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METHODOLOGY
INT
REVIVING THE WESTERN INDIAN OCEAN ECONOMY:Actions for a Sustainable Future
BCG ECONOMIC VALUATION:METHODOLOGY AND SOURCES
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Frontcover Atraditionalfisherwomangleansforoctopusonavastreef flatduringlowtide.Octopusfishingisasourceoffoodand livelihoodformanycommunitiesacrosstheWesternIndianOcean.©GarthCripps TheBostonConsultingGroup(BCG)isaglobalmanagementconsultingfirmandtheworld’sleadingadvisoronbusinessstrategy.Wepartnerwithclientsfromtheprivate,public,andnot-for-profitsectorsinallregionstoidentifytheirhighest-valueopportunities,addresstheirmostcriticalchallenges,andtransformtheirenterprises.Ourcustomizedapproachcombinesdeepinsightintothedynamicsofcompaniesandmarketswithclosecollaborationatalllevelsoftheclientorganization.Thisensuresthatourclientsachievesustainablecompetitiveadvantage,buildmorecapableorganizations,andsecurelastingresults.Foundedin1963,BCGisaprivatecompanywith85officesin48countries.Formoreinformation,pleasevisitbcg.comWWFisoneoftheworld’slargestandmostexperiencedindependentconservationorganizations,withover5millionsupportersandaglobalnetworkactiveinmorethan100countries. WWF’smissionistostopthedegradationoftheplanet’snaturalenvironmentandtobuildafutureinwhichhumansliveinharmonywithnature,byconservingtheworld’sbiologicaldiversity,ensuringthattheuseofrenewablenaturalresourcesissustainable,andpromotingthereductionofpollutionandwastefulconsumption.ISBN978-2-940529-51-3Citationofthismethodologydocument:WWF.2016.BCGEconomicValuation:MethodologyandSources.RevivingtheWesternIndianOceanEconomy:ActionsforaSustainableFuture.WWFInternational,Gland,Switzerland.24pp.
Forallreferencesanddetails,pleaserefertothemainreportavailableatocean.panda.org.TheBostonConsultingGroup:MartySmits,TazChaudhry,JenMcPhillips,DouglasBeal,CamilleAstierLeadauthorofthemainreport:Dr.DavidObura,CORDIOEastAfricaP.O.BOX10135Mombasa80101,KenyaEditor-in-chief:JohnTanzerManagingeditor:PaulGamblinContributingeditors:ValerieBurgener,SianOwen,AimeeGonzalesDesign/layout:StefaneMauris AWWFInternationalproductionThedesignationofgeographicalentitiesinthisreport,andthepresentationofthematerial,donotimplytheexpressionofanyopinionwhatsoeveronthepartofWWFconcerningthelegalstatusofanycountry,territory,orarea,orofitsauthorities,orconcerningthedelimitationofitsfrontiersorboundaries.PublishedinNovember2016byWWF–WorldWideFundForNature(FormerlyWorldWildlifeFund),Gland,Switzerland.Anyreproductioninfullorinpartmustmentionthetitle,theleadauthor,andcredittheabove-mentionedpublisherasthecopyrightowner.©Text2016WWF.Allrightsreserved
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Contents Ocean annual income and asset-valuation methodology & sources ............................................................... 4
Terminology .................................................................................................................................................... 5Total Western Indian Ocean “shared wealth fund” by asset categories.......................................................... 6
Annual Value Generated from the Western Indian Ocean's economy.......................................................... 14Ocean related activities grouped into 4 primary categories .......................................................................... 15
• Direct output of the ocean ................................................................................................................. 16
• Direct services enabled by of the ocean ............................................................................................ 18
• Adjacent benefits of the ocean .......................................................................................................... 21
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Oceanannualincomeandasset-valuationmethodology&sources
ThismethodologydocumentproducedbytheBostonConsultingGroup(BCG)providessupplementalinformationtothediscussionsoneconomicvalueinpart1ofthereportRevivingtheWesternIndianOceanEconomy:ActionsforaSustainableFutureandillustratedbyFigure1ofthesamereport(pp16-17).Theassumptions,analysisanddatasourcesthatinformtheWesternIndianOcean'sannualcontribution(“grossmarineproduct”)andasset-valuation(“sharedwealthfund”)areoutlinedinthismethodologydocument.BCG’sintentwastotriangulateacrossandrefineexistingprimaryresearchattheregionalscale,adaptedfromthemethodologyusedintheglobalreport,RevivingtheOceanEconomy:Thecaseforaction–2015,publishedbyWWFInternational.Thefullreportcanbefoundatocean.panda.org.TheanalysesarepartlybasedoninformationthathasnotbeengeneratedbyBCGandhasnot,therefore,beenfullyverified.Theinformation,opinionsandanalysescontainedherearebasedonsourcesbelievedtobereliableandcomprehensivebutnorepresentation,expressedorimplied,ismadeastotheaccuracy,completenessorcorrectnessoftheoriginalmethodsusedtogathertheprimarydata.Furthermore,theanalysesandconclusionscontainedinthisdocumentarebasedonvariousassumptionsthatBCGhasdevelopedregardingeconomicgrowth,andthecurrentandfuturestateoftheocean(baseduponfactorsandeventsthataresubjecttouncertainty).Ofcourse,futureresultsornetpresentvalues(NPV)derivedfromforecastedresultscouldthusbemateriallydifferent.
