Third International Symposium on the Ocean in a High-CO2 World 26 September 212 Understanding the Economics of Ocean Acidification Luke Brander Institute for Environmental Studies, VU University Amsterdam; Division of Environment, HKUST, Hong Kong
Outline Economic view of ocean acidification Framework for economic assessment Economic damage estimates (with e.g. on coral reefs) Distribution and vulnerability Knowledge gaps and next steps Conclusions
Economic view of OA Economics is the study of resource allocation and human welfare OA is an external cost of using fossil fuels Polluters do not pay this cost and overuse fossil fuels Economic questions on OA: What are the human welfare impacts of OA (expressed in monetary terms)? Do the benefits of addressing OA (reduced damages) outweigh the costs of mitigation or adaptation? What is the expected distribution of damages to guide investments in adaptation?
Framework for assessment Ecosystem Services (ES) approach to link biophysical impacts to human welfare ES are the benefits that humans derive from ecosystems ES impacted by OA: Fisheries Coastal protection Tourism/recreation Biodiversity Carbon storage
Impact pathway for OA Marine Ecosystems Ecosystem Services Socio-economic impacts Socio-Economic Activity Population Income CO 2 Emissions Food webs Fish stocks Fish Catch Aquaculture Welfare Distribution Ocean Acidification Vulnerability Food Security Coral Reefs Tourism Coastal protection Adaptation Biodiversity Adapted from Moore (211); Tyrell, Williamson and Turley (211)
Valuation of impacts on coral reefs Corals provide multiple ecosystem services: Tourism/recreation Coastal protection Fisheries Biodiversity (existence values) Not traded directly in markets Coral reef values are invisible to decision makers Non-market valuation methods
Valuation of impacts on coral reefs CO 2 concentration in atmosphere Ocean acidification and coral loss models Loss of coral reef CO 2 emissions FUND Economy Climate model Population, Income Meta-analytic value function Visitor model (HTM) Tourist numbers Source: Brander et al. (212) Economic impact of ocean acidification on coral reefs
Meta-analysis of coral reefs values 81 value observations Standardised values: US$/km 2 /year Ecosystem Service Number of value estimates Recreation/tourism 66 Fisheries 7 Coastal protection 2 Biodiversity 6
Location of valued coral reef sites
Meta-regression / Value function Category Variable Coefficient Standard deviation Constant.216 5.298 Socio-economic GDP per capita (ln) 1.125*.573 Population density (ln).516*.282 Visitors (ln).675***.129 Location USA -3.64** 1.457 South East Asia -4.66** 1.614 Australia -6.725** 2.779 Reef characteristics Area coral cover (ln) -.524***.92 Biodiversity index (ln) 2.475** 1. Services Snorkeling -.65*.427 Other reef tourism.535*.466 Coastal protection -3.61* 1.757 Valuation method CVM -1.71* 1.649 Adj. R 2 =.61 N = 81
12 11 Population 1 billion people 9 8 7 6
9 8 7 Income Income 6 $/p/yr 5 4 3 2 1 12 11 Population 1 billion people 9 8 7 6
4 35 3 Visitors Visitors visitors (2=1) 25 2 15 1 5 12 11 Population 9 8 7 Income 1 6 billion people 9 8 $/p/yr 5 4 3 7 2 1 6
9 8 Carbon dioxide 7 ppm 6 5 4 3 12 11 9 4 Population Income Visitors 8 35 7 3 Visitors billion people 1 9 8 $/p/yr 6 5 4 3 visitors (2=1) 25 2 15 7 2 1 1 5 6
. -.5 Ocean Acidity -.1 ppm 9 8 7 6 5 4 3 Carbon dioxide -.15 change in ph -.2 -.25 -.3 -.35 -.4 -.45 12 11 9 4 Population Income Visitors 8 35 7 3 Visitors billion people 1 9 8 $/p/yr 6 5 4 3 visitors (2=1) 25 2 15 7 2 1 1 5 6
. 9 8 7 Carbon dioxide ppm 6 -.5 5 4 3 -.1. -.5 -.1 fraction coral -.15 -.2 change in ph -.15 -.2 -.25 -.3 -.35 -.4 -.45 Acidity -.25 -.3 Corals 12 11 9 4 Population Income Visitors 8 35 7 3 Visitors billion people 1 9 8 $/p/yr 6 5 4 3 visitors (2=1) 25 2 15 7 2 1 1 5 6
14 12 Value ppm 9 8 7 6 5 4 Carbon dioxide 1 3 mln $/km2 8 6 4 change in ph. -.5 -.1 -.15 -.2 -.25 -.3 -.35 -.4 -.45. Acidity -.5 2 fraction coral -.1 -.15 -.2 -.25 -.3 Corals 12 11 9 4 Population Income Visitors 8 35 7 3 Visitors billion people 1 9 8 $/p/yr 6 5 4 3 visitors (2=1) 25 2 15 7 2 1 1 5 6
billion dollar 1 8 6 4 2 Impact.14% of GDP E c o l o g y change in ph ppm 9 8 7 6 5 4 3. -.5 -.1 -.15 -.2 -.25 -.3 -.35 -.4 -.45. Carbon dioxide Acidity -.5 fraction coral -.1 -.15 -.2-2 -2 billion people 12 11 1 9 8 7 -.25 E c o n o m y -.3 9 4 14 Population Income 8 Visitors Value 35 12 7 3 1 6 25 5 8 2 4 6 15 3 4 1 2 2 1 5 $/p/yr visitors (2=1) Visitors mln $/km2 Corals 6
Economic damage assessments Study Ecosystem Service Scale Damage cost (annual; US$ billions; 21 price level) Brander et al. (212) Coral reef services Global 1,93 Cheung et al. (211) Fish and invertebrates N-E Atlantic - Cooley and Doney (29) Mollusks United States.7 Cooley et al. (212) Mollusks Global - Finnoff (21) Fisheries; non-use values Baring Sea Harrould-Kolieb et al. (29) Coral reefs; fisheries Global - Kite-Powell (29) Coral reefs; fisheries Global - Moore (211) Mollusks United States.31 Narita et al. (212) Mollusks Global 139 Sumaila et al. (211) Capture fisheries Global - -
Global damage costs Climate Change Ocean Acidification US$ 14 trillion US$ 1.2 trillion % of Gross World Product Coral Reefs Mollusks Annual global damages in 21; US$; 21 price levels; SRES B Very few estimates; Very high uncertainties (1 order of magnitude) Sources: Tol (29); Brander et al. (212); Narita et al. (212)
Distribution and vulnerability High localised impacts Vulnerability: Dependence on fish protein and coral reef ecosystem services Adaptive capacity to replace lost ecosystem services Fish protein consumption Tropical coral reefs
Knowledge gaps and next steps Knowledge gaps: Links between bio-physical impacts and ecosystem services Few ecosystem services valued (only mollusk fisheries and coral reef recreation) Spatial convergence of impacts and vulnerability Next steps: Spatial analysis to understand the human impacts of Ocean Acidification (SESYNC US Socio-Environmental Synthesis Centre)
Conclusions Economic damage estimates are few and highly uncertain OA adds substantially to the costs of CO 2 ( 1%) Implications for CO 2 mitigation policy: Changes the trade offs between GHGs Increases the urgency of CO 2 mitigation
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