The Economic Value of Coral Reefs

by Kimberly Coombs

Coral reefs are known for supporting a habitat rich in species diversity and abundance. Besides the benefit coral reefs provide to other species, they also offer a benefit to humans. Coral reefs provide a source of economic gain in terms of tourism and fisheries, usually bringing in about $30 billion each year. However, climate change is threatening to diminish this revenue as corals become bleached and experience higher rates of mortality.

Chen et al. (2015) conducted a study to estimate the global economic impact from loss of corals as a result of climate change. They identified three main factors from climate change that impact coral reefs the most: sea surface temperatures, CO2 concentrations in the water, and sea level rise. In order to assess the impact of these factors on coral reefs, Chen et al. used a threshold model in which they found that there are two temperature thresholds that may negatively impact coral reefs. When sea surface temperatures are between 22.37 and 26.85, coral cover may increase; conversely, when sea surface temperatures drop below 22.37 or rise above 26.85, coral cover decreases. Chen et al. found that increasing CO2 concentrations also cause a decrease in coral cover, while sea level fluctuations were found to have no significant effect.

In order to evaluate the value of coral reefs, Chen et al. used a meta-analysis that incorporated the percent coral cover, number of visitors to the reefs, GDP per capita, and the tourism expenditure for each visitor. They found that when coral cover decreased, reef value was reduced. The number of visitors correlates negatively with coral reef value because visitors prefer to visit uncrowded coral reefs. The GDP per capita and the tourism expenditure for each visitor were found to have positive effects on coral reef value.

Lastly, Chen et al. developed four different mitigation scenarios in response to climate change to evaluate coral reef value. The impact of these different mitigation scenarios on tourism and recreation revenue varies as coral cover varies under these scenarios. The economic loss ranges from $1.88 billion to $12.02 billion by the year 2100. Chen et al. noted that this result only represents the coral reef value from tourism and recreation and that there are many other factors that will be impacted by a decline in coral cover; therefore, they create a crude economic loss estimate under these four mitigation scenarios that ranges from $3.72 billion to $23.78 billion.

Overall, CO2 and sea surface temperatures will affect coral cover, which will reduce the coral reef value. A reduction in coral reef value reduces the recreation and tourism expenditures amongst other factors; therefore, ensuring coral cover remains high will give a higher guarantee that recreation, tourism.

Chen, P., Chen, C., Chu, L., McCarl, B., 2015. Evaluating the economic damage of climate change on global coral reefs. Global Environmental Change, 30, 12-20.

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