Wewelcomeconstructivecommentsandcontributions(publishedregionaleconomicvaluationpapersregionalvaluationreferences)tohelpimprovetheeconomicanalysisfurther.Wecanalsosharethespreadsheetwhichcontainsourcalculations,uponrequest.
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Terminology
Whatisthe“grossmarineproduct”andhowdoesitrelatetogrossdomesticproduct?Followingthesameapproachastheglobalreport,thisregionalreportintroducesthemeasurement“grossmarineproduct”(GMP)toallowcomparisontothenationaleconomiesintheWesternIndianOceanregion.Asgrossdomesticproduct(GDP)measuresthetotaldollarvalueofgoodsandservicesproducedbyacountryinayear,GMPisthevalueoftheannualeconomicoutputoftheWesternIndianOcean.BCG’seconomicanalysisoffersaconservativeestimateofUS$20.8billionfortheWesternIndianOcean’sGMPTheGDPofacountrycomprisesthesumofvalue-addedbyeachindustry,wherebyoutputisadjustedforintermediateinputsfromotherindustries.GMPdirectlycalculatestheoutputofmarine-relatedindustries.Whatisanocean“sharedwealthfund”?Theocean“sharedwealthfund”leveragestheanalogymadeintheRevivingtheOceanEconomy:Thecaseforaction–2015report.The“sharedwealthfund”isanattempttocalculatethetotalassetbaseoftheoceanintheWesternIndianOceanregion,fromwhichannualeconomicproduction(i.e.theGMP)isdrawn.ForthemarineassetsoftheWesternIndianOcean,thishasbeenconservativelyestimatedatUS$333.8billion.
Whatisthedifferencebetweentheocean“sharedwealthfund"andthe"grossmarineproduct"?
Theocean“sharedwealthfund"istheoverallassetvalueoftheoceanintheWesternIndianOceanregion,basedonmarketvalueofassets(formarinefisheries)oronnetpresentvalue(NPV)ofassets’cashflows(forallotherelementsofocean“sharedwealthfund”),whereastheGMPistheoutputofeconomicactivitiesgeneratedbytheseassetseveryyear.
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TotalWesternIndianOcean“sharedwealthfund”byassetcategoriesvaluedatUS$333.8billion
Six primary 'value-generating' asset categories
Marine Fisheries
Mangroves
Coral Reefs
Seagrass
Productive Coastline
Carbon Absorption
Asset (US$ billion)
Primary Assets of the
Western Indian Ocean
Adjacent Assets
135.06
42.71
18.09
20.78
93.24
23.96
“Shared Wealth Fund” asset base ~333.84
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ThetotalassetvalueofUS$333.8billionisanaggregateofthemostreadilymeasuredoceanassetswithintheWesternIndianOcean.FourofthesixassetsaremarineecosystemsthatgenerateservicesthatcanbeconsumeddirectlyfromtheoceanandarevaluedatUS$216.6.Theremainingtwoareadjacentassets,whichprovidefunctionalbenefitsthatareutilizedindirectly.TheyarevaluedatUS$117.2andincludeproductivecoastlines(focussedontourism)andcarbonabsorption.Alloftheseassetsaredependentonthesoundecologicalfunctionandwellbeingoftheoceanenvironmenttogeneratevalue.Thecalculationsforarrivingatthesesumsareavailableuponrequest.
Thesecategoriesarenotacollectivelyexhaustivelistbutaimtotacklemaincomponentswhereprimaryanalysisexists.Methodology:Inordertovalueeachassetclasstwodifferentmethodswereutilized:
1. MarketBased:Derivedassetvaluelookingatquantityofaresourcepricedatitscurrentmarketvalue
2. ValueBased:Impliedassetvalueascertainedbyidentifyingannualvaluegenerationoftheasset,andconductinganNPVoffutureyears
Forseveraloftheassetcategories,ahybridormodifiedversionofthetwoabovemethodswasemployedtobetterestimateandtriangulatetotalassetvalue.• NetPresentValueCalculations
ForallcalculationsutilizingtheNPVmethod,certainassumptionswereestablishedtoensureconsistencyandaccuracy.
InordertoappropriatelycalculatetheNPVofourassetclasses,weneededtodetermineanappropriateregionalrisk-freerateandregionalriskpremium.WeleveragedWorldBankdata:risk-freetreasurybillrate(lendingrateminusriskpremiumonlending)andriskpremiumonlending.Basedonthesedata,wecalculatedthearithmeticmeanacrosstheWesternIndianOceancountriesforwhich2014datawereavailable(Kenya,Mauritius,Mozambique,Seychelles,SouthAfricaandTanzania;Madagascarwasexcludedduetoanextremelyhighvaluewhichcouldnotbeexplained),todeterminetheregionalrisk-freerate(6.4percent)andregionalriskpremiumrate(6.5percent)forourNPVcalculations.(Source:http://data.worldbank.org/indicator/)
Definitions:Anetpresentvaluerequiresspecificationofthenumberoffutureyearsbeingconsidered(e.g.10years,50years,infinity)andadiscountrate,whichisthesumoftheriskfreerateandriskpremiumtorepresentthefactthatsocietyplacesagreatervalueoncurrentbenefitsthanfuturebenefits.Arisk-freeinterestrateisthetheoreticalrateofreturnofaninvestmentwithnoriskoffinancialloss.Oneinterpretationisthattherisk-freeraterepresentstheinterestthataninvestorwouldexpectfromanabsolutelyrisk-freeinvestmentoveragivenperiodoftime.
