Environmental economics of coral reef destruction in Sri Lanka

Environmental economics of coral reef destruction in Sri Lanka

Primary Country: Sri Lanka
Ecosystem: coral reef
Sample Value Estimates:
  1. approx $20 million / year: Value coastal tourism to the national economy of Sri Lanka in the mid 1990s
  2. 27050 USD/ha/yr: This value was provided by a partner database. ESVD values are from a derived data set. This value point is for Flood prevention
Region: Asia / Indian Ocean
Data source: Consvalmap.org

Publication information

Berg, H. Ohman, M.Troeng, S.Linden, O. “Environmental economics of coral reef destruction in Sri Lanka” Ambio, 27(8), 627-634. , 1998

Addtional Notes

Coral reefs are a resource of immense importance for a large number of people, especially the coastal populations of the developing world. Available information on coral reefs in Sri Lanka and Southeast Asia has been used to evaluate the ecological services provided by coral reefs and to assess the long-term economic benefits derived from some of the ecosystem functions. The minimum value of coral reefs in Sri Lanka is estimated to exceed the net benefits of coral mining by as much as $6,610,00Km2 reef when analyzed over 20 years in tourism areas. The highest costs were associated with decreased tourism, and increased erosion. However, in rural areas there is still a strong incentive for coral mining, because coral mining in the short-term perspective provides a more profitable business compared to fishing and agriculture. The results have implications for management and show that Sri Lankan legislation banning coral mining in the coastal zone is beneficial to the country's economic development. Revenue estimate: Net value of coral reef fish-habitat function (EOP): $7800-$9800 km2 reef yr.

Net value of reef as tourist attraction: $150,000(FR)-$214,000(CV) km2 reef yr1

Cost of coastal erosion resulting from loss of reef: $160-$172,000 (PV) km-2 reef yr.-1

Cost of replacing the coastal protection function of a degraded reef: $1,230,000-$4,180,000 (PE) km-2 reef yr-1 depending on the type of coastal protection structures used

Total quantifiable economic value of reef: $13,000-$4,404,000 km-2 reef yr.-1

Total net present value of 1 km2 over 20 years with 9% discount rate: $142,000-$7,504,000

Annual direct cost of coral mining: $192,000-$430,000 km-2 reef yr.-1

Accumulated net present benefits of coral mining over 20 years: $749,000-$1,671,000 per km2

Accumulated net present costs of coral mining over 20 years: $111,000-$7,364,000.

This study estimated the minimum economic value of Sri Lankan coral reefs over a twenty-year period, taking into account its uses as a fish habitat, stabilizing structure, and tourist attraction. It then quantified the economic benefits of coral mining over this same twenty year period. The study points out that if coral mining is favored over the reefs' other uses, there will be no economic value at all to these reefs after twenty years, making the use of a discount rate debatable.

Sri Lanka

Coral reefs

coral mining, fishing, tourism

Existing literature

1980-2003

Net value of coral reef fish-habitat function (EOP): $7800-$9800 km2 reef yr.

Net value of reef as tourist attraction: $150,000(FR)-$214,000(CV) km2 reef yr1

Cost of coastal erosion resulting from loss of reef: $160-$172,000 (PV) km-2 reef yr.-1

Cost of replacing the coastal protection function of a degraded reef: $1,230,000-$4,180,000 (PE) km-2 reef yr-1 depending on the type of coastal protection structures used

Total quantifiable economic value of reef: $13,000-$4,404,000 km-2 reef yr.-1

Total net present value of 1 km2 over 20 years with 9% discount rate: $142,000-$7,504,000

Annual direct cost of coral mining: $192,000-$430,000 km-2 reef yr.-1

Accumulated net present benefits of coral mining over 20 years: $749,000-$1,671,000 per km2

Accumulated net present costs of coral mining over 20 years: $111,000-$7,364,000.Fish-habitat function was estimated with the effect-on-production approach (EOP). The tourist-attraction function was estimated using both the financial-revenue approach (FR) and the contingent valuation (CV)approach. The physical structure function was estimated using the preventive-expenditure approach (PE) and the loss of property-value approach (PV). Total quantifiable economic value was calculated over twenty years using a discount rate of 9%.

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Kim Barry

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