Integrating values of ecosystem services into decision making in coastal management in Xiamen

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Integrating values of ecosystem services into decision making in coastal management in Xiamen Meina Su, Benrong Peng∗ Joint Key Laboratory of Coastal Study, Coastal and Ocean Management Institute, Xiamen University, Xiamen, Fujian, 361005, China

A R T I C LE I N FO

A B S T R A C T

Keywords: Integrated coastal management Value of ecosystem services Decision making Xiamen

This study presents three case studies of integrating coastal ecosystem services' value into decision making in Xiamen under the integrated coastal management (ICM) framework. Xiamen's experiences show that integrating the values of ecosystem services into decision making can harmonize coastal economic development, environmental protection, and local stakeholders' concerns regarding preserving the ecosystems they depend on. Scientists play a critical role in integrating the values of ecosystem services into decision making by convincing policymakers and concerned stakeholders that the benefits and costs of development and conservation of ecosystems are worthwhile. ICM also provides the required operational framework and policy mechanism for incorporating ecosystem services and their values into decision making, especially at times of market and institutional failures.

1. Introduction Human survival, economic prosperity, and overall quality of life of coastal populations depend on the goods and services the coastal and marine ecosystems provide. In addition to yielding the most basic necessities, such as food, materials and genetic resources, the coastal and marine ecosystems also provide essential services, such as water purification, air quality maintenance, climate control, and nutrient cycling, which are not replaceable at a reasonable price (WRI, 2001; Millennium Ecosystem Assessment, 2005a). Unfortunately, human activities are diminishing the capability of many coastal and marine ecosystems to continue providing these necessary goods and services (Burke et al., 2001). Rapid socioeconomic development in coastal regions, increased population, and associated pressures on the environment have led to a substantial loss of key coastal and marine habitats, continued degradation of water quality, and depletion of living resources. Globally, at least 35% of mangrove forests, 29% of seagrass beds, and 25% of saltmarsh have been lost since the 1940s due to coastal reclamation, engineering and urbanization, and eutrophication (VALIELA et al., 2001; Waycott et al., 2009; Duarte et al., 2008; Duarte, 2009). The oversupply of nitrogen, phosphorus, and other nutrients in coastal ecosystems is one of the most widespread pollution problems (Dennison, 2008). Reports of eutrophication in coastal areas has increased significantly since 1990 (UNEP, 2012). Additionally, 31.4% of

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assessed fish stocks were overfished and 58.1% were fully fished (FAO, 2016). In China, large-scale coastal development has caused the losses of almost half of its coastal wetlands and 73% of mangroves since the middle of the 20th century (SOA, 2003). Many economic and political factors are responsible for ecosystem damage, such as government policies, market forces, poverty, land tenure, and globalization of production and trade, and might influence how goods and services are extracted from coastal and marine ecosystems. The economic signals reflected in prices and government policies are one of the prime factors determining the treatment of ecosystems (Töpfer et al., 2000) and choices of consumption and production, which closely relate to the management of coastal and marine ecosystems. Notably, prices often send the wrong signals due to the special characteristics of coastal and marine ecosystems' services such as public goods. In most cases, prices do not reflect the real costs of harvesting ecosystem goods and services. Moreover, the less tangible services provided by the ecosystems are not bought or sold in the marketplace and therefore harder to assign value. The market fails to register the real worth of ecosystems’ services in its price system—a “market failure” (Pearce and Warford, 1993). The result is that most ecosystem services have been undervalued and have often been neglected in decision making pertaining to exploitation of the goods and services or alteration or depletion of the ecosystems (Alvarado and Toledo, 2017; Sathirathai, 1998; Foley et al., 2007; Millennium Ecosystem Assessment, 2005b).

Corresponding author. E-mail address: [email protected] (B. Peng).

https://doi.org/10.1016/j.ocecoaman.2018.08.024 Received 30 September 2017; Accepted 24 August 2018 0964-5691/ © 2018 Elsevier Ltd. All rights reserved.

Please cite this article as: Su, M., Ocean and Coastal Management, https://doi.org/10.1016/j.ocecoaman.2018.08.024

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2001). Consequently, the Marine Functional Zoning Scheme for Xiamen was established in 1997 (MFZ 1997) to minimize the conflicting uses of coastal and marine resources and improve the marine environment (Zheng et al., 2005; Fang et al., 2018). Under the MFZ 1997, the dominant function of the WSA was identified for the port and transportation, and tourism and protection of endangered species were delineated as secondary functions. However, most of the WSA sea areas were already densely covered by mariculture practices, which did not conform with the newly developed MFZ. As such, a suggestion of integrated treatment and development of WSA was proposed and presented to the mayor's office by the Ocean Management Office (OMO) of the Xiamen Municipal People's Government in 2001 (OMO, 2001). Next, a mayor's office meeting (MOM)1 was held to discuss and study the proposal of the OMO in the same year. The OMO was asked to develop the detailed program of integrated treatment and development of the WSA (PWAS) by this MOM.

