Estimating the value of coral reef management options

Incentives for coral reef resource use have, historically, been skewed toward extractive options that yield private returns, and against protection options that provide predominantly public good benefits. The consequence of this incentive imbalance has been an excessive rate of coral reef resource exploitation and hence an under-supply of protected coral reefs. Numerous policy otions, ranging from direct government intervention that sets aside specific reef areas as reserves, through to the encouragement of reef-based industries that are predicated on reef protection (for example, ecotourism), are available to correct the situation. However, before such policies are implemented, it is useful to gain an appreciation of the extent of change that would be in the best interest of society. Put simply, it is important to know where to go before starting off on the journey. To achieve this understanding, it is necessary to gather information regarding the costs of alternative coral reef management options and the benefits they generate. Problematic in the quest for information on the benefits of coral reef protection is that many of the benefits are not marketed. In order to compare relative costs and benefits across a range of management options, a numeral, or unit of measurement, of value is required. In most societies, value is commonly measured in money terms. A challenge to economists is, therefore, the estimation, in monetary terms, of non-marketed, environmental benefits. One technique that is useful in the estimation of non-marketed values is choice modeling. In a choice modeling application, people who are likely to be affected by changes in resource management are asked, in the format of a questionnaire, to select their preferred management options from a range of options. The options are described in terms of the characteristics or attributes of their outcomes. For instance, coral reef management options may be described in terms of the number of fish species that are present on the reef and the area of coral in a healthy condition. A statistical analysis of the choice made by the questionnaire respondents allows the development of a model that explains the probability of an option being selected by respondents in terms of the attributes of the option`s outcomes and the socioeconomic characteristics of respondents. So long as one of the attributes used to describe the option`s outcomes is monetary - for instance, an additional tax to be used to fund the environmental improvements offered by the opinion - the model of choice can be used to estimate, in monetary terms, the values people place on different management options.