Dr. Eric Hyman is an Economist in the USAID Economic Growth, Education, and Environment Bureau’s Economic Policy Office. Dr. Hyman was previously Economist and Environmental Officer at the U.S. African Development Foundation and Chief of Program Evaluation at EnterpriseWorks Worldwide/Appropriate Technology International. He has a Ph.D and M.R.P in Environmental Planning from the University of North Carolina at Chapel Hill, and a B.A. in Economics and Environmental Science from the University of Virginia.
Mangrove Restoration vs. Shrimp Aquaculture in Indonesia
Takeaways from a Climatelinks-CEADIR webinar
September 24, 2020
Dr. Eric Hyman
Although half of global mangrove deforestation since 2000 has been in Indonesia, Bintuni Bay and Mimika District have some of the largest intact areas of mangroves in the world. These two areas are also home to many indigenous groups and have special autonomous governance status and exceptional biodiversity. Since 1998, Bintuni Bay has had a mangrove harvesting concession for wood chips that operates at a sustainable extraction rate.
On August 20, 2020, Climatelinks and the USAID-funded Climate Economic Analysis for Development, Investment, and Resilience (CEADIR) Activity co-sponsored a webinar on CEADIR’s cost-benefit analysis of mangrove conservation in Indonesia. The analysis explored the financial and economic value of mangrove conservation in Bintuni Bay and Mimika District, including impacts on near-shore fishing and greenhouse gas emissions. Two scenarios were considered in the analysis: the business-as-usual scenario assumed the current 0.05 percent rate of mangrove conversion for shrimp ponds per year, and the alternative scenario considered a higher annual conversion rate of 0.80 percent.
Cost-benefit analysis methodology
The team surveyed 120 households in three villages in each of the two areas to gather data on the costs and benefits of mangrove-related activities. The financial analysis addressed the monetary value to the local communities, including household consumption. These activities included near-shore fishing, farming, hunting and gathering, wood harvesting, and mangrove palm products for roofing materials and food and beverages. Shrimp ponds in former mangrove areas have a usable life of only 10 years or less.
Over a 100-year period, the financial value of partial conversion of mangroves for shrimp aquaculture was lower than that of mangrove conservation, even after accounting for the time value of money at real annual discount rates between 3 percent and 12 percent. This result was largely due to the value of mangroves for near-shore fisheries. It did not include the harder-to-estimate value of mangroves as spawning and nursery areas for deep sea fish.
The economic analysis focused on the effects on the national economy plus the global value of carbon mitigation benefits that were not being monetized. Carbon emission reductions were valued at four levels of the social cost of carbon, ranging from $0 to $25 per metric ton of carbon dioxide equivalent.
At nonzero values for greenhouse gas emission reductions, mangrove conservation had substantially higher net economic benefits than partial conversion for aquaculture. Since the two study areas had low risks of typhoons and tsunamis, the potential benefits of mangroves in reducing coastal flooding did not apply.
This report pointed out the need to improve accounting of both financial and economic values, and the vast gap between financial and economic values. Local communities can only capture the financial values and often bear a disproportionate share of the costs. When economic values within a country exceed financial values, there is a good justification for domestic public sector support. Since a substantial share of the economic value is global, international public or private sector financing should be provided; for example, through REDD+ payments.
Webinar Q&A Highlights:
Dr. Juliann Aukema (USAID Senior Climate Change and Sustainable Landscapes Advisor) provided background on the global status of mangroves and related USAID programming. Benjamin Brown (Senior Advisor for the Indonesian NGO Blue Forests and Research Associate at Charles Darwin University) introduced the cost-benefit analysis and ecological and sociocultural context. Dr. Gordon Smith (CEADIR Technical Lead for Sustainable Landscapes and Director of Ecofor LLC) discussed the methods and findings of the cost-benefit analysis.
How can analyses like this one be more effective in influencing political decisions?
Mr. Brown: Since the long-term, global economic value of mangroves does not reach local communities, pressures to capture more short-term financial value persist, even if these uses are unsustainable. We need more ways to increase the financial benefits that local communities can obtain from sustainable use of goods and services from mangroves that can maintain the economic value of carbon sequestration. For instance, mangrove Nipa palm was once a globally important source of industrial alcohol and its sap could be used again for palm sugar or bioethanol production.
Dr. Smith: There are important institutional and governance issues. Most developed land is individually owned and remaining undeveloped land is often publicly owned. As a result, individuals have incentives to convert mangroves to capture financial value and use rights. However, most development of mangrove areas releases the carbon stored in mangrove biomass and soils. We need governance systems that help people earn viable and sustainable livelihoods to avoid negative environmental impacts that impose large costs on society.
Can aquaculture be compatible with mangrove conservation?
Dr. Smith: It depends on the extent and shape of the mangrove area. If there are several hundred meters of mangroves between the open water and higher land elevations, a modest portion can be used for aquaculture if the coastal mangroves are kept intact. However, it would be important to understand and maintain the ecological functioning of the mangroves.
Mr. Brown: Some mangrove areas are less suitable for aquaculture than others. A landscape-specific study is needed to identify sites that can be converted with less damage to ecosystem services. Ecosystem services decline sharply above certain thresholds of development. Indonesia’s Ministry of Maritime Affairs and Fisheries and the Government of the Philippines recently mandated an 80/20 split between mangrove conservation and conversion. That being said, landscape-specific studies are recommended to understand the nature and position of critical thresholds and determine appropriate landscape mosaics.
This analysis found that most of the economic value of mangroves stemmed from carbon storage. It is hard to communicate these global benefits locally. What strategies can help?
Dr. Smith: Remote areas often have natural resources with open access and low labor costs. There has been a lot of talk over the past 20 years about developing carbon markets on a large scale. To date, local people in areas that store a lot of carbon have received little compensation for their contributions to climate stabilization. Helping local communities to obtain carbon credits may not be the best option, but there are few other options at this point.
Are the findings from this study likely to apply in other mangrove areas?
Dr. Smith: Bintuni Bay and Mimika District have large areas of intact mangroves and low risks of cyclones and tsunamis. In other parts of the world, cyclones and tsunamis cause devastating damage to human settlements and infrastructure on islands and coastal zones. Mangroves can reduce this damage, especially if they span long strips up to a few hundred meters wide. The ecosystem-based adaptation benefits can substantially increase the economic value of mangrove conservation.
Mr. Brown: This report did not fully capture the value of the connectivity of these specific mangrove systems and their roles in sustainable ecosystems. Future landscape mosaics will only be valuable and resilient if they also maintain a natural degree of connectivity both within the mangrove ecosystem and also with adjacent terrestrial and coastal systems. A collapse of these systems would be bad for local people and other populations within and outside of the country.