47241 M A T T E R S A T T H E W O R L D B A N K w vie Re nnualA 2008·t elopmenv de sustainabled arwot Valuing Coastal and Marine Ecosystem Services News Updates Global Climate Change -- The Bank's Strategic Climate Investment Funds Framework A Recognizing that global deliberations on a future funding strat- newreportbytheWorldBank egy for climate change mitigation are under way, the World Bank concludes that global efforts to overcome poverty and Group and other multilateral development banks (African Devel- advance development can no longer ignore an urgent need to address global climate change. New Funding opment Bank, Asian Develop- ment Bank, European Bank The report--Development and Climate Change: A Strategic Frame- Source for for Reconstruction and Devel- work for the World Bank Group--notes that climate change "has Climate Change the potential to reverse the hard-earned development gains of the opment, and Inter-American past decades and the progress toward achieving the Millennium Mitigation DevelopmentBank)--together Development Goals. It can cause mass migration and contribute to conflict. An effective response to climate change must combine miti- with a number of countries-- gation of global GHG emissions--to avoid the unmanageable--and have developed the Clean Investment Funds (CIF) as an interim adaptation at regional, national, and local levels--to manage the unavoidable." measure to scale up assistance to developing countries. The CIF includes a Clean Technology Fund for scaling up investments in The report sets out a comprehensive strategic framework for WBG actions in this area, articulating objectives, guiding principles, areas low-carbon technologies, and a Strategic Climate Fund for sup- of focus, and major initiatives to guide the operational response porting various programs to test innovative approaches to climate for the next three years. It identifies six action areas for the World Bank Group's engagement on climate change: (1) supporting cli- action. The CIF was approved by the World Bank's Board of Ex- mate actions in country-led development processes; (2) mobilizing ecutive Directors on July 1, 2008, and received pledges totaling additional concessional and innovate financing; (3) facilitating the development of market-based financing mechanisms; (4) leveraging over $6 billion on September 26, 2008. For more information, private sector resources; (5) supporting the accelerated develop- see www.worldbank.org/cif. ment and deployment of new technologies; and (6) stepping up policy research, knowledge, and capacity building. B a n k S p o n s o r s N e w P r o g r a m t o P r o t e c t T h r e a t e n e d S p e c i e s T he World Bank, Global Environment Facility (GEF), and the International Union for Conservation of Nature (IUCN) are launching a new effort to encourage corporate support for the protection of threatened and en- dangered species. The new partnership also includes the government of France and the Noé Institute, a Belgian NGO. The core of the new initiative is that many corporations have built their brand using im- ages of threatened and endangered species and that it is now time for those enterprises to invest in saving these creatures before they disappear. The Save Your Logo campaign seeks to leverage private sector and multistakeholder engagement for dramatically expanded funding for threatened species. While focusing on particularly threatened species, this initiative will also target those animals used for branding and in logos of global corporations. The fund will be invested in the long-term sustainability of their natural habitats. "These efforts will complement and expand current Bank commitments to biodiversity conservation, including the Global Tiger Initiative, which President Zoellick launched in June 2008 in partnership with the GEF and national and international NGOs,"saidWarren Evans, director of the Bank's Environment Department. L e t t e r f r o m K AT H E R I N E S I E R R A V I C e P r e s I d e n t s U s t A I n A B L e d e V e L o P m e n t T he focus of this year's Environment Matters is long overdue. Although we are creatures of the land, 50 percent of humanity is distributed along the narrow margins of the world's ocean within 100 kilometers of a coast. Since ancient times major civilizations have settled along the shores of continents and islands, their economies linked to the sea through fishing, connected to each other by maritime trade and exchanges of culture and people. With the growth of urban centers, leisure time, and disposable income, coastal tourism has flourished into one of the fastest growing industries in the world. Although the numbers are hard to quantify, as this issue of Environment Matters points out, estimates of the annual contribution of coastal and marine ecosystem goods and services to the global economy have exceeded $20 trillion, over a third of the gross world product. Nonmarket values such as biodiversity and climate regulation are incalculable, and the spiritual worth of an intact seascape and the wonder of a coral reef are impossible to quantify. Yet for all the benefits they provide to humankind and the planet, marine ecosystems are grossly undervalued in our calculus of development trade-offs and the investments we are willing to make to preserve precious natural capital. Our inability to adequately capture and account for these values, nurtured by our land-centric bias, has greatly jeopardized the health of marine ecosystems and their ability to continue to provide essential services in fisheries productivity, tourism amenities, coastal protection, and CO2 uptake. The last two decades have seen a rapid loss of critical wetlands and coral reefs. The UN Food and Agriculture Organization reports that 20 percent of the world's mangroves were lost between 1980 and 2005. Some 16 percent of the world's coral reefs died in the wake of widespread coral bleaching tied to the El Niño events of 1997. While some reefs have recovered, others are succumbing rapidly to a combination of human and climate-change-related impacts. Under a business-as-usual scenario, scientists warn that we may witness the disappearance of coral reefs in our lifetime. The loss of these vital ecosystems and their services cannot be measured only in economic terms. Provisioning and regulating services from these systems are the lifeblood of coastal populations around the world, but especially the small-island developing states, whose people are almost completely dependent on healthy marine systems for food, livelihoods, and coastal protection. Vulnerability will only increase with climate change. Sea level rise, increased storm activity, a warming and acidifying ocean, and a greater incidence of disease are all predictable effects of climate change. Countering these effects will require far greater investments--of both political and financial capital--in coastal zone management, control of land-based pollution, and stewardship of fish stocks. Maintaining robust and resilient ecosystems in the face of climate change is one of the best defenses we can mount. Science tells us this, countries are demanding this, and we must gear up to respond. While this edition of Environment Matters is alarming in some aspects, I hope you find it instructive in describing the challenges we face and some of the solutions before us. © 2009 The International Bank for Reconstruction and Development / THE WORLD BANK Welcome 1818 H Street, NW to Washington, DC 20433 All rights reserved. Environment Matters is a magazine of the matters. World Bank Group. You will also find the magazine on the Bank's website -- http:// www.worldbank.org/environmentmatters . . Sustainable Development Network Vice President Katherine Sierra ur blue planet is 70 percent ocean--one interconnected body of water that wraps around the globe. e ocean is the origin of life on Earth and its greatest source of biodiversity. It provides Environment Director James Warren Evans vast quantities of food and stores carbon, a critical service in an era of climate change. Yet these vital ocean services have been treated as free goods, and the marine and coastal ecosystems that provide Environment Matters is produced by the them have consequently declined through overuse, pollution, and physical destruction. Climate change now following World Bank Environment staff: threatens to push many of these systems over the edge, with severe consequences for society, but especially the Technical Editor: Marea E. Hatziolos world's poor. Managing Editor: Jim Cantrell Story Editor: Robert T. Livernash Designer and Photo Editor: Jim Cantrell e theme of this issue of Environment Matters is valuing coastal and marine ecosystem services and their Associate Editor: Maria Beatriz Garcia contributions to sustainable development. Anada Tiéga, secretary general of the Ramsar Secretariat, recounts the myriad services provided by wetlands and their multiple benefits to communities. Professor Special Contributors Helena Naber M.S. Swaminathan, founder and chair- man of the MS Swaminathan Research Jeffrey A. Brez Foundation and world-famous agricultural scientist, emphasizes the disproportion- Linda Starke ate importance of these natural assets to the rural poor and their dependence Jeffrey Lecksell Annaliese Alex Wiederspahn on coastal and marine resources for liveli- hoods, nutrition, and social resilience. Alexandra Sears Glenn-Marie Lange of the Earth Institute at Columbia University and Narriman Jiddawi of the Institute of Marine Sciences of the University of Dar es Salaam describe how economic valuation can be applied to assess the value of coral reefs and mangroves to the economy of Zanzibar. e Bank's Stefano Pagiola describes the Notes: challenges of adapting a system of payments for environmental services (PES) to coastal ecosystems, while Walter Vergara and his team warn of the consequences of losing coral reefs in the Caribbean to climate change. All $ = U.S. dollars except where noted. All tons = metric tons. IBRD maps numbered 31562 through Regional reviews offer a brief inventory of the range of coastal and marine ecosystems that characterize each 31567 contained in the Regional section of region, their status, and the value of goods and services they provide to coastal economies and to community the magazine were produced by the Map Design Unit of the World Bank. The bound- livelihoods. e heightened exposure of coastal populations, and particularly small-island developing states, aries, colors, denominations, and any other information shown on these maps do not to sea level rise, increased storm surge, and flooding and saltwater intrusion carries far greater risk as coral imply, on the part of the World Bank Group, reefs succumb to bleaching and acidification and as mangroves and coastal forests are reclaimed for coastal any judgment on the legal status of any ter- ritory, or any endorsement or acceptance of development. such boundaries. The countries identified by name on these maps are countries to which the Bank provides development assistance How is the World Bank Group responding to these challenges? It is ramping up investments in sustainable in the form of loans or advisory services, and for which the Bank has a designated fisheries through good governance and legal and policy reforms, supporting marine biodiversity conservation official responsible for the country. through the establishment and comanagement of marine protected areas, and introducing alternative livelihoods to relieve pressure on natural resources. It is also promoting integrated coastal zone management through institutional strengthening and more robust regulatory frameworks. Finally, by demonstrating the links between sustainable coastal resources management and social and ecological resilience to climate change, the Bank is helping build the political will required for countries to invest in protecting their natural capital now as part of a no-regrets policy for the future. Marea E. Hatziolos Senior Environmental Specialist Environment Department Printed with soy ink. C O V E R I M A G E World Bank Publications Information: Boy swimming over reef, Solomon Islands: 202-473-1155 © Stephen Frink/CORBIS General Inquiries: 202-473-3641 Department Fax: 202-477-0565 Web address: www.worldbank.org/environment Dear Readers -- Please help us update our subscriber database by sending your The World Bank Group current email address to ematters@worldbank.org. We will use it to notify readers 1818 H Street, N.W. Washington, D.C. 20433 electronically about future issues and new on-line data on our website. Thank you! Contents Annual Review · 2008 News Updates (inside front cover) A Letter from Katherine Sierra, Vice President of 1 the Sustainable Development Network Director's Overview -- James Warren Evans 4 Viewpoints We Must Value and Conserve 6 Our Coastal Wetlands Maintaining