The Value of the Ocean - what it means, how it's changing, who cares, and what we need to know

From a talk presented remotely at the U.S. Consulate General Rio de Janeiro, Brazil on June 7, 2022?as part of the U.S. State Department's Speakers Program.

by Linwood Pendleton

I’ve been researching the economic value of the ocean and coastal ecosystem services for more than 30 years now. People always ask me about the value of the ocean. So, let's jump in.

What is the value of global marine and coastal ecosystem services??

There are two honest answers to this question.?The first is we don’t know.?The second is that it is likely to be something close to infinity.

Why??Let’s take a look at the second answer first.

Value is a very human-centric idea.?We measure value by trying to understand how we could compensate people for the loss of something. If we were to lose the ocean or more specifically, the global ocean ecosystem and its services, there would be no people and no way of compensating humanity for this loss.?So, there would be no sum of money or no other actions short of leaving the planet that would be able to compensate humanity for this loss.?In that sense, the global value of marine and coastal services is infinitely large.

This is a natural extension of the increasing value of scarcity.?As something becomes more scarce, it becomes more valuable.?

Infinity, however, is not a very useful number.?And so, people have tried to estimate the value of global marine and coastal ecosystems - these attempts are noble and important.?We want the world to understand how much the ocean and coasts contribute to our well-being, but economics is not particularly well-equipped to estimate these values at a global scale.

?Why??The biggest reason is that the methods we use for valuing ecosystem services are based on micro-economic techniques that work well to measure relatively small changes in a resource, holding everything else constant. This is why we call this field “micro-economics.”??

Valuation techniques for ecosystem services were originally developed to accomplish two things :

First, we developed these techniques to calculate economic damages caused by well-defined ecological harm - like oil spills and anchor damages to coral reefs.?In these cases, the impact was sufficiently limited so we could assume a narrow focus would not result in big errors of estimation.?

?Second, valuation techniques were used to help include the value of changes in ecosystem services in benefit-cost analysis - usually at a project scale.??

In both cases, these valuation techniques worked well, because one could assume that the simplifications needed to estimate these values led to only minor errors.

When we start thinking about the value of marine ecosystems services beyond these applications and scales, though, it is important that we don’t over simplify - because the errors can be quite large and the mistakes we make could be serious.

The biggest simplification we have to avoid is the mistaken belief that we can measure the value of individual ecosystem services separately and that we can measure some services without measuring them all.?The value of a mangrove is not just the sum of the value of the services associated with carbon, food, and shoreline protection??It has to include the potential disservices associated with pests, disease, and potential dangers.?

The importance of considering the full suite of services produced by an ecosystem was recently demonstrated in a paper in the ICES Journal of Marine Science sometimes referred to as Kelp Won’t Help .?The paper showed that the carbon services provided by seaweed are likely to be completely negated by the carbon production of animals living in the seaweed.?While the authors didn’t try to estimate the value of the carbon ecosystem services of kelp, they clearly showed that you can’t focus on just the part of the ecosystem you like while ignoring the rest.

The other simplification to avoid is to ignore the complexity and interconnectedness of marine and coastal ecosystems.?The value of a coral reef depends importantly on the condition of nearby sea grasses, mangroves, and even mobile components of the ecosystem like migratory species and plankton.?If you want to know the value of any one part of the ecosystem, you have to understand how it is connected to the rest of the ecosystem - that goes for the social and ecological components of the ecosystem.

None of this means that the ocean and coast are not economically important.?They are hugely important.?It just means our ability to really understand the economic value of an ecosystem as huge as the ocean is beyond serious economic methods.?New natural capital approaches and asset valuation techniques are definitely a step in the right direction, we just aren’t there yet.

What do we do with a big number anyhow?

Beyond being a big number that we can use for advocacy, what could we really do with an understanding of the value of the global ocean ecosystem??Mostly what we want to know is how the value of the ocean is changing, who is benefiting, who is losing out, and what can we do about this??From a practical perspective, understanding the change in the economic value of ocean and coastal ecosystems helps us understand the potential benefit of avoiding further damage or more positively of investing in restoration, protection, and management.

What are the main changes these services have been going through?

To understand how marine ecosystem services have been changing, it is important to understand what contributes to ecosystem services and how these contributors can change.

The core factors to consider are:

• People?
• who is affected by an ecosystem service or disservice
• What substitutes exist for the ecosystem service in question
• Complements - what is the cost and availability of other things needed to enjoy that service.?For instance, if you have to fly to an island to enjoy the tourism services provided by a coral reef, the value of that service will decline if the cost of flying increases.
• Quantity - how much of the service is there
• Quality of the service
• Quantity and quality of other interconnected ecosystems and their services

Without getting into all of the potential possibilities, let’s look at things that we know that have changed.