The interest in valuing and integrating the values of ecosystem services into decision making to correct market failures and balance the economic development and environmental protection is increasing (Costanza et al., 1997; TEEB, 2010; Braat and de Groot, 2012; Costanza and Kubiszewski, 2012; White et al., 2012). Notably, a better accounting of all costs and benefits of ecosystem conversion would not necessarily mean that all values would be captured in decision making under current single-sector oriented management systems. The value of marine biodiversity, for example, is of little immediate import to an economic department trying to maximize profit, for example, fishery resource exploitation. Hence, a cross-sector platform to enable decision making across sectoral interests is necessary. Integrated coastal management (ICM) have been found to provide the required holistic, cross-sectoral planning and management platform and operating processes for sustainable development of coastal zones (Chua, 1998; Cicin-Sain and Knecht, 1998; O'Hagan and Ballinger, 2010; Sas et al., 2010; Portman et al., 2012). ICM is generally implemented at the local level in China, and approximately 20 coastal cities in nine coastal provinces have officially declared their adoption of the ICM framework: covering about 12% of China's coastline (Ye et al., 2015). This integrated approach is characterized by intergovernmental, inter-sectoral, land–sea, science–policy, and multiple-disciplinary integrations and enables governmental agencies to consider the values of ecosystem services when making decisions related to coastal and marine development, and conservation and habitat restoration (Fang et al., 2018). Many efforts have been made to mainstream the ecosystem service approach and incorporate the values of nature into decision making (Heather Ranganathan et al., 2008; Tallis and Polasky, 2009; Hancock, 2010; TEEB, 2010; Portman, 2013; Guerry et al., 2015); however, little attention has been paid to empirical studies on the process, mechanism, and enabling conditions that integrate values of ecosystem services into decision making in coastal management. This paper first presents three concrete examples of integrating the values of coastal ecosystem services into the decision-making process in Xiamen under the ICM framework. Next, we discuss the obstacles, their solutions, and the role of stakeholders in conserving the value of ecosystems. The conclusion is included in the last section.

2.1.1. PWSA scheme As the coordination agency of integrated ocean and coastal management in Xiamen, the OMO consulted the relevant stakeholders in the process of developing the PWAS. The consulted stakeholders include the relevant government agencies (e.g., land management, environmental protection, financial department, planning, port management, and tourism), governments of the related districts (e.g., Haicang, Jimei, and Huli), and the affected aquaculture farmers. The drafted scheme for the PWAS was distributed to the relevant departments for review. After several rounds of reviews and revisions, the final scheme that accommodated the concerns of each party was created (ECC, 2002). The identified management extent in the PWSA covers 77 km2 of marine areas and 60.7 km2 of the adjacent coastal land areas (Fig. 1) to ensure appropriate integration of land and sea area use management for achieving ecosystem-based management (ECC, 2002). Different from traditional single-sector oriented environmental management plans that focus only on environmental goals, the PWAS aims to balance regional economic development, environmental protection, and social equity. The planned key projects of the PWSA are listed in Table 1 and reflect multiple objectives: promoting the development of marine industries by resolving resource use conflicts, providing more space for urban development, improving the marine environmental quality by reducing the pollutants discharged into the seas, and restoring the damaged coastal ecosystem. Considering that implementing the PWSA would cause the displacement of thousands of fish farmers, a compensation policy was developed to compensate aquaculture farmers, who were the losers due to the implementation of the PWSA. The compensation scheme included policies to distribute cash subsidies, support rural economic development, create employment, and ensure the minimum living standard of the affected famers. Under the ICM institutional framework, an authoritative coordination mechanism, the leading group was established to coordinate the main actions of the PWSA. The executive vice mayor was appointed as the director of the leading group and was assisted by the two deputy mayors responsible for marine affairs and planning. A deputy director of the Xiamen People's Congress and a vice chairman of Xiamen Political Consultative Committee served as the deputy directors of the leading group. Other members included the directors of related governmental agencies and heads of the related districts (OMO, 2001).

2. Case studies in Xiamen As a coastal city, Xiamen's economic development and the wellbeing of its residents depend on its surrounding seas for natural resources, goods, and services. Deterioration and degradation of environmental and resource conditions resulting from the human activities have jeopardized the sustainable development of Xiamen. The implementation of an ICM program in Xiamen has significantly increased the annual socioeconomic benefit from its marine ecologic–economic system (Peng et al., 2006). ICM provides a mechanism for integrating the value of ecosystem services (VES) into policymaking. Additionally, the efforts of local and national academic communities have contributed significantly to research, information dissemination, and public education. These efforts provide information for policymakers and stakeholders of the VES which have been considered in several decision-making processes of the local government, as reflected in the following case studies. 2.1. Western Sea area initiatives The Western Sea Area (WSA) is in the center of Xiamen City (Fig. 1). As a result of rapid industrialization, urbanization, and population growth in this region, competing and conflicting uses of the coastal and marine space were severe among the users. In addition, large-scale land reclamation resulted in a 57.4% loss of sea areas and significantly altered the shoreline, polluted the coastal environment, seriously destroyed the natural ecosystems, and depleted tourism resources (OMO,

1 The mayor's office meeting (MOM) is a decision-making mechanism regarding pertinent issues of municipal government and chaired by the mayor or executive vice mayor. Heads of relevant governmental agencies attend the meeting.

