ECONOMIC VALUATION ON CLIMATE CHANGE IN THE MARINE FISHERIES IN CILACAP, CENTRAL JAVA. Rizky Yulianisa Prof. Drs. Indah Susilowati, M.Sc., Ph.

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1 ECONOMIC VALUATION ON CLIMATE CHANGE IN THE MARINE FISHERIES IN CILACAP, CENTRAL JAVA Rizky Yulianisa Prof. Drs. Indah Susilowati, M.Sc., Ph.D ABSTRACT The objective of this study is to estimate the impact of climate change in the marine capture fisheries in Cilacap, Central Java. Also to formulate the adaptation and mitigation strategies on the impacts of climate change. Data collection was done through multi-stages sampling. Samples of respondents were: 73 marine-fisher respondents, 43 collector respondents, and 100 consumer respondents, which were analyzed by descriptive statistics. In the aspect of production, there was a decrease in catch which caused severe losses in 26 respondents, an increase in length of trip which was vary from 1 day to 7 days, and changes in fishers spending, such as: change in cost of fuel, change in food & lodging cost, and change in productivity. Lack of production has led to a decrease in fish-stocks. Therefore availability and sustainability of fish-stock in the aspect of distribution became questionable, which influenced availability and affordability of fish in market (Aspect of consumption). Thus, enhancing the performance of extension institution was needed to anticipate the impact of climate change in marine fisheries sector. An ideal extension institution was made to enhance the performance of extension institution was made in order to estimate transaction cost of the policy. The result has shown the amount of information cost, policing cost and operational & maintenance cost to establish a successful program. Keywords: climate change, marine-fisheries, Cilacap, direct use value, transaction cost, extension institution.

2 INTRODUCTION Indonesia is located between 6 08 North latitude and South latitude, and between East longitude and equator line located at 0 latitude line. According to Bailey (1987), the geographic location of Indonesia, between Continent of Asia and Continent of Australia, and between Indian Oceans and Pacific Oceans, influences the condition of the current surface for Indonesian waters. The current surface condition is also affected by the winds of prevailing monsoons. North of the equator during November through March, the monsoons winds flow out of the Northeast. From June to September is dominated by the Southeast monsoons. During this period, the circulation of surface waters is through the Banda, Flores, Java, and Shout China Sea. But, during these last decades this condition might change due to global warming and/ or climate change. Climate change is defined as any substantial change in Earth s climate that lasts for an extended period of time. Global warming refers to climate change that causes an increase in the average temperature of the lower atmosphere (Kim, Granger, Puckett, Hasar, and Francel; 2006). Sea level rise, changing sea temperature, inland temperature changes, changes in precipitation and water availability, and also extreme weather, such as cyclone and inland flood, are caused by climate change. Climate change and or global warming can cause an increase in sea temperature, which leads to a melting of ice and snow surface on earth. This causes sea water volume increase and sea level rise. Over the last decade, sea level has risen approximately 0.1 to 0.3 meters (Numberi, 2009). If this continues, mangrove forests and wetlands will reduce, causing a decrease in water productivity and disrupt the marine biota, which is associated with coastal ecosystems. Moreover, coral bleaching will increase, reducing nutrition and population of fish. This may threaten fisheries and aquacultures by shifting the distribution of fish stocks, especially in Indonesia. The coastline of Indonesia spans over km (Marine and Fisheries Services, 2009) making Indonesia famous for its rich and diverse marine biota/life