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Ariskpremiumisthereturninexcessoftherisk-freerateofreturnaninvestmentisexpectedtoyield;anasset'sriskpremiumisaformofcompensationforinvestorswhotoleratetheextrarisk,comparedtothatofarisk-freeasset,inagiveninvestment.Foreachassetcategory,methodologyandsourcesareprovided:• MarineFisheries
TypeofValuation:MarketBasedCalculation:Totalproductivefishbiomass(intons)multipliedbyanimpliedmarketportsidepricefor1tonoffishmultipliedbytheWesternIndianOcean'sexclusiveeconomiczone(EEZ)shareoftotalglobaloceanareaConsiderations:ThisvaluationbuildsonthemethodologyappliedintheGlobalReport.Itdoesnottakeintoaccountsupplyanddemandelasticity,recognizingthatthelargerthesupplybecomes,lowerpricesareexpected.Additionally,thisfiguredoesnotdistinguishbetweenreadilycatchableandcommonfishvarieties,andthosefishcategoriesthatmaynotbeinhighmarketdemand,orthataretoodifficulttofeasiblycatch(e.g.deep-seavarieties).Duetolackofdefinitivereferencesandquantitativedata,wewereunabletomakeadjustmentstoaccountforregionspecificinformation(e.g.impactofclimatechangeonfishdistribution).Shouldmoregranulardataorregion-specificdatabecomeavailable,amoreprecisevaluationcouldbeperformed.
Primary Sources: • Total Fish:
Wilson RW, Millero FJ, Taylor JR, Walsh PJ, Christensen V, Jennings S and Grosell M (2009) "Contribution of Fish to the Marine Inorganic Carbon Cycle" Science, 323 (5912) 359-362.
• Market Value of fish:
OECD-FAO Agricultural Outlook (Fisheries) 2014-2023 http://stats.oecd.org/
• EEZ area: UBC Sea Around Us database (Industrial, Artisanal) http://www.seaaroundus.org/data/#/eez
• Total ocean coverage: NOAA (National Centers for Environmental Information) database http://www.ngdc.noaa.gov/mgg/global/etopo1_ocean_volumes.html
• Inflation rate: World Bank (consumer price annual inflation rate)
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• MangrovesTypeofValuation:ValueBased(usingsomemarketassumptions–i.e.quantityofresource)Calculation:NPVofallfuturemangrovevaluesbasedonthefollowingassumptions:A. TotalMangroves:769,760hectares
B. Degradationofmangroves:ratevariesbycountry,rangingfrom-1percentto+4per
centyearly.Theaverageregionaldegradationrateis-1percentannually.
C. Valuederivedfrommangroves=US$4,185perhectare(appliedforeachyear,notadjustedforforecastedinflationaswewantNPVincurrentdollars).
D. Discountrate:Averageregionalrisk-freerate
E. Noriskpremium–decisionmadenottoapplyriskpremiumtonaturalassets
(followingthemethodologyappliedinglobalreport:riskpremiumappliedonlyonassetsdirectlyconnectedtoindustrial/marketoutput)
• CoralReefsTypeofValuation:ValueBased(usingsomemarketassumptions–i.e.quantityofresource)Calculation:NPVofallfuturecoralreefvaluesrelatedtocoastalprotection,tourism/recreationandbiodiversityvaluesbasedonthefollowingassumptions:A. TotalCoral:1,205,000hectares
Primary Sources: • Total Mangroves:
Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.
• Value generation: Brander, Luke M., et al.. "Ecosystem Service Values for Mangroves in Southeast Asia: A Meta-analysis and Value Transfer Application." Ecosystem Services 1.1 (2012): 62-69.
• Asset degradation: Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.
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B. Degradationofcoralat-1percentyearlyC. Valuederivedfromcoral=US$849perhectare(appliedforeachyear,notadjusted
forforecastedinflationaswewantNPVincurrentdollars)
Note:Valuederivedtakingintoaccountonlyrelevantbenefits(coastal,tourism/recreation,andbiodiversity)toavoiddoublecountingwithother“sharedwealthfund”assets:
• Totalvalueofbenefitsfromcoralreefsintheworld:US$29,081millionperyearonaglobalcoralareaof284,000km2,thusatotalbenefitvalueofUS$1,050perhectare.
• Relevantbenefitsvalue:81percentoftotalbenefitvalue,henceavalueofcoralreefbenefitsofUS$849perhectare.
D. Discountrate:Averageregionalrisk-freerateE. Noriskpremium–decisionmadenottoapplyriskpremiumtonaturalassets
(followingthemethodologyappliedinglobalreport:riskpremiumappliedonlyonassetsdirectlyconnectedtoindustrial/marketoutput)
Primary Sources: • Total Coral Reefs:
Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. Web. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.
• Value generation: Cesar, Herman; Burke, Lauretta; Pet-Soede, Lida (2003). "The Economics of Worldwide Coral Reef Degradation" Published by: Cesar Environmental Economics Consulting (CEEC) WWF - Netherlands NOTE: Identifying the correct value estimate for 1 hectare of coral reef proved challenging as many widely varying values are reported. We selected Cesar et al as the most applicable source for this calculation as it provided a breakdown of direct benefits. We only included values for coastal protection, tourism / recreation, and biodiversity value to avoid double counting with other “shared wealth fund” assets (e.g. fisheries).