2

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Fig. 1. Geographic extent of the PWSA and planed reclamation area (Extent of the PWSA is within the bold line area. WS1-WS7 are planned reclamation areas located in WSA, and the TB1 - TB8 are planned reclamation areas located in Tonag'an Bay). Table 1 Planned key projects of PWSA. Data source: ECC (2002). Projects

Integrated treatment and development of Maluan Bay

Restoration and development of mud flat

Restoration and development of shoreline

Construction of sewage plant and waste water collection system Relocation of mariculture practices

Goals of the projects

Estimated costs (RMB million)

● Dredging and opening the Maluan dam to improve the hydrological condition, increase the tidal influx, and then significantly improve the water quality of Maluan Bay; ● Enlarging the water area to 8 km2 from its current 3 km2; and ● Transforming the function of the Maluan Bay from a dominantly agricultural area into a subcenter of the city. ● Restoring the coastal ecosystem by replanting the mangroves; ● Increasing the space for tourism by enlarging the water area and restoring natural habitats of uninhabited island; and ● Creating more land for urban development through restrictive coastal reclamation. ● Increase the shoreline for harbors, ports, and tourism development by integrating and transforming extant shoreline use; and ● Restoring the seaside scenery and natural habitat restoration. ● Reducing the pollutant discharged into the Western Seas to improve its environmental quality. ● Removing floating fish cages and rafts for oyster and mussel culture in the area; ● Reducing use conflicts between shipping and mariculture practices; and ● Reducing pollution caused by these mariculture practices.

Total

3254.81

1964.13

852.04

1403.01 232.61

7706.6

costs by a task force from Xiamen University authorized by the OMO. The identified benefits and costs under three discount rate scenarios, namely, 2%, 4.5% and 8%,2 are presented in Table 2 (ERC, 2005). The benefits of the PWSA include economic and environmental benefits. The economic benefits were indicated by the increased net revenue of two promoted marine industries (port and shipping and

2.1.2. Benefit and cost analysis of the PWSA By achieving the objectives of the planned projects listed in Table 1, the PWSA could greatly promote the development of the port, shipping, and tourism industries, improve environmental quality, restore the coastal ecosystem, and create more and high-valued coastal land areas for urban development. On the other hand, these objectives would not be achieved without substantial financial investments. The static direct engineer costs peaked at RMB 7706.6 million, which should be covered by public fiscal funding (Table 1). Moreover, more than 17,000 fish farmers’ livelihoods would be affected by implementing the PWSA. A thorough benefit–cost analysis (BCA) was therefore conducted to determine if the benefits PWSA produced are in excess of the estimated

2 Discount rate 4.5% is set according to the interest rate of long-term treasury bonds. Discount rate 2% indicates the social discount and 8% of the market interest rate. High discount rate means putting low weight in the future payment and vice versa.

3

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Table 2 Benefits and Costs of the PWSAa (2002 RMB, million). Data source: ERC (2005). NO.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20)

Items

Benefits Economic benefit Port and shipping Tourism Land value Environmental benefit Pollution treatment Climate regulation Air quality maintenance Erosion protection Recreational value Amenity value Value of endangered species Total costs Cost of policy Engineering cost Compliance cost Social cost Net benefit non-incorporating the environmental benefit Net benefit incorporating the environmental benefit

Indicators

Discount rate scenarios

(2)+(6) (3)+(4)+(5) Increased net revenue Increased net revenue Value of created land (7)+(8)+……+(13) Increased carrying capacity and treatment costs Annual volume of sequestrated CO2 and rate of carbon tax Annual volume of emitted O2 and costs of O2 production Avoided area of land and value of land Travel cost and visit trips Increased property value due to improvement of environmental quality Willingness to pay for endangered species protection (15)+(16)+(17)+(18) Cost of policy development and implementation Engineering investment Loss of fishery industry Cost of unemployment (2)–(14) (1)–(14)

2%

4.50%

8%

16,135.49 9152.04 947.29 1897.31 6307.44 6983.45 228.73 388.47

12,745.91 7352.38 718 1437.99 5196.39 5393.53 173.62 294.88

9398.15 5519.44 501.86 1005.29 4012.29 3878.71 121.56 206.46

2730.83 2423.27 1212.15 9055.22 57.01 7029.96 1352.93 615.32 96.82 7080.27

2086.43 1918.49 920.11 8058.72 46.17 6290.72 1229.42 492.41 −706.34 4710.81

1475.79 1430.69 644.21 6921.08 35.98 5419.99 1088.16 376.95 −1401.64 2493.23

a This BCA analysis considers the benefits and costs of 20 years of the PWSA. The benefits and costs the occurred in different years are discounted to the year 2002 by using the discount rates 2%, 4.5%, and 8%, separately.