3 as one of the largest in the world. This diversity consists of coastal ecosystem, including mangrove forests, sea grass, coral reef, and marine ecosystem, with large number of fish. Table 1 Fish Production in Indonesia Year Production (million tons) 6,87 7,49 8,24 9,05 10,07 Sub Total 4,71 4,81 5,04 5,20 5,29 Capture fisheries Culture fisheries Marine Fisheries 4,41 4,51 4,73 4,70 4,79 Inland Open water Fisheries 0,30 0,29 0,31 0,49 0,50 Sub Total 2,16 2,68 3,19 3,86 4,78 Marine culture 0,89 1,37 1,51 1,97 2,44 Brackishwater 0,64 0,63 0,93 0,96 1,18 Freshwater 0,33 0,38 0,41 0,48 0,59 Cage 0,07 0,06 0,06 0,08 0,09 Paddy Field 0,12 0,11 0,09 0,11 0,14 Source: Ministry of Marine Affairs and Fisheries, 2010 Table 1 shows the trend in fisheries production in Indonesia from In 2009, total fish production was about 10,07 million, with the marine and inland fisheries contributed 7,23 million tons (71,80 percent) and 2,84 million tons (28,20 percent) respectively, and contributed 3,14 percent of the total GDP and 3,40 of the GDP of non-oil and Gas. This clearly indicates that predominance of the marine subsector in Indonesian fisheries. The island of Java plays an important role in the fisheries sector in Indonesia. The number of fishery households in Java consecutively in 2008 and 2009 were covers 44,71 percent and 41,79 percent of the total fishery households in Indonesia. Southern coast of Java is proven to be more vulnerable of disaster and climate change, because its direct adjacent to Indian Oceans and Australasian

4 Plate (National Disaster Management Agency, 2010). Therefore, southern coast of Java is more relevant to be study-area than northern coast of Java. the southern coast of Java is characterized by relatively high-wave energy, this is because the coast directly adjacent to the open sea (Indian oceans). In theory, there are three factors which trigger waves, such as swell, local wind, and the plate shifting at the bottom of the ocean. In certain places, the interference between the swell with the local wind waves for example in Cimaja, Pelabuhanratu, or in Cilacap - can form waves as high as 3 4 meters. The southern coast of Java is also vulnerable to tsunami. Tsunami is triggered by the shifting of the plate at the bottom of the ocean. Interaction between the three types of waves (swell, local-wind waves, and tsunami) is believed to produce a massive-wave which will be able to sweep the coast. Also, because of its direct adjacent to Indian Ocean, southern coast of Java, especially Cilacap, is vulnerable to sea surface temperature (SST) changing. According to Bailey (1987), the role of SST is important, since it is the interface from the atmospheric to the oceanographic environment. SST changing (global warming) will cause harm to the fishers, because it is related to the temperature tolerance of microbial, plankton, larvae, and fish biomass. Regency of Cilacap is the leading area of fisheries sectors in southern coast of Central Java. It contributed ,4 tons or 75,4 percent of the total production in southern coast of java, with the value of rupiahs. Global climate change gives significant impact on the fisheries sector. A significant impact of climate change in terms of ecological and oceanography variables have been detected since the past 30 years. According to Intergovernmental Panel on Climate Change (2004), one of the strongest variables in measuring climate change is SST. The variability of global SST has shown a lot more significant changes since 1970 present compared to decades before.

5 Figure 1 Variability of Global SST in year Source : IPCC, 2010 In measuring the level of climate change and its vulnerability to the fisheries sector, information on climate and weather is required. In Indonesia, the measurement of the change in climate and weather is provided by BMKG (Badan Meteorologi, Klimatologi dan Geofisika) or Meteorology, Climatology and Geophysics Agency. Provided information includes rainfall density, temperature, and wind flow that affects sea currents, weather forecast, and sea level rise. This information is useful for agriculture and fisheries sectors, especially marine fisheries sector. In the agriculture sector this information can help farmers to determine the best time to seed and cultivate their rice-fields, so that they obtain the best yields as possible. Whereas in the fisheries sector, especially marine fisheries, this information is used to seek the best time to capture fish. Although BMKG has provided information about climate change, the marine-fishers have low capabilities in accepting this information. Therefore, decreasing in quantity and quality of production happens every year, especially in Cilacap as the leading fisheries sector in southern part of Central Java. Economic valuation on the impact of climate change is important, to estimate how much the impact of climate change in the marine fisheries sector in Cilacap and furthermore to formulate strategies in order to anticipate and mitigate the impact of climate