coastal wetlands and their services, which are im- mensely valuable, is a critical part of the development future, according to Anada Tiéga, secretary general of the Ramsar Convention on Wetlands. Valuing Ecosystem Services of Coastal 8 Zones: Challenges for India New Publications 23 India needs integrated approaches to solve the problems of coastal-zone ecosystems, writes Prof. M.S. Swaminathan. Regional Reviews Reviews of work in the Bank's six Regions focus on efforts to Feature Articles preserve and maintain coastal ecosystems. Marine Conservation: How Economic Valuation 10 Sub-Saharan Africa Region 24 of Ecosystem Services Can Help Using Zanzibar as a case study, Glenn-Marie Lange and Narri- East Asia and Pacific Region 28 man Jiddawi discuss how employing an "environmental account- Europe and Central Asia Region 32 ing" approach to the valuation of marine ecosystems can be a Latin America and the Caribbean Region 36 powerful management tool for government decision makers. Middle East and North Africa Region 40 Can Payments for Environmental Services Help 14 South Asia Region 44 Protect Coastal and Marine Areas? Though challenging, it may be possible in some cases to use the payments for environmental services (PES) approach to help Institutional safeguard coastal and marine areas, writes Stefano Pagiola. Private Sector Contributions to Improved 48 Improved Governance of Marine Fisheries Can 18 Coastal and Marine Resource Management Recover up to $50 Billion Annually The International Finance Corporation's current investment portfolio sup- Poor fisheries management means that the annual economic ports different approaches through which the private sector can contribute benefits from global marine fisheries are $50 billion less than to and create incentives for the sustainable management of coastal and they could be, according to a new report produced by the World marine ecosystems and their services, writes Robert Gerrits. Bank and the Food and Agriculture Organization of the United Nations. A Policy and Legal Framework Supporting 51 Payments for Ecosystem Services The Consequences of Climate-Induced Coral 20 To ensure sustainable PES schemes, countries need supporting Loss in the Caribbean by 2050­80 legal and institutional frameworks, write Patrice Talla Takoukam Written by Walter Vergara and others. and Sachiko Morita. Coastal and Marine Resources A Hidden Treasure Sperling C rankF D I R E C T O R ' S O V E R V I E W -- James Warren evans EnvironmEnt DEpartmEnt oastal and marine ecosystems play change materialize, the value of carbon we do not yet fully understand the relation- a complex and vital role in supporting storage is certain to increase. Furthermore, ship of such highly diverse ecosystems to economic prosperity and social welfare that value will increasingly be recognized offshore ocean environments. As Vergara in developing countries. They sustain the by governmental entities. and others point out (see page 20), we livelihoods of millions of poor households, must now contemplate the complete loss provide multiple ecosystem services that Climate change is also expected to be ac- of coral ecosystems, and the impact of that are essential for life, yield vast amounts companied by an increase in the intensity loss cannot possibly be measured only in of food, and play a critical role in driving of coastal storms. Coastal ecosystems can economic terms. weather and climate. play a valuable role in absorbing the impacts of these storms, so we can reason- Why does valuation matter? Certainly, it As we progress further into the 21st ably anticipate that the value of these matters in the political context. In the day- century, the importance of these coastal coastal systems as buffers will increase in to-day work of decision makers, putting and marine resources is certain to increase. the coming decades. even rough valuation numbers on these Both in absolute terms and as a proportion services can help make the case that govern- of the whole, more of the world's popula- Valuation of indirect ecosystem services, ments, private enterprise, and international tion will live along or near coastal areas. If such as the regulating role of coastal and institutions must make investments in the we are to make further inroads in reducing marine resources in providing habitat for sustainable management, protection, and poverty around the world, it will be vitally fish, as a receptor for wastewater, or to restoration of such services. important to manage coastal and marine control beach erosion, is weak. As Lange resources more sustainably. and Jiddawi point out (see page 10), these In Zanzibar, for example, the fact that nonmarket services are an important marine ecosystem services support nearly In many of the articles presented here, a input in provisioning services with direct one-third of that nation's GDP certainly recurring theme is that coastal and marine economic value, such as fisheries or the should alert decision makers to the stakes ecosystem services are undervalued. In the viewing of coral reefs by tourists. that are at risk. It also should engage the at- case of coastal wetlands, Tiéga notes that tention of decision makers that 75 percent we have not yet fully recognized the major of global fish stocks are fully exploited or role different coastal and inland wetlands Better Valuation: Priceless depleted and that there is gross overcapac- play in the global carbon cycle--for ity in global fishing fleets--reducing the example, the role of intertidal marshes or It is clear that some supporting services are annual economic benefits from global forested coastal systems such as mangroves immensely valuable yet are not amenable marine fisheries by about $50 billion a in carbon sequestration and storage (see to economic valuation. The loss of corals year, according to a new World Bank/FAO page 6). As the predicted impacts of climate can have measurable economic costs, but report, The Sunken Billions (see page 18). 4 EnvironmEnt mattErs · 2008 Overview with an assured stake in the benefits that Black Sea Basin and other programs in the coastal and marine resources can provide. Mediterranean Sea, the Bank is increasingly As the case of Zanzibar makes clear, local cognizant of the importance of reducing communities often receive only a fraction pollution from land-based sources into of the benefits produced by coastal and large water bodies and coastal zones, marine ecosystems. including discharges of untreated urban wastewater and agricultural runoff. At the global level, we face significantly different challenges. How, for example, can Given the fact that some impacts of global LLC we reduce global fishing effort and rebuild climate change, particularly sea level rise Images global fish stocks? As Kelleher suggests and storm surge, now seem inevitable, the (see page 18), fisheries reform "requires Bank also is investing in prudent initiatives Shutterstockbroad-based political will founded on a to adapt to these impacts. In the Bay of social consensus. Social safety nets and Bengal, where coastal communities are Getting the Policies and the creation of alternative livelihoods can particularly vulnerable to sea level rise, be an important element of reform. These the Bank--through the Global Environ- Institutions Right reforms can be integrated with poverty ment Facility and in partnership with reduction programs and other instruments the Food and Agriculture Organization of economic and social development." of the United Nations--is supporting a Valuation is one part of the challenge, Sustainable fisheries, he adds, "require transboundary diagnostic analysis of the but there are many other factors at play. political will to replace incentives for priority environmental issues that will need As with so many environmental issues, overfishing with incentives for responsible to be addressed in a strategic action plan many authors point to the fragmentation stewardship." for the Bay of Bengal. of government responsibilities and the cross-sectoral nature of these issues as a key More broadly, the Bank is making real challenge going forward. As Swaminathan, The Bank's Response progress in mainstreaming climate vulner- Damodaran, and Vel note (see page 8), ability and risk management into country overlapping jurisdictions and mandates The World Bank's engagement in these dialogue and into working with client have tended to fragment governmental issues is growing. We are increasingly countries. We have improved our under- interventions in coastal areas and overlook prepared to invest in strengthening gover- standing of country-specific adaptation the role of shore communities and local nance and policy regimes to better manage challenges, achieved greater inclusion of stakeholders. Greater reliance on stake- marine fisheries at levels that are both more adaptation in Country Assistance Strate- holder consultation and conflict resolution environmentally sustainable and more gies, launched a "screening tool" to help can help overcome these problems. profitable, as well as to reduce illegal fish- identify climate risks, and worked with the ing and to encourage private investment Global Facility for Disaster Risk Reduction Greater appreciation of coastal resources in local sustainable fish production. For and Recovery to integrate climate change. also can result in positive changes in example, theWest Africa Regional Fisheries In IDA projects, support for comprehen- governmental regulations. In India, for Project ($90 million GEF/IDA) will help sive climate risk management will likely be example, new coastal zone regulations have countries sustainably generate more local the largest source of funding for adaptation created conditions for the consolidation wealth from fish resources. In Asia, the in the least developed countries in the and strengthening of management of Bank is investing in alternative income immediate future. critical mangrove and coral reef estuaries generation options. Seaweed farming, an for conservation. The idea behind all alternative livelihood, is an example of Our future management of the world's these measures, Swaminathan notes, has a small-scale solution to overfishing; the coastal and marine ecosystems will play been "to optimize the ability of coastal Bank supports such programs in Indonesia an absolutely critical role in deciding the zones to provide ecosystem services for and the Philippines. The Bank is also sup- fate of the global environment, not to local communities, resulting in improved porting community-based coastal fisheries mention the future prospects for hundreds livelihoods as well as incentives for better resources management. of millions of poor people living in coastal environmental stewardship." To ensure areas who rely on the benefits of coastal and long-term success, it is vital to provide As illustrated by the Strategic Partnership marine ecosystems for their basic needs. stakeholders and local coastal communities for Nutrient Reduction in the Danube/ annual rEviEw · July 2007­JunE 2008 (Fy08) 5 Anada Tiéga Secretary General The Convention on Wetlands Ramsar Secretariat T he services provided by wetland ecosystems are wetlands also play an important role in many other areas immense, arguably at least $14 trillion per year, that affect human livelihoods, including food security according to the 2005 Millennium Ecosystem and health care, flood control, shoreline stabilization and Assessment. Yet the value of these services still re- storm protection, water purification, sediment and nu- mains widely unappreciated, as we are continu- trient retention, climate change mitigation and adapta- ing to destroy both coastal and inland wetlands tion, recreation and tourism, and enrichment of cultural faster than any other ecosystem. We need to radically shift values. For example, recent studies have calculated that our thinking and decision making to recognize coastal for the coastal areas of the United States, coastal wet- wetlands as key tools for our future livelihoods. lands provide $23 billion each year in storm protection services. Under the Ramsar Convention on Wetlands, wetlands include all coastal and nearshore marine systems to a The multiple roles of wetland ecosystems and their val- permanent inundation depth of six meters. Such systems ue to humanity are increasingly understood and docu- include marine subtidal aquatic beds; coral reefs; rocky mented. This has led to massive expenditures to restore marine shores; sand, shingle, or pebble shores; estua- lost or degraded hydrological and biological functions of rine waters; intertidal mud, sand, or salt flats; intertidal wetlands. However, there is also ample evidence that it marshes; intertidal forested wetlands such as mangroves; is much more cost-effective to maintain our coastal wet- coastal brackish/saline lagoons; coastal freshwater