• Asset degradation: Bruno JF, Selig ER (2007) Regional Decline in the Indo-Pacific:
Timing, Extent, and Subregional Comparisons. PloS ONE 2(8): e711. doi: 10.1371/journal.pone.0000711
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• SeagrassTypeofValuation:Valuebased(usingsomemarketassumptions–i.e.quantityofresource)Calculation:NPVofallfutureseagrassvaluesbasedonthefollowingassumptions:A. Totalseagrass:58,704hectaresB. Degradationofseagrass:-1.5percentyearlyC. Valuederivedfromseagrass=US$26,479perhectare(appliedforeachyear,not
adjustedforforecastedinflationaswewantNPVincurrentdollars)D. Discountrate:Averageregionalrisk-freerateE. Noriskpremium–decisionmadenottoapplyriskpremiumtonaturalassets
(followingthemethodologyappliedinglobalreport:riskpremiumappliedonlyonassetsdirectlyconnectedtoindustrial/marketoutput)
Consideration:Benefitsfromprovisioningservicesfromseagrasshavebeenexcludedinordertoavoiddoublecounting(e.g.withmarinefisheries).
• Productive/DestinationCoastlinesNote:productivecoastlineassetvalueiscalculatedastheNPVofcoastaltourismactivity.Coastaltourismincludesconsumptiveandnon-consumptiveactivitiesincoastalzones.Consumptiveactivitiesincludefishing,shellfishing,etc.,whereasnon-consumptiveactivitiesincludeswimming,diving,boating,surfing,wind-surfing,jetskiing,birdwatchingandsnorkelling.
Primary Sources: • Total Seagrass:
Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.
• Value generation:
De Groot, Rudolf et al. "Global estimates of the value of ecosystems and their services in monetary units" (2012) 55
Costanza, Robert et al. "Changes in the global value of ecosystem services". Global Environmental Change 26 (2014) 152-158
• Asset degradation:
Telesca, Luca, et al. "Seagrass Meadows (Posidonia Oceanica) Distribution and Trajectories of Change." Sci. Rep. Scientific Reports 5 (2015): 12505. Web. <http://www.nature.com/articles/srep12505>.
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TypeofValuation:ValueBasedCalculation:NPVofallcoastalproduction(tourism-based)valuesbasedonthefollowingassumptions:A. Totalvalueproducedannually:US$10.4billion(takenfromyearlycalculation)
B. Perpetualgrowthrate:1percent(basedonglobalreportmethodology)
Note:BCG’sanalysisconcludesthatonly27percentofpotentialcoastlinesareutilizedbyhumandevelopment.Itislikelythiswillcontinuetoriseinthecomingdecades,howeverthisalsomaydiminishvalueofthisandotherconnectedassets–thusaconservativeperpetualgrowthof1percentwasused.
C. Discountrate:Averageregionalrisk-freerate+averageregionalriskpremium
D. Riskpremium–decisionmadetoapplyriskpremiumtoallassetsderivingvalue
fromindustrial/marketbasedsources,basedonthemethodologyappliedintheglobalreport.
Consideration:Thereispotentialfordoublecountingbetweenproductivecoastlineassetvalueandmangroves/coralreefsassetvalues.Thiscannotbeavoidedbasedonavailabledata.
Primary Sources: • Coastal tourism value
Coastal Value annual assessment – see below sections for methodology. Secondary Sources: • World Wildlife Fund. Marine Problems: Tourism and Coastal development
http://wwf.panda.org/about_our_earth/blue_planet/problems/tourism/ • UNWTO. Tourism Highlights. 2014 Edition • World Wildlife Fund – Blue Plan: Coasts
http://wwf.panda.org/about_our_earth/blue_planet/coasts/ • Sustainable Development of Tourism – UN World Tourism Organization. Coast Project.
http://sdt.unwto.org/en/content/coast-project • World Ocean Review. Coasts
http://worldoceanreview.com/en/wor-1/coasts/living-in-coastal-areas/2/ • Intergovernmental panel on Climate Change. "Increasing human utilization of the coastal zone"
http://www.ipcc.ch/publications_and_data/ar4/wg2/en/ch6s6-2-2.html • NOAA – State of the Coast
http://stateofthecoast.noaa.gov/population/welcome.html • UN Atlas of the Oceans
http://www.oceansatlas.org/servlet/CDSServlet?status=ND0xODc3JjY9ZW4mMzM9KiYzNz1rb3M~
• Estimates of Coastal Populations http://www.rockefeller.edu/labheads/cohenje/PDFs/256Cohensmall.htm http://www.prb.org/Publications/Reports/2003/RippleEffectsPopulationandCoastalRegions.aspx
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• CarbonAbsorptionCarbonsequestrationrateswereappliedtoareaofnaturalassetsthatsequestercarbon(mangroves,seagrass)andthetotalweightofcarbonmultipliedbythecostofcarbonTypeofValuation:ValueandmarketbasedPrimaryCalculation:NPVoffutureexpectedcarbonsequestrationfromseagrass,mangrovesandsaltmarshesmultipliedbymarketpriceofcarbonA. Estimatedannualvalueofcarbonsequestrationfrombiologicalprocessesoverthe
WesternIndianOcean:US$2.9billionperyear.• Tworeferencesusedforsizing;maximumvaluebetweenthetwoselected,where
applicableo EstimatedyearlymonetaryvalueofbluecarbonstorageinNorthernMozambiqueChannelcountries(2015)fromNunesandGhermandi(2015)
o RegionalStateoftheCoast,WesternIndianOcean(2015)reportB. Discountrate:averageregionalrisk-freerate+averageregionalriskpremiumC. Riskpremium–decisionmadetoapplyriskpremiumtoallassetsderivingvalue
fromindustrial/marketbasedsources,basedonthemethodologyappliedintheglobalreport
Primary Sources:
• Annual value of carbon sequestration:
Nunes, Paolo A.L.D., and Andrea Ghermandi (2015). Understanding and Valuing the Marine Ecosystem Services of the Northern Mozambique Channel. WWF International Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.