6 change in marine fisheries sector in Cilacap, not only because its vulnerability on climate change but also lack of previous research in study area. LITERATURE REVIEW Definition of Climate Change Climate change is the change of conditions of earth s atmosphere, including temperature and rainfall density which heavily impacts on many aspects of human lives (Ministry of the Environment, 2001). These physical changes happen in a long period of time. National Institute of Aeronautics and Space (2002) defines climate change as the average change of one or more elements of weather in an area and global climate change is defined as the change of climate of the earth. IPCC (2001) stated that climate change refers to the average variations of an area s climate or to the variability which is statistically actual for a long period of time (usually decades or more). Further, it is also stated that climate change happens due to internal natural process, as well as external forces or continuous human activities change the atmosphere s composition and land use patterns. Definition of Marine Fishers Charles (2001) divided groups of fishermen into several terminologies. Full fishermen are fishermen that depend all of their daily needs on capturing fish. Part-time fishermen are fishermen that depend some of their daily needs on capturing fish as well as doing other activities such as farming and labors. There are ship-owner fishermen who can afford to run a fisheries business such as ships, fishing nets, equipment and tools. Ship-crew is people that allocate their time to operate ships and nets and earn wages from the job. Individual fisherman is a fisherman who has his own ships, boats, and nets, and operates it individually. Besides those groups, fishing industry in this region involves individuals working in four major activities: fish-capturing, fish-farming, fish-processing, and sales of fish (Indah Susilowati, 2004). Economic Valuation Economic valuation in the context of environment is the measurement of people s preferences environment (which is less important). According to Pearce (2006),

7 economic valuation is mainly the process of value determination of goods and services of the environment. Total Economic Value (TEV) According to Freeman III (2002) TEV is a sum of economic value based on use value (UV) and economic value based on non-use value (NUV). UV consists of direct use value, indirect use value, and option value. While NUV consists of two components: bequest value and existence value. Typology of total economic value can be seen in figure 2. Figure 2 Typology of Total Economic Value Total Economic Value Use Value Non-Use value Direct Use Value Indirect Use Value Option Value Bequest value Existence Value Source: Freeman III, 2002 Barton (1994) explains several methodological approaches to valuate ecosystem/resource based on the typology above. Most of the approaches used are based on cost-approach. This is because benefit-approach is relatively unpredictable. Some popular methodologies are the effect of production (EOP) or production analysis and benefit-cost analysis, where benefit is described as production income. In its application in fishery, the widely used economic valuation was direct use value, with the analysis of production as the basis of its estimation. Benefit and Cost Analysis One of the means in economic valuation is by analyzing the cost and benefit resulted from a production. (Pearce et. al, 2006) Wattanutchariya (1982), cost of fishery business is classified into three components:

8 a) Variable cost, the cost that is actually paid and changed according to number of fish produced, for example food supplies, fuel, wager, and medicine. b) Fixed cost, the cost outside the production and operation, such as reduction of fishing nets and equipment. c) Opportunity cost from input owners, both variable cost and fixed cost, such as wager for crew members from own family, the use of land and interests from capitals. Fixed cost usually consists of depreciation cost of assets and the payment of interests used to buy those assets. Opportunity cost of capital ownership invested in fishery business is supposed to be fixed cost. Variable cost is defined as the total cost from all inputs when the fishery business operates, which includes workforce cost, fuel cost, other input cost, and opportunity cost from workforce from own family. METHODS OF RESEARCH Data used in this recearch is primary and secondary data. Data collection in this study was gained through interview, observation, in-depth interview, and documentations. Methods of Analysis The method of analysis in this study was a descriptive statistics to determine the impact on climate change to the stakeholders, and economic valuation of benefit and cost which were obtained by the stakeholders because of climate change. Descriptive statistics is used to calculate socio-economic profile of respondents, revenue and cost patterns of respondents, and other related indicators. The approach of the model of economic valuation analysis used in this research is Total Economic Value (TEV). TEV was employed to estimate the risk caused by the climate change on marine-fisheries, especially the marine- fisheries in Cilacap. The risk encountered by the fishermen of marine-capture fisheries was the loss caused by the decrease of the number of fish captured. Loss is defined as loss