la- lands than to restore systems that have been degraded or goons; and karst and cave systems. Coastal wetlands also destroyed. Restoration alone is not enough; we have to are integral parts of large marine ecosystems--the regions improve sustainable management practices on a signifi- of ocean and coastal space that encompass river basins cant global scale, particularly as the world's leaders try to and estuaries and extend out to the seaward boundary of cope with the accelerating water crisis and the effects of continental shelves and the seaward margins of coastal climate change. current systems. Although we know an increasing amount about the values Many studies highlight the vital role of coastal zone man- of different wetlands, including coastal systems, the sci- agement. For instance, coastal habitats provide over 80 ence of ecosystem valuation is still developing and evolv- percent of the marine fish that humans consume. Coastal ing, and much more needs to be done to understand the 6 EnvironmEnt mattErs · 2008 V IE W P O INT s full value of such systems. For example, we have not yet wetland values, including biodiversity, fisheries, and the fully recognized the major role different coastal and in- management of marine protected areas. Both the World land wetlands play in the global carbon cycle. We can an- Bank'sworkandtheexperienceoftheRamsarConvention ticipate that forested coastal systems such as mangroves emphasize that the conservation and wise use of coastal are playing a role in carbon sequestration and storage. wetlands are potentially affected when development oc- A recent assessment by the Ramsar STRP also indicates curs along the coasts or when resources are extracted or that wetlands--particularly intertidal marshes such as salt altered. It is also encouraging to recognize that many marshes--play a major role in carbon storage that may countries are taking major steps to conserve, restore, and be an order of magnitude greater than for many inland enhance the wise use of the multiple values of wetlands. peatlands. While there is still uncertainty over the precise For example, Coastal America's Corporate Wetland Res- figures, it is becoming clear that we need to pay much toration Partnership--with more than 400 corporations more attention to maintaining the ecological character and NGOs working together to provide matching funds of such coastal wetlands not only for their services such and in-kind services--has made significant contributions as food and coastal protection, but also in our climate to wetland restoration and protection. mitigation and adaptation strategies. Many coastal wetlands have major aesthetic and recre- Integrated coastal management is an important orga- ational value. In Asia and Pacific developing countries, as nizing principle that can have positive results on many well as in Africa's small-island countries such as Mauri- tius and the Seychelles, tropical coastal tourism is a major industry, contributing significantly to economic growth and local employment. However, we have to recognize that coastal tourism is dependent on the natural environ- ment. In this regard, the trends are not always good; in some cases, biodiversity hotspots are increasingly being turned into tourism hotspots. It is important to recog- nize that the coastal ecosystem of small islands is particu- larly vulnerable to ecological damage caused by excessive numbers of tourists. Inadequate tourism planning can lead to unsustainable coastal tourism, with significant di- rect and indirect impacts on biodiversity conservation. The Contracting Parties to the Ramsar Convention met for their 10th Conference (COP10) in late October 2008. The meeting was hosted by the Republic of Ko- rea. Participating governments paid particular attention to the closely interrelated issues of water, human health, climate change, food security, poverty reduction, and hu- man well-being in relation to the key role of wetlands. COP10 provided an opportunity for all governments, and not just those parts of governments directly respon- sible for wetlands, to stress that the success of all devel- opment sectors depends on maintaining wetlands and their services, as much as wetlands themselves depend on decisions made in other sectors. Working more closely together for a sustainable wetland future will be critical. LLC Anada Tiéga, Secretary General, The Ramsar Convention Secretariat Images 28 Rue Mauverney, CH-1196 Gland, Switzerland Tel. +41 22 999 0180, Fax. +41 22 999 0169 Shutterstock Email: tiega@ramsar.org, Website: www.ramsar.org. annual rEviEw · July 2007­JunE 2008 (Fy08) 7 valuing EcosystEm sErvicEs of coastal zonEs Professor M. S. Swaminathan Member of Parliament (Rajya Sabha), India I ndia's vast area of coastline and estuaries--an esti- the Pitchavaram and Muthupet regions of Tamil Nadu mated 8,000-kilometer coastal belt and estuaries acted like a shield and bore the brunt of the tsunami. The comprising about 2.7 x 104 square kilometers--are impact was mitigated and lives and property of the com- a vital part of its national wealth. Comprised of wet- munities in the region were saved. lands, lagoons, mangroves, and seagrass beds, India's estuaries, linked to the country's vast network of riv- Rehabilitation measures undertaken in the post-tsunami ers, are sources of nutrients and are rich in biodiversity. period in India included restoration of dwellings and They also support rich brackish and marine fish stocks. capital assets of coastal communities, such as fishing Estuaries provide a variety of economic and ecosystem boats and nets. However, in order to achieve their in- functions, including supporting aquaculture activities, tended objective of enduring asset reconstruction, these facilitating navigation, providing fresh water, and recy- measures need to be complemented by significant steps cling nutrients. Estuaries and their greenbelts also make to restore the ecological capital of the affected areas-- an immense contribution to ecosystem resilience and including mangroves and other wetlands. protection from natural disasters, a benefit that has been unappreciated until recently. Over the years, the gradual decline of community prop- erty resources denied coastal communities their tradi- Yet as rich and diverse as these ecosystems are, they are tional rights to shoreland resources such as small timber under considerable stress. Demographic pressures--more and husks (Damodaran 2005). This, in turn, reduced in- than 300 million people live in India's coastal areas--have come diversification options for these communities. Un- had significant impacts, including the extension of settle- til the 1980s, investment in coastal management in India ments and industrial activities. Pollution is another sig- was designed to secure higher efficiency in fishing opera- nificant issue. In spite of programmatic interventions on tions. This changed in the early 1980s, when new coastal the part of the central and state governments to control zone management guidelines took effect, puting brakes point source pollution in coastal areas, the incidence of on development projects--such as energy-intensive fish- land-based pollution is very high in India's coastal areas. eries and the construction of tourism amenities with unsustainable features. In addition, these coastal zone Natural disasters have also played an important role in the regulations placed restrictions on the use of shorelands dynamics of India's coastal zone. Following the December for recreation purposes in the sensitive (and regulated) 2004 tsunami in the southern Indian Ocean, millions of coastal zone closest to the high-tide line. A consequence people--mainly in small coastal communities--lost their of India's coastal zone regulations has been the favorable livelihoods. However, in pockets where estuary manage- condition created for the takeover of critical mangrove ment was sustainable, mangroves and reefs absorbed the and coral reef estuaries for conservation. Similarly, de- onslaught of the tsunami. For instance, the mangroves in graded shorelands have been restored through afforesta- 8 EnvironmEnt mattErs · 2008 V IE W P O INT s tion and conservation activities. The idea behind all these Valuing coastal resources and the ecosystem services they measures has been to optimize the ability of coastal zones provide appropriately is essential to accurately calculat- to provide ecosystem services for local communities, re- ing tradeoffs in investment decisions in the coastal zone. sulting in improved livelihoods as well as incentives for If coastal areas are protected based on their biodiversity better environmental stewardship. and natural capital wealth and discount rates are set ap- propriately, cost-benefit analysis will be able to yield the Due to overlapping jurisdictions and mandates, public right results for conservation causes. Such a system could interventions in shore areas in the past have resulted in also contribute to the emergence of a scheme of payments fragmented governance patterns that have denied shore for ecosystem services rendered by estuaries. Still better communities the opportunity to optimize their livelihood would be a system of coastal resource valuation that cap- options. Integrated coastal zone management principles, tures option values that run the risk of not getting real- which include stakeholder consultation and conflict ized due to irreversible land use and habitat change in resolution, can help overcome fragmented governance coastal areas due to development projects. and non-community-based systems of shoreland man- agement, thus strengthening community empowerment. To sum up, the challenge before policy makers in India The ideal of sustainable livelihoods for coastal communi- is enormous when it comes to capturing and valuing the ties will bear fruit only under such circumstances. ecosystem services provided by India's coastal areas and estuaries. Integrated coastal zone management calls for a In 2005, a high-level government committee chaired by slew of measures involving resource valuation and guided the author comprehensively reviewed shore-zone regula- investments, which need to be backed by economic in- tions and suggested measures to reconcile the goals of struments that are employed in creative ways. It is obvi- development with that of conservation. The commit- ous that the biodiversity and livelihood significance of tee recommended integrated approaches to solving the India's coastal areas and estuaries is too important for problems of shore-zone ecosystems. The elements of in- these key habitats to be valued only for their real estate tegrated shore management included "area planning," and recreational values. which is based on intergenerational equity, promotion of economic development, stewardship of resources for conserving biodiversity, conflict resolution, protection of public safety to meet natural hazards, and proprietorship Bibliography of public submerged lands and waters in a manner that ensures economic returns to the public from government- Damodaran, A. 2005. "Coastal Resource Complexes of South India: held shore areas (Swaminathan and others 2004). Options for Sustainable Management." Journal of Environmental Management 79: 64­73. While the principles of integrated coastal zone manage- Swaminathan, M. S., and others. 