by
Adrian Whiteman
Senior
Economist,
Forest Economics Service,
FAO Forestry Department, Rome
Background
As part of the technical backstopping for FAO Project TCP/EGY/0168(A): Rehabilitation, conservation and sustainable utilization of mangroves in Egypt, the Forest Economics Service of the FAO Forestry Department was asked to review the methodology and results presented in this report.
Before presenting these comments, it is recognised that it is extremely difficult to produce estimates of Total Economic Value (TEV), given the short amount of time available to do this analysis and the very limited amount of information available. This report presents a number of results that have been calculated using “state of the art” valuation techniques. The methodologies that have been used have been applied correctly, but the reliability of the results that have been obtained is severely restricted by the quality of information available. The comments presented here have been provided to draw attention to some of the uncertainties surrounding these results and to reinforce some of the comments already made in this respect in the main part of the report.
Assumptions and uncertainties
Nearly all of the valuation figures presented here have been based on a large number of assumptions. This is common in economic analysis, where it is often difficult to obtain cost and price information. In most economic analyses though, it is usually possible to obtain at least some information to use as a guide for making estimates. However, in the case of non-market evaluation, this problem is usually much worse, because there is often no information to use as a guide for estimation.
It is not really possible to comment on whether the assumptions made here are reasonable or not, but it is possible to raise some questions about these figures for further consideration. This is done below with respect to some of the largest value figures presented in the report.
Recreation value: the estimates of recreation values presented here are probably the most robust and reliable of all of the estimates. They have been calculated from visitor numbers and cost and price information that is readily available. They have made a number of assumptions regarding the estimation of producer and consumer surplus as a measure of the value of these benefits. These assumptions seem quite reasonable, but the main uncertainty concerns how much of the value from recreation can be attributed to the presence of the mangroves. For example, for visitors to Nabq, how much of the value of the visit should be attributed to the mangroves and how much is simply the value of a day out at the beach?
It is not possible to answer this question without a properly designed survey to elicit such information. This analysis has reduced the total estimated recreation values, to take into account that only a proportion should be attributable to the mangroves, but this is not based on any data or information. What can be said is that the unadjusted values probably provide a reasonable estimate of the recreation benefits obtained from Ras Mohammed and Nabq as a whole.
Value of the benefits to off-site fisheries: the economic methodology used to produce this estimate - “lost production” - is the best available methodology, but the main problem here is the lack of scientific information on which to base this estimate. Although the analysis has been somewhat cautious and has included various factors to reduce the estimate of this benefit, there is insufficient scientific information to estimate the effect that a reduction in the area of mangroves would have on fish catches.
Coastal protection and sediment regulation: the estimation of the value of these functions has used the replacement cost method. While this is a recognised technique, it is only appropriate where the cost of replacing these functions is less than cost of the damage that would be caused if they were not replaced. This can either be estimated using the same “lost production” methodology used in the case of off-site fisheries or, in some cases, it is unnecessary when it is obvious that the damage cost would be larger than the replacement cost.
This figure has been based on the cost of building replacement structures to protect the coastline and stop soil erosion (at a cost of US$ 75 per linear metre for such structures). The question that should be considered is whether such structures would actually be built in these areas if the mangroves were not there.
Non-use values: the estimates of non-use values account for a significant proportion of the TEV presented here, particularly in the case of Nabq. Estimation of non-use values is extremely difficult, particularly because of the problem of scale. Many studies have shown that if someone is asked how much they would be willing to pay to protect mangroves, they will often give figures that are almost the same to protect one hectare of mangroves, all the mangroves in Egypt, or all the mangroves in the World. Because this defies one of the basic laws of economics (more of something is usually worth more), this casts considerable uncertainty on the reliability of such estimates.
It should also be noted that the assumption made here that foreign visitors would be willing to pay US$ 10 to protect the mangroves in Egypt is twice the current entrance charge paid by foreigners to visit Nabq. It seems unlikely that the non-use value would be so much higher than the amount that foreign visitors currently pay to use the mangroves (unless the latter was itself a very large underestimate of their maximum willingness to pay).
Conclusions
Given the very limited amounts of information available, an assessment of these results has to fall-back on less reliable methods such as comparison with other studies and professional judgement. Overall, the Total Economic Value figures presented here seem to be rather high. For many of the different outputs, they are higher than most of the estimates obtained in other similar studies (and reported in the text in many places). In addition, compared with the amounts that are currently raised from government, tourists and others to protect these areas, they are an order of magnitude larger. Thus, it seems likely that the assumptions made here may be rather optimistic.
However, the results of the study do raise some useful points, which are as follows:
• the relative magnitude of the values of the different outputs may be correct, indicating that benefits to off-site fisheries, recreation and soil protection are probably the three most important benefits of mangroves in Egypt;
• although these figures may be overstated, the presence of these many other non-market benefits in potentially large quantities is probably sufficient to justify all reasonable requests for further expenditure or investment to protect these resources;
• conversely, without protection, if the mangroves were to disappear or become severely degraded, there is a real chance that this could lead to significant losses to local communities and the national economy.
Finally, perhaps the most important outcome of this analysis is the observation that much better information would be required to assess what should be done and how much should be done to protect and manage this resource. If the Government of Egypt wishes to use economic appraisal to guide investment in environmental protection, then this study shows that there is a critical need for more data collection and analysis in mangroves (and probably for other types of environmental assets as well) in order to make such judgements.