What’s the economic value of the Great Barrier Reef? It’s priceless

Neil Perry, Western Sydney University

Deloitte Access Economics has valued the Great Barrier Reef at A$56 billion, with an economic contribution of A$6.4 billion per year. Yet this figure grossly underestimates the value of the reef, as it mainly focuses on tourism and the reef’s role as an Australian icon.

When you include aspects of the reef that the report excludes, such as the ecosystem services provided by coral reefs, you find that the reef is priceless.

Putting a price on the Great Barrier Reef buys into the notion that a cost-benefit analysis is the right way to make decisions on policies and projects that may affect the reef. For example, the environmental cost of the extension to the Abbot Point coal terminal can be compared to any economic benefits.

But as the reef is both priceless and irreplaceable, this is the wrong approach. Instead, the precautionary principle should be used to make decisions regarding the reef. Policies and projects that may damage the reef cannot go ahead.

How do you value the Great Barrier Reef?

The Deloitte report uses what’s known as a “contingent valuation” approach. This is a survey-based methodology, and is commonly used to measure the value of non-market environmental assets such as endangered species and national parks – as well as to calculate the impact of events such as oil spills.

In valuing the reef, surveys were used to elicit people’s willingness to pay for it, such as through a tax or levy. This was found to be A$67.60 per person per year. The report also uses the travel-cost method, which estimates willingness to pay for the Great Barrier Reef, based on the time and money that people spend to visit it. Again, this is commonly used in environmental economics to value national parks and the recreational value of local lakes.

Of course, all methods of valuing environmental assets have limitations. For example, it is difficult to make sure that respondents are stating realistic amounts in their willingness to pay. Respondents may act strategically if they think they really will be slugged with a Great Barrier Reef levy. They may conflate this environmental issue with all environmental issues.

But more importantly, the methodology in the report leaves out the most important non-market value that the reef provides, which are called ecosystem services. For example, coral reefs provide storm protection and erosion protection, and they are the nurseries for 25% of all marine animals which themselves have commercial and existence value.

The Deloitte report even cites (but does not reference) a 2014 study that values the ecosystem services provided by coral reefs at US$352,249 per hectare per year. The Great Barrier Reef Marine Park covers 35 million hectares with 2,900 individual reefs of varying sizes. This means the ecosystem services it provides are worth trillions of dollars per year.

That is, it is essentially priceless.

The problem with putting a value on the Reef

Valuing the environment at all is contentious in economics. Valuation is performed so that all impacts from, say, a new development, can be expressed in a common metric – in this case dollars. This allows a cost-benefit analysis to be performed.

But putting a price on the Great Barrier Reef hides the fact that it is irreplaceable, and as such its value is not commensurate with the values of other assets. For instance, using Deloitte’s figure, The Australian newspaper compared the reef to the value of 12 Sydney Opera Houses. But while they are both icons, the Opera House can be rebuilt. The Great Barrier Reef cannot. Any loss is irreversible.

When environmental assets are irreplaceable and their loss irreversible, a more appropriate decision-making framework is the Precautionary Principle.

The Precautionary Principle suggests that when there is uncertainty regarding the impacts of a new development on an environmental asset, decision makers should be cautious and minimise the maximum loss. For example, if it is even remotely possible that the extension to the Abbot Point coal terminal could lead to massive destruction of the reef, then precaution suggests that it shouldn’t go ahead.

Assigning a value to the reef might still be appropriate under the Precautionary Principle, to estimate the maximum loss. But it would require the pricing of all values and especially ecosystem services.

While the Precautionary Principle has been much maligned due to its perceived bias against development, it is a key element of the definition of Ecologically Sustainable Development in Australia’s Environment Protection and Biodiversity Conservation Act 1999.

For a priceless asset like the Great Barrier Reef, it is perhaps better to leave it as “priceless” and to act accordingly. After all, if the Precautionary Principle is ever going to be used when assessing Ecologically Sustainable Development, in contrast with cost-benefit analysis and valuations, it is surely for our main environmental icon.

Ultimately, the protection and prioritisation of the Great Barrier Reef is a political issue that requires political will, and not one that can be solved by pricing and economics.

Neil Perry, Research Lecturer, Western Sydney University

This article was originally published on The Conversation. Read the original article.

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What do we tell kids about the climate change future we created for them?

Marc Hudson, University of Manchester

Over the past two years The Conversation has published my analyses on a range of topics related to climate change and politics, including climate denial in the Liberal Party, 25-year-old cabinet papers (not once but twice), coal industry PR campaigns and much else besides.
Finally comes a topic I can cheerfully say I know nothing about (at first hand, at least): raising children.