2004. "Report of Committee to ment are sound, more needs to be done at the policy Review Coastal Regulation Zone Notification, 1991." Ministry of level to make it sustainable. There is a need for integrated Environment and Forests, India. Available at: http://envfor.nic.in/ environmental policies that capture environmental exter- news/janmar05/swaminathan.pdf nalities and internalize them into development decision- making. Currently in India, for example, market-based Zingde, M. D. undated. "Estuaries of India -- Their Environmen- instruments such as water fees are levied on industries tal Status and Management Strategies." Available at: www.nio.res.in/ to reduce unsustainable water consumption by indus- past_events/mandovi_zuari/zingde.pdf tries. But these fees do not take into account wastewa- ter generation and contamination of waterways. Coastal Professor M. S. Swaminathan industries that discharge wastewater directly into nearby Member of Parliament (Rajya Sabha), India estuaries need to be assessed differently for their waste- Dr. A. Damodaran water. Incentives for such industries--such as rebates for Professor of Economics, Indian Institute of Management, Bangalore, India Dr. A. Senthil Vel cleaner production processes--could be effective. Additional Director, Ministry of Environment & Forests, Government of India annual rEviEw · July 2007­JunE 2008 (Fy08) 9 Marine Conservation How Economic Valuation of Ecosystem Services Can Help M arine ecosystem services To engage decision makers at the macro- demonstrate to macroeconomists the role of are seriously undervalued, economic level, we must demonstrate what sustainable marine ecosystem management resulting in underinvest- their stake is. We do this by integrating in achieving poverty reduction goals. ment in conservation and ecosystem values with national income ac- lost opportunities for economic growth counts to show the ecosystem's influence The Earth Institute at Columbia University and poverty reduction. Economic valuation on the major indicators of macroeconomic and the Institute of Marine Sciences, Uni- provides stakeholders with a powerful tool performance, such as the contribution to versity of Dar Es Salaam, collaborated to for decision making by showing how depen- GDP, employment, and the balance of pay- apply this "environmental accounting" ap- dent the economy is on an ecosystem and ments. But it is not sufficient just to esti- proach to the economic valuation of marine what would be lost if the ecosystem is not mate values; the distribution of benefits is ecosystems in Zanzibar. protected. When integrated with the na- crucial both for sector-level managers and tional income accounts, economic valuation macroeconomists. can help two distinct but equally important groups: (1) line ministries, the private sec- At the sectoral level, information about Economic Growth tor, and civil society organizations directly the distribution of benefits contributes to involved in the use and management of the improved management. Countless studies and Threats to the marine ecosystem and (2) agencies with have shown that incentives for sustainable Marine Ecosystem responsibility at the macroeconomic level-- management are strongest when benefits ac- like the Ministry of Finance--that control crue to those who steward natural resources. Zanzibar is a small, densely populated island the national budget and make policies that At the macroeconomic level, policy makers archipelago off the coast of Tanzania with indirectly affect the marine ecosystem. The in many countries have adopted develop- many endangered and rare species of corals, former are often quite receptive to valuation ment plans in which poverty reduction has fish, seagrass, mangroves, and other flora studies, which can clearly help them with joined the traditional macroeconomic goals and fauna. Its population of 1.1 million is management. The latter have no direct re- of economic growth and stability. Valuation highly dependent on the marine ecosystem, sponsibility for the marine ecosystem and that shows the distribution of incomes from which accounts for 30 percent of GDP. But mustbeconvincedthatthey,too,haveastake marine ecosystem services, especially the despite its clear economic importance, the in sustainable ecosystem management. share accruing to poor communities, can marine ecosystem is seriously degraded due 10 EnvironmEnt mattErs · 2008 Feature Articles We wanted to understand why degradation ings (see Table, below). Tourism is by far of the ecosystem occurred in Zanzibar and the most economically important marine identify opportunities to promote marine ecosystem service, accounting for most of conservation and sustainable development the income, foreign exchange, and invest- in the future. To do so, we explored the ment. However, it does not generate very value of marine ecosystem services in the much employment--and many of those macroeconomy, how economic benefits are employed are non-Zanzibaris or Zanzibaris distributed among different stakeholders, from outside the local communities where and the incentives or disincentives this cre- tourism activities are based. ates for marine conservation. There are several additional, but unpriced, marine ecosystem services. Education and research services are provided through sev- Marine Ecosystem eral institutions of local, regional, and in- Services and the ternational significance. Critical regulating egnaLeiraM-nnelG services include habitat for fisheries, waste- Macroeconomy water assimilation, and control of beach ero- sion by seagrass beds and coral reefs. These Poverty is extensive in Zanzibar; roughly nonmarket services are what economists call 50 percent of the population falls below the "indirect" ecosystem services because their to both human and natural causes, includ- poverty line, and average per capita GDP economic value derives from their use as an ing uncontrolled tourism development, was only $415 in 2007. The major marine- input to something else that has direct eco- rapid population growth, overfishing and based economic activities include tourism, nomic value, such as fisheries or the viewing destructive fishing practices, overharvesting fishing, seaweed farming, and mangrove of coral reefs by tourists. The ecological in- of mangroves, dumping of untreated waste- harvesting. They account for 30 percent formation necessary for economic valuation water from urban areas, and periodic coral of GDP, 77 percent of investment, a large is not currently available, but evidence from bleaching. Why has this happened? share of formal sector employment, and around the world indicates that these ser- most of the nation's foreign exchange earn- vices have a high value. Twenty-five years ago, local communities in Zanzibar were responsible for managing Table Contribution of marine ecosystem services to the macroeconomy the marine ecosystem and received all the in Zanzibar, 2007 benefits. Harvesting of fish and other ma- GDP (income Share Foreign exchange Share of invest- rine products was the only major marine generated, of GDP earnings Employ- ment, 2003­ thousand $) (%) (thousand $) ment 2007* (%) activity. Since then, tourism has grown rap- Provisioning services idly, largely to take advantage of the island's spectacular beaches and coral reefs and its Seaweed farming 1,663 0.4 2,397 16,422 Fishing** rich cultural heritage, which merited des- 29,179 6.2 37,203 1 Mangrove harvesting 28 unknown ignation as a World Heritage Site. From Recreation and 1985 to 2007, Zanzibar's tourism-based tourism services 119,636 23.6 184,929 9,351 + 76 economy experienced rapid growth--an- Total value 150,506 30.2 187,326 62,976 + 77 nual tourist arrivals increased from about Other ecosystem services, nonmarket 19,000 to 220,000. However, the impact Education and Value unknown, but likely to be significant of this growth on the marine environment Research Regulating services: was largely overlooked. Furthermore, lo- Fisheries habitat, waste- Value unknown but likely to be significant cal communities had little stake in the new water assimilation, shore protection economy. Notes: blank indicates negligible or zero value. *Cumulative value of investment projects approved by the Zanzibar Investment Promotion authority. **Only artisanal fishing is included here, not deep-sea fishing, which is licensed to foreign operators. Source: adapted from lange and Jiddawi (forthcoming). annual rEviEw · julY 2007­junE 2008 (fY08) 11 Who Benefits from Marine Ecosystem egnaLeiraM-nnelG Services in Zanzibar? Of the major economic activities based on the marine ecosystem, all but tourism de- liver most of their benefits to local commu- nities (see Table, below). Local communities receive only 20 percent of income from tourism, while 80 percent of income goes to stakeholders outside local communi- ties: other Zanzibaris (13 percent), govern- ment (15 percent), and non-Zanzibaris (52 percent). to support local processing. Most farmers Fishing. Fishing is mainly an inshore, ar- Commercial Seaweed Farming. Com- earn very little due to a combination of low tisanal operation involving about 34,000 mercial seaweed farming was introduced in global prices for seaweed and low farm pro- fishers and another 3,000 people in the the late 1980s and now involves more than ductivity; even the exporters currently earn transport and marketing sectors. (Foreign- 16,000 farmers, mainly women. Seaweed ers are licensed to fish offshore within the provides carrageenan, a thickening and gell- very little under current market conditions. 200-mile EEZ.) Nearly half the vessels are ing agent used mainly in processed foods, The role of seaweed farming in economic dugout canoes; only 11 percent of boats are dairy products, and other products such as development is controversial, but for many motorized. In 2007, the catch was nearly toothpaste. The raw material is sold to a few rural women it is still the only source of cash 26,000 tons, most sold without further pro- companies for export--too little is grown income. cessing in local markets. Overfishing and de- structive fishing practices have contributed Table Distribution of income from marine ecosystem services in Zanzibar, 2007 to the decline of Zanzibar's marine ecosys- (thousand $) tem. But in an environment of low incomes Zanzibari beneficiaries and rapid population growth in largely Zanzibaris unregulated, open-access fisheries, there is outside insufficient incentive to change. Changing Local com- local com- Govern- Non-Zanzibari munities munities ment beneficiaries Total this behavior would require much greater involvement with--and income from-- Provisioning services activities that depend on healthy coral reefs Seaweed farming 1,616 46 1,662 and fisheries. Fishing* 29,179 29,179 Mangrove harvesting 28 28 Recreation &Tourism Mangrove Harvesting. Mangrove harvest- services 23,903 15,211 17,495 63,028 119,637 ing is presently a minor activity because of Total value 54,726 15,211 17,541 63,028 150,506 the massive loss of mangrove forests, partic- Other ecosystem services, nonmarket ularly on the main island of Unguja. Only education & research X XX XX XX Na an estimated 20,000 hectares of mangroves Regulating services remain, mostly on Pemba. Fisheries habitat XX X X X Na Wastewater assimilation XX X X XX Na Tourism. Tourism is by far the most im- Shore protection XX X X XX Na portant ecosystem service in terms of mac- Notes: blank indicates zero or negligible value. roeconomic indicators. But the benefits of Na: not available tourism mostly go to non-Zanzibaris rather *Only artisanal fishing is included here, not deep-sea fishing, which is licensed to foreign operators. "X" indicates the relative importance of service to the stakeholder group for services that cannot be precisely valued. "XX" than local communities. Furthermore, is greater than"X." within the dominant segments of the tour- Source: adapted from lange and Jiddawi (forthcoming). 12 EnvironmEnt mattErs · 2008 Feature Articles ism industry--all-inclusive, "club" tourism, stake in marine conservation. Increased pro- Policy makers worldwide increasingly recog- and large, up-market tourism--economic ductivity in seaweed farming and reduced nize the importance of economic valuation, incentives for marine conservation are not losses from fishing can help increase local but several aspects critical for policy have strong. Many of these tourists go for boat incomes, but large increases in income will often been neglected, such as (a) bringing rides or spice-farm tours, or simply enjoy only come from tourism. Initiatives to in- natural capital into the national income ac- the beach, but do not participate as much crease the provision of local goods to hotels counts in order to involve stakeholders both as other tourists in activities like snorkeling and restaurants will help. Greater participa- at the sectoral and macroeconomic levels; or diving, where the health of coral reefs tion in tourism will require improvements (b) analyzing the distribution of economic and fisheries is essential. The government in education. The development of high-end benefits to understand the incentives and obtains much of its revenue from these seg- tourism will require substantial improve- disincentives for sustainable management; ments of the tourism industry, so it also has ments in infrastructure. and (c) accurately valuing the nonmarket, less incentive to make marine conservation regulating ecosystem services that underpin a priority. By contrast, tourists in the small, Zanzibar, like many countries, has set a the marine economy. To promote marine up-market segment participate the most in goal for tourism development in terms of a conservation, we need (a) a global database diving and snorkeling and have the highest target number of annual visitors. A better of economic valuation studies of marine average daily spending, but constitute the approach would be to set a target revenue ecosystems that can be used by govern- smallest segment of the tourist market. stream and promote the kind of tourism ments, communities, the private sector, and that meets that target with the least impact other stakeholders in development plan- Nonmarket Ecosystem Services. Non- on the environment and most benefit for ning; (b) more training of local environ- market ecosystem services have not been society. On Unguja, Zanzibar's main is- mental economists to