Friday, October 31, 2008

Nature sanctuary closing in Barbados

Bad environmental news from Barbados in yesterday's Nation News.

Graeme Hall Nature Sanctuary will be closing down on December 15 of this year. The sanctuary, home to the Graeme Hall mangrove swamp, is set in some 1,100 acres of lakes and woodland, and is one of the last significant wildlife habitats remaining on the island.

If the government of Barbados allows this area to be developed it would appear to be a very poor decision from an economic perspective. The land is for sale at a price of US$12 million. A recent valuation study (I have a copy if anyone wants to see it) puts the annual value of the sanctuary and adjoining lands at over US$551 million. Preservation clearly passes the benefit/cost test.

Considering the strong call for continued incentives to support tourism during the economic downturn, policy designed to save Graeme Hall seems a no-brainer. Of course, as with all public goods, the government has to be willing to make the payment up front in order for the environmental land rents to be distributed to society. Notice the importance of the public investment discount rate here.

One could argue that there are significant opportunity costs associated with investing $12 million now, and also forgoing all future tax reciepts that could be earned if the lands were sold to private developers. But, it is hard to imagine an alternative public spending project that could yeild this rate of return.

This is a complicated issue. Proper functioning of the swamp ecosystem requires that the swamp be drained regularly by opening a sluice gate that allows water from the swamp to flow to the sea. This is also critical in preventing flooding in the area. Below are some links to recent articles:

The swamp water contains tannins which makes the water appear dirty (though testing shows that its not dirty).

Tourists get upset when the dirty-looking water clouds the otherwise clear blue Caribbean Sea at adjacent beaches.

Clearly we have a trade-off between two important environmental goods, both of which contribute to the economy via tourism.

In terms of alternative uses, in 2004 a US $22 million dollar water park was proposed for the area as a tourist attraction (think Myrtle Beach, complete with mini golf and a "lazy river"). This was favored by some and opposed by others. The plans for the water park did not go through.

As much time as I've spent in Barbados, I've never been to Graeme Hall... I certainly have a positive willingness to pay (option value) associated with its preservation.


Dr. Peter Schuhmann said...

Here are some interesting quotes from the conclusion of "The Wetlands of Graeme Hall: An Initial Assessment of Value", Williams, A.N., July, 2008.

"The study also produced some
“shadow values” of ecosystem services such as support to quality of life indicators. There can be little dispute that these values are positive and our opinion is that our estimates are likely to be under-valuing these services. These limitations point to the need for substantive progress to be made in the composition of a database or studies containing the information necessary for conducting analyses of ecosystem service valuation on the national, regional and local scales."

"Nevertheless , the absence of such confirming data does not prevent us from coming to some very
significant conclusions about the valuable role that the Graeme Hall Wetlands play in the economic
and social welfare of Barbadians. If we actually lived in a world that was ecologically sustainable,
socially fair and where everyone had perfect knowledge of their connection to ecosystem services
these connections would be clearly reflected in both market prices and surveys of willingness-to-pay.
We can conclude unhesitatingly that if the ecosystem services of the Graeme Hall Wetlands were
actually paid for, in terms of their value contribution to quality of life, the tourism product and the Barbadian economy, the structure of prices in the Barbados economy, including wages, interest rates and profits, would be very different from what they are today. The costs of a Tourist visit would be higher with implications for destination competition. The cost of living would be higher impacting on wages, salaries and income distribution."

"The true meaning of
the magnitude of these valuations is not that we are undervaluing natural resources like the
Graeme Hall Wetlands. Rather, they tell us that we must begin to give the natural capital stock that
produces these services, adequate weight in the decision making process, otherwise current and
continued future human welfare may drastically suffer."

Drew Moxon said...
This comment has been removed by a blog administrator.
Antonio Joyette said...

Greame Hall swamps like other such swamps are among the most productive ecosystems in the world and are invaluable to the host community for many reasons:

They improve water quality by removing and sequestering pollutants.They store floodwaters and so slow down the force of flood. They host many migratory birds and other wildlife. They also support biodiversity, some of which are aestatically pleasing, and they provide valuable open space and create wonderful recreational opportunities.

But there is a market failure associated with wetlands that presents significant problems. The market does not consider full or value the aforemention characteristics of the swamps. These costs, including loss of flood control are not considered, because these services are not readily or routinely valued. In fact, the services provided by the swamps are provided for free - they do not have to be bought. It is only when these services become absent that "monetisation" of values occur. So, "non-valued" swamp services is of very high value to Barbadians. Since its not easy for persons to to receive monetary benefit for those services which the swamps provides to the community, the true value of such services are not considered or accounted for in GDP or even less, land use management decisions.

There are a few factors that contribute to market failure when it comes to these swamps.

Because the swamps devivers its benefits to all of the community, the distribution of cost between owners and non-owners is problemetic to resolve. This may leave the owner feeling economically disadvantaged for preserving what is really a community good. If he fails to maintain it, the community will assume the costs in terms of lost benefits.

Because the swamp benefits are shared by many, there is little or no incentive for anyone to join in the preservation efforts. Community benefits, but no one individual is wiling to assist.

Small and cumulative changes has been occuring in the swamps and are now representing themselves in a bigger issue. The swamp is dying and now one saw the changes coming and now no one or very few believes the swamps need attention and so there is much unwilling to assist in saving the swamps.

Limited understanding of science by politicians,has leas to much problems understanding the realvalue of the swamps. Their understanding of the ecological functioning of the swamps do not allow them to fully appreciate or understand all of the benefits that swamps provide to protect ecosystem and protect the community from flooding. This lack of understanding leads to undervaluing benefits and contributions of the Graeme Hall Swamps.

I am hoping that someone somewhere with initiative can make the change needed to save these swamps.