Coral reef use and management - the need, role, and prospects of economic valuation in the Pacific

The need for economic valuation of coral reefs and other natural resources to underpin resource allocation decisions has always been recognized by economists, but recently it has been emphasized by others. In practice, however, the usefulness of economic valuation as an input management of coral reefs in the small island nations of the Pacific, and elsewhere, is not as clear. This paper argues that its relevance needs to be particularly examined in the context of the great degree of uncertainty in our understanding of the complex and dynamic coral reef ecosystems and the lack of understanding about the functional relationship between human activities and their impact on the goods and services supported by the reefs. It is equally important to examine the need for detailed economic valuation in the light of the increased devolution of use and management decisions down to local communities and the use of the adaptive decision-making process. Economic valuation can help improve coral reef conservation and management, but the level of detailed valuation required will depend on the use the value estimates will be put to and the management objective addressed. It will also depend on whether a "top-down" centralized decision-making process is appropriate or whether a "bottom-up" community-based decision-making process is to be used. If it is the latter, it is very likely that the local Pacific island communities will be making only minor decisions one at a time, for which detailed net economic valuation-based decision-making may be overdone. In any case the net benefit estimation in these circumstances will be associated with a great degree of uncertainty. Instead, some gross estimation of the expected net economic (financial) benefits may suffice. But more importantly for community-based management, careful considerations of other economic issues may be more useful in designing community-based institutional regimes to suit the local conditions.