9 in production (catch), additional length of trip, and increased spending. These costs were estimated through the analysis of benefit and cost. RESULT AND DISCUSSION Production Aspect Production aspect was measured by the impact of climate change towards catch, length of trip and fishers spending. Based on the result of interviews with fishers, it is known that their knowledge about climate change was limited. 71,2 percent of respondents knew about climate change, but 28,8 percent others did not know anything about it. This was due to the fact that some respondents still used star constellation as a way to see the changes of climate or season, while many others have already used information from BMKG through radio, television, etc., and information from TPI. Most respondents (93,2 percent) suffered a decrease in their volume of catching (production), while only 6,8 percent respondents did not. In addition, 91,8 percent of respondents experienced an increase in their length of trip, while 8,2 others did not. Length of trip could potentially increase the amount of fuel. 91,8 percent of respondents had to top up fuel, while 8,2 percent others did not. Length of trip also influenced the amount of food supply and lodging as admitted by 93,2 percent of them. Changing of climate also affected the boat, As reported by 93,2 percent of the respondents, the maintenance cost got higher. Catch As mentioned previously, 68 respondents (93,2 percent) experienced a decrease in their volume of production. Decrease in catch volume, according to 61 respondents (83,6 percent), was due to season/climate change. 3 others (4,1 percent) thought that it was due to an increase in fuel price, so that they were not be able to go fishing. Whereas, 9 others (12,3 percent) thought that it was because there were fishers who still used tiger-trawl as their fishing gears, so that the fish supply in the ocean also decreased. This decrease was due to the fact that some of them were still using traditional methods to predict climate change, such as constellations, and moon

10 position. Therefore, the fishers are not being able to predict the climate and seasonal pattern, which caused a decrease in the volume of production and losses. Because of this, 26 of respondents (35,62 percent) suffered severe impacts from climate change. Table 2 Profile of Respondents with Severe Impact on Climate Change (n=26) N o Description Mean Min Max SD 1. GT 23, ,59 2. Labor (ABK) 10, ,93 3. Production (kg/trip) 2.684, ,01 4. Production value (/trip) , , , , - 5. TVC () , , , , - 6. TFC () , , , ,- 7. TC () , , , , - 8. Losses () , , , ,- Source: Primary data 2010, modified Table 2 shows the profile of fishers who suffered severe impact from climate change. The average of production was 2.684,20 kilograms per trip, ranging from minimally 452 kilograms and maximally kilograms. The average production value was ,- starting from ,- to ,-. Total variable cost contributed 91,22 percent of total cost, while total fixed cost contributed 8,78 percent of total cost. The minimum loss was ,- and maximum loss was ,-. The ratio of revenue or benefit and cost was 0,12 which means that the average loss was about 12 percent of the total cost. Length of Trip As mentioned previously, 67 respondents (91,8 percent) experienced an increase in their length of trip, while 6 respondents (8,2 percent) did not. The trip of 26 respondents as caused by the climate change could lengthen up to 2 until 7 days. As compared to other respondents, it can be concluded that these 26 respondents suffered longer trip than others.

11 Furthermore, an additional length of trip rose the spending, for example spending in direct costs (variable costs), such as: usage of fuel and food-supply (Food & Lodging) costs. Costs / Spending The spending of fishers in Cilacap consisted of variable cost and fixed cost. According to respondents, variable costs included: cost of fuel, cost of labor (ABK), cost of food and lodging, etc, while fixed cost consisted of depreciation in machine, boats, fishing gears, and others. Climate change had caused changes in fishers spending. According to respondents, the changes of spending include: changes in cost of fuel, which was due to changes in the length of trips; changes in productivity; and changes in cost of food & lodging. 67 respondents (91,8 percent) experienced an increase in usage of fuel, while 6 respondents (8,2 percent) did not experience. Based on interview with respondents, the average of an increase in fuel-usage was because an increase in length of trip. One additional day would averagely need about 100 liters more fuel (average amount of 75 liters in GT boats, 100 liters of GT boats, and 125 liters in GT boats), thus it increased the cost of fuel. Not only increasing the cost of fuel, but also increasing the cost of food and lodging. One day additional length of trip increased about ,- cost of food and lodging per day, thus variable cost increased. Increase in amount of food & lodging cost came from average amount of increase in GT, GT, and GT boats which was ,- ; ,- ; and ,- respectively, or ,-. Table 3 Estimation of Changes in Variable Cost of Respondents per trip N n=73 Description Fuel *) Additional 1 day 2 days 3 days 4 days 7 days Percentage of Respondents 5,5 21,9 35,6 Increase in Amount 100 liters Increase in Variable Cost (rupiah/trip) , , , , ,- Cost , , , , ,-