• Asset degradation: degradation rates of underlying resources
Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme. Bruno JF, Selig ER (2007) Regional Decline of Coral Cover in the Indo-Pacific: Timing, Extent, and Subregional Comparisons. PloS ONE 2(8): e711. doi: 10.1371/journal.pone.0000711 Telesca, Luca, et al. "Seagrass Meadows (Posidonia Oceanica) Distribution and Trajectories of Change." Sci. Rep. Scientific Reports 5 (2015): 12505. Web. <http://www.nature.com/articles/srep12505>.
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AnnualValueGeneratedfromtheWesternIndianOcean'seconomy(GrossMarineProduct)
TheanalysisinFigure1ofthereportdemonstratestheannualeconomicvalueofocean-relatedactivitiesintheWesternIndianOcean.Iftheoceaneconomywereitsowneconomy,itwouldbefourthlargestintheregionafterSouthAfrica,KenyaandTanzania.Wedeterminedtheannualeconomicvaluerangeusingbothatop-downandbottom-upanalysis.Ourtop-downanalysis(~US$25billion)wasconductedbysurveyingavailablepublicinformationfortheWesternIndianOceannationsregardingtheannualeconomicvalueoftheoceantolocaleconomies.Ourbottom-upanalysis(~US$20.8billion)wasconductedbycategorizingandevaluatingtheannualeconomicvalueforocean-relatedgoodsandservicesintheWesternIndianOcean.Top-downestimateMethodology:Weconductedresearchonthe10WesternIndianOceancountriesandterritoriestosourceforliteratureoneconomicvalueoftheocean.AlldatapointsusedfromtheUnitedNationsEnvironmentProgramme(UNEP)reportwereinUSdollars.TheUNEPreportcalculatesthevalueoftheblueeconomyisUS$25billionforComoros,Kenya,Madagascar,Mauritius,Mozambique,LaReunion(France),theSeychelles,Somalia,SouthAfricaandTanzania.
Primary Sources: • Ocean economic valuation
Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.
• GDP of countries
World Bank database (2014) • Currency exchange rate
Oxford Economics Exchange Rate Database
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Oceanrelatedactivitiesgroupedinto4primarycategoriesAlldirectlydependentontheocean’secologicalfunctionsandwell-being
4categoriesofannualoceanactivities
CategoryTotalvalue(US$billion)
A)Directoutputoftheocean• Activitiesrelatedtothecontentsoftheocean 1.9
B)Servicesenabledbytheocean• Activitiesoccurringin/ontheocean 4.3
D)Adjacentbenefitsoftheocean• Quantifiablebenefitsenabledbytheocean 14.6
E)Otherintangiblebenefitsoftheocean• Allundefinableactivitiesattributedtothepresence
oftheoceann/a
Totalvalue:~US$20.8billion
Thisdemonstratesaclassificationofallecosystemservicesthatrelyontheocean.Asonemovesdownthetable,thecorrelationtotheoceanbecomeslessdirect,movingfromdirectservices,toservicesenabledbytheocean,adjacentbenefitsoftheocean,andotherintangiblebenefitsoftheocean.Categoriesincludethefollowingservices:A)fishingrelatedactivities,marinerenewableenergy,B)education&training,research&development,oceansurvey,cruiseindustry,marinetourism,security&control,C)directimpactofcoastaltourism,carbonsequestration,coastalprotection,andmarinebiotechnology,D)spiritual&culturalbenefits,climatechangebenefits,andoverallutility.Thelattercategory–intangiblebenefits–islikelytoincludehighlyvaluablebenefits,butwefounditdifficulttoascribeadollarvalue.BottomupestimateWeconductedacomplementary"bottom-up"analysistoestimatetheannualeconomicvaluegeneratedbymarinerelatedindustries.Marineindustrieswerebrokendowninto4primarycategories,eachwithrespectiveservicesallocatedwithin.Thelistbelowisnotexhaustiveandonlytakesintoaccounttheprimaryactivitiesrelatedtotheocean.Thisanalysisisdecidedlyconservativeinitsapproach,andonlyvalueswhatwearecapableofassessingandquantifying.Thus,thetrueyearlyeconomicvalueoftheoceanintangibleandintangibletermsmaybemuchhigher.
