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Benefit and cost analysis of mariculture based on ecosystem services
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a v a i l a b l e a t w w w. s c i e n c e d i r e c t . c o m
w w w. e l s e v i e r. c o m / l o c a t e / e c o l e c o n
Benefit and cost analysis of mariculture based on ecosystem services Wei Zheng a,b , Honghua Shi a,b,⁎, Shang Chen b , Mingyuan Zhu b a b
College of Environmental Science and Engineering, Ocean University of China, Qingdao 266100, China Key Lab for Science and Engineering of Marine Ecology and Environment, First Institute of Oceanography, SOA, Qingdao 266061, China
AR TIC LE I N FO
ABS TR ACT
Article history:
As a life-supporting system, marine ecosystem provides various services for human being.
Received 11 February 2007
Based on ecosystem services, we developed a Benifit and Cost Analysis model to balance the
Received in revised form
conflicts between economic income and environmental loss caused by mariculture
25 November 2007
activities. This model not only calculates market income of mariculture but also
Accepted 3 December 2007
monetizes the positive and negative effects of mariculture activities on ecosystem
Available online 21 February 2008
services. In this model, three indices, the NPV (Net Present Value), BCR (Benefit to Cost Ratio) and RC (Relative Coefficent) with consideration of discount rate, are developed to
Keywords:
assess and prioritize the candidate mariculture modes. This Benefit and Cost Analysis
Beneft and cost analysis
model was applied to Sanggou Bay, one typical mariculture bay in China, to identify
Marine ecosystem services
sustainable mariculture mode. In this paper, we find that benefit and cost analysis based on
Mariculture mode
ecosystem services value provides a convenient and effective tool to compare different
Sanggou Bay
exploitation modes of marine ecosystem. © 2007 Elsevier B.V. All rights reserved.
1.
Introduction
Ecosystem services and their valuation research have become one of the most important research fields of applied ecology. Research on ecosystem services mainly focuses on the ecological theories, valuation methods, and their applications (Costanza et al., 1997; Daily, 1997). At the scope of ecological theory, the definition of ecosystem services, given by Daily (1997), was widely used. However, the definition by Millennium Ecosystem Assessment (MA, 2003) was more apt to the sociology and management. Although there is no standard to classify the ecosystem services now, the MA's classification is very useful and practical for valuation (MA, 2003). At the aspect of valuation methods, argues still exist (Farber et al., 2002; De Groot et al., 2002). Many techniques could be used to assess people's Willingness to Pay (WTP), however, the valuation for the nonmarket services is still weak. At the fact of applications, more
attention is attracted. Most of the research focused on the tradeoff between economic activities and ecosystem services in order to guide the management of the ecosystem in a sustainable way. For example, Folke et al. (1991) argued that with the rapid increase of agriculture, industry and fishing, natural capital has become the major limiting factor for economic development of Balic Sea Region, and ecological engineering and the management for production are important measures to promote the sustainable development of economy. There are also many other relative studies (Alexander et al., 1998; Kreuter et al., 2001; Schröter et al., 2005). In China, the concept of ecosystem services was introduced in 1990s, and there have been many studies about ecosystem services which involve the introduction of abroad studies, valuation methods and case studies. At present, the application research of ecosystem services attract more attention. Our study tries to apply benefit and cost analysis to quantify
⁎ Corresponding author. College of Environmental Science and Engineering, Ocean University of China, Qingdao 266100, China. Fax: +86 532 88967435. E-mail address: [email protected] (H. Shi). 0921-8009/$ – see front matter © 2007 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2007.12.005
E CO L O G I CA L EC O NO M IC S 6 8 (2 0 0 9) 1 62 6–1 63 2
the influence of mariculture on marine ecosystem services, and identify a sustainable mariculture mode by optimizing the ecosystem services value. Mariculture is a developing industry that makes a significant contribution to the national economy. Also it is an important animal protein supplement for majority of people in coastal area of China. On the other hand, mariculture in some areas causes the degradation of species (Zhu et al., 2000), the loss of biodiversity (Zhang et al., 2005b), and the decrease of ecosystem function (Zhu et al., 2000). In addition, it will lead to degradation of local environment due to mariculture wastewater (Cui et al., 2005), the death of mariculture living (Zhang and Zhang, 1999). Therefore, mariculture has various impacts on marine ecosystem services. Although it increases the value of some ecosystem services (for example, the increase of food production value), the value of some other ecosystem services will decrease possibly. Analyzing the impact of mariculture activities on the marine ecosystem services, and conducting benefit and cost analysis of mariculture based on ecosystem services, can help to identify the sustainable mariculture mode. In this study, marine ecosystem services are classified firstly, according to the characteristic of China's marine ecosystem to give a framework of marine ecosystem services valuation. Then a benefit and cost analysis model based on marine ecosystem services is developed to assess and prioritize the candidate mariculture modes. Finally, this method was applied to Sanggou Bay, in the Yellow Sea, one typical mariculture bay in China, to identify the sustainable mode of mariculture.
culture service as their impacts on people are often indirect or occur over a very long time. So when conducting assessment, supporting services aren't considered in order to avoid that the benefit or cost will be double-counted (MA, 2003).
2.2. A modified benefit and cost analysis model based on ecosystem services Benefit and cost analysis (BCA) is a typical economic method of choosing which among a number of alternatives. The benefits and costs of a certain measure (program, project or investment) are weighed up against each other and the measure with the highest net value is recommended for adoption. In this paper, we will modify this method and apply it to the analysis of mariculture. Firstly, some terms in benefit and cost analysis should be defined. Benefit (B) refers to the increasing value of marine ecosystem services due to the change of mariculture mode, e.g. the increase of marine products due to the increase of mariculture area. If Bi is the increase value of ith marine ecosystem service, then B ¼ B1 þ B2 þ B3 þ N þ Bn
Methods
2.1.