carry out economic valued, but it is possible to rank the benefits land, it may be too late because of the large valuation studies; (c) increased dialogue received by different stakeholders. All stake- number of big hotels already built. But it is among stakeholders (scientists, local users holders benefit, but local communities-- possible to reconsider policy for Pemba, a and managers of ecosystems, governments, whose livelihoods from fishing, seaweed relatively pristine island with great ecotour- private sector, NGOs) to understand how farming, and tourism depend most heavily ism potential. to interpret and best use valuation studies; on these services--benefit the most. and (d) increased collaboration between The institutional challenge, common to economists and natural scientists to provide most countries, is the fragmentation of de- accurate, policy-relevant valuation of indi- cision making and management; no single rect ecosystem services like habitat provi- Conclusions and agency has responsibility for all activities af- sion and storm protection. Recommendations fecting the marine ecosystem. Comprehen- sive economic valuation can help overcome Bibliography fragmentation and build a broad, cross-sec- Unless there are shared incentives for sus- toral alliance of stakeholders by quantifying World Bank. 2008. Valuation of Marine Ecosystem Services: Gap Analysis. Environment tainable management, the future of Zan- the common interests and mutual depen- Department. Washington, DC: World Bank. zibar's marine ecosystem is not promising. dence of different stakeholders, and provid- Greater local participation in the tourism ing a scientific basis for assessing trade-offs Lange, G., and N. Jiddawi. (forthcoming.) economy will help, but only if tourism poli- among options for development. "Environmental Accounting for Marine Eco- systems as a Tool to Promote Conservation." cy favors ecotourism, which has the greatest Draft final report for the Pew Fellowship Pro- gram in Marine Conservation. Available at: http://www.columbia.edu/~gl2134/ This article was prepared by Glenn Marie-Lange (GL2134@columbia.edu) of the Earth Institute at Columbia University and Narriman Jiddawi (njiddawi@ims.udsm.ac.tz) of the Institute of Marine Sciences at the University of Dar egnaLeiraM-nnelG es Salaam. Columbia University website: www.columbia.edu. University of Dar es Sa- laam website: www.udsm.ac.tz. annual rEviEw · julY 2007­junE 2008 (fY08) 13 Can Payments for Environmental Services Help Protect Coastal and Marine Areas? I n recent years, considerable efforts that those who benefit from environmental South America, where the effects of Hur- have been devoted in many countries services (such as users of clean water) should ricane Mitch in 1998 underscored the de- to developing systems of payments pay for them, and that those who contrib- pendence of the population, especially poor for environmental services (PES). The ute to generating these services (such as up- people, on environmental services and the PES approach has been developed to address stream land users) should be compensated protection provided by natural ecosystems. the classic problem of environmental exter- for providing them. The approach thus nalities; that is, many of the benefits that an seeks to create mechanisms to arrange for A few developing countries have established ecosystem provides, and the costs resulting transactions between service users and ser- nationwide PES programs. Costa Rica's PES from the loss of those ecosystem services, do vice providers that are in both parties' inter- program, operated by the National Fund not affect those who make decisions about ests, internalizing what would otherwise be for Forest Financing (FONAFIFO), is the how that ecosystem should be managed. As an externality. The PES approach is attrac- oldest. Under the 1997 Forestry Law, land a result, they have little or no incentive to tive in that it (a) generates new financing, users can receive payments for specified land take these offsite benefits into account when which would not otherwise be available for uses, including new plantations, sustainable they make their management decisions, and conservation; (b) is likely to be sustainable, logging, and conservation of natural forests. thus these benefits are often degraded or as it depends on the mutual self-interest of Costa Rica's PES program currently protects lost. For example, farmers stand to receive service users and providers and not on the about 250,000 hectares of forest. Mexico the benefits of the crops they can cultivate whims of government or donor financing; created a similar program in 2003, admin- if they clear forest for cultivation but do not and (c) is likely to be efficient, in that it istered by the National Forest Commission suffer from the ensuing increased erosion. conserves services whose benefits exceed the (CONAFOR), which currently protects Downstream water users suffer from the im- cost of providing them and does not con- about 2 million hectares of forest. Ecua- pact of erosion but have no say in how the serve services when the opposite is true. dor recently announced a plan to establish upstream ecosystems are managed. Under a similar payment program, Socio Bosque. the PES approach, those who benefit from In China, the Sloping Lands Conversion a particular ecosystem service compensate Program (also known as "grain for green") those who manage the ecosystem in such a Experience with PES pays farmers to reforest erosion-prone lands, way that it provides the desired service. with a goal of protecting over 14 million There has been considerable interest in the hectares by 2010. PES is a market-based approach to conserva- use of PES throughout the world. Inter- tion financing based on the twin principles est has been especially high in Central and The vast majority of PES initiatives, how- ever, have been for smaller-scale initiatives 14 EnvironmEnt mattErs · 2008 Feature Articles PES programs. Several projects supporting both national and watershed-scale PES pro- grams are under implementation, and oth- ers are under preparation. The World Bank has also played a pioneering role in helping develop carbon markets for ecosystems, ini- tially through its BioCarbon Fund. The For- est Carbon Partnership Facility, launched in late 2007, will play a similar role for REDD markets. PES in Coastal and CLLsegamIkcotsrettuhSMarine Ecosystems Throughout the world, coastal and marine ecosystems and the valuable environmen- tal services they provide are under severe at the scale of individual watersheds. Service threat. The causes of this degradation are users paying for watershed conservation in- often very similar to those facing terres- clude many municipal water supply systems trial ecosystems: many of the benefits of (ranging in size from that serving Quito, the coastal and marine ecosystems are not re- capital of Ecuador, to those serving small ceived by those who manage them, but by rural townships), hydroelectric power pro- others. Both mangroves and coral reefs, for ducers, irrigated agriculture, and industrial example, play very important roles in the users. Although these initiatives cover much lifecycles of many commercially important smaller areas, they tend to be much more ef- fish. These fish, however, are often caught ficient than the larger, government-financed at some distance from the mangroves and programs. reefs. Thus the benefits of these ecosystems are enjoyed by faraway fishers, not by those There has also been considerable use of the who directly manage them. The latter thus PES approach to sequester carbon, with have limited incentives to protect these eco- buyers seeking emissions reduction cred- systems. In principle, it therefore seems that its--necessary to satisfy obligations under PES could help protect these ecosystems. national laws or the Kyoto Protocol--by To date, however, no PES programs have paying for reforestation or afforestation ac- been implemented for coastal and marine tivities in developing countries. There is also ecosystems. an active voluntary ("retail") market for sale of carbon emission reductions to individu- Before examining the challenges to imple- als or firms wishing to reduce their carbon menting a PES approach for coastal and footprint. Negotiations are under way to marine ecosystems, it is important to bear expand eligible activities under the Reduced in mind that not all problems are amenable Emissions from Deforestation and forest to PES as a solution. When coral reefs are Degradation (REDD) approach. degraded by cyanide or dynamite fishing, for example, the problem is not primarily The World Bank has been active in sup- one of externalities but of open access--the porting its client countries in implementing "tragedy of the commons." Fishers use these CLLsegamIkcotsrettuhS annual rEviEw · julY 2007­junE 2008 (fY08) 15 techniques to capture, easily and cheaply, erate. In such cases, the most practical so- tourists. Moreover, such direct uses must be some of the direct benefits of reefs. They lution is to seek to generate revenues from carefully managed to avoid damaging the may be well aware that their efforts are those on-site benefits through direct user very asset they depend on. damaging the reef but have no incentive to fees rather than through PES. On-site ben- modify their behavior because others might efits are generally much easier to charge for, Emerging lessons from the application of step in their place. A PES approach would because direct access to the site is necessary PES in watersheds and for carbon sequestra- not be applicable to these cases, as there to enjoy on-site benefits. This makes entry tion suggest the steps that would be needed would be no limit to the number of poten- fees for marine protected areas, for example, to implement PES programs in coastal and tial claimants. A minimal level of tenure se- a viable financing mechanism whenever ac- marine areas. The first step is to clearly iden- curity is necessary before PES can be used. cess can be controlled. Even voluntary en- tify the services that the ecosystem is provid- Likewise, the threat to reefs caused by rising try fees have sometimes proved successful. ing and the users of those services. To the temperatures resulting from global climate The revenue generated by a voluntary fee extent possible, it is useful to quantify the change cannot be addressed with PES. Only program instituted by the Cancun Marine service levels that users receive, and how mitigating global climate change will help. Park, for example, was enough to double its they would change if the ecosystem were de- operating budget. This approach has already graded. The second step is to develop ways Inmanycases,coastalandmarineecosystems been applied successfully in many reef areas. to charge service users. Ideally, service users provide valuable on-site benefits in addition It obviously has its limits, however, as not would be charged directly, but in some cases to whatever off-site benefits they might gen- all reefs can attract a sufficient number of this is impossible or impractical. In these CLLsegamIkcotsrettuhS 16 EnvironmEnt mattErs · 2008 Feature Articles cases, it then becomes necessary for the gov- be based on either a close understanding of fund watershed conservation, yet irrigation ernment or another third party to step in. the ecology of the ecosystems concerned or is almost universally exempted from paying This should generally be a last resort, how- through statistical analysis, as in the case of these fees despite being the largest single ever, as many of the advantages of PES may the Gulf of California research. water user. be lost. The third step is to develop payment systems that reach ecosystem managers and Documenting the link between ecosys- There are thus considerable challenges to the induce them to change their behavior in the tems and their users is only the first step, use of PES to safeguard coastal and marine desired way. Finally, institutions must be however. Turning this link into a flow of ecosystems--particularly for user-financed established to implement the mechanism. payments is the second major hurdle. The PES programs. These are likely to be greater Of these steps, the first and second usually situation in the Gulf of California illustrates than for many other ecosystems, because prove to be the biggest hurdles; this is likely this challenge. The fisheries involved are the very nature of coastal and marine eco- to be true for coastal and marine ecosystems mainly small-scale, artisanal fisheries. The systems makes cause-and-effect relation- as well. main problem in getting them to pay for ships between ecosystem condition and the the services they receive from mangroves is services provided harder to establish and be- Identifying and quantifying the specific not, as is commonly