12 n=26 Average ,01 Food & Lodging Additional 1 day 2 days 3 days 4 days 7 days Average 5,5 21,9 35,6 21,9 6, , , , , , , , , , , , ,47 Fuel *) Additional 2 days 3 days 4 days 7 days Average Food & Lodging Additional 2 days 3 days 4 days 7 days Average 15,4 30,8 34,6 19,2 15,4 30,8 34,6 19,2 *) Note : 1 liter of fuel = 4.500,- Source: Primary data, 2010, modified. 100 liters , , , , , , , , , , , , , , , , , , ,54 Table 3 shows changes in variable cost which consists of fuel cost and food & lodging cost. We can see that the average value of variable cost of 26 respondents affected by climate change is higher, with the average value of ,31 in fuel cost and ,54 in food & lodging cost. This was due to the fact that 26 respondents had longer length of trip than others which led to an increase in fuel usage and food and lodging. Not only that, length of trip also changed the productivity, which according to FAO can be measured by labor cost. Additional length of trip caused labor (ABK) is being used in additional length of trip, hence the cost of productivity is increasing. N Table 4 Estimation of Change in Cost of Productivity of Respondents per trip (in Rupiah) Amount of ABK Additional Length of Trip 1 day 2 days 3 days 4 days 7 days , , , , ,00

13 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,00 Average , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,00 Average , , , ,62 *) Note: income of labor per person = ,- Source: Primary data, 2010, modified. Table 4.10 shows the estimation of change in cost of productivity. The average cost of labor was obtained from the average amount of labor times the average cost of labor per trip. A one day additional trip increased the average cost of labor about ,-; while two-days additional trip increased the average cost of labor about ,-. From the above table we can also see that the average change of productivity between n=73 and n=26 was different. The difference was due to average of labor which was 11,41 and 11,30 which were being used in additional length of trip. The minimum average value of labor cost of 73 and 26 respondents were ,- and ,46, while maximum value of labor cost were ,- and ,62. In the context of fishery, the economic valuation which often used is the direct use value or the value of economy obtained from the direct use of marine resources. From the above analysis it can be concluded that there was a change in the direct use value as the impact of climate change. Change in direct use value consisted of change in fuel cost, food and lodging cost, and change in productivity

14 or cost of labor (ABK). The summary of changes in direct use value can be seen in figure 3. Figure 3 Comparison of Changes in Fisheries Direct Use Value Between n=73 and n=26 as the Impact of Climate Change in Cilacap Direct Use Value (n=73) Direct Use Value (n=26) Change in Productivity Change in Food & Lodging Cost Change in Fuel Cost Change in Productivity Change in Food & Lodging Cost Change in Fuel Cost Average Min ,- Average ,47 Min ,- Average ,- Min ,- Average ,- Min ,- Average ,5 4 Min ,- Average ,31 Min ,- Max ,- Max ,- Max ,- Max ,- Max ,- Max ,- Figure 2 shows that the average direct use value of 26 respondents severely affected by climate change was higher than the overall average of direct use value which consisted of labor cost, food and lodging cost, and fuel cost. We can conclude that these costs (fuel cost, labor cost, and food lodging cost) are increasing because length of trip of fishers is also increasing, the increasing of length of trip increases costs or spending of fishers, and increases direct use value. This is bad, because when the length of trip increases costs or spending of fishers, while their volume of production is decreasing due to climate change, they cannot pay for their costs, thus they experience losses or severe impacts of climate change. Aspects of Distribution Aspect of distribution was estimated by collector respondents. This aspect was measured from the respondents opinion on the accessibility, availability, and sustainability of fish stocks. To the respondents opinions, the accessibility of fish