Framework of marine ecosystem services
Based on the framework of the Millennium Ecosystem Assessment (MA, 2003), and considering the availability of the data of China's marine ecosystem, China's marine ecosystem services are classified into 14 types: 4 provisioning services, 4 regulating services, 3 cultural services and 3 supporting services adopted from MA (Chen et al., 2006; Shi et al., 2007). Provisioning services refer to the products obtained from marine ecosystem. There are four provisioning services in China sea: i.e. (1) food production (seafood), (2) material production (biological material for chemical, pharmaceutical use, ornamental resources), (3) oxygen production and (4) provision of genetic resources. Regulating services are the benefits obtained from the regulation of marine ecosystem processes, including (5) climate regulation, (6) waste treatment, (7) biologial control and (8) disturbance regulation. Cultural services are the non-material benefits obtained from marine ecosystem through spiritual enrichment, cognitive development, reflection, recreation, aesthetic and eduacational experiences. There are three cultural services: (9) recreation value, (10) cultural value and (11) scientific value. Supporting services are those that are necessary for all other marine ecosystem services. There are three supporting services: (12) primary production, (13) nutrient cycling, and (14) species diversity maintainance. Supporting service is different from provisioning service, regulating service and
ð1Þ
Cost (C) is the decreasing value of marine ecosystem services due to the change of mariculture mode. If Ci is the decreasing value of ith marine ecosystem service, then C ¼ C1 þ C2 þ C3 þ N þ Cn
2.
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ð2Þ
Time is important in BCA because, even if we have future benefits and costs, decisions have to be made today. What is important is thus the calculation of present values. BCA is a decision supporting system where decisions have to be made today. This means that costs and benefits have to be expressed in present-day values, and thus future costs and benefits have to be discounted. Let r be the discount rate, the Benefit in the tth year (Bt) and corresponding Cost (Ct) can be discounted to present values (PBt, PCt) respectively as: PBt ¼ Bt =ð1 þ rÞt
ð3Þ
PCt ¼ Ct =ð1 þ rÞt
ð4Þ
Net present value (NPV) is the most important criteria in benefit and cost analysis. NPV is an absolute index for the net contribution of a program to economy. It is a sum of the net benefit in every year by the end of the program in terms of the present value. Those programs with net benefits greater than zero are the feasible programs. The formula of NPV is as the following: NPV ¼
T X ðBt Ct Þ t¼0
ð1 þ rÞt
ð5Þ
Where Bt and Ct are the benefit and cost in the tth year respectively during the program, r represents the discount rate and T is the timescale of the program.
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Benefit to cost ratio (BCR) is also an important index in the benefit and cost analysis. The formula for calculating the BCR is: BCR ¼
T X
Bt
t¼0
ð1 þ rÞt
=
T X
Ct
t¼0
ð1 þ rÞt
ð6Þ
Where ∑ is the sum of values, Bt is the benefit at time t, Ct is the cost at time t, T is the timescale of project, t = 0 denotes the start time of project, and r denotes the discount rate. Those programs with a BCR greater than one are economically justified. Generally, the higher the BCR is, the more efficient the use of resources and environment could be. In this study, BCR indicates the resistance of marine ecosystem to mariculture stress. BCR N 1 means weak mariculture stress and less loss of ecosystem services. So mariculture mode is feasible. In case of BCR b 1, the mariculture mode is considered to be rejected. NPV and BCR are different decision criterions in BCA. NPV mainly considers the total net benefit during the whole period. More attention should also be paid to BCR which denotes the efficiency of the Output (benefit) to Input (cost). However, there sometimes exists a conflict between NPV and BCR. As we know, the greatest NPV and highest efficiency (BCR) does not always occur simultaneously in a specific program. In this paper, we develop an integrated model combining NPV and BCR. The main procedures involved in the decisionmaking process are to: (1) Calculate NPV and BCR, if NPV is greater than 0 and BCR is greater than 1, and then this program should be regarded as a candidate program; (2) Identify all the candidate programs according to the above method; (3) Let NPVi and BCRi be the NPV and BCR of ith candidate program, and then calculate the Relative Coefficient (RC) as: RCi ¼ NPVi BCRi
ð7Þ
Here i = 1,2,…,n, n is the number of candidate programs; (4) Select the best program with greatest value of RC.
3.
Case study
3.1.
Study site
yield of mariculture added up to 242,100 ton (Ocean and Fishery Bureau of Rongcheng City, 2005). Now it is necessary to assess the change of ecosystem services in Sanggou Bay, which is influenced by mariculture activities, and to identify the sustainable mariculture mode.
3.2. Identification of candicate mariculture modes in Sanggou Bay Fishery resources are abundant in Sanggou Bay. The Mariculture area and yield have increased gradually from 1999 to 2004 (Table 1) (Ocean and Fishery Bureau of Rongcheng City, 2005). In order to assess the effect on ecosystem services under mariculture activities, and conduct benefit and cost analysis of different mariculture modes, we choose the years of 1999, 2003 and 2002 with large, medium and small mariculture areas as the optimal mariculture mode candidates.
3.3. Valuation on the ecosystem services affected by mariculture activities in Sanggou Bay Provisioning and regulating services should be calculated for the valuation on ecosystem services affected by mariculture in Sanggou Bay. On the one hand, the culture services are little affected by mariculture in Sanggou Bay. In Sanggou Bay, the recreation activities mainly include bathing and sightseeing along the coastal line. Those recreations located inside Sanggou Bay such as diving, boating and so on have not been developed now. So the change of mariculture mode in Sanggou Bay has little infuence on the recreation value. And there is also no obvious evidence to indicate the influence by mariculture on other culture services (i.e. culture value and scientific value). On the other hand, as we have mentioned above, in order to to avoid double-counting, supporting services won't be valued. Therefore there are eight ecosystem seivices that should be addressed in this study, i.e. food production, material production, provision of genetic resources, oxygen production, climate regulation, waste treatment, biologial control and disturbance regulation which are affected by mariculture activities. Due to data limitation and difficulty in valuing some ecosystem seivices (e.g. provision of genetic resources, biological control and disturbance regulation), only four services (i.e. food production, oxygen production, climate regulation and waste treatment) will be considered here. In this study, we calculate the value of the above four affected ecosystem services in 1999, 2002 and 2003, and compare the differences among them.