environmental benefits generated from the PWAS account for 40% of the total benefits, where is the money?3 To facilitate the understanding of the environmental benefits, scientists from the task force of the BCA project explained how people benefits from nature, the concepts of value and willingness to pay, and benefit through a simple example.4 Generally, the stakeholder could understand and accept the environmental benefits after inculcation and education regarding the VES. The PWAS, the results of the BCA, and the hearing were presented to the MOM specializing in the PWAS. Most of the attendants of the MOM agreed that the PWAS was desirable from the standpoint of society. The only argument was from the fiscal department: the comparability of the substantial expenditure (investment) and abstract environmental benefits of the PWAS. The task force explained that although the environmental benefits are abstract, they have value to society. Eventually, the PWSA was officially accepted by the government in this MOM, and the planned projects of PWSA were implemented. The acceptance and implementation of the PWSA was a clear indication that the VES had been integrated into the decision-making process by the policymakers in Xiamen. Although we could not find the post assessment of the PWSA, it was a successful story because most of the planned projects had been completed and major objectives achieved. Moreover, the experiences of PWSA have been replicated by other sea areas in Xiamen and other coastal cities in China. Programs of integrated treatment and development of Wuyuan Bay and Tong'an Bay were initiated in 2005 and 2008, respectively. Successful implementation of the PWSA and replications of similar approaches indicate that the VES has been considered in policymaking in Xiamen, reflecting the recognition of the importance of

coastal tourism) and values of created coastal land. The environmental benefits were indicated by increased VES due to implementation of the PWSA. The identified ecosystems’ services included regulatory services such as pollution control, climate regulation, and erosion protection; culture services such as recreation, amenity, and non-use value such as endangered species. The identified costs of the PWSA include policy development and implementation, engineering, compliance, indicated by the loss of fishery industry caused by the PWSA, and social costs, indicated by the cost of unemployment. Table 2 reports the present values of the net benefits (NPV) of two scenarios, incorporating environmental benefits and non-incorporating environmental benefits. If environmental benefits were not included in the BCA, the net benefits of the PWSA, that is, the difference between the economic benefits and total costs, is −1.4 billion with discount rate of 8%, which is less than 0. Even with a relatively low discount rate of 4.5%, the net benefits remain negative (−0.71 billion) (column 19, Table 2). The PWSA would not pass the BCA test, that is, the PWSA will neither be accepted nor implemented. If environmental benefits are incorporated in the BCA, the net benefits of the PWSA under different discount rate scenarios are 7.01, 4.71, and 2.49 billion, separately (column 20, Table 2), that is, the PWSA would pass the BCA test and the government should probably accept the PWSA. 2.1.3. Acceptance of PWAS The analysis can determine whether the policy makers would accept the PWAS, dependent on whether they would integrate the VES into decision making. Policymakers found it difficult to include environmental considerations for long-term societal benefits instead of shortterm economic gains because their term of office was short. To understand the stakeholders’ opinion regarding the PWAS, the OMO held several hearings. The results of the BCA were presented to the public, participants of the meetings, experts, and officials of relevant governmental agencies. In the hearing, the most disputed question was regarding the environmental benefits generated by the PWAS. Initially, it was difficult for the stakeholders to understand the ecosystem services and their values, especially the less tangible services, such as climate regulation and value of endangered species. For example, the two most frequently asked questions were: How can you justify and visualize the benefits from ecosystem restoration? and If the

3

Fortunately, one of authors of this paper participated in the whole process of the decision making, including the conduction of BCA, hearings, and the MOM about the PWAS. 4 In one of the hearings, the scientist explained the VES taking the Chinese white dolphin (CWD), an endangered species in Xiamen, as an example. Firstly, the scientist introduced the CWD and their endangered status, and then asked participants if they were willing to pay (WTP) for the protection of the CWD, and how much if the answer is yes. After calculating the average WTP and total WTP of the participants, the scientist explained that the value of CWD to the participants is their total WTP. 4

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Bureau (OFB) to determine an optimal reclamation scheme to balance socioeconomic development and marine environmental protection.

environmental protection in economic development. More importantly, the reliability of the information provided and political will in pursuing long-term sustainable development are essential. These enable decisionmakers to adopt the PWSA and other related programs; however, policy and social acceptance of the projects can only build on scientific and systematic accounting of the benefits and costs of conservation and protection programs as well as understanding and acceptance of the values by the decision-makers, which is a difficult and long-term undertaking.