15 stock to distribute was relatively marginal. 23 of respondents (53,5 percent) said that the accessibility of fish stock was bad, and the availability was also bad. 18 (41,9 percent) of respondents said that accessibility and availability of fish stock was normal. While other said that the accessibility and availability was good. Such opinion was seconded by other 35 respondents (81,4 percent) that the fishstock was fluctuated in the last 6 months. Thus, 29 respondents or (67,4 percent) had suffered from difficulties/lack in availability of fish-stocks, however 14 respondents (32,6) had never experienced any difficulties. 40 respondents (93 percent) believed that lack of availability was caused by climate change. Sustainability of fish stock in Cilacap, according to 25 respondents (58,1 percent),would be bad. While 15 (34,9 percent) believed that the sustainability of fish-stocks in Cilacap would be normal, and 3 others were optimistically believed that sustainability of fish-stock would be fine. In anticipating the lack of availability and accessibility of fish-stocks, many alternatives were done by respondents, for example, taking day-off, finding stocks to other region, or selling whatever amount of fish-stocks that they obtained from TPI. 22 respondents (51,2 percent) preferred to sell whatever amount of fish-stock they received from TPI, 15 respondents (34,9 percent) chose to take day-off and 6 others decided to find fish-stocks in another region such as West Java. The average of fish stocks in Cilacap was twenty-thousand rupiah, which was considered normal according to 93 percent of respondents (pengepul). But, 35respondents (81,9 percent) said that the price of fish-stocks was fluctuating in the last 6 months. Most respondents believed that price fluctuation of fish-stock was caused by season/climate (35 respondents). According to respondents, seasonal change held up fishers to go fishing, because they were afraid of high tidal-waves Market accessibility was averagely normal. 25 respondents (58,1 percent) said so, while 5 respondents (11,6 percent) felt that the market accessibility (consumers) was bad, while 13 respondents (30,2 percent) said that it was good. The availability of fish-stocks in the consumers market was averagely normal, 27

16 respondents (62,8 percent) said so, 6 respondents (14 percent) said the availability of fish-stocks in consumers market was bad, while 10 others (23,3 percent) said that availability in consumers market was good. 40 respondents (93 percent) said that they already had certain consumers/market, while 3 respondents (7 percent) did not have certain consumers/market. There were many alternatives of distributing system of respondents, such as: distribution to retailer; direct distribution to consumers; distribution to other distributors; and combination of those alternatives. 20 respondents (46,5 percent) chose to distribute their fish stocks to retailer, 12 respondents (27,9 percent) chose to distribute directly to consumers, 2 respondents (4,7 percent) chose to distribute to another distributors, and 9 others (20,9 percent) combined the distribution system. Local market in Cilacap according to respondents was Ajibarang, Kroya, majenang, Adipala, Maos, Kawunganten, and etc. While regional market was Jogja, Bandung, Cirebon, Garut, Solo, and Semarang. The average selling price of fish was thirty-thousand rupiah. Although selling price of fish fluctuated (according to 81,4 percent of respondents). The distributor still gained profit. The major causes of price fluctuation were season/climate change (according to 81,4 percent of respondents) and the increasing transportation cost due to the increasing fuel price (18,6 percent of respondents). Therefore, it can be concluded that climate change affected the aspect of distribution, specifically the physical distribution of fish. The accessibility, availability and sustainability of fish stock averagely were not good due to climate change. Aspect of Consumption Based on consumer respondents, the availability and sustainability of fish/marine products was not good. 47 respondents said that the availability of fish fluctuates and it was not sustainable. While 43 respondents said the availability of fish was still normal, but they presumed that the sustainability of fish would get

17 worse. Although there was a fluctuation in the fish-stocks, 2 respondents were optimistic in saying that the availability of fish-stock would be better. Fluctuation in fish-stock affected fluctuation in fish-price. Although there was a fluctuation of price, respondents thought that it was normal. It means that the respondents can still afford fish stocks although price was fluctuating. The average fish-price according to consumer respondents was ,- which included: fish, shrimp, prawns, and squid. The cross tabulation between fluctuation in fish price and affordability of fish can be seen in Table 5 Table 5 Cross Tabulation between Fluctuation of Fish-Price and Its Affordability Affordability Normal Not Good Total Fluctuation of fish-price Yes No Total Source: Primary Data, modified Based on 88 respondents, the fluctuation of fish-price was because climate change, so that fishers would not be able to catch fish, and distributors cannot distribute fish-stock to retailers and or directly to consumers. The unpredictable climate caused difficulties of seeking the best time to catch fish. Even though they experienced difficulties, they still went fishing. Some of respondents predicted the best time to go fishing through traditional methods, such as constellations and moon position (38,4 percent), and some of them had the awareness about the information from BMKG via radio, and local television(20,5 percent) and information by marine and fisheries agency through TPI (41,1 percent). From the above perception, it can be concluded that marine-fishers were lack of education. Although they had been aware of climate change but they did not know how to get information about climate change and how to apply this information. It can be seen by the lack of respondents using information by BMKG (20,5 percent) as the main source of climate change information and there