3.3.1. Sanggou Bay is a typical mariculture bay which is situated in the Yellow Sea near Rongcheng city of Shangdong Province in China (37°01'–37°09'N, 122°24'–122°35'E). Sanggou Bay is a coastal embayment with 143.2 km2 water area and 20 km2 intertidal area. The annual average temperature is 10.90 °C and monthly precipitation is 68.02 mm and mainly in July and August. Mariculture is the dominant human activity in this bay, and the direct economic value of fishery production accounts for 65.29% of the whole ecosystem services value in 2004 (Shi et al., 2008). Nowadays, the main mariculture species include scallop, oyster, kelp etc. In 2004, the mariculture area reached 5964.8 ha, and the
Food production
According to the statistical data of fishery in Sanggou Bay (Ocean and Fishery Bureau of Rongcheng City, 2005) we calculate mariculture output net value in 1999, 2002 and 2003, which is shown in Fig. 1. So the value of food production service is 31.96 × 107 CNY in 1999, 54.15 × 107 CNY in 2002, and 59.47 ×107 CNY in 2003. There is an 86% increase in food production net value from 1999 to 2003. The net value of food production is 5.24 ×104 CNY/ha in 1999, 9.63 ×104 CNY/ha in 2002, and 10.22 ×104 CNY/ha in 2003. From Fig. 1, we can see that the net value of food production in 2002 and 2003 is obviously larger than that in
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Table 1 – General status of mariculture activities in Sanggou Bay Year
1999 Area (ha)
Yield (ton)
2000 Area (ha)
Yield (ton)
2001 Area (ha)
2002
Yield (ton)
2003
2004
Area (ha)
Yield (ton)
Area (ha)
Yield (ton)
Area (ha)
Yield (ton)
4160 704 704 51.2 5619.2
84,500 27,500 66,000 2400 180,400
4160 640 960 57.6 5817.6
84,500 25,000 90,000 2700 202,200
4160 128 1600 76.8 5964.8
84,500 4000 150,000 3600 242,100
Species Kelp Scallop Oyster Abalone Total
4160 1856 64 19.2 6099.2
84,500 72,500 6000 900 163,900
4160 1472 96 25.6 5753.6
84,500 56,000 9000 1200 15,0700
4160 1280 192 32 5664
84,500 50,000 18,000 1500 154,000
1999, but the mariculture area in 1999 is the largest, which indicate that the decrease of mariculture area don't cause the decrease of economic income, while the income increase a lot.
3.3.2.
Oxygen production
Oxygen production is finished by marine algae and plant through photosynthesis process. In Sanggou Bay, marine phytoplankton emits oxygen through photosynthesis process, in addition mariculture kelp emits large quantity of oxygen. To calculate oxygen quantity, primary production and kelp production should be identified, and then the quantity of oxygen can be calculated through equation of photosynthesis process. At the same time, the economic value of oxygen production can be obtained by multiplying the price of industrial oxygen, which is 400 CNY/ton at present (Pan et al., 2002). For the calculation of oxygen production in 1999, we choose the data surveyed by First Institute of Oceanography (FIO), State Oceanic Administration (SOA) from May in 1999 to April in 2000, and the survey result is that the primary production is 230 mg C/m2d in waters and 347 mg C/m2d in intertidal area. For the calculation of oxygen production in 2002 and 2003, we choose the data surveyed by FIO, from August in 2003 to May in 2004, and survey result is that primary production is 58 mg C/m2d. The final results are shown in Fig. 2.
3.3.3.
To estimate CO2 quantity fixed by phytoplankton in 1999, 2002 and 2003, we firstly choose the primary production surveyed by FIO, SOA beginning from May in 1999 to April in 2000, and from August in 2003 to May in 2004 (just as before). Then the fixed CO2 by phytoplankton can be obtained through equation of photosynthesis process. Shellfish can fix CO2 through two approaches: One is to predate phytoplankton, organic carbon granule, and then transform and fix C; the other is to absorb directly the HCO−3 from water. As for the first approach, because primary production has been included, second production won't be calculated repeatedly. Our paper would mainly consider the second approach, i.e. the absorption of HCO3. The equation is as follows: Ca2þ þ 2HCO 3 ¼ CaCO3 þ CO2 þ H2 O From the above equation, we can find that: at the time of depositing 1 mol CaCO3, 1 mol CO2 is liberated to the water. However, at the same time 2 mol HCO3 is absorbed; meanwhile, the decrease in concentration of HCO3 drives the same quantify (in mol) of CO2 entering the water from the atmosphere to balance the concentration of HCO3 in the ocean
Climate regulation
In ocean, algae may regulate climate through sequestering greenhouse gases, and slow the global warming. The benefit of fixing carbon in Sanggou Bay is mainly shown in two aspects: one is carbon fixed by phytoplankton and mariculture kelp, and the other is fixed by cultured shellfish.
Fig. 1 – Output value(food production net value) in Sanggou Bay (×107 CNY).
Fig. 2 – (a) Quantity of oxygen production (104 ton). (b) Value of oxygen production (107 CNY).
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Table 2 – Quantity of fixed CO2 and value of climate regulation Year
1999
2002
2003
Quantity of fixed CO2 (105 ton) Value of climate regulation (107 CNY)
1.55 5.26
1.20 4.07
1.26 4.27
surface. This effect is indirect as a contribution to remove CO2 from the atmosphere (Zhang et al., 2005a). It is very important to note that the carbon cycle in ocean is a very complex process and it has spatial heterogeneity. In our study, Sanggou Bay is a typical coastal mariculture bay where the carbon cycle process is not always same to that in open sea (Mann and Lazier, 1991). Through this equation, we can get the quantity of the fixed carbon by shellfish. And the fixed C can be eliminated from the water after the cultured shellfish are harvested. Based on the estimated quantity of total fixed carbon by phytoplankton and shellfish, the Sweden carbon tax rate can be used, which is 150 USD/tC (Ouyang et al., 2004), to calculate the value of climate regulation. The final results are shown in Table 2.
3.3.4.
Waste treatment
Ecosystems can be a source of impurities in fresh water but also can help to filter out and decompose organic wastes introduced into inland waters and coastal and marine ecosystems (MA, 2003). For the valuation of waste treatment, we choose the quantity of N and P fixed by phytoplankton and kelp. When conducting photosynthesis process, C, N and P are absorbed according to Redfield ratio, which is C:N:P = 106:16:1 (Redfield, 1958). Based on primary production in Sanggou Bay and Redfield ratio, we can calculate the quantity of N and P fixed by phytoplankton. For the quantity of N and P fixed by kelp, we obtain it according to the proportion of N and P in its issue. The proportion of N and P in kelp is respectively 4.818% and 0.322% (Huang et al., 2005). For the valuation of reducing N and P, the cost of effluent treatment is used, which is 1.5 CNY/ kg for N and 2.5 CNY/kg for P (Zhao, 1995). The calculation results are shown in Table 3.
