Reading on valuation & Caribbean applications

Here is a short policy perspective that summarizes the main points of this report.

The report is fairly lengthy. The first 16 pages provide an overview of economic value and valuation methods. The remainder is a summary of marine resource valuation work in the Caribbean and recommendations for future work.  Please let me know if you find any typos (I'm sure there are a few), as I am working on the final version of the report.

Pamlico Sound to Close to Large-Mesh Gill Net Fishing to Protect Sea Turtles

This just came through my inbox...
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Pamlico Sound to Close to Large-Mesh Gill Net Fishing to Protect Sea Turtles

MOREHEAD CITY – To protect sea turtles, Pamlico Sound will close to all large-mesh gill net fishing on Wed., Sept. 26.

The Pamlico Sound Gill Net Restricted Area opened Sept. 15, and during the first week the N.C. Division of Marine Fisheries has documented four interactions between gill nets and sea turtles in these waters. These interactions included one dead and one live endangered Kemp’s ridley sea turtles.

It is uncertain if the waters will reopen this fall. The decision will depend on the occurrence of sea turtles in the area.

By federal rule, all of Pamlico Sound closes to large-mesh gill net fishing from Sept. 1 through Nov. 30 each year. The closure began in 1999 after several instances of fishery interactions with threatened and endangered sea turtles.

However, since 2000, the National Marine Fisheries Service has allowed a highly-monitored, large-mesh gill net fishery during the closure in limited areas of the sound under a series of incidental take permits. These permits, authorized under Section 10 of the federal Endangered Species Act, allow for limited takes of threatened or endangered species in an otherwise lawful activity.

North Carolina’s latest incidental take permit for the Pamlico Sound Gill Net Restricted Area expired Dec. 31, 2010. However, the National Marine Fisheries Service has agreed to allow this fishery to continue while the state applies for an incidental take permit to cover set gill nets statewide. An application for this permit, submitted in May 2010, is still under review.

Specific regulations pertaining to the closure can be found at http://portal.ncdenr.org/web/mf/proclamation-m-42-2012.

Readings on economic incentives for pollution control

Here is a link to a report on the use of economic incentives for pollution control in the US. You can use the "quick links" on the right to navigate the document.

Environmental Defense Fund has a short piece on how the use of incentives was a powerful solution to addressing acid rain.

The Environmental Literacy Council has a nice short article on standards vs. incentives.

Here's more from the World Bank.

Here is a short article on economic incentives for water quality management from the WHO.

Here is a great article by Robert Stavins on the topic.

Lots of great information in this report on Economic Incentives for Pollution Control from UNEP.

Welcome CERMES students

Welcome CERMES students!

From today forward we will have 26 students from the Centre for Resource Management and Environmental Studies (CERMES) UWI Cave Hill joining us on the blog.

These students come from Barbados, Belize, The Bahamas, Dominica, Grenada, Guyana, St. Kitts & Nevis, St. Vincent and the Grenadines and Trinidad & Tobago. I hope I didn't forget anyone...

What do natural resource economists do?

This is a blog entry that I originally posted in 2009. I thought I would post it again for this year's students.
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As new students begin to study the discipline of natural resource economics, there is often a great deal of confusion about what the topic is really about. This is especially the case when students are coming from backgrounds with only limited exposure to economics (e.g. EVS, where you've only had one or two econ classes before this one).

Generally speaking, economists try to solve problems using a combination of theory, empirical analysis (data, statistics, math), and intuition.  For example, macro economists try to address issues such as how to keep an economy growing without significant inflation. Natural resource economists try to solve problems associated with scarce natural resources.

Some examples from my work include: How to maximize fishery value while balancing the competing needs of commercial and recreational fishers and maintaining a biologically sustainable stock? How can Caribbean tourism grow without harming marine turtle populations? What regulations would maximize the net gains to society from white tailed deer populations? In the face of depleted stocks, will a nation's supply of seafood increase or decrease with financial incentives to curtail fishing effort?  How can scuba diving sites be managed to maximize economic gains and minimize damage to corals?  How important is beach width to tourists? Is beach re-nourishment worth the expense?