2.2.1. Optimal reclamation scheme A study on optimal reclamation scheme, that is, determining the total allowable areas for coastal reclamation (TAACR) in the WSA and Tong'an Bay, was conducted by a research team commissioned by the MEG and OFB (FMI and SKLMES, 2006). A nonlinear program model was established to estimate the TAACR. The basic idea of the model is that the net benefits, that is, the difference between the benefits and costs of coastal reclamation, should be maximized and subject to a set of constraints such as scale constraint and no net loss of key coastal ecosystems. A linear benefit function of reclamation was established based on weighted average prices for the planning reclamation areas. Four cost functions of reclamation, namely, engineering cost, increased dredging cost, damage to ecosystem services, and reduced value of environmental carrying capacity, were considered in the model (FMI and SKLMES, 2006; Peng et al., 2013). The inclusion of damage to ecosystem services and reduced value of environmental carrying capacity indicates that the VES has been integrated into the optimal reclamation scheme. The research team reported the TAACR schemes of considering and non-considering the VES. In the schemes of considering the VES, the TAACR of three discount rate scenarios, namely, 2%, 4.5%, and 8%, were estimated (Table 3). As shown in Table 3, if the VES is not considered, the TAACR is 19.63 km2, which is equal to the proposed reclamation areas because the value of created land was greater than the engineering costs of reclamation. If the VES is considered, the TAACR is 6.57 km2, at a discount rate of 4.5%, and only 33.48% of the total proposed reclamation area, suggesting that the proposed reclamation plan is economically inefficient from the standpoint of the society. Under a low discount rate of 2%, the optimal reclamation area is zero. Even with a high discount rate of 8%, the optimal reclamation area is 9.47 km2, approximately half of the proposed reclamation area.

2.2. Coastal reclamation plan The population of Xiamen increased to approximately 4 million in 2016 from 2 million in 2006. Similar to other coastal areas with high population density, Xiamen used the coastal reclamation as the solution to ease the pressure of the deficit of space. The areas of coastal reclamation were 128.72 km2 from 1950s to 2005, which led to decreases in the sea areas of the Western Seas and Tong'an Bay by 58% and 27%, respectively (Zhang et al., 2008; Peng et al., 2013). Large-scale coastal reclamation caused the disappearance of 90% of the natural mangroves and the destruction and alteration of natural habitats, damaging the functional capacity of coastal ecosystems to provide goods and services that the residents of Xiamen traditionally depended on. In 2006, a coastal reclamation plan of 20 km2 was proposed by the land planning department to accommodate the demands for space arising from rapid economic development, population growth, and coastal urbanization. Under the plan, eight planned areas to be reclaimed in Tong'an Bay (TB1–TB8 in Fig. 1) represented a total of 15.22 km2 (16.33% of the current bay area), and seven planned areas to be reclaimed in the WSAs (WS1–WS7 in Fig. 1) represented a total of 4.41 km2 (9.71% of the current sea area) (Fig. 1 and Table 3). The proposed reclaimed areas were intended for industrial, urban, and infrastructure development. The new proposed reclamation plan created great concern among scientists, policymakers, and the general public, especially the marine experts group (MEG), which was established by the Xiamen Municipal People's Government (XMPG) to provide scientific support for ICM. The MEG expressed their concerns to the government that the proposed reclamation plan would exacerbate the extant environmental problems in the WAS and Tong'an Bay. To address the concerns of stakeholders, the mayor's office required the MEG and Xiamen Ocean and Fisheries

2.2.2. Accepted coastal reclamation plan After passing the reviews of the MEG and relevant governmental agencies, such as the planning, agriculture, environmental protection, land, and fiscal departments, the results were presented to the mayor's office at the end of 2006. The suggested reclamation area was 6.57 km2, which was the result at discount rate of 4.5%. In the MOM specialized in the optimal reclamation scheme, all the attendants agreed that VES should be considered in the coastal reclamation scheme, and none argued about the VES; this result revealed that the decision-makers have understood and accepted the VES. Although the final decided reclamation area was 10 km2, which was similar to the result at discount rate of 8% (9.47 km2), it is logical to argue that the VES had been integrated into the decision making. As aforementioned, the proposed reclamation area of 19.63 km2 would be accepted by the government if the VES were not considered. The second conclusion drawn from this case study is that policy makers tend to choose the market interest rate as a discount rate, indicating that the policymakers generally put low weight on the future environmental benefit in this period.

Table 3 Optimal reclamation area and location. Data source: Peng et al. (2013) and FMI and SKLMES (2006). Location

Proposed reclamation area (hm2)

TACCR (hm2) Non-considering VES

TB1 TB2 TB3 TB4 TB5 TB6 TB7 TB8 Sub-total WS1 WS2 WS3 WS4 WS5 WS6 WS7 Sub-total Total

16 115 213 59 429 84 161 445 1522 48 147 22 44 114 39 27 441 1963

16 115 213 59 429 84 161 445 1522 48 147 22 44 114 39 27 441 1963

Considering VES 4.50%

8%

2%

16 81.22 81.22 59 97.01 84 149.4 0 567.85 0 8.6 19.07 13.46 7.85 13.46 27 89.44 657.29

16 115 160.9 59 193.52 84 161 0 789.42 0 23 22 31.86 22.25 31.86 27 157.97 947.39

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2.3. Marine ecological damage compensation of sea area use The interest in marine ecological damage compensation (MEDC), an economic incentive of ocean and coastal environmental management in China, has been increasing (SOA, 2009; CCICED, 2007; Peng et al., 2011). MEDC is a mechanism to internalize the externalities resulting from ocean use activities that negatively affect the marine environment and natural resources by making users of sea areas pay for the full costs, including damages to the coastal ecosystems’ services. Current law, for example, Article 89 of the Marine Environmental Protection Law of People Republic of China, regulates ecological damage compensation caused by 5