4.
Result
In this study, we take 1999 as the baseline year and select the average value 5% of loan and deposit annual interests released by People's Bank of China from 1999 to 2004 as the discount rate (The People's Bank of China, 2006). Compared with 1999, the value of food production increased in 2002, so the benefits mainly refer to the increase of food production value. There is a decrease in the value of oxygen production, climate regulation
Table 3 – Value of waste treatment in Sanggou Bay Year
1999
2002
2003
Quantity of fixed N (ton) Quantity of fixed P (ton) Value of waste treatment (107 CNY)
6268 409 1.04
4593 305 0.77
4593 305 0.77
Table 4 – Result of benefit and cost analysis Year 8
NPV (10 CNY) BCR RC
2002
2003
1.12 4.11 4.60
1.33 4.59 6.10
and waste treatment, and so the costs mainly refer to the decrease of these three ecosystem services values. Finally, we can estimate that the benefit in 2002 is 1.48 × 108 CNY, and the cost is 0.36 × 108 CNY. The benefit in 2003 is 1.70 × 108 CNY, and the cost is 0.37 × 108 CNY. So the benefit and cost analysis results are shown in Table 4. From Table 4, we can see that both NPV N 0 and BCR N 1 in 2002 and 2003, which indicates that benefits outweigh costs, the mariculture mode in Sanggou Bay has been improved compared with that of 1999. The main reason is probably due to the change of the mariculture species. The area of mariculture species with high economic value, such as Abalone increases a lot. In addition, culture kelp plays a very important role in the process of purifying environment in Sanggou Bay. Some scientific mariculture technique is also used in the mariculture process, which reduces the damage to environment. So in the future we should make efforts to the improvement of the mariculture modes in Sanggou Bay from the following aspects: Increase the area of the mariculture species with high economic value, and correspondingly decrease the area of some other mariculture species, keep kelp mariculture and improve mariculture technique. And the NPV, BCR and RC in 2003 with the medium mariculture area are greater than that of 2002 with minimum mariculture area in Sanggou Bay. The most moderate mariculture mode is in 2003 with the mariculture 5619.2 ha. Too large or small mariculture area cannot bring the greatest ecosystem services value.
5.
Discussion
Benefit and cost analysis has been promoted as a democracy enhancing technology, and policymakers and consultants have promoted it as a tool for clarifying and rationalizing social choices and building consensus (Chestnut and Mills, 2005). Spurgeo (1998) studied the economic efficiency of coastal habitat rehabilitation and creation through developing a benefit to cost ratio (BCR) model in benefit and cost analysis (BCA). Hansjürgens (2004) discussed the possibilities and limitations of cost–benefit analysis (CBA), and concluded that “CBA is not only a mere mechanism of monetarisation, but a heuristic model for the whole process of valuation”. In this paper, an improved benefit and cost analysis model based on ecosystem services is developed. This model highlights the selection of decision-making criterion. Firstly, in this paper, the definition of benefit and cost are based on the marine ecosystem services, which take into account most of the benefits and costs (including both economic and ecological contribution and loss) generated by mariculture activities. For example, the increasing food production value indicates economic benefit, and the decrease value of some ecosystem
E CO L O G I CA L EC O NO M IC S 6 8 (2 0 0 9) 1 62 6–1 63 2
services is at the cost of affecting environment. On the other hand, the decision-making model modified in this paper is different from other studies combining NPV and BCR as one integrated index (RC). The decision-making method used in this model gives a way to balancing benefit and efficiency in resource exploitation and environment protection. Human well-being and progress toward sustainable development are vitally dependent upon the Earth's ecosystems. Changes in availability of all the ecosystem services can profoundly affect aspects of human well-being (Zheng et al., 2006). Humans are altering the capability of ecosystems to continue to provide many of these services while their demands for ecosystem services are growing rapidly. Management of this relationship is required to enhance the contribution of ecosystems to human well-being without affecting their long-term services-providing capacity (MA, 2003). In this paper, through benefit and cost analysis based on ecosystem services, the impact of mariculture activities on the marine ecosystem has been analyzed to identify the most moderate mariculture mode. In this paper, we take Sanggou Bay, a typical mariculture bay, as an example. We compared the different mariculture modes in 1999, 2002 and 2003, and analyzed why the mariculture mode was improved in 2003. From Fig. 1, we find that the net value of food production in 2002 and 2003 is obviously larger than that in 1999, but the mariculture area in 1999 is the largest, which indicate that the decrease of mariculture area don't cause the decrease of economic income, while the income increase a lot. The possible reasons for the above phenomena are as follows: one is that compared with 2002 and 2003, mariculture technique is poor in 1999; the other is that, in 2002 and 2003, the mariculture area of mariculture species with high value (e.g. the mariculture area of abalone) rose and then economic income increased. Benefit and cost analysis model provides decision-makers with an idea of how they should optimize the ecosystem services in Sanggou Bay. Finally, we find that benefit and cost analysis based on ecosystem services value analyzed in this paper provides a convenient and effective tool to compare different exploitation modes of marine ecosystem. When the benefit and efficiency are not accordant, identifying the optimal program is often very difficult. As an integrated index, Relative Coefficient (RC) developed in our BCA model is an important attempt of decision-making standard in BCA.
Acknowledgement This work is supported by the UNDP/GEF Yellow Sea Large Marine Ecosystem Project, National Basic Research Program of China (No. 2002CB412406), SOA-funded Program (No. 908-0204-03) and National Marine Public Welfare Project of China for Marine Biodiversity Conservation Research and Demonstration Based on Coastal Zone Integrated Management (No. 200705029). We would like to thank Prof. Dr. Xuelei Zhang for his help in data collection and useful comments on this paper. Great thanks also to Mr. Yihang Jiang and Mr. Isao Endo of UNDP/GEF Yellow Sea Large Marine Ecosystem Project Office. Without their help it is very difficult to complete this paper.
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We are very appreciable to three anonymous reviewers for their constructive comments as well.