supposed, that these cause the actors involved are more often nu- services that ecosystems provide, and how fishers have relatively low income levels. If merous and dispersed, leading to significant they would be affected by ecosystem degra- the mangroves collapsed, their income levels collective action problems. Harder does not dation, is a critical first step. It is difficult to would be even lower. They would be better mean impossible, however. The low-hang- induce people to pay for a service if that ser- off with the mangroves, even if they had to ing fruit are likely to be cases in which the vice and the benefits it brings them are not pay for their conservation, than they would benefits provided are relatively short-range, clearly defined. In a watershed context, ex- be without the mangroves and without the such as coastal protection, so that cause- perience shows that it is better to begin with cost of conservation. There are many exam- and-effect relationships are relatively easy to a problem affecting specific service users ples throughout the world of even poor com- assess and the number of actors involved is (such as dirty water) and then trace it back munities paying for conservation through limited. Outside such cases, the use of PES to its source (degradation in a watershed). PES because the alternative would be even may be limited to government-financed But what works in the unidirectional world worse. Rather, the main obstacle to the fish- programs. There is a strong rationale for the of waterflows may not be as effective in the ers paying for mangrove conservation is that use of public funding (whether from the context of coastal and marine ecosystems. the fisheries industry is too fragmented, general budget or from earmarked fees) to There may thus be little alternative to inven- with a large number of individual fishers. protect valuable ecosystems, but such efforts torying the services that a particular coastal This creates a collective action problem, in are dependent on the existence of sufficient or marine ecosystem provides, and then try- which even though fishers as a group have a political will. Moreover, in such cases the ef- ing to determine whether its degradation strong incentive to pay for conservation, ev- ficiency and sustainability benefits of PES would affect a specific group of users. Both ery individual fisher has the incentive to try will be harder to reach. qualitatively and, especially, quantitatively, to avoid paying, as they would then get the we are likely to find that we know much less benefit of that conservation without bearing For Further Reading about the environmental services generated any of the costs. In such cases, intervention by different kinds of land uses than we often by some governing body might be required See the special issue of Ecological Economics on think we do. That mangroves contribute to to overcome the collective action problem. Payments for Environmental Services (Vol. 65, No. 4, May 2008). fisheries, for example, has long been known, This could take the form of a fee imposed but there has been limited documentation on the relevant users (on the fishers, in this Aburto-Oropeza, O., E. Ezcurra, G. Danemann, of the magnitude of this link. Some efforts case) by the government, with the revenue V. Valdez, J. Murray, and E. Sala. 2008. "Man- have been made in this direction, however. being used for conservation. While this groves in the Gulf of California increase fishery For example, recent work has demonstrated would be better than nothing, it would lack yields." Proceedings of the National Academy of Sciences 105(30): 10456­10459. that mangroves are responsible for about the efficiency advantages of voluntary pay- one-third of landings (by volume) by small- ments by users. Both the amounts and the scale fisheries in the Gulf of California. More use of these payments would be determined This article was prepared by Stefano Pagiola such work is needed to clearly identify how by political processes rather than by the us- (spagiola@worldbank.org) of the Latin America coastal and marine ecosystems contribute to ers acting in their own self-interest. Many and Caribbean Department. LAC website: specific economic activities. This work can countries, for example, assess water fees to www.worldbank.org/lac. annual rEviEw · julY 2007­junE 2008 (fY08) 17 Improved Governance of Marine Fisheries Can Recover up to $50 Billion Annually P oor fisheries management--in- in developing countries and over half are dissipated due to redundant investment and cluding overfishing and oversized women. operating costs. fleets--means that the annual economic benefits from global Other factors also play a role. For example, marine fisheries are $50 billion less than the loss of fishery habitat, pollution, rising they could be. Over the last three decades, The Economic Losses sea temperatures, and the increasing acidity the cumulative loss totals over $2.2 trillion. of the oceans are placing additional stress on Increasingly over the last several decades, already stressed ecosystems. Illegal fishing The Sunken Billions: The Economic Justifica- catching operations--the foundation of the and unreported catches undermine fishery tion for Fisheries Reform, a report produced industry--have become less economically science, while subsidies continue to support by the World Bank and the Food and Agri- efficient. The bulk of economic losses oc- unsustainable fishing practices. culture Organization of the United Nations cur in two main ways. First, depleted fish (FAO), argues that well-managed marine stocks--more than FIGURe World population and global fish supply, 1970­2003 fisheries could turn most of these losses into 75 percent of the 12 sustainable economic benefits for millions world's fish stocks of fishers and coastal communities. are "underperform- ing assets," accord- 10 6.0 Fish supply from capture sheries Marine fishing operations are only part of ing to FAO--mean the $400 billion global seafood industry, that there are fewer 8 Fish supply from aquaculture but economically healthy catch operations fish to catch, and Population underpin the sustainability of supply and therefore the cost of 6 profitability of onshore activities, which are finding and catch- 5.0 a major source of employment in develop- ing them is greater )gk(ylppusatipacreP 4 )snoillib(noitalupoP ing countries. For each person working at than it might be sea, it is estimated that another three are (see Figure, at right). 2 employed in processing, distribution, and Second, fleet over- other onshore activities. All told, such ac- capacity means that 0 4.0 tivities provide livelihoods for over 200 mil- the economic ben- 1980 1983 1986 1989 1992 1995 1998 2001 lion people; 90 percent of these people are efits of fishing are Source: FaO FishStat Plus; World bank 2006. 18 EnvironmEnt mattErs · 2008 Feature Articles fish resources result in stagnant productivity improve efficiency. Greater transparency in and economic inefficiency (see Figure, be- the allocation of fish resources and greater low). In response to the decline in physical public accountability for the health of fish productivity, the global fleet has attempted stocks will help private initiatives to certify to maintain profitability by reducing labor sustainable fisheries. costs, lobbying for subsidies, and through increased investment in technology. Reforms also will require investments in good governance, including measures to Right now, no one is winning. The real in- reduce illegal fishing and subsidies. In par- come levels of fishers are depressed, much of ticular, subsidies for fuel and for investment the industry is unprofitable, fish stocks are in fishing vessels and fishing gear have con- depleted, and other sectors of the economy tributed to the decline in catch-per-fisher foot the bill for an ailing fishing industry. and catch-per-vessel. Over $10 billion in yrarbiLotohPknaBdlroW/radraoJ.P subsidies that directly impact fishing capac- ity and foster overfishing were provided in 2000. Close to 80 percent of the total global Recovering the Sunken subsidy is provided by developed countries. Billions Regular public reporting on the state of national fish stocks and their contribution to national wealth would also promote ac- Growing pressures from climate change The recovery of the "sunken billions" can countability and good governance. further reinforce the arguments for con- take place through two main approaches. certed national and international actions to First, a reduction in fishing effort would Fisheries reform requires broad-based po- rebuild fish wealth, while the heavy carbon increase productivity, profitability, and net litical will founded on a social consensus. footprint of some fisheries adds to the justi- economic benefits. Second, rebuilding fish Social safety nets and the creation of al- fication for fisheries reform. stocks would lead to increased sustainable ternative livelihoods can be an important yields and lower fishing costs. element of reform. These reforms can be This and previous studies highlight the mas- integrated with poverty reduction programs sive overcapacity in the global fishing fleet: At the same time, strengthened fishing rights and other instruments of economic and so- the current catch could be achieved with can provide fishers and fishing communi- cial development. roughly half the current global fishing effort. ties with incentives to harvest responsibly These excess fleets competing for limited and efficiently. Phasing out subsidies will The alternative to reform--business as FIGURe evolution of global fleet productivity (decked vessels) usual--is a continued decline in global fish wealth, increasingly inefficient harvest 3.5 Decked vessels (number) 140 operations, growing poverty in fishery- Fleet capacity index ( shing power) dependent communities, increased risks yticapactee 3.0 Catch per vessel (tons) 120 of fishery stock collapses, and increasingly Catch per unit capacity (tons) compromised marine ecosystems. In short, 2.5 100 sustainable fisheries require political will /slessev (million) to replace incentives for overfishing with 2.0 80 ytciapactinurephct (tons) incentives for responsible stewardship. It is power) 1.5 60 not just about boats and fish. deckedforebmuN (shing 1.0 40 The Sunken Billions was supported by PROFISH, a World Bank partnership focused on policy initiatives for sustainable fisheries. index ca/lessevrephctaC www.worldbank.org/sunkenbillions 0.5 20 This article was prepared by Kieran Kelleher 0 (kkelleher@worldbank.org) of the Agricul- 1970 1980 1985 1990 1995 2000 2005 ture and Rural Development Department. Source: authors' calculations; Garcia and Newton 1997; FaO FishStat Plus; FaO FIeP. AGR website: www.worldbank.org/fish. annual rEviEw · julY 2007­junE 2008 (fY08) 19 The Consequences of Climate- Induced Coral Loss in the Caribbean by 2050­80 C oral reefs support more than 25 frequent bleaching events (1993, 1998, frequent bleaching events experienced in re- percent of all marine species, 2005), the latest of which caused wide cent years and expected in the future due making them the most biologi- bleaching throughout the Caribbean re- to climate change. The cost of reducing the cally diverse of marine ecosys- gion. The extended coral mortality caused vulnerability of corals to bleaching and ac- tems and an equivalent, in terms of biomass during such events may be only partially celerating the recovery of affected popula- productivity, to rain forests on land ecosys- recovered over time, provided that no sub- tions through artificial means is likely to be tems. Corals have been around for hundreds sequent bleaching takes place. More than very large, yet it remains unassessed. of million years and have evolved over time one bleaching event over a short time frame to adjust to relatively stable environmental can be devastating. Under conditions an- conditions in tropical seas, defined through ticipated by the IPCC, during the current a narrow range of temperatures, salinity, century temperatures in the Caribbean may Modeling Climate- and pH. Because of their stable environ- reach threshold values that would lead to a ment, most corals are also very sensitive collapse of the coral biome. Induced Coral to changes in environmental parameters. Bleaching in the When stressed by rising temperatures, cor- A coral collapse is anticipated to have ma- als can lose their symbiotic arrangements jor impacts on fisheries, tourism, coastal Caribbean to conduct photosynthesis, leading to their protection, and ecosystem integrity. It will bleaching and eventual death. Increased cause severe losses in biodiversity and spe- While a lot has been learned from recent carbon dioxide concentrations in the atmo- cies. Appropriate monetization of these bleaching events in the Caribbean, there is sphere also lead to more