You can’t understand changes in ecosystem services without understanding changes in human behaviour.

Let’s start with people. ?

Tourism plays a major role in many of the valuation studies that have been conducted about coastal ecosystem services.?80% of the value of the Mediterranean Sea, as estimated by the Worldwide Fund for Nature , historically has come from tourism.?How did that change during the pandemic??It declined, of course, since many fewer people were able to enjoy these services.?The decline was even more striking in small island states like the Seychelles where tourism virtually disappeared.

At the same time, the pandemic pushed people out of cities in many places and to the sea where they began fishing and living near the sea.?The value of the ecosystem services associated with food services likely increased in the short-term, but so did the pressure and damage to the ecosystem.?So, the long-term value may have declined.?

Quantity and Quality of Ecosystem Services

Elsewhere, it is important to recognise that the quantity and quality of ecosystem services has increased in many places - due to better management, restoration, and reductions in ocean pollution.

Still, recent IPCC special reports and yet more coral reef mass bleaching show us that in many places ecosystems continue to decline in both quantity and quality.?This, of course, represents a loss in value, especially for those people who depend on these resources to make a living or provide for their families.?If these people cannot move or migrate, then their wellbeing is likely much reduced.

But, even these losses in ecosystem services can have somewhat counter-intuitive impacts - because increasing scarcity might benefit those that still have healthy ecosystems.?If mass bleaching in Australia occurs, diver tourists can always go to the Coral Triangle.?This benefits dive tourism businesses in the Coral Triangle and reduces the economic impact to divers.

This is an important point - most ecosystem service valuations assume that people do not make adjustments to deal with the change in ecosystems - that they just lose all that value.?This kind of an error was a feature of early estimates of the impacts of climate change.?It is called the dumb farmer assumption. We routinely assume that people that benefit from ecosystems are equally dumb.

In fact, many people do have options: tourists can go some place different, people can change their diets, people build seawalls, etc.?These alternatives are rarely as good as what the healthy ecosystem produced - if they were, people would have switched to these alternatives before there was a change in the ecosystem.??

But failure to consider how people react leads to a number of problems:

FIRST - it means we potentially over-estimate the economic harm of some ecosystem changes. Over-estimating the value of an ecosystem service doesn’t seem like a bad thing if the result is to get people to invest in nature instead of new parking lots, but if people over-invest in one part of the ecosystem because it is overvalued and under-invest in another part because it has not been valued, that can be a problem.

As with estimates of the economic impact of climate change, once we assume the smart farmer or smart ecosystem service user, the estimates of the value of many types of ecosystem services have fallen as we account for substitution and smart decisions.

SECOND - It means we are less aware of how a change in one ecosystem may affect another ecosystem.?An ecosystem loss in one place may lead to a temporary increase in value in another place, but also more pressure and damage in that place. I mentioned the example of coral reef bleaching in Australia.

THIRD - If we only focus on how some people benefit, without spending equal time understanding those that might be harmed, we will make a similar mistake. Consider very positive actions like the creation of marine protected areas. The positive value of a marine protected area, say from increased tourism value or increased carbon storage or even from the increased existence value of rare and charismatic species might be partially offset by the loss of ecosystem services by those that are excluded from the area.?And if those people, say fishers, go somewhere else, they may reduce the quantity and quality of ecosystem services to which they are displaced.?Even conflict can arise with its own associated costs.

FINALLY - It is important to understand how the demand for ecosystem services by people even far away from the ocean places you care about may affect the value of those places. Fish are exported.?Tourists come from other countries and the value of the carbon stored in Brazilian ecosystems depends on how climate change affects people worldwide.

The ecological interconnectedness of ecosystems is also critical.

The value of Brazil’s coastal and marine ecosystems depend importantly on what’s happening on land, what’s happening in the Amazon, and what’s happening, say, in parts of Africa where the South Atlantic current begins. In many cases, the fate of the value of ecosystem services in coastal Brazil is not in the hands of people living by or working near the coast.

And of course, climate change affects the quantity and quality of ecosystem services everywhere and often not for the better.

Compliments matter

By compliments, I don’t mean telling someone they look nice.

I mentioned earlier that some ecosystem services need to be combined with other goods and services for people to enjoy them. We call these compliments. Just as I said that an increase in the price of fuel could change the value of a marine ecosystem, it also is true that a change in the demand for a marine ecosystem service could affect the demand for compliments that have negative impacts.?The ecosystem service value of tourism needs to include the climate disservices of air travel, furnishing hotels, and importing food.?The ecosystem service value of fishing needs to include the disservices associated with the by-catch of other species, the use of fuels, and the potential human rights concerns that come with some types of fishing.