18 were many respondents still use traditional methods in predicting the season/climate (38,4 percent), thus many respondents suffered losses. Therefore, extension education was considered important in establishing adaptation and mitigation strategies on the impact of climate change in marinefisheries sector. In fact, although extension education was needed, it was considered not effective enough to mitigate the impact of climate change towards fisheries sector in Cilacap. Thus, the local government needs to build the capacity of extension institution, for example creating new database about fisheries potential in Cilacap, updating climate and weather information, improving the maintenance of infrastructure and database, and the evaluation of institutional performance and regulation. This capacity building can be estimated via transaction cost in order to gain information about the amount of cost needed by the government. Extension Institution Model in Cilacap Extension institution in Cilacap uses decentralization model. Decentralization means that the planning and the implementation of extension program are carried out from bottom up to the government. The Minister of Marine and Fisheries mandated the Provincial Marine and Fisheries Offices to formulate their own policy. The Marine and Fisheries Offices in Central Java coordinate with the Provincial Extension Agency (Badan Penyuluh / Bapeluh). At the city/regency level, the Extension Coordination Body (Badan Koordinasi Penyuluh / Bakorluh) coordinates with the Badan Pelaksana Penyuluhan Pertanian, Perikanan, dan Kehutanan (BP4K) or the Extension Implementation Agency. There are only 10 regions (city/regency) in Central Java which have Bakorluh, and Cilacap is one of them. While the Extension Center and the Extension Station manage instructors in sub-district/village. Based on the Government Regulation number 43 of 2009 on the financing, development, and oversight agricultural extension, fisheries and forestry, the model of extension program can be seen in figure 4.

19 Figure 4 Model of Extension Institution in Central Java Marine and Fisheries Offices in Central Java Provincial Extension Agency Extension Coordination Body Delivery / coordination Extension Implementation Agency in Cilacap Extension Centers grass-root action Extension Station Source: Marine and Fisheries Offices of Central Java, 2010 The advantages of decentralization model are as follows: 1. Accommodating condition and potentials in a diverse society, especially in the local area. 2. Expertise of extension is polyvalent. It means that the instructor or trainer must master several areas of fisheries, which includes marine fisheries and aquaculture. 3. There is a sharpening of activities undertaken by the local government so that the absorption of development fund increases. 4. There is a sharpening of development-fund absorption mechanism, so that funds can be allocated well. 5. There is a sharpening of the exact format of the operational activities conducted by the community, based on the community needs and capabilities. (Sumodiningrat, 2000) Estimation of Transaction Cost (Scenario 1) Scenario 1 was an ideal scenario which involved all components of the extension institutional model based on the Government Regulation No. 43 Year 2009, which consisted of Extension Agency (Bapeluh) at

20 the provincial level, the National Extension Coordination (Bakorluh) at district level, the Extension Implementation Agency (BP4K), Extension Center, and Extension Station, starting from the delivery of the program to the grass-root action of program. Component of transaction costs is the information cost, policing cost and operational & maintenance cost of the preparation program at the provincial level to grass-root implementation at sub-district/village. Information cost is the cost of gathering information in managing a system to produce an efficient decision (Abdullah et al., 1998), this includes: creating new database of fisheries potentials in Cilacap, database of instructors, information on technology, weather and climate information, etc. Policing cost is the cost incurred in making an agreement between stakeholders. Such costs include: program planning, coordination with related institution / agencies, fishers-group. Operational &maintenance cost is the cost used to establish, implement and monitor extension education programs. These costs include: executing the programs, maintaining the infrastructure, monitoring and evaluation, and institutional operational cost. The estimation of transaction cost can be seen in the Table 6. Table 6 Estimation of Transaction Cost (Scenario 1) *) Extension Institution Provincial Extension Agency Extension Coordination Body Transaction Cost Estimated Cost % Information Cost Policing Cost Operational & Maintenance Cost Subtotal ,33 Information Cost Policing Cost Operational & Maintenance Cost