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a v a i l a b l e a t w w w. s c i e n c e d i r e c t . c o m
w w w. e l s e v i e r. c o m / l o c a t e / e c o l e c o n
Benefit and cost analysis of mariculture based on ecosystem services Wei Zheng a,b , Honghua Shi a,b,⁎, Shang Chen b , Mingyuan Zhu b a b
College of Environmental Science and Engineering, Ocean University of China, Qingdao 266100, China Key Lab for Science and Engineering of Marine Ecology and Environment, First Institute of Oceanography, SOA, Qingdao 266061, China
AR TIC LE I N FO
ABS TR ACT
Article history:
As a life-supporting system, marine ecosystem provides various services for human being.
Received 11 February 2007
Based on ecosystem services, we developed a Benifit and Cost Analysis model to balance the
Received in revised form
conflicts between economic income and environmental loss caused by mariculture
25 November 2007
activities. This model not only calculates market income of mariculture but also
Accepted 3 December 2007
monetizes the positive and negative effects of mariculture activities on ecosystem
Available online 21 February 2008
services. In this model, three indices, the NPV (Net Present Value), BCR (Benefit to Cost Ratio) and RC (Relative Coefficent) with consideration of discount rate, are developed to
Keywords:
assess and prioritize the candidate mariculture modes. This Benefit and Cost Analysis
Beneft and cost analysis
model was applied to Sanggou Bay, one typical mariculture bay in China, to identify
Marine ecosystem services
sustainable mariculture mode. In this paper, we find that benefit and cost analysis based on
Mariculture mode
ecosystem services value provides a convenient and effective tool to compare different
Sanggou Bay
exploitation modes of marine ecosystem. © 2007 Elsevier B.V. All rights reserved.
1.
Introduction
Ecosystem services and their valuation research have become one of the most important research fields of applied ecology. Research on ecosystem services mainly focuses on the ecological theories, valuation methods, and their applications (Costanza et al., 1997; Daily, 1997). At the scope of ecological theory, the definition of ecosystem services, given by Daily (1997), was widely used. However, the definition by Millennium Ecosystem Assessment (MA, 2003) was more apt to the sociology and management. Although there is no standard to classify the ecosystem services now, the MA's classification is very useful and practical for valuation (MA, 2003). At the aspect of valuation methods, argues still exist (Farber et al., 2002; De Groot et al., 2002). Many techniques could be used to assess people's Willingness to Pay (WTP), however, the valuation for the nonmarket services is still weak. At the fact of applications, more
attention is attracted. Most of the research focused on the tradeoff between economic activities and ecosystem services in order to guide the management of the ecosystem in a sustainable way. For example, Folke et al. (1991) argued that with the rapid increase of agriculture, industry and fishing, natural capital has become the major limiting factor for economic development of Balic Sea Region, and ecological engineering and the management for production are important measures to promote the sustainable development of economy. There are also many other relative studies (Alexander et al., 1998; Kreuter et al., 2001; Schröter et al., 2005). In China, the concept of ecosystem services was introduced in 1990s, and there have been many studies about ecosystem services which involve the introduction of abroad studies, valuation methods and case studies. At present, the application research of ecosystem services attract more attention. Our study tries to apply benefit and cost analysis to quantify
⁎ Corresponding author. College of Environmental Science and Engineering, Ocean University of China, Qingdao 266100, China. Fax: +86 532 88967435. E-mail address: [email protected] (H. Shi). 0921-8009/$ – see front matter © 2007 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2007.12.005
E CO L O G I CA L EC O NO M IC S 6 8 (2 0 0 9) 1 62 6–1 63 2
the influence of mariculture on marine ecosystem services, and identify a sustainable mariculture mode by optimizing the ecosystem services value. Mariculture is a developing industry that makes a significant contribution to the national economy. Also it is an important animal protein supplement for majority of people in coastal area of China. On the other hand, mariculture in some areas causes the degradation of species (Zhu et al., 2000), the loss of biodiversity (Zhang et al., 2005b), and the decrease of ecosystem function (Zhu et al., 2000). In addition, it will lead to degradation of local environment due to mariculture wastewater (Cui et al., 2005), the death of mariculture living (Zhang and Zhang, 1999). Therefore, mariculture has various impacts on marine ecosystem services. Although it increases the value of some ecosystem services (for example, the increase of food production value), the value of some other ecosystem services will decrease possibly. Analyzing the impact of mariculture activities on the marine ecosystem services, and conducting benefit and cost analysis of mariculture based on ecosystem services, can help to identify the sustainable mariculture mode. In this study, marine ecosystem services are classified firstly, according to the characteristic of China's marine ecosystem to give a framework of marine ecosystem services valuation. Then a benefit and cost analysis model based on marine ecosystem services is developed to assess and prioritize the candidate mariculture modes. Finally, this method was applied to Sanggou Bay, in the Yellow Sea, one typical mariculture bay in China, to identify the sustainable mode of mariculture.
culture service as their impacts on people are often indirect or occur over a very long time. So when conducting assessment, supporting services aren't considered in order to avoid that the benefit or cost will be double-counted (MA, 2003).
2.2. A modified benefit and cost analysis model based on ecosystem services Benefit and cost analysis (BCA) is a typical economic method of choosing which among a number of alternatives. The benefits and costs of a certain measure (program, project or investment) are weighed up against each other and the measure with the highest net value is recommended for adoption. In this paper, we will modify this method and apply it to the analysis of mariculture. Firstly, some terms in benefit and cost analysis should be defined. Benefit (B) refers to the increasing value of marine ecosystem services due to the change of mariculture mode, e.g. the increase of marine products due to the increase of mariculture area. If Bi is the increase value of ith marine ecosystem service, then B ¼ B1 þ B2 þ B3 þ N þ Bn
Methods
2.1.