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Onceallprimaryindustrieswereidentified,andplacedintothecategorizationframework,wecalculatedtheannualvaluegeneratedforeachsub-category.Publiclyavailabledatafortheregional/countryvalueforeachoftheindustriesisnotfullyavailableforsomeactivities,withsomedataestimatedfromthepast,orextrapolatedfromaglobalfigureusedintheglobalreport.Multiplepubliclyavailablesourceswereleveragedandtriangulatedtoarriveatafairandestimatedamountforeachrespectiveindustry.Forcertainindustrieswherepastinformationwasavailable,butnotmostrecentdata,historicalcompoundannualgrowthrate(CAGR)wascalculatedandusedtoestimatecurrenteconomicvalue.Additionally,oil&gasproductionrevenueandexpendituresarenotincludedinthisoverallanalysis.Thecontributionofyearlyoffshoreproduction,inconjunctionwithpotentialoffshorereservesandannualoil&gasexpendituressuchasoilrigs,liquidnaturalgascontainers,etc.,wouldinflatethetruevalueofanindustrythatwouldremainoperationalwithorwithouttheocean.Inaddition,shippingandmaritimetransportandinfrastructure,althoughdependentonthesurfaceoftheoceanlikepassageofships,isnotdependentontheecologicalfunctionandwell-beingoftheocean.Hencethesesectorshavebeenexcludedfromtheanalysisaswell.TheexerciseaimsatsizingthevalueoftheoutputgeneratedbytheoceanintheWesternIndianOceanregion,butdoesnottackletheshareofvaluecapturedlocallyversusexternally.Belowisthemethodologyleveragedtoarriveateconomicestimates.Forsourceinformationpleaseseeprimarysourcecitation.
• Directoutputoftheocean
Marinefisheries(Commercial)Comprisesmarinefisheries(offshore),marinefisheries(coastal),andaccessfeesMethodology• Weightoffishmultipliedbypriceoffishfortotalvalueofmarinefisheries,access
feesadded(wheredatawereavailable).• Weightoffishobtainedbyextrapolatingtotalregionalfishcatchin2010byapplying
historical2006-2010UBCcatchCAGRfortheregion,2006-2013FAOcatchCAGRusedforTanzaniaduetoone-offspikeinfishcapture
• 2015priceoffishobtainedfromOECDFAOOutlookdatabase,WorldFishpriceused• Dataon2015AccessfeesandlicensingdataavailablefromtheEuropean
CommissionuseddirectlyPrimary Sources: • Marine fisheries (offshore) and marine fisheries (coastal) fish weight
UBC Sea Around Us database (Industrial, Artisanal) http://www.seaaroundus.org/data/#/eez
• Price of fish: OECD-FAO Agricultural Outlook (Fisheries) 2015-2024: http://stats.oecd.org/
• Access fees: http://ec.europa.eu/fisheries/cfp/international/agreements/index_en.htm
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Primary Sources: • Aquaculture fish weight:
FAO aquaculture data http://www.fao.org/fishery/statistics/global-aquaculture-production/en
• Price of fish aquaculture: OECD-FAO Agricultural Outlook (Fisheries) 2015-2024 http://stats.oecd.org/
• Price of plant aquaculture: Bryceson, I. and Beymar-Farris, B. (2011). Main challenges for coastal aquaculture development in the WIO region – who are the winners and losers? In Mariculture in the WIO Region “Challenges and Prospects” (eds. Troell, M., Hecht, T., Beveridge, M., Stead, S., Bryceson, I., Kautsky, N., Ollevier, F. and Mmochi, A.) No 11, pp. 6-8. WIOMSA Book Series
Marinefisheries(subsistence&recreational)Comprisesmarinefisheries(subsistence)andmarinefisheries(recreational)
Methodology
• Weightoffishmultipliedbypriceoffishfortotalvalueofmarinefisheries• Weightoffishobtainedbyextrapolatingtotalregionfishcatchin2010byapplying
historical2006-2010UniversityofBritishColumbia(UBC)catchCAGRfortheregion,2006-2013FAOcatchCAGRusedforTanzaniaduetoone-offspikeinfishcapture
• 2015priceoffishobtainedfromOCEDFAOOutlookdatabase,WorldFishpriceused
Aquaculture
Methodology• Weightoffishmultipliedbypriceoffishfortotalvalueofaquaculture• Weightoffishobtainedbyextrapolatingtotalregionfishcatchin2013byapplying
historicalCAGR.UseddifferenthistoricalCAGRs–2009-2013forFrenchTerritories,Madagascar,Mauritius,Reunion,Somalia,andSouthAfrica;2011-2013forKenya,Mayotte,andMozambique;and2012-2013forComoros,theSeychellesandTanzania.Growthrateswereselectedtochoosemoreconservativeestimatesduetohighvariabilityincatchdatawhichcouldpotentiallyskewgrowthrates.
• 2015priceoffishaquacultureobtainedfromOECDFAOOutlookdatabase• 2015priceofplantaquaculturewasobtainedfromBrycesonandBeymar-Farris
paper
Primary Sources: • Marine fisheries (subsistence) and marine fisheries (recreational) fish weight
UBC Sea Around Us database (Industrial, Artisanal) http://www.seaaroundus.org/data/#/eez
• Price of fish: OECD-FAO Agricultural Outlook (Fisheries) 2015-2024 http://stats.oecd.org/
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Marinerenewableenergy
Methodology• ReferencedRegionalStateoftheCoastReportsectiononmarinerenewableenergy–nocurrentvalueinthissector.