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2.3.2. Acceptance of the MEDC scheme The MEDC scheme was submitted to the related governmental agencies and sea area users for review in August 2017. Most of the involved stakeholders agreed that implementing the MEDC regime is necessary to protect the coastal ecosystems. One of the arguments is about the double charges. Some agencies and ocean users argue that users have already paid the sea area using fees when they received the right to use the sea area. However, the user fees are designed to recover the resource rents generated from sea area usage (like a land rent) and do not reflect damage to the ecosystem. The other concern is about the increasing the financial burden of firms resulting from the implementation of MEDC regime, which is related to the compensation standard, especially the lump-sum compensation. A MOM was held to discuss compensation standards at the end of 2017 and the following occurred during the meeting. The attendants understood the difference between the sea area user fees and ecological damage after the explanation from the research team. The discussions focused on the lump-sum compensation standard: the standard of 8% was considered too low but 4.5% was too high. The research team was asked to calculate the compensation standards of discount rates between 4.5% and 8% and send them back to be put on the agenda for the coming MOM for decision making. Eventually, the MEDC scheme included a compensation standard, that is, a 6% discount rate was accepted in a MOM held in June of 2018. The acceptance of the MEDC scheme illustrates that the VES has been integrated into the decision-making process because the basis of the compensation is VES. Compared with the case of coastal reclamation plan which accepting the scheme of discount rate of 8% (section 2.2.2), policymakers accept the scheme of 6% in this case, indicating that policymakers are paying increasing attention to the environment and ecosystems when making decisions.

wrongful or unlawful acts, such as pollution-related accidents and destruction of marine ecosystems and resources or marine protected areas. By contrast, the ecological damages caused by regular or routine ocean use activities, such as aquaculture, sea bridges, and anchorage facilities, have received scant attention. That is, under the current management system, damage to marine ecosystems associated with approved ocean use activities are often excluded from compensation considerations. These damages are typically long lasting and have considerable cumulative effects on marine habitats and the environment. Under these circumstances, the XMPG called for establishing the MEDC system in the Strategic Action Plan of Second Round of ICM in Xiamen in 2005 (GOXMPG, 2005). In 2010, the Xiamen People's Congress promulgated Several Regulations of Marine Environmental Protection, and Article 18 stipulates the compensation regime for marine ecological damage resulting from regular sea area uses.

2.3.1. Implementation scheme of the MEDC To facilitate the implementation of the MEDC regime, an implementation scheme of MEDC, including a compensation standard (MEDC scheme) was developed by a research team commissioned by the OFB in 2012 (COMI, 2012; Rao et al., 2014). But the MEDC scheme has not been on the agenda of the XMPG. In 2017, however, the XMPG listed the implementation of MEDC regime in its work plan and required the OFB, the agency responsible for implementing the MEDC scheme, to create the MEDC scheme and compensation standard (GOXMPG, 2017). The research team revised the MEDC scheme and reestimated the compensation standard in 2017 (COMI, 2017). The revised MEDC scheme sets two types of compensation approaches: economic value-based compensation and restoration-based compensation. For small scale sea area use projects, the users of marine space provide financial compensation equals in amount to economic value of the injured coastal ecosystem services. For large-scale sea area use projects,5 the users of marine space should restore the damaged coastal ecosystems to the former or baseline status, or undertake the cost of restoration (i.e., compensate the ecological damage through restoring the damaged ecosystems and their services). A restorationbased compensation approach could address the challenges due to the insufficient understanding of nonlinear interactions in the natural systems and ecological thresholds. The MEDC scheme also stipulates that compensation payments will be used for ecosystem restoration and protection in the same region. Regarding the economic value-based compensation approach, the research team developed a compensation standard based on the unit values of costal ecosystem services and severity of damage of different ocean use types to different ecosystems’ services. Under the standard, the sea areas of Xiamen are divided into 15 eco-zones according to natural conditions, key habitats, natural resources, unique ecological components (e.g., endangered and threatened species), and management tradition (e.g., protected areas) to address the spatial heterogeneity of ecosystems, services, and their values (Fig. 2). The ocean use activities are categorized into ten types to address the variety of severity of damage to the marine ecosystem services of the ocean uses types (Tables 4 and 5). The research team calculated the annual compensation standards of five ocean use types, harbor and anchorage, shipping channel, seaside resort, intake and outfall, and temporary sea area use in each eco-zone (Table 4). To obtain quickly the funds for restoration, lump-sum compensations of different discount rates were computed for coastal reclamation and stationary structures, such as impermeable structures, sea bridges, and submarine pipelines (Table 5).