Obviously, these are complex issues that require interdisciplinary effort. One of the things that I really love about what I do is that I work side-by-side with biologists, policy makers and resource users to address these problems.

Below are links to two excellent essays that provide a nice perspective on the economic view of the environment.

The second essay covers non-market valuation, which we will cover in detail later in the term. It makes a good read now however, as it sets the stage for much of what we're covering at the beginning of the class (e.g. the anthropocentric view of value).

How do Economists Really Think About the Environment (Fullerton and Stavins, RFF, 1998)

Economic Values without Prices (Loomis, Choices, 2005)

TBL 3BL

The topic of measuring the value of ecosystem services was recently raised in class. The context of the discussion was the inability of consumers to make "environmentally friendly" purchase decisions, because there is no clear accounting for the environmental behavior of producers.  Firms can easily present an environmentally friendly appearance in commercials and brochures, but understanding how "green" a firm really is can be a difficult undertaking for the average consumer or investor. Likewise, measures of national, regional or local output most often lack measures of environmental change.


Adding the value of ecosystem goods and services to measures of the bottom line (for a firm, nation, state or municipality) allows for a clearer picture of success, progress and well-being. Likewise, omitting such measures can be misleading. For example, suppose the services of a natural ecosystem such as an estuary are degraded via coastal development. The loss of naturally produced water filtration is not reflected in measures of national output such as GDP.  But if a water treatment plant is constructed to replace the lost ecosystem service, the associated market transactions will be reflected in an increase in national GDP.  Hence, the nation would appear to be better off as a result of replacing a natural ("free") service with a man-made substitute that is most likely inferior. Changes in GDP can therefore be inaccurate measures of changes in net output as well as changes in well being. 

The same is true for firms, though on a different level. Reporting traditional "bottom line" measures like earnings allows investors to make good decisions with regard to financial returns, but some investors also want to support environmental and social progress, and are willing to sacrifice some monetary gains to do so. Similarly, while it is true that all consumers seek to buy products that satisfy their personal wants and needs, some consumers also want to support the greater good, and buy products from firms that are socially and environmentally responsible. How can we measure environmental (and social) outputs so that they can be reported and compared?  Is it even possible to create a set of acceptable measures and common reporting standard for non-monetary outputs? 

A short piece on the triple bottom line here at The Economist.


The state of Maryland uses something called the Genuine Progress Indicator (GPI), which tracks and measures traditional economic measures as well as those related to the environment and people. Thanks to Nikolai for the link.

Food security and sustainability

One of the primary challenges of the day is meeting the growing food needs of our population while minimizing damage to the environment.  Alleviation of poverty requires economic growth and large-scale agriculture, but these things often cause significant environmental damage. Sustainable agricultural practices are available that are less damaging to the environment, but can they effectively feed billions of people? Probably not.

Is poverty reduction vs. environmental sustainability an inescapable tradeoff? I've always considered this to be the case and as such my enthusiasm for sustainable agriculture has remained tempered.  But a new study reveals that there may be hope for seemingly incompatible goals of feeding the planet and preserving critical ecosystem services. Read about it here at Science Daily.  The upshot of the analysis is that yield gaps can be closed with better management of water, land and fertilizer. In other words, it appears to be possible in theory if we can make some changes. These include shifting consumption toward a diet that includes less meat, using less food crops for fuel, using fertilizer more effectively (increasing use in some places and decreasing use in others) and curtailing the burning of tropical forests for low-yield agriculture.

Now the question becomes, can we achieve these goals?  If so, how? Can we rely on the market mechanism to get us there or do we need market intervention via active policy? If the latter, what types of policy interventions might move us in the right direction?

More on the topic here at Scientific American

More here at World Bank