• Directservicesenabledbyoftheocean
Marinetourism
Methodology• Totalmarineandcoastaltourismcalculatedbyapplyingthepercentageoftourism
attributabletomarineecosystemstototaltourismreceipts• Totaltourismreceiptscompriseinternationaltourismreceiptsanddomestictourism
spendingo InternationaltourismreceiptsunavailableforFrenchTerritories,Mayotte,
andSomalia.o DomestictourismreceiptsunavailableforFrenchTerritories,Mayotte,
Reunion,andSomalia.• Wherelatesttourismreceiptnumberswerenotavailable,historicalCAGRforeach
countrywasappliedtothelatestavailabledatapoint• PercentageoftourismattributabletomarineecosystemsbasedontwoUNEPreports.• Marineandcoastaltourismsplitisbasedonmarine&coastaltourismproportion
fromtheglobalreport(marinetourism–27percent,coastaltourism–73percent)
Note:ForSouthAfricaitwasnotpossibletoseparatetourismreceiptsontheIndianOceancoastfromrevenuesontheAtlanticcoast.ForthepurposesofthisanalysisithasbeenassumedthatthemajorityofmarineandcoastaltourismactivitiesareoccurringontheIndianOceancoast.
Primary Sources: • Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer
(2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.
• Hammar, L., Ehnberg, J., Gullstrom, M. and Molander, S. (2009). Ocean energy in combination with land-based renewable energy sources: appropriate technology for smaller electricity grids in Africa? Proceedings of the 8th European Wave and Tidal Energy Conference. Uppsala, Sweden
19
Cruiseindustry
Methodology• Cruiseindustryvaluecalculatedbyaggregatingdirectandindirectrevenuesfortotalcruisemarket(dataonlyavailableforMauritius).
Education&training
Methodology• Scaleddownglobaleducation&trainingnumbertotheWesternIndianOceanbased
onthetop-downregionalGMPestimateasapercentageofglobalGMP(1.0percent)• Globaleducation&trainingvaluebasedonannualexpendituresderivedfrom
"Marineindustriesglobalmarketanalysis"reportandgrownathistoric5yearCAGRrateof3percent.DatafoundinEurosandconvertedtoUS$at2014exchangerate.
Primary Sources:
Marine Industries Global Market Analysis. Vol. 1. Douglas-Westwood Limited, Mar. 2005. <http://oar.marine.ie/bitstream/10793/559/1/Foresight%20Series%201%20Marine%20Industries%20Global%20Market%20Analysis.pdf>.
Primary Sources: • Direct and indirect cruise industry revenues
Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.
Primary Sources:
• International tourism receipts World Bank http://data.worldbank.org/indicator/ST.INT.RCPT.CD • Domestic tourism spending WTTC http://www.wttc.org/datagateway/ • % tourism attributable to marine ecosystems Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme. Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.
20
Research&development
Methodology• Scaleddownglobalresearch&developmentnumbertoWesternIndianOceanbased
ontop-downregionalGMPestimateasapercentageofglobalGMP(1.0percent)• Globalresearch&developmentvaluebasedonannualexpendituresderivedfrom
"Marineindustriesglobalmarketanalysis"reportandgrownathistoric5yearCAGRrateof2percent.DatafoundinEurosandconvertedtoUS$at2014exchangerate.
Oceansurvey
Methodology• Scaleddownglobalresearch&developmentnumbertoWesternIndianOceanbased
ontop-downregionalGMPestimateasapercentageofglobalGMP(1.0percent)• Globaloceansurveyvaluebasedonannualexpendituresderivedfrom"Marine
industriesglobalmarketanalysis"reportandgrownathistoric5yearCAGRrateof3percent.DatafoundinEurosandconvertedtoUS$at2014exchangerate.
Security&control
Methodology• Scaleddownglobalsecurity&controlnumbertoWesternIndianOceanbasedon
top-downregionalGMPestimateasapercentageofglobalGMP(1.0percent)• Globalsecurity&controlvaluebasedonannualexpendituresderivedfromtotal
expendituresonmaritimerelatedsecurityfor2014.
Primary Sources: • Marine Industries Global Market Analysis. Vol. 1. Douglas-Westwood Limited, Mar. 2005.
<http://oar.marine.ie/bitstream/10793/559/1/Foresight%20Series%201%20Marine%20Industries%20Global%20Market%20Analysis.pdf>.
Primary Sources: • Marine Industries Global Market Analysis. Vol. 1. Douglas-Westwood Limited, Mar. 2005.
<http://oar.marine.ie/bitstream/10793/559/1/Foresight%20Series%201%20Marine%20Industries%20Global%20Market%20Analysis.pdf>.
Primary Sources: • Marine Industries Global Market Analysis. Vol. 1. Douglas-Westwood Limited, Mar.
2005. <http://oar.marine.ie/bitstream/10793/559/1/Foresight%20Series%201%20Marine%20Industries%20Global%20Market%20Analysis.pdf>.