3. Discussion The interest in valuing and integrating VES into decision making to harmonize economic development and environmental protection and correct market failures has been increasing (Costanza et al., 1997; Ranganathan et al., 2008; Tallis and Polasky, 2009; TEEB, 2010; Braat and de Groot, 2012; Costanza and Kubiszewski, 2012; White et al., 2012; Guerry et al., 2015). Scientists, policymakers, and activists have promoted the ecosystem services approach as a means of conveying the extent of threats to natural ecosystems with the goal of crafting socially acceptable and effective policy to address ecological threats and biodiversity conservation (Millennium Ecosystem Assessment, 2005b; Ranganathan et al., 2008; Hancock, 2010; Portman, 2013). However, improved accounting of all the costs and benefits of ecosystem conversion would not necessarily mean that the VES would be captured in the decision-making process. The institutional arrangement that makes the policymakers consider the VES when making decisions related to the coastal development and protection is required. As a dynamic, holistic, and adaptive process aiming to achieve sustainable use, development, and protection of coastal and marine areas and resources, ICM provides an opportunity for policymakers to consider the economic and environmental benefits of ecosystem conversion projects, simultaneously. The presented case studies have demonstrated the complexities in decision making regarding achieving the best economic use of coastal areas with minimal damage to the ecosystems and the imposition of ecological compensation for restoration. The PWSA is an integrated plan that aims to balance regional economic development and environmental protection. A substantial amount of public financial investment was involved to implement this plan. Greater than 40% of the benefits produced by this plan are environmental benefits. As indicated in section 2.2, the economic benefits are much less than that of the costs and the sum of the economic and environmental benefits outweighs the financial investment. Under this

5 Large scale is defined as: > 10 ha for land reclamation, > 50 ha for exclusive uses (e.g., harbor, aquaculture, and salt making), and > 100 ha for other uses.

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Fig. 2. Eco-zones of the MEDC scheme (Totally 15 eco-zones are identified. ES1 and ES2 are eco-zones located in Estuary sea area; WSA1-WSA4 are eco-zones located in Western sea areas; TB1 to TB4 are eco-zones located in Tong'an Bay; DS1 and DS2 are eco-zones located in Dadeng sea area; and ESS1-ESS3 are eco-zones located in Eastern and Southern Sea Area). Table 4 Annual compensation standard (yuan/m2.yr). Data source: COMI, 2017. Sea Area

Eco-zonea

Harbor/anchorage

Shipping channel

Seaside resort

Intake/outfall

Temporary use

Western Sea Area

WSA1 WSA2 WSA3 WSA4 ESS1 ESS2 ESS3 TB1 TB2 TB3 TB4 ES1 ES2 DS1 DS2

1.75 1.25 1.50 0.75 2.25 2.25 1.00 1.50 1.00 2.00 0.50 1.50 0.50 1.00 0.25

1.50 1.00 1.25 1.00 2.50 2.00 1.00 1.25 1.00 1.75 0.75 1.00 1.00 0.75 0.50

1.00 1.00 1.00 0.75 0.75 0.75 0.75 0.75 0.75 1.00 0.75 1.00 0.75 0.75 0.50

2.00 1.50 1.75 1.25 2.00 1.75 1.25 1.75 1.25 2.00 1.00 1.50 1.25 1.00 1.00

1.50 1.25 1.50 1.00 2.25 2.00 1.00 1.50 1.00 1.75 0.75 1.25 1.00 1.00 0.50

Eastern and Southern Sea Area

Tong'an Bay

Estuary Sea Area Dadeng Sea Area

a

Location of each eco-zone is shown in Fig. 2.

not undertaken. The final decision that incorporates VES in the coastal reclamation plan has resulted in a drastic reduction of the area for reclamation, fully reflecting the importance given by the policymakers and economic managers to the protection of ecosystem services. It must be noted that the final accepted reclamation areas were slightly larger than the suggested areas calculated according to the low discount rate. Thus, convincing the policy makers to put more weight on the VES is urgent. The MEDC is an economic incentive of coastal management proactively employed by the policymakers in Xiamen. Different from the two aforementioned plans that essentially involve scientists and officials, the MEDC of sea area use affects the interests of many ocean users. The concerns regarding the financial burdens of firms and double charges

circumstance, the decision-makers could still accept and implement the plan, indicating that the VES were included in the decision making. However, during the decision-making process, a satisfactory understanding of the VES by the concerned policymakers and government officials is critical to the acceptance of the plan. Policy makers can easily understand the benefits from economic sectors but must understand and be convinced how environmental protection and conservation could yield tangible and nontangible environmental benefits in the long term. The PWSA fully demonstrates the strong buy-ins from the decision makers. The coastal reclamation plan focuses on the optimal scale and location of reclamation; notably, a comprehensive consideration of socioeconomic development and environmental protection was initially

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Table 5 Lump-sum compensation standard (yuan/m2). Data source: COMI, 2017. Sea area