Framework of marine ecosystem services
Based on the framework of the Millennium Ecosystem Assessment (MA, 2003), and considering the availability of the data of China's marine ecosystem, China's marine ecosystem services are classified into 14 types: 4 provisioning services, 4 regulating services, 3 cultural services and 3 supporting services adopted from MA (Chen et al., 2006; Shi et al., 2007). Provisioning services refer to the products obtained from marine ecosystem. There are four provisioning services in China sea: i.e. (1) food production (seafood), (2) material production (biological material for chemical, pharmaceutical use, ornamental resources), (3) oxygen production and (4) provision of genetic resources. Regulating services are the benefits obtained from the regulation of marine ecosystem processes, including (5) climate regulation, (6) waste treatment, (7) biologial control and (8) disturbance regulation. Cultural services are the non-material benefits obtained from marine ecosystem through spiritual enrichment, cognitive development, reflection, recreation, aesthetic and eduacational experiences. There are three cultural services: (9) recreation value, (10) cultural value and (11) scientific value. Supporting services are those that are necessary for all other marine ecosystem services. There are three supporting services: (12) primary production, (13) nutrient cycling, and (14) species diversity maintainance. Supporting service is different from provisioning service, regulating service and
ð1Þ
Cost (C) is the decreasing value of marine ecosystem services due to the change of mariculture mode. If Ci is the decreasing value of ith marine ecosystem service, then C ¼ C1 þ C2 þ C3 þ N þ Cn
2.
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ð2Þ
Time is important in BCA because, even if we have future benefits and costs, decisions have to be made today. What is important is thus the calculation of present values. BCA is a decision supporting system where decisions have to be made today. This means that costs and benefits have to be expressed in present-day values, and thus future costs and benefits have to be discounted. Let r be the discount rate, the Benefit in the tth year (Bt) and corresponding Cost (Ct) can be discounted to present values (PBt, PCt) respectively as: PBt ¼ Bt =ð1 þ rÞt
ð3Þ
PCt ¼ Ct =ð1 þ rÞt
ð4Þ
Net present value (NPV) is the most important criteria in benefit and cost analysis. NPV is an absolute index for the net contribution of a program to economy. It is a sum of the net benefit in every year by the end of the program in terms of the present value. Those programs with net benefits greater than zero are the feasible programs. The formula of NPV is as the following: NPV ¼
T X ðBt Ct Þ t¼0
ð1 þ rÞt
ð5Þ
Where Bt and Ct are the benefit and cost in the tth year respectively during the program, r represents the discount rate and T is the timescale of the program.
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Benefit to cost ratio (BCR) is also an important index in the benefit and cost analysis. The formula for calculating the BCR is: BCR ¼
T X
Bt
t¼0
ð1 þ rÞt
=
T X
Ct
t¼0
ð1 þ rÞt
ð6Þ
Where ∑ is the sum of values, Bt is the benefit at time t, Ct is the cost at time t, T is the timescale of project, t = 0 denotes the start time of project, and r denotes the discount rate. Those programs with a BCR greater than one are economically justified. Generally, the higher the BCR is, the more efficient the use of resources and environment could be. In this study, BCR indicates the resistance of marine ecosystem to mariculture stress. BCR N 1 means weak mariculture stress and less loss of ecosystem services. So mariculture mode is feasible. In case of BCR b 1, the mariculture mode is considered to be rejected. NPV and BCR are different decision criterions in BCA. NPV mainly considers the total net benefit during the whole period. More attention should also be paid to BCR which denotes the efficiency of the Output (benefit) to Input (cost). However, there sometimes exists a conflict between NPV and BCR. As we know, the greatest NPV and highest efficiency (BCR) does not always occur simultaneously in a specific program. In this paper, we develop an integrated model combining NPV and BCR. The main procedures involved in the decisionmaking process are to: (1) Calculate NPV and BCR, if NPV is greater than 0 and BCR is greater than 1, and then this program should be regarded as a candidate program; (2) Identify all the candidate programs according to the above method; (3) Let NPVi and BCRi be the NPV and BCR of ith candidate program, and then calculate the Relative Coefficient (RC) as: RCi ¼ NPVi BCRi
ð7Þ
Here i = 1,2,…,n, n is the number of candidate programs; (4) Select the best program with greatest value of RC.
3.
Case study
3.1.
Study site
yield of mariculture added up to 242,100 ton (Ocean and Fishery Bureau of Rongcheng City, 2005). Now it is necessary to assess the change of ecosystem services in Sanggou Bay, which is influenced by mariculture activities, and to identify the sustainable mariculture mode.
3.2. Identification of candicate mariculture modes in Sanggou Bay Fishery resources are abundant in Sanggou Bay. The Mariculture area and yield have increased gradually from 1999 to 2004 (Table 1) (Ocean and Fishery Bureau of Rongcheng City, 2005). In order to assess the effect on ecosystem services under mariculture activities, and conduct benefit and cost analysis of different mariculture modes, we choose the years of 1999, 2003 and 2002 with large, medium and small mariculture areas as the optimal mariculture mode candidates.
3.3. Valuation on the ecosystem services affected by mariculture activities in Sanggou Bay Provisioning and regulating services should be calculated for the valuation on ecosystem services affected by mariculture in Sanggou Bay. On the one hand, the culture services are little affected by mariculture in Sanggou Bay. In Sanggou Bay, the recreation activities mainly include bathing and sightseeing along the coastal line. Those recreations located inside Sanggou Bay such as diving, boating and so on have not been developed now. So the change of mariculture mode in Sanggou Bay has little infuence on the recreation value. And there is also no obvious evidence to indicate the influence by mariculture on other culture services (i.e. culture value and scientific value). On the other hand, as we have mentioned above, in order to to avoid double-counting, supporting services won't be valued. Therefore there are eight ecosystem seivices that should be addressed in this study, i.e. food production, material production, provision of genetic resources, oxygen production, climate regulation, waste treatment, biologial control and disturbance regulation which are affected by mariculture activities. Due to data limitation and difficulty in valuing some ecosystem seivices (e.g. provision of genetic resources, biological control and disturbance regulation), only four services (i.e. food production, oxygen production, climate regulation and waste treatment) will be considered here. In this study, we calculate the value of the above four affected ecosystem services in 1999, 2002 and 2003, and compare the differences among them.