acidic seas, which impacts is not easy. Among these impacts, still a great deal of uncertainty as to the spe- impairs the ability of corals to assimilate the loss of species and ecosystem integrity cific responses, at a specific coral-reef level, carbonates and calcify. Corals also play very are the most difficult to evaluate, yet they to a warmer future. For conservation and important roles for other species by provid- may represent the most important of the preservation planning, it is particularly im- ing the habitat for spawning of many life consequences. Of the more than 700 spe- portant to appraise the timing and intensity forms and protection and mechanical sup- cies of reef-building corals worldwide, one- of coral mortality under currently projected port for other plants and animals. third are already threatened with extinction. scenarios of climate change in the Carib- In the Caribbean, it is estimated that 60 to bean. The Coral Mortality and Bleaching Gradual and consistent increases in sea sur- 70 endemic species of corals are in danger. Output (COMBO) model can be used to face temperatures have yielded increasingly Extinction risks are increasing due to more assess the prospects of coral bleaching and 20 EnvironmEnt mattErs · 2008 Feature Articles species. In this analysis, we estimate (a) the direct use to the human species. This value direct economic losses associated with coral results in goods and services that are not degradation reflected in lost economic re- tradable in markets and are unpriced. Giv- turns (such as fisheries, tourism activity, en the importance of assessing the relative coastal protection); (b) the indirect eco- economic worth of these goods or services nomic losses, which would only indirectly using nonmarket valuation techniques, eco- result in losses to humans (loss of ecosystem nomics has developed a range of valuation integrity caused by coral collapse); (c) the techniques for assessing the economic value losses of non-use value; and (d) the loss of of biodiversity and ecosystems. intrinsic value. This component does not follow traditional economic theory, but we Some economists have alluded to the con- have made an effort to document it with ex- cept that the web of life provides an overall amples. The four terms are reflected in the integrity to the global biosphere on which following expression: all species depend. They consider that the CLLsegamIkcotsrettuhS services directly and indirectly provided by L (value of corals lost) = Ldirect + natural ecosystems are essential to maintain Lindirect + Lnon-use + Lintrinsic human activity and the integrity of Earth and thus should be credited accordingly. (a) Ldirect (direct use losses). In order to have a rough estimate of the direct value Alternatively, one can credit all of the ser- mortality in the region. COMBO models of lost economic services, we estimated an- vices provided by other species that depend the response of coral growth to changes in nual losses of economic services for coastal on or benefit from corals that, in the end, sea surface temperature, atmospheric CO2 protection, tourism, fisheries, and pharma- are of direct economic value to us. For ex- concentrations, and high-temperature-re- ceutical uses in a setting of 50 percent and ample, one would account for the income lated bleaching events. The model has been 90 percent coral reef mortality (see Table, generated by the tourism industry at turtle described in detail elsewhere (Buddemeier below). Simulations done suggest that 50 nesting sites for species that forage in coral and others 2008). percent coral reef mortality could be ex- reefs, and the increase in productivity of pected as soon as by 2040, and 90 percent habitats adjacent to coral reefs as a result of The A1B (IPCC) scenario--which consid- mortality by 2060, under the A1B climate this connectivity, which ultimately results ered a temperature increase of +2ºC as a change scenario. in the sustenance of species that may be of response to a doubling of CO2 concentra- human use. The list may be endless, limited tion over pre-industrial levels--suggests These estimates are very sensitive to the data only by lack of information on the linkages that the effects of both warm seas and severe and assumptions, because valuation is af- between ecosystems. high-temperature episodes could likely lead fected by many variables in specific circum- to the mortality of all corals in the area be- stances and uncertainties. (c) Lnon-use (option and non-use val- tween 2060 and 2070. ue). This reflects the economic cost of spe- (b) Lindirect (indirect use value). This cies loss. This could also be assessed through is the value of the lost services that are of no the proxy of the willingness to pay to main- Estimation of the Table annual losses of economic services of Caribbean coral reefs (ldirect) in Damage of Coral Loss 2040 and 2060 (2008 $ million) 50% of corals in Caribbean lost by 2040 90% of corals in Caribbean lost by 2060 What are the consequences of the collapse Low estimates High estimates Low estimates High estimates of the coral reef biome in the Caribbean? Coastal protection 438 1,376 788 2,476 Tourism 541 1,313 973 2,363 Traditional economic theory considers that Fisheries 195 319 351 574 all benefits provided by any species are re- Pharmaceutical uses 3,651 3,651 6,571 6,571 ceived by human beings. However, this Total 4,825 6,659 8,683 11,984 does not consider benefits accrued by other Source: authors' data. annual rEviEw · julY 2007­junE 2008 (fY08) 21 CLLsegamIkcotsrettuhS tain the species for reasons that exclude its and the economic evaluation of coral reefs. Bibliography direct or indirect economic value (such as In particular, valuations of indirect and non- fishery income, tourism income). However, use values are currently beyond the scope of Buddemeier, R.W., P.L. Jokiel, K.M. Zimmer- man, D.R. Lane, J.M. Carey, G.C. Bohling, and these estimates also have limitations in cap- adequate quantification by traditional eco- J.A. Martinich. 2008. "A Modeling Tool to Eval- turing the true value of coral biodiversity, nomic tools, but they remain significant. uate Regional Coral Reef Responses to Changes just like other valuation approaches. Other This is partly due to current limited scien- in Climate and Ocean Chemistry." Limnology economic agents willing to contribute to tific knowledge in this regard to support and Oceanography Methods 6: 395­411. biodiversity conservation (governments, such valuations. Costanza, R., R. d'Arge, R. de Groot, S. Farberk, donors, philanthropic foundations, envi- M. Grasso, B. Hannon, K. Limburg, S. Naeem, ronmental NGOs, general public) were not Direct coral loss, as shown above, can have R.V. O'Neill, J. Paruelo, R. G. Raskin, P. Sut- consulted, making this willingness to pay significant economic impacts. However, it is tonkk, and M. van den Belt. 1997. "The Value of the World's Ecosystem Services and Natural exercise a lower bound estimate. an estimate limited to direct services provid- Capital." Nature 387: 253­260. ed by corals. There are many other valuable (d) Lintrinsic (intrinsic value of lost functions of coral reefs, including some we Pagiola, S., K. von Ritter, and J. Bishop. 2005. coral). This value relates to the issue of do not yet fully understand, such as their re- How Much is an Ecosystem Worth? -- Assessing the Economic Value of Conservation. Washing- the intrinsic value of corals as repositories lationship to offshore ocean environments, ton, DC: World Bank, IUCN, and the Nature of unique genetic information. Again, there which are not amenable to economic valua- Conservancy. is no consensus on how best to assess their tion. The extinction of an entire ecosystem as value from an economic perspective. biologically diverse and productive as coral This article was prepared by Walter Vergara reefs is difficult to contemplate--yet this is (wvergara@worldbank.org), Alejandro M. Our review of the consequences of coral loss what is predicted, not just in the Caribbean Deeb (adeeb@worldbank.org), and Daniel in the Caribbean highlights the lack of eco- but on a global scale, if CO2 concentrations Mira-Salama (dmirasalama@worldbank nomic tools for appraisal and the existence are allowed to exceed 450 ppm. Calculating .org) of the Latin America and Caribbean of only partial assessments of the value of this loss to society and the planet in purely Regional Environment Unit and by Nat- corals. There is a need for improvement of economic terms greatly underestimates its suko Toba (ntoba@worldbank.org) of the scientific knowledge about complicated di- impact and undermines the urgent case for Finance, Economics and Urban Depart- rect and indirect linkages of coral reefs with reducing GHG emissions and conserving ment. LAC website: www.worldbank.org/lac other species, the integrity of ecosystems, coral reefs throughout their distribution. FEU website: www.worldbank.org/urban. 22 EnvironmEnt mattErs · 2008 A S e l e c t i o n o f W o r l d B a n k G r o u p P u b l i c a t i o n s Fisheries and Aquaculture Forests and Forestry Optimizing Fisheries Benefits in the Pacific Islands -- Distortions to Agricultural Incentives in Latin America Major Issues and Constraints Kym Anderson and Alberto Valdes, editors Jhony Hari Masand $39.95 May 2008 October 2008 East Asia and Pacific Region ISBN: 0-8213-7513-X Report Number 44457 Guidance Note on Mainstreaming Environment in Climate Change Forest Sector Reform Low Carbon, High Growth -- Diji Chandrasekharan and Fernando Loayza Environment Department Note, Number 01 Latin American Responses to Climate Change March 2009 Pablo Fajnzylber and John Nash, editors $35.00 Natural Resource Management February 2009 ISBN: 0-8213-7619-5 Addressing China's Water Scarcity -- Recommendations for Selected Water Resource Management Issues Accelerating Clean Energy Technology Research, Jien Xie Development, and Deployment -- $35.00 Lessons from Non-Energy Sectors December 2008 Patrick Avato and Jonathan d'Entremont Coony ISBN: 0-8213-7645-4 $15.00 June 2008 Environmental Flows in Water Resources Policies, Plans, ISBN: 0-8213-7481-8 and Projects Forthcoming, May 2009 Environmental Economics and Indicators ISBN: 978-0-8213-7940-0 Promoting Market-Oriented Ecological Compensation Biodiversity Mechanisms -- Payment for Ecosystem Services in China John Dixon and Jian Xie Tigers Under Threat -- The Search for a New Growth East Asia and Pacific Region Strategy by Malaysia and its Southeast Asian Neighbors Report Number 42177 Shahid Yusuf and Kaoru Nabeshima $24.95 Valuation of Marine Ecosystem Services -- A Gap Analysis April 2009 Helena Naber, Glenn-Marie Lange, and Marea Hatziolos with ISBN: 0-8213-7880-5 inputs from UNEP/WCMC July 2008 Institutions and Governance 57 pages Environment Department An Impact Evaluation of India's Second and Third Andhra Pradesh Irrigation Projects -- Assessing the Environmental Impact of Development Policy A Case of Poverty Reduction with Low Economic Returns Loans on Coastal Areas -- A World Bank Toolkit Howard White, editor Nicola Cenacchi $30.00 Forthcoming, 2009 June 2008 62 pages ISBN: 0-8213-7542-3 Environment Department Making Connections -- Putting Social Policy at the Heart of The Little Green Data Book 2009 Infrastructure Development 236 pages Anis A. Dani, Timothy Kessler, and Elliott Sclar, editors Forthcoming, May 2009 $20.00 Environment Department December 2008 ISBN: 978-0-8213-7854-0 ISBN: 0-8213-6997-0 World Bank Environment and Development series Experiences and Lessons in Drought Management -- Past and Emerging Trends in World Bank­Supported Investments Natural Resource Management Forthcoming, May 2009 These publications may be obtained by sending an email to ematters@worldbank.org or by phoning the Environment Department Publications Unit at (202) 473-3641. annual rEviEw · julY 2007­junE 2008 (fY08) 23 Sub-Saharan Africa Region The Importance of Africa's of coral reefs and mangrove forests. Lastly, the northeastern coast Coastal and Marine Ecosystems along the Red Sea is characterized by coral reefs and high biodi- S versity, which also support rich fisheries. These coastal ecosystems, ub-Saharan Africa is endowed with a variety of coastal when maintained, host high levels of biodiversity and provide habi- ecosystems--such as estuaries, coral reefs, mangrove tat for the reproduction of a wide range of fish and invertebrate forests, wetlands, and dunes--that provide critical ser- species that coastal communities harvest for their livelihoods. vices to numerous coastal communities and to national economies. Those benefits include coastal stabilization from severe Throughout Africa, rural coastal fishing communities--which are weather and sea level rise, regulation of water quality and quantity, directly dependent on the services provided by these coastal and biodiversity, and spawning habitat for many aquatic species. marine