21 Subtotal ,35 Information Cost Extension Policing Cost Implementation Agency Operational & Maintenance Cost Subtotal ,84 Information Cost Policing Cost Extension Center Operational & Maintenance Cost Subtotal ,43 Information Cost Policing Cost Extension Station Operational & Maintenance Cost Subtotal ,05 TOTAL TRANSACTION COST *) Based on interview with related institution The above table shows that the biggest contribution of transaction cost on each institution was operational and maintenance costs. It was due to the high cost of maintenance for the Infrastructure of institutions, facilities of extension program, instructor wages (the amount of extension instructors of Central Java in 2010 was 6434 persons, whereas in Cilacap only was 240 persons in 2011), also the costs of evaluating the performance and sustainability extension program. It was different in Extension Coordination Body, because Central Java only has 10 of Extension Coordination Body, therefore the operational & maintenance cost was not very high. Estimation of Transaction Cost (Scenario 2) Scenario 2 estimated the delivery of extension program, only at the level of government without any grass-root action of the program. Information cost of Scenario 2 consisted of: creating database of potentials in the area, the instructors and extension institution, and a new website. But information cost in scenario 2

22 did not include information of training cost and information of market opportunities. Policing cost of scenario 2 consisted of: the cost of decision making process (local regulation); and activation cost of main tasks & function of extension institution. But Policing-cost in Scenario 2 did not include the cost of cooperation with related agencies (such as sub-district offices) and cost of cooperation with business community (such as: private companies in fisheries sector). Also, operational & maintenance cost of scenario 2 which consisted of: SOTK (Organizational Structure and Administration), operational cost of instructors, maintenance of database, websites, infrastructure, etc., but did not include field trip, meetings with fisheries group, and other activities related to action of the program. Therefore, the estimation of transaction cost only consisted of delivering program from the provincial Extension agency to the Extension Implementation Agency. Transaction cost of Scenario 2 can be seen as follows: Table 7 Estimation of Transaction Cost (Scenario 2) *) Transaction Cost Estimated Cost % Information Cost ,27 Policing Cost ,42 Operational & Maintenance Cost ,31 Total *) Based on interview with relevant institution Although there were differences in information cost, policing cost and operation & maintenance cost, the biggest contribution of estimated transaction cost was actually operational & maintenance cost. Even though the grass-root action was not considered in Scenario 2, but the maintenance of infrastructure, maintenance of database and facilities of extension program did contribute towards operational & maintenance cost.

23 CONCLUSION AND POLICY IMPLICATIONS Conclusion Based on data analysis, it can be concluded as follows: 1. Cilacap is the most vulnerable area to climate change in the southern part of Central Java respondents suffered severe impacts on climate change and there were changes in direct use value, which consisted of change in productivity, change in food & lodging cost, and change in fuel cost. 3. Average change in productivity, food & lodging cost, and fuel cost of 26 respondents with severe impact on climate change were ,00 ; ,54 ; ,31 ; while the average loss was ,00 per trip 4. Strategy can be done by the government in anticipating the impact of climate change was establishing a better extension program through building an ideal extension institution. Policy Implications The adaptation and mitigation strategy in this study was still limited. This study did not analyze about other factors of productions, such as technology. This policy could only be used in the specific problem on the impact climate change, while others would be considered ceteris paribus. Basically, there are three adaptation strategies that can be done to prevent the negative impacts of climate change. The first is a protective approach, for example by growing vegetation / plants, such as: mangroves and other coastal vegetation, or structures (breakwaters, groins, dikes, etc.) that can directly withstand sea level rise, hit a big wave and rob. Second, with the accommodative approach or making adjustments both physically and socio-economic and cultural life, for example: (1) livelihood of coastal communities to switch to another may not be affected by climate change, (2) development of aquaculture species that are resistant to temperature-rising, floods and other climate change impacts (eg

24 through genetic engineering and acclimatization), and (3) development of production technologies (capture fisheries and aquaculture) which according to the circumstances that will occur as a result of global climate change. And, the third is the pattern of retreat, with a living, build infrastructure and buildings far from the beach or to create and implement a spatial-based global climate change. While the mitigation strategies can be done through energy conservation and efficiency, by optimizing the use of renewable energy, such as: biofuels, solar energy, wind energy and thermal energy.

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