Thursday, October 2, 2008

Classic Externality in the Caribbean

Here is a link to an article citing a recent study about the effects of pollution on the health and status of coral reefs. Some of the numbers are pretty disturbing.

Click here to read the Caribbean Net News Article

I found the story of Cancun to be pretty interesting... An undisturbed and pristine area presents an opportunity for economic growth if used for tourism. Development ensues and tourists follow. However, the development and tourists damage the very resource that started the process in the first place. Clearly there is a need for a balance. Without proper management, the area will be left without resource quality and without tourist revenues.

Applicable economic theory?
Potential solutions?
What information needs to be gathered first?


Lindsay Lamb said...

The article makes it pretty clear that one of the reasons the corals are dying is because of the waste being dumped into the ocean from tourist sites. If the economic benefits to the Caribbean, especially places like Cancun, is so great then why don't they use part of that money to come up with better ways to dispose of the waste? If people vacationing there don't find it a beautiful place anymore they will take their money and go somewhere else. If the people down there want to continue making money wouldn't it be best for them to clean up the area, keep the coral reefs from dying, and continue to keep their tourist numbers up.

Another way to clean up the waste could be to charge a fine to the companies who are dumping their waste into the ocean. The only thing with that is it would be really hard to locate the source of pollution.

A good way to gather information on how people feel about the cost/benefits of the beaches and reefs, would be to do a survey. Maybe researchers could talk to people on the beach or those staying in the hotels. They could show them a picture of what coral reefs, the water, and the beaches are suspected to look like in the next few years and see if they would still vacation there. It could be a way of hypothetical surveying.

I would think that scuba divers there to see the magnificent reefs would be especially upset to see the damage done. First of all the water would be contaminated and there wouldn't be all of the different fish who depend on the coral reefs for survival. In the article the scuba instructor even says he wouldn't take experienced divers to the deteriorating reefs. After reading that if I ever get down to Cancun and go scuba diving I would be pretty upset if I was taken to a "destroyed" reef because it was assumed that I didn't know any better.

Drew Moxon said...

There would have to be an evaluation done to determine whether tourist benefit from "spring breakers" (those going to Cancun to drink and party) or the tourist benefit from divers and eco-tourists would generate more revenue. The problem could be that the government doesn't see divers/eco-tourists as a revenue generator compared to spring breakers. This would also have to be compared to the ecological benefits (read: non-market valuation) as well. It could put a few things into perspective for the government.

sarah said...

Using survey testing such as Choice Modeling and Random Utility Modeling will allow developers (if they chose to develop the pristine area) to keep in mind what consumers value most. This will keep the tourism market at its most efficient point and make the land use effecient. When conducting these surveys it will be vital to make sure to include the pristine coral reef area as one of the amenities, the avaliablitiy of proper waste disposal, the multiple uses of the water and beach e.g. diving, snorkeling, swimming, and tanning, and the porximity of night life. By evlauting the willingness to trade money for levels of each amenity, they will be able to set values to each amenity. This will produce a value for keeping the pristine state of the land and the value of certain elements of development for tourism.
-Sarah Musten

Leilah Pandy said...

Sarah made a good point on using Choice Modelling to determine value. We should also use the Travel Cost method as well and combine the two. In Belize, there have been cases of actually closing money-making sites (e.g. Altun Ha) in order to re-think the management plan, to conduct restorative work, or to allow the system to regenerate. A benefit/cost analysis would have to be conducted so as to ascertain whether such a plan could be done in the wider Caribbean. If we can provide sound economic reasoning as to why closing down sites will be beneficial in time, we might be convincing. However, this effort in itself would be costly spanning across individual nations. It would definitely require regional coordination. If we were to try to ‘rescue’ destination sites by closing them down, we would need to have alternatives in place. Tourism drives the economy of many small island developing states (SIDS); Antigua is completely dependent upon it.

Caribbean SIDS suffer from limited natural resources, small open economies, and growing populations. Despite some of our efforts (like Barbados Programme of Action and national environmental agendas), sustainable development and proper uses of our resources is lacking. Fuelled by socio-economic issues like poverty, the Caribbean displays classic short term gain symptoms. I believe this is where the problem lies. The need to provide encourages us toward making near-sighted decisions. We are held captive; spending beyond our means because the cost of degradation in time will be so great that all mitigative measures will fall short.

The Keeper said...

I am gonna be brief. Lets consider the problem.We know what is the problem. It's degrading and diappearing coral reefs and associated biodiversity. We know what's causing it. Human activities and tropical weather. We have an Idea of what we need to do. We need to manage the human activities that threaten the existence of the reefs. So whats so difficult about that? Well its a an issue of focus. If we keep our forcus on economics benefits, we will not resolve the problem.While economics may be able to assist in producing a solution or possible solutions. We need to focus on conservation. We need not engage in more studies to envisage what we will lose if we excusing ourselves with benefit cost analyses.

We need to address human activities: Solve the overfishing, the excess capacity of tourists in the protected areas, the excessive use of pesticides, the impotence in monitoring and enforcement, and the other lacks.

I believe we should apply stringent use "no touch" regulations with heavy fines for all. We can utilise user fees based on available data. "No fish zones" are useful and it can be policed electronically and similar instruments.

Open acces was a vaiable option in the past. Now because we have shifting and seasonal as well as growing popolations, we have to find ways to efficiently protect but at the same time distribute and provide access to that population. Failure to do so will burden the ecosystems with undue stress which will certainly lead to its demise.

As for the notion that we are captive to our lifestyles. That is so as far as government subsidises commodity prices and other things which the market is well able to take care of. We need market approach now.