3.3.1. Sanggou Bay is a typical mariculture bay which is situated in the Yellow Sea near Rongcheng city of Shangdong Province in China (37°01'–37°09'N, 122°24'–122°35'E). Sanggou Bay is a coastal embayment with 143.2 km2 water area and 20 km2 intertidal area. The annual average temperature is 10.90 °C and monthly precipitation is 68.02 mm and mainly in July and August. Mariculture is the dominant human activity in this bay, and the direct economic value of fishery production accounts for 65.29% of the whole ecosystem services value in 2004 (Shi et al., 2008). Nowadays, the main mariculture species include scallop, oyster, kelp etc. In 2004, the mariculture area reached 5964.8 ha, and the
Food production
According to the statistical data of fishery in Sanggou Bay (Ocean and Fishery Bureau of Rongcheng City, 2005) we calculate mariculture output net value in 1999, 2002 and 2003, which is shown in Fig. 1. So the value of food production service is 31.96 × 107 CNY in 1999, 54.15 × 107 CNY in 2002, and 59.47 ×107 CNY in 2003. There is an 86% increase in food production net value from 1999 to 2003. The net value of food production is 5.24 ×104 CNY/ha in 1999, 9.63 ×104 CNY/ha in 2002, and 10.22 ×104 CNY/ha in 2003. From Fig. 1, we can see that the net value of food production in 2002 and 2003 is obviously larger than that in
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Table 1 – General status of mariculture activities in Sanggou Bay Year
1999 Area (ha)
Yield (ton)
2000 Area (ha)
Yield (ton)
2001 Area (ha)
2002
Yield (ton)
2003
2004
Area (ha)
Yield (ton)
Area (ha)
Yield (ton)
Area (ha)
Yield (ton)
4160 704 704 51.2 5619.2
84,500 27,500 66,000 2400 180,400
4160 640 960 57.6 5817.6
84,500 25,000 90,000 2700 202,200
4160 128 1600 76.8 5964.8
84,500 4000 150,000 3600 242,100
Species Kelp Scallop Oyster Abalone Total
4160 1856 64 19.2 6099.2
84,500 72,500 6000 900 163,900
4160 1472 96 25.6 5753.6
84,500 56,000 9000 1200 15,0700
4160 1280 192 32 5664
84,500 50,000 18,000 1500 154,000
1999, but the mariculture area in 1999 is the largest, which indicate that the decrease of mariculture area don't cause the decrease of economic income, while the income increase a lot.
3.3.2.
Oxygen production
Oxygen production is finished by marine algae and plant through photosynthesis process. In Sanggou Bay, marine phytoplankton emits oxygen through photosynthesis process, in addition mariculture kelp emits large quantity of oxygen. To calculate oxygen quantity, primary production and kelp production should be identified, and then the quantity of oxygen can be calculated through equation of photosynthesis process. At the same time, the economic value of oxygen production can be obtained by multiplying the price of industrial oxygen, which is 400 CNY/ton at present (Pan et al., 2002). For the calculation of oxygen production in 1999, we choose the data surveyed by First Institute of Oceanography (FIO), State Oceanic Administration (SOA) from May in 1999 to April in 2000, and the survey result is that the primary production is 230 mg C/m2d in waters and 347 mg C/m2d in intertidal area. For the calculation of oxygen production in 2002 and 2003, we choose the data surveyed by FIO, from August in 2003 to May in 2004, and survey result is that primary production is 58 mg C/m2d. The final results are shown in Fig. 2.
3.3.3.
To estimate CO2 quantity fixed by phytoplankton in 1999, 2002 and 2003, we firstly choose the primary production surveyed by FIO, SOA beginning from May in 1999 to April in 2000, and from August in 2003 to May in 2004 (just as before). Then the fixed CO2 by phytoplankton can be obtained through equation of photosynthesis process. Shellfish can fix CO2 through two approaches: One is to predate phytoplankton, organic carbon granule, and then transform and fix C; the other is to absorb directly the HCO−3 from water. As for the first approach, because primary production has been included, second production won't be calculated repeatedly. Our paper would mainly consider the second approach, i.e. the absorption of HCO3. The equation is as follows: Ca2þ þ 2HCO 3 ¼ CaCO3 þ CO2 þ H2 O From the above equation, we can find that: at the time of depositing 1 mol CaCO3, 1 mol CO2 is liberated to the water. However, at the same time 2 mol HCO3 is absorbed; meanwhile, the decrease in concentration of HCO3 drives the same quantify (in mol) of CO2 entering the water from the atmosphere to balance the concentration of HCO3 in the ocean
Climate regulation
In ocean, algae may regulate climate through sequestering greenhouse gases, and slow the global warming. The benefit of fixing carbon in Sanggou Bay is mainly shown in two aspects: one is carbon fixed by phytoplankton and mariculture kelp, and the other is fixed by cultured shellfish.
Fig. 1 – Output value(food production net value) in Sanggou Bay (×107 CNY).
Fig. 2 – (a) Quantity of oxygen production (104 ton). (b) Value of oxygen production (107 CNY).
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Table 2 – Quantity of fixed CO2 and value of climate regulation Year
1999
2002
2003
Quantity of fixed CO2 (105 ton) Value of climate regulation (107 CNY)
1.55 5.26
1.20 4.07
1.26 4.27
surface. This effect is indirect as a contribution to remove CO2 from the atmosphere (Zhang et al., 2005a). It is very important to note that the carbon cycle in ocean is a very complex process and it has spatial heterogeneity. In our study, Sanggou Bay is a typical coastal mariculture bay where the carbon cycle process is not always same to that in open sea (Mann and Lazier, 1991). Through this equation, we can get the quantity of the fixed carbon by shellfish. And the fixed C can be eliminated from the water after the cultured shellfish are harvested. Based on the estimated quantity of total fixed carbon by phytoplankton and shellfish, the Sweden carbon tax rate can be used, which is 150 USD/tC (Ouyang et al., 2004), to calculate the value of climate regulation. The final results are shown in Table 2.
3.3.4.
Waste treatment
Ecosystems can be a source of impurities in fresh water but also can help to filter out and decompose organic wastes introduced into inland waters and coastal and marine ecosystems (MA, 2003). For the valuation of waste treatment, we choose the quantity of N and P fixed by phytoplankton and kelp. When conducting photosynthesis process, C, N and P are absorbed according to Redfield ratio, which is C:N:P = 106:16:1 (Redfield, 1958). Based on primary production in Sanggou Bay and Redfield ratio, we can calculate the quantity of N and P fixed by phytoplankton. For the quantity of N and P fixed by kelp, we obtain it according to the proportion of N and P in its issue. The proportion of N and P in kelp is respectively 4.818% and 0.322% (Huang et al., 2005). For the valuation of reducing N and P, the cost of effluent treatment is used, which is 1.5 CNY/ kg for N and 2.5 CNY/kg for P (Zhao, 1995). The calculation results are shown in Table 3.