Apologies for oversharing, but I had a vasectomy in 2004. The columnist Andrew Bolt spotted this, via an article in Britain’s Daily Mail which clearly stated that I was the one who had been under the knife. Bolt claimed that my wife had “sterilised herself”. (She does a lot of yoga, but she’s not that flexible. We have pointed this out but Bolt has kept at it, repeating the claim almost six years later).

Despite what the Daily Mail article says (and what is within the quotes was never said), our decision not to have kids wasn’t based on concern for what our hypothetical children would do to the planet, but rather what the planet would do to them. My wife copped some online abuse, and I was once disinvited to appear on the BBC after explaining my actual position.

I first switched on to climate change in about 1989, and have become convinced that the second half of the 21st century will probably make the first half of the 20th look like a golden age of peace and love. There have been 30 years of promises and pledges, protocols and agreements, while atmospheric greenhouse gas levels have climbed remorselessly due to humanity’s emissions. I suspect that the reported recent flatlining in emissions growth could well turn out to be as illusory as the so-called global warming “hiatus”.

Writing recently in the Sydney Morning Herald, climate scientist Sophie Lewis eloquently asked:

Should we have children? And if we do, how do we raise them in a world of change and inequity? Can I reconcile my care and concern for the future with such an active and deliberate pursuit of a child? Put simply, I can’t.

While I would never presume to tell anyone what to do with their genitals, I must confess my personal amazement that climate activists who do have children – and who I know have read the same scientific research as me and drawn the same conclusions – aren’t freaking out more. (Perhaps they are just very tired.)

As the Manic Street Preachers sagely warned, our children will have to tolerate whatever we do, and more besides.

Be prepared?

So how do we prepare tomorrow’s adults for the world bequeathed to them by the adults of yesterday and today? Even the mainstream media is beginning to ask this question.

Some studies say young people don’t care enough about climate change; others claim they do. The Australian picture seems to be mixed.

As the environmental writer Michael McCarthy has lamented:

A new edition of the Oxford Junior Dictionary was published in 2007 with a substantial group of words relating to nature – more than 50 – excised: they included acorn, adder, ash, beech, bluebell, buttercup, catkin, conker, cowslip and dandelion. Their replacements included terms from the digital world such as analogue, blog, broadband, bullet-point, celebrity, chatroom, cut-and-paste, MP3 player and voicemail.

Might we be more adaptive than we think? The social demographers Wolfgang Lutz and Raya Muttarak, in their snappily titled paper Forecasting societies’ adaptive capacities through a demographic metabolism model, think so, describing how “the changing educational composition of future populations” might help societies adapt to climate change.

But not everyone thinks our brains will get us out of the mess that they and our opposable thumbs have got us into. As an editor at the Daily Climate pointed out:

A substantial portion of the human population lives on coasts. Much of their protein comes from fish. What happens when ocean acidification turns all of that to slime?

So what should we tell kids about climate?

It always helps to be open to advice from different settings. For instance, I stumbled on this good advice on a blog aimed at military spouses, but it strikes me that it holds just as true for the climate-concerned:

It is okay to show sadness around your kids; in fact, it is probably healthy. However, it is not okay to dump your emotions on them. Save rants and deep conversations for trusted adults.

If you are feeling overwhelmed (and you will), don’t turn to your kids. Children are usually helpless to offer advice and it can cause them to experience anxiety. Seek help from an adult friend … extended family, a neighbor, your church, or a counselor.

Sophie Lewis sensibly hopes that the next generation(s) “can be more empathetic, more creative and more responsive than we have been”. It’s a noble hope, but it will only happen if we behave differently.

So as previously in this column, it’s over to you, the readers. I have a couple of questions for you:

First, how do those of you who are parents (and grandparents, aunts and uncles) talk to your children about the climate change impacts that will happen in their lifetimes? Avoidance? Sugar-coating? The “straight dope”? Do you slip books from the burgeoning fields of dystopian fiction and “cli-fi” into their Christmas stockings? Besides The Hunger Games, there is Tomorrow, When the War Began, the excellent Carbon Diaries and, more recently, James Bradley’s The Silent Invasion. Do you worry about scaring the kids? What do the youngsters themselves say?

Second, what steps are you taking to help young people develop the (practical and interpersonal) skills required to survive as times get tougher? What are those skills? How do we make sure that it isn’t just the few (children of the rich and/or the “switched on”) who gain these skills?

Marc Hudson, PhD Candidate, Sustainable Consumption Institute, University of Manchester

This article was originally published on The Conversation. Read the original article.