21
• Adjacentbenefitsoftheocean
Coastaltourism
Methodology• Totalmarineandcoastaltourismcalculatedbyapplyingpercentageoftourism
attributabletomarineecosystemstototaltourismreceipts• Totaltourismreceiptscompriseinternationaltourismreceiptsanddomestictourism
spendingo InternationaltourismreceiptsunavailableforFrenchTerritories,Mayotte,
andSomaliao DomestictourismreceiptsunavailableforFrenchTerritories,Mayotte,and
Somalia• Wherelatesttourismreceiptnumberswerenotavailable,historicalCAGRforeach
countrywasappliedtothelatestavailabledatapoint• PercentageoftourismattributabletomarineecosystemsbasedontwoUNEPreports.• Marineandcoastaltourismsplitisbasedonmarine&coastaltourismproportion
fromtheglobalreport(marinetourism–27%,coastaltourism–73%)Note:ForSouthAfricaitwasnotpossibletoseparatetourismreceiptsontheIndianOceancoastfromrevenuesontheAtlanticcoast.ForthepurposesofthisanalysisithasbeenassumedthatthemajorityofmarineandcoastaltourismactivitiesareoccurringontheIndianOceancoast.
Primary Sources: • International tourism receipts
World Bank http://data.worldbank.org/indicator/ST.INT.RCPT.CD
• Domestic tourism spending
WTTC http://www.wttc.org/datagateway/
• % tourism attributable to marine ecosystems Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.
Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.
22
CarbonsequestrationComprisescarbonsequestrationfromseagrass,mangroves,andsaltmarshes.
Methodology• Sumofcarbonsequestrationvaluesforsaltmarshes,mangrovesandseagrassesin
eachWesternIndianOceancountry.o 2differentsourceswereused,withmaximumvalueselectedwherethe2
wereavailableo FortheRegionalStateoftheCoastvalues:wheneverarangewasprovided,
medianvaluewasused.
Coastalprotection
Methodology• Coastalprotectionvaluestakenfromvaluationsoftheannualcoastalprotectionvaluesofmangroves,saltmarshesandcoralreefs(noestimateavailableforseagrass),multipliedbythesurfaceareaofmangroves,saltmarshesandcoralreefsinWesternIndianOceancountries.
Mangroves:A-Estimatedaveragevalueofcoastalprotection:US$1,088/ha/yearB-TotalMangrovesarea:769,760hectaresSaltmarshes:A-Estimatedaveragevalueofcoastalprotection:US$8,236/ha/yearB-TotalSaltmarshesarea:2517hectaresCoralreefs;A-Estimatedaveragevalueofcoastalprotection:US$317/ha/year
• Valuederivedfromworldcoastalprotectionfromcoralreefsvaluedividedbyworldcoralsurface
B-Totalcoralreefarea:1,205,000hectares
NOTE:Identifyingthecorrectvalueestimationperhectareofcoastalresourcesprovedchallengingasmanywidelyvaryingvaluesarereported.Weonlyincludedvaluesforcoastalprotectionforthisportionoftheeconomicanalysis.
Primary Sources: • Annual value of carbon sequestration
Nunes, Paolo A.L.D., and Andrea Ghermandi (2015). Understanding and Valuing the Marine Ecosystem Services of the Northern Mozambique Channel. WWF International Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.
23
Marinebiotechnology
Methodology• Marinebiotechnologymarketestimatedbyscalingdownglobalmarketformarine
biotechnologytotheWesternIndianOceanbasedonthetop-downGMPestimateasapercentageofglobalGMP(1.0percent)
• Globalmarketformarinebiotechnologywasprovidedfor2018,andadjustedtogetto2015basedongrowthrateprovided(4percent)
Primary Sources: • Total areas:
o Mangroves & Salt marshes :Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme
o Coral reefs: Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. Web. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.
• Value generation: o Mangroves: Cesar, Herman et al (2008), Economic Value of Coral Reefs,
Mangroves, and Seagrasses: A global compilation. Note: A 2005 assessment of the Rekawa mangrove-lagoon ecosystem, Sri Lanka, found that the Total Economic Value was about $1,088/ha/year
o Salt Marshes: Barbier, Edward et al (2011), The Value of estuarine and coastal ecosystem services, Ecological Monographs, 81(2), 2011, pp. 169–193 Note:Coastal protection attenuates and/or dissipates waves. Important controlling components are tidal height, wave height and length, water depth in or above canopy, marsh area and width, wind climate, marsh species and density, local geomorphology
o Coral Reefs: Cesar, Herman; Burke, Lauretta; Pet-Soede, Lida (2003). "The Economics of Worldwide Coral Reef Degradation" Published by: Cesar Environmental Economics Consulting (CEEC) WWF – Netherlands
• Asset degradation: Bruno JF, Selig ER (2007) Regional Decline of Coral Cover in the Indo-Pacific: Timing, Extent, and Subregional Comparisons. PLoS ONE 2(8):e711. doi:10.1371/journal.pone.0000711
Primary Sources: • Global marine biotechnology market
Global Industry Analysts Inc. (2013). Marine Biotechnology: A Global Strategic Business Report., http://www.strategyr.com/marine_biotechnology_market_report.asp (Referenced in Regional State of the Coast Report: Western Indian Ocean, page 407)
INT• REVIVING THE WESTERN INDIAN OCEAN ECONOMY - METHODOLOGY
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60 MILLION
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4TH2.4%
About 60 million people live within 100km of the coast across the Western Indian Ocean
The economic output of the Western Indian Ocean makes it the fourth largest economy in the region Only 2.4 per cent of
marine areas are under some form of protection in the Western Indian Ocean
The overall value of ocean assets in the Western Indian Ocean is more than US$333.8 billion
The Western Indian Ocean in numbers
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