The Lesson - We Need Good Ecosystem Service Science

The lesson here is that to do a good job of managing marine and coastal ecosystems, and to really ensure that people continue to benefit from these services, we need to work together to collect data - data about people, about marine life, and about ecosystem conditions - everywhere that people need to make decisions about how oceans and coasts are used and we have to do this in a way that it is easy to share these data and monitor the impacts of our actions or our failures to act. ?In our analysis of mangrove ecosystem services worldwide , we found a trend of less and less original data collection and more recycling of old value estimates to try to show the “importance” of mangroves.?This doesn’t increase our understanding of the complexity and processes that underpin the economics of the ocean ecosystems.

And, most importantly, the data we collect and the research we conduct really needs to be useful to those making decisions.

Co-creating Ocean Science and Knowledge for Sustainable Development

It is this last point that is the objective of co-creating science with the people and communities who depend on oceans and coasts and those that make decisions about how people use these ecosystems.?This is a core principle underlying the United Nations Decade of Ocean Science for Sustainable Development and the many programmes that have emerged under its auspices - like Marine Life 2030 that already has good participation from partners in Brazil.??

The “co-creation of science and knowledge for sustainable development” means that scientists and researchers need to start working with those who depend on the ocean, who may be affected by changes in the ocean, and those that make decisions that affect the ocean.?This could be anyone from someone who needs to decide whether to buy a fish for dinner, to catch a fish, or even how to manage a fishery.?And it may include people that don’t even realize that they depend on the ocean or have an influence on ocean health. I’m going to call all of these non-researchers “stakeholders” for now, but I realize this is a term that really does not capture everyone that needs to be included.?

Just figuring out who needs to be part of the process is an essential first step without which co-creation cannot occur.?

Co-creating science and knowledge is not the same as simply including stakeholders.??

Many of us have worked with stakeholders - as scientific collaborators, as partners, and even as research subjects.?Co-creation, however, requires that we start working with “stakeholders” well before we begin writing scientific proposals.?It requires researchers to listen to others, hear what kinds of decisions and priorities people face, and to recognise that the science and information that people need to make decisions may not be the science and information the researcher wants to do.??

This listening, really a deep listening, is beyond what many researchers know how to do and it requires training.

Closely associated with listening, is trust building.??

If someone does not trust you, they will not tell you what you need to hear.?

It does not matter how well you listen if your non-researcher partners are not communicating to you.?Trust building is difficult and it requires patience, repeated and intentional interactions, and a lot of time - all of this before you even know if you are the right researcher for the problem at hand.?This is not just culturally difficult for all those involved, but it is difficult from a time management perspective.?Everyone is busy. Researchers often need to teach, fishers need to fish, divers want to dive. In the short-run, time invested in trust building and listening does not result in outcomes that benefit those involved - researchers don’t necessarily write a paper, fishers don’t get to buy and sell a fish during these exercises.

Probably most importantly, funders rarely are willing to pay for this trust building, but that is starting to change.?

Places like the University of Minnesota are starting to use soil grants.?

Many of you are familiar with seed grants - small amounts of money designed to test an idea of a potential collaboration. Soil grants start one step earlier - before you can plant a seed you need good soil in which to plant.?Soil grants provide funds to bring researchers, stakeholders, and even funders and facilitators together to build trust, listen, identify opportunities for co-creation, and to explore the possibility of writing proposals for seed grants and other types of funding.

To really make the co-creation of ocean science work, we will have to find new ways of funding and rewarding those who are willing to participate in these processes.

We Need New Ways of Connecting People and Sharing Knowledge

As I mentioned, sharing knowledge and connecting people also is essential and this is the key objective of the Ocean Knowledge Action Network - or Ocean KAN -?that I help lead as the Executive Director of its International Project office.?

?Some of our very first collaborators at the Ocean KAN are right here in Brazil at UNIFESP, where we work with Leandra Goncalves, Ronaldo Christofelleti, and Ivan Martins and with the Painel Mar, especially through our long relationship with Leopoldo Caveleri Gerhardinger who was on the team that helped to develop the Ocean KAN.?These partners, of course, connect us with the hundreds of others working on these issues in Brazil.?

The Ocean KAN, in turn, connects our Brazilian partners with others doing similar work in places like Seychelles, Taipei, Ghana, South Africa, the USA, France, and Canada and this is just the start.?The Ocean KAN also connects these on-the-ground-partners with the ocean science networks of Future Earth, and global networks of marine social scientists, and marine scientists.

I invite you to visit us at oceankan.org, follow our work, and get involved with our partners in Brazil and around the world.