Eco-zone

Coastal reclamationa

Impermeable structureb

permeable structureb

Sea bridgeb

WSA1 WSA2 WSA3 WSA4 ESS1 ESS2 ESS3 TB1 TB2 TB3 TB4 ES1 ES2 DS1 DS2

4.5% 530 430 480 220 600 650 280 490 370 590 200 450 220 300 140

4.5% 165 145 155 90 155 170 100 150 120 180 80 145 90 100 60

4.5% 70 60 60 40 75 80 45 60 45 85 35 60 35 40 25

4.5% 50 40 40 20 55 60 30 40 30 55 20 40 20 25 15

Western Sea Area

Eastern and Southern Sea Area Tong'an Bay

Estuary Sea Area Dadeng Sea Area

6% 400 320 360 170 450 480 210 370 280 440 150 340 160 230 110

8% 300 240 270 130 340 360 160 280 210 330 110 260 120 170 80

6% 130 115 120 70 125 140 80 120 95 145 60 115 70 80 50

8% 100 90 95 55 95 105 60 95 75 110 50 90 55 60 35

6% 55 50 50 30 60 65 35 50 35 65 25 50 30 30 20

8% 40 40 40 25 45 50 30 40 30 50 20 40 20 25 15

6% 40 30 30 20 45 45 20 35 25 45 15 30 15 20 10

Submarine pipeline/tunnelb 8% 30 25 25 15 35 35 20 25 20 35 10 25 10 15 10

4.5% 8.00 6.00 6.50 5.00 9.50 9.25 6.25 6.75 4.25 9.50 4.25 5.75 4.50 4.00 3.00

6% 7.25 5.50 6.00 4.25 8.50 8.50 5.75 6.00 4.00 8.75 4.00 5.00 4.00 3.50 3.00

8% 6.25 4.75 5.00 4.00 7.50 7.50 5.00 5.50 3.50 7.75 3.50 4.50 3.50 3.00 2.50

Notes. a Lump-sum payment calculated as the annual value divided by the discount rate (4.5%, 6%, and 8%). b Lump-sum payment calculated using formula of present value with the statutory maximum life of stationary structures (50 years) and discount rate (4.5%, 6%, and 8%).

Third, ICM is an effective mechanism to integrate the VES into decision making. Single-sector oriented management systems only consider one or a few aspects of societal needs due to its inherent fragmented characteristic. As a dynamic, holistic, and adaptive process aiming to achieve sustainable use, development, and protection of coastal and marine areas and resources, ICM provides a framework and mechanism for considering multiple objectives of the society including marine environmental protection. In Xiamen, the PWAS and optimal reclamation scheme considered the economic and environmental objectives under ICM framework. The MECD regime was initially proposed in a strategic action plan of ICM and promoted under ICM initiatives (section 2.2). Fourth, interdisciplinary experts are vital to integrating VES into decision making. Assessment of the values of ecosystem services, accounting for the benefits and costs of development and conservation of ecosystems, and translating these information that could be understood by the stakeholders are the premise of integrating VES into decision making. All these factors require the cooperation of scientists from multiple disciplines. Finally, the science–policy integrated platform can facilitate the adoption of ecosystem services’ value-based management programs. With this platform, scientists, decision-makers, and other stakeholders can share and exchange the information and experiences of successful ocean and coastal management. Moreover, the dialogue in the platform could instill and enhance the understanding and acceptance of the value of ecosystem services.

(section 2.3) indicate that the concerned stakeholders must be involved in the development and implementation of the initiative. That the stakeholders have accepted the idea of the MEDC and responsible parties’ compensation for the ecological damages resulting from their activities indicates that local stakeholders have recognized the values of ecosystem services. One major step toward progress in the MEDC is that the decision-makers have adopted the restoration-based compensation approach for large-scale ocean use. The example cases occurred in different time periods, we can observe that the stakeholders’ understanding and acceptance degree of the VES are progressing. In the case of the PWAS, there were many doubts about the environmental benefits but there were no arguments about the VES and incorporating the VES into decision making in the latter two cases. Moreover, the decision-makers in Xiamen tend to place a higher weight on the VES than that of their predecessors regarding the choices of the discount rates in the case of the coastal reclamation plan and MEDC standard. 4. Conclusion This paper presents three concrete case studies of integrating the VES into decision making in Xiamen under ICM. From the analysis regarding the decision-making process that integrates the VES into decision making, we conclude the following. First, local stakeholders have the great incentive to preserve the ecosystems they depend on. As services provided by local ecosystems are enjoyed locally, the local inhabitants would suffer most when these benefits are lost. However, as the market for ecosystem goods is becoming increasingly global, outside economic and political factors might influence local policies’ treatment of ecosystems. As reflected in three cases, local stakeholders are taking initiative to protect and conserve ecosystems by integrating the VES into coastal development plans and by imposing damage compensation. Providing information to the local stakeholders about the VES would inspire them to protect and conserve the ecosystems well. Second, integrating the VES into decision making is an efficient and effective solution to harmonize and sustain socioeconomic development and environmental protection as reflected in the development and implementation of the PWSA and coastal reclamation plan. If the VES is not considered, the PWAS that generating substantial environmental benefits would not be accepted and implemented, and the reclamation areas would be larger than the socially efficient reclamation level.

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