensive culture operations and hatcheries). These decisions will require information about the probability, frequency, magnitude, and timing of potential future problems created by ocean acidification. In some cases, large investments with long payoff horizons will be at stake, so information on
BOX 5.4
Producer and Consumer Surplus
Gross revenues provides a rough indicator of the value of a fishery, but may not provide a good estimate of net societal benefits associated with that fishery (and thus the potential loss in value). A preferable approach is to project changes in producer and consumer surplus. Producer surplus is the difference between the revenues and the full costs associated with producing a good. Consumer surplus is the difference between what consumers pay for a good and the maximum they would be willing to pay. In addition to changes in producer and consumer surplus from U.S. fisheries, net benefits to the U.S. population could be affected by loss of consumer surplus from imported seafood. Other ecosystem services such as recreational fishing also provide consumer surplus—the value participants place on the activity itself less the expenditures they incur (e.g., travel costs, boats, fuel, gear).
expected impacts several years away may be useful. But, as with conventional fisheries, threats of changes 5 to 10 years in the future are likely to be of greatest interest.
5.4 TROPICAL CORAL REEFS
Coral reefs provide many valuable ecosystem services, including direct use values for recreation, e.g., diving, snorkeling, and viewing; indirect use values of coastal protection, habitat enhancement, and nursery functions for commercial and recreational fisheries; and preservation values associated with diverse natural ecosystems (Brander et al., 2007). Two coral species are listed as threatened under the U.S. Endangered Species Act—the elkhorn coral Acropora palmata and the staghorn coral Acropora cervicornis—with two others considered “species of concern” (National Ocean and Atmospheric Administration, 2009a). Tropical coral reefs also provide habitat for other protected species. According to one estimate, coral reefs are estimated to provide around $30 billion in net annual benefits globally of which some $5.7 billion is associated with fisheries, $9 billion with coastal protection, $9.6 billion with tourism and recreation, and $5.5 billion with preserving biodiversity (Cesar et al., 2003). While only about $1.1 billion is attributed to coral reefs in U.S. waters, U.S. citizens derive value from non-U.S. reefs. Many coastal populations in less developed regions of the world are dependent on reef-based fisheries for food, including people residing in U.S. territories and protectorates. Degradation or loss of reefs could undermine regional food security and have political and security implications.
The value of reefs can vary greatly and there is little consistency or agreement on methods for economic valuation. A meta-analysis of coral reef recreational valuation studies shows a wide variation of estimated values (net value of site visits) only partially explained by site characteristics (Brander et al., 2007). The study did find significantly higher values for reefs with larger areas, more dive sites, and fewer visitors. If the number of reefs and associated biodiversity declines over time, the value of those that remain can be expected to increase due to scarcity. Consequently, the marginal damage associated with increased reef losses would be expected to increase.
The tropical coral reef sector is somewhat different from the previous two sectors in that it represents a single ecosystem with a wider range of user groups that have different (and sometimes conflicting) values and goals. There are many potential users of information about ocean acidification impacts on tropical coral reefs, including a variety of government agencies that manage reefs (e.g., NOAA National Marine Sanctuaries Program), non-governmental conservation groups that work to protect reefs (e.g., Conservation International, World Wildlife Fund), tourism and recreation industry groups, native communities, and others that rely on the ecosystem services provided by reefs. Information on expected impacts on coral reefs and the vulnerabilities of these various groups may allow users to prepare for and adapt to changes. While there is virtually no information on decision support specific to ocean acidification impacts on coral reefs, there is a growing body of literature on possible management responses for the impacts of climate change (e.g., Johnson and Marshall, 2007; Keller et al., 2008; West et al., 2009). Given the similarities of the two problems, the following discussion applies the same principles toward responding to ocean acidification.
Mitigation is one possible response to predicted impacts. Analysis of the predicted impacts on coral reefs can be used to complement arguments to mitigate carbon dioxide emissions on a global scale. In addition, small reefs having important features may warrant local mitigation actions such as using carbonates to buffer seawater, but the effectiveness and associated ecological risks have not been studied. For large-scale operations, this is unlikely to be economically feasible.
The other class of management response is to promote resilience in vulnerable components of the coral reef ecosystem and associated human communities. This will allow the system to better resist and recover from disturbances caused by acidification and is an ideal management approach given uncertainty in predictions of impacts. Approaches for managing for resilience include reducing other anthropogenic stressors such as pollution, overfishing, or habitat destruction. Managers of reef-related fisheries might need to adjust catch and effort levels to reflect
reductions in productivity. Reef managers could focus protection efforts on critical elements of the reef ecosystem. For example, herbivores have been identified as a key functional group for maintenance of coral reef ecosystems; protection efforts could ensure that herbivores are afforded special protection (Johnson and Marshall, 2007). Another example is identifying and protecting refugia—areas that are less affected by ocean acidification and other stressors and that can serve as a refuge for organisms (Johnson and Marshall, 2007; West et al., 2009). It is also important to promote the social and economic resilience and adaptive capacity of users that rely on tropical coral reefs. All of this will require a great deal more information on both the biological impacts of ocean acidification on coral reefs as well as the socioeconomic systems that will be affected.