4.
Result
In this study, we take 1999 as the baseline year and select the average value 5% of loan and deposit annual interests released by People's Bank of China from 1999 to 2004 as the discount rate (The People's Bank of China, 2006). Compared with 1999, the value of food production increased in 2002, so the benefits mainly refer to the increase of food production value. There is a decrease in the value of oxygen production, climate regulation
Table 3 – Value of waste treatment in Sanggou Bay Year
1999
2002
2003
Quantity of fixed N (ton) Quantity of fixed P (ton) Value of waste treatment (107 CNY)
6268 409 1.04
4593 305 0.77
4593 305 0.77
Table 4 – Result of benefit and cost analysis Year 8
NPV (10 CNY) BCR RC
2002
2003
1.12 4.11 4.60
1.33 4.59 6.10
and waste treatment, and so the costs mainly refer to the decrease of these three ecosystem services values. Finally, we can estimate that the benefit in 2002 is 1.48 × 108 CNY, and the cost is 0.36 × 108 CNY. The benefit in 2003 is 1.70 × 108 CNY, and the cost is 0.37 × 108 CNY. So the benefit and cost analysis results are shown in Table 4. From Table 4, we can see that both NPV N 0 and BCR N 1 in 2002 and 2003, which indicates that benefits outweigh costs, the mariculture mode in Sanggou Bay has been improved compared with that of 1999. The main reason is probably due to the change of the mariculture species. The area of mariculture species with high economic value, such as Abalone increases a lot. In addition, culture kelp plays a very important role in the process of purifying environment in Sanggou Bay. Some scientific mariculture technique is also used in the mariculture process, which reduces the damage to environment. So in the future we should make efforts to the improvement of the mariculture modes in Sanggou Bay from the following aspects: Increase the area of the mariculture species with high economic value, and correspondingly decrease the area of some other mariculture species, keep kelp mariculture and improve mariculture technique. And the NPV, BCR and RC in 2003 with the medium mariculture area are greater than that of 2002 with minimum mariculture area in Sanggou Bay. The most moderate mariculture mode is in 2003 with the mariculture 5619.2 ha. Too large or small mariculture area cannot bring the greatest ecosystem services value.
5.
Discussion
Benefit and cost analysis has been promoted as a democracy enhancing technology, and policymakers and consultants have promoted it as a tool for clarifying and rationalizing social choices and building consensus (Chestnut and Mills, 2005). Spurgeo (1998) studied the economic efficiency of coastal habitat rehabilitation and creation through developing a benefit to cost ratio (BCR) model in benefit and cost analysis (BCA). Hansjürgens (2004) discussed the possibilities and limitations of cost–benefit analysis (CBA), and concluded that “CBA is not only a mere mechanism of monetarisation, but a heuristic model for the whole process of valuation”. In this paper, an improved benefit and cost analysis model based on ecosystem services is developed. This model highlights the selection of decision-making criterion. Firstly, in this paper, the definition of benefit and cost are based on the marine ecosystem services, which take into account most of the benefits and costs (including both economic and ecological contribution and loss) generated by mariculture activities. For example, the increasing food production value indicates economic benefit, and the decrease value of some ecosystem
E CO L O G I CA L EC O NO M IC S 6 8 (2 0 0 9) 1 62 6–1 63 2
services is at the cost of affecting environment. On the other hand, the decision-making model modified in this paper is different from other studies combining NPV and BCR as one integrated index (RC). The decision-making method used in this model gives a way to balancing benefit and efficiency in resource exploitation and environment protection. Human well-being and progress toward sustainable development are vitally dependent upon the Earth's ecosystems. Changes in availability of all the ecosystem services can profoundly affect aspects of human well-being (Zheng et al., 2006). Humans are altering the capability of ecosystems to continue to provide many of these services while their demands for ecosystem services are growing rapidly. Management of this relationship is required to enhance the contribution of ecosystems to human well-being without affecting their long-term services-providing capacity (MA, 2003). In this paper, through benefit and cost analysis based on ecosystem services, the impact of mariculture activities on the marine ecosystem has been analyzed to identify the most moderate mariculture mode. In this paper, we take Sanggou Bay, a typical mariculture bay, as an example. We compared the different mariculture modes in 1999, 2002 and 2003, and analyzed why the mariculture mode was improved in 2003. From Fig. 1, we find that the net value of food production in 2002 and 2003 is obviously larger than that in 1999, but the mariculture area in 1999 is the largest, which indicate that the decrease of mariculture area don't cause the decrease of economic income, while the income increase a lot. The possible reasons for the above phenomena are as follows: one is that compared with 2002 and 2003, mariculture technique is poor in 1999; the other is that, in 2002 and 2003, the mariculture area of mariculture species with high value (e.g. the mariculture area of abalone) rose and then economic income increased. Benefit and cost analysis model provides decision-makers with an idea of how they should optimize the ecosystem services in Sanggou Bay. Finally, we find that benefit and cost analysis based on ecosystem services value analyzed in this paper provides a convenient and effective tool to compare different exploitation modes of marine ecosystem. When the benefit and efficiency are not accordant, identifying the optimal program is often very difficult. As an integrated index, Relative Coefficient (RC) developed in our BCA model is an important attempt of decision-making standard in BCA.
Acknowledgement This work is supported by the UNDP/GEF Yellow Sea Large Marine Ecosystem Project, National Basic Research Program of China (No. 2002CB412406), SOA-funded Program (No. 908-0204-03) and National Marine Public Welfare Project of China for Marine Biodiversity Conservation Research and Demonstration Based on Coastal Zone Integrated Management (No. 200705029). We would like to thank Prof. Dr. Xuelei Zhang for his help in data collection and useful comments on this paper. Great thanks also to Mr. Yihang Jiang and Mr. Isao Endo of UNDP/GEF Yellow Sea Large Marine Ecosystem Project Office. Without their help it is very difficult to complete this paper.
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We are very appreciable to three anonymous reviewers for their constructive comments as well.
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