ecosystems--are often poor, vulnerable, and likely to suffer most from environmental change. As there are often few livelihood More specifically, a wide continental shelf that benefits from a alternatives in such communities, more sustainably managed ma- strong upwelling current along the northwest coast of Africa (Mau- rine resources can be a significant factor in poverty reduction and ritania and Senegal) supports some of the richest fishing grounds shared growth. More specifically, fish resources provide livelihoods in the world. Further south, the West and Central African coasts and contribute to food security. Fisheries provide employment for are naturally forested by mangrove species, with coastal waters that up to 10 million people in Africa, often in labor-intensive, small- are very rich in demersal and pelagic fish populations. The southern scale fisheries that include both subsistence and commercial activi- and eastern coasts of the continent, including Madagascar and the ties for people involved in harvesting, selling, and processing of fish archipelagos of Comoros, are characterized by a wide distribution products. In Senegal, for example, the sector provides employment 24 EnvironmEnt mattErs · 2008 sub-saharan africa region for some 17 percent of the active workforce. the early 1990s and declined in some areas precipitation and water availability. These In terms of food security, fish provide up to since then. This, combined with an increase potential environmental changes will have 70 percent of the daily animal protein intake in global demand for fish products, has made an impact on natural systems, such as alter- in some coastal countries in Africa. In ad- fish less affordable for poorer people. Over ing the health of coral reef and mangrove dition, the fisheries sector generates foreign the past 20 years, per capita fish consump- forests, and thus fish productivity around exchange and public revenues for countries. tion in Sub-Saharan Africa has declined. For them. Direct resource users may find it The value of net exports of fish products instance, Senegalese fishers increasingly work more difficult to catch the fish resources for the continent reached the equivalent off Guinea-Bissau and Mauritania as a result they traditionally harvest and may have to of $2.4 billion in 2005, exceeding the net of the depletion of demersal fish stocks, and find ways to adapt to maintain their live- foreign exchange income reported for any 40 percent of Senegal's fish exports actually lihoods. To date, efforts to conserve the other agricultural commodity. Furthermore, come from foreign waters. health of marine and coastal ecosystems as in Mauritania or Guinea-Bissau, the marine a buffer against such climatic changes have fisheries sector contributes 25 to 30 percent The overwhelming cause of overfishing in been shown to be the most effective adapta- of government budgetary receipts. African waters is the lack of appropriate tion strategy for communities. governance and management frameworks Coastal and Marine to control the use of fish resources and re- Valuing Africa's Ecosystems and strict access to this public good. Access to these resources is often open to all, leading Coastal and Marine Resources at Risk to increasing overcapitalization and exces- sive fishing pressure, given the strong price Ecosystems Following a common pattern around the signals from the global marketplace for food Despite the importance of these ecosystems world, Africa's growing population in coastal fish. Many countries in the region have not and resources to livelihoods and economic areas and global demand for fish, along with been able to build the capacity necessary to growth in most coastal countries in Africa, increased availability of fishing technol- sustainably manage the resource base of the World Bank investments in this area are ogy in an environment of open or poorly fisheries or to prevent illegal fishers from tak- still relatively small, and often dependent regulated access to the resources, have driven ing the resources. on Global Environment Facility (GEF) widespread overfishing and degradation of cofinancing. The World Bank is currently supporting ecosystems. The result has been a In addition to overfishing, risks to coastal supporting operations in Senegal, Tanzania, loss for the coastal and marine environment, habitats and marine resources from climate andGuinea-Bissauaimedatprotectingcoast- for local livelihoods, and for African econo- change are increasing and significant. These al and marine ecosystems and fish resources. mies. Capture from marine fisheries in the risks include modifications to surface water SenegalisimplementingtheIntegratedCoast- continent seems to have reached a plateau in temperatures, rising sea level, and changes in al and Marine Resources Management Proj- LLC Images Shutterstock annual rEviEw · julY 2007­junE 2008 (fY08) 25 Nardello.R ect (GIRMaC), totaling $15 million in IDA is implementing the South-Western Indian Potential Economic and GEF funds to support the protection Ocean Fisheries Project ($15 million), a of coastal ecosystems and the introduction regional program aimed at improving infor- Benefits of Marine of comanagement of coastal fisheries in the mation available to regional fisheries organi- central region (see Box, below). Tanzania is zations through stock assessment and other Resources implementing a Marine and Coastal Envi- vital oceanographic information. The case for ramping up investments is be- ronment Management Project (MACEMP) coming stronger as a better understanding totaling $60 million (IDA/GEF, primarily The benefits and services these ecosystems of costs and benefits emerges. For example, IDA); it involves management of industrial and resources provide to coastal countries, economists calculate the most profitable lev- as well as small-scale fisheries through an and their potential to make a much greater els of fishing--and those that generate the integrated coastal management framework. contribution to shared economic growth if greatest wealth for a country--are actually Guinea-Bissau is implementing the Coastal more sustainably managed, have not often at levels of capture and fishing effort below and Biodiversity Management Project been appreciated. For example, recent esti- the maximum harvest levels that are bio- (CBMP) totaling $8 million in IDA and mates show that West African countries may logically sustainable. A win-win situation for GEF funds, which includes support for ma- lose the equivalent of roughly $400 million economic and environmental sustainability rine, coastal, and terrestrial protected areas. per year just to illegal fishing without includ- can be created by promoting fishing effort The Bank also is executing GEF grants to ing the further potential losses resulting from at levels below the biologically maximum support their management in Namibia and poor management and overexploitation of sustainable yield and by regulating access to regionally in the Southwest Indian Ocean. It the fisheries. Comanagement -- Empowering Users to Better Manage Coastal and Marine Ecosystems and Resources The comanagement of fisheries is an approach that decentralizes natural resource management responsibility to direct users. It is a man- agement instrument that engages and empowers local resource users in partnership with government to manage marine resources in a way that generates sustainable returns. The approach encourages local fishing communities to reduce their fishing effort by adopting better fishing practices such as nets with bigger mesh size, adopting biological rest by temporarily restricting fishing access to certain areas, or abandoning predatory fishing practices such as dynamite fishing, which allows some fish catch but essentially destroys unwant- ed species and habitats. Reduction of pressure from local users can be achieved with appropriate incentives and regulations, along with acceptable livelihood diversification compensation and opportunities, including microfinance and training available for communities to engage in value-added processing, better access to markets, sustainable aquaculture, or small- and medium-size enterprises outside the sector. These methods can increase local revenues by allowing local fishers to fish less and produce and market their products bet- ter, while at the same time permitting renewal of stocks with less fishing pressure and improved habitat protection. 26 EnvironmEnt mattErs · 2008 sub-saharan africa region The West Africa Regional Fisheries Project An estimated $3 billion worth of fish is captured from the marine waters of West Africa every year, but most of that value is taken by foreign nations and illegal fishing vessels, while the fish stocks are becoming more and more depleted due to overexploitation 3,000 and poor governance. The estimated annual wholesale value of what is caught in West 2,500 African waters vs. the actual value these fish products add to the region's economy Local small-scale vessels Legal local industrial vessels shows a striking difference (see histogram). Essentially, of the estimated total capture 2,000 Legal foreign industrial vessels in West African waters, an estimated 15 percent is stolen by illegal or pirate vessels and dollars 1,500 Illegal vessels almost another 50 percent is taken by legal foreign vessels, both of which provide less than $200 million in local value-added to the region. In total, this $3 billion only pro- million1,000 vides some $571 million in local value-added to the region, almost all of which comes from local small-scale fisheries. 500 0 Many countries are also losing a large portion of the fish in their waters because large Annual wholesale Value added to value of sh West Africa numbers of foreign vessels "mine" fishery resources and move on, without obtaining le- catch in West gal permits to gain access to the fisheries or ever landing their catch in the region, pro- African waters viding little value to the countries. For example, a study carried out in 2006 showed that of 92 trawlers spotted off the coast of Guinea, 1 in 10 had neither a flag nor a name, almost a third had no license, and close to half were fishing illegally at some time. With significant sector reforms, investments in local infrastructure, and more private sector investments, the offshore economy can slowly start to come onshore, increasing the value that the resources bring to the countries. The aim of the West Africa Regional Fisheries Project ($90 million IDA/GEF), which is currently under preparation, is to help the coun- tries to sustainably generate more wealth from these fish resources and to capture a greater portion of that wealth by reducing ille- gal fishing, strengthening the governance and management of the sector, and supporting reforms and increased investment in local value-added. fish stocks through the creation and alloca- provide a strong rationale for greater World their marine ecosystems and ensure increased tion of fishing rights within a limit of total Bank investment in these areas in Africa. capture of benefits for the country and local allowable catch to communities and users. communities. For example, Senegal is pre- This could be done through a transparent paring a Sustainable Management of Fish Re- and equitable process that eliminates excess The Horizon sources Project for $10 million (GEF/IDA), capacity and improves benefit sharing, in ad- for World Bank together with an additional $15 million in dition to efforts to protect critical habitats parallel financing from the government and that affect fisheries' productivity. The prob- Investments other donors. Similarly, Kenya is preparing lem is that many fisheries have already far a Coastal Management Project for roughly exceeded these levels, so that often drastic Governments of Africa are starting to un- $35 million in IDA and GEF funds that reductions in fishing effort and capacity are derstand that their fisheries and supporting would help sustainably manage the coastal required, along with strengthening gover- ecosystems are key to maintaining many ecosystems and resources. Last, the World nance to prevent illegal and unsustainable livelihoods and that they need to invest in Bank is currently preparing the West Africa fishing. But the benefits can provide fishers improving the governance of the sector and Regional Fisheries Program--including nine with needed incentives for sustainable and management of the resources. The World eligible countries from Mauritania to Gha- equitable management of resources. This Bank will increasingly help countries to in- na--with the aim of sustainably increasing is a long process of reform that can take vest in strengthening governance and policy the contribution that marine fisheries can many years, significant investments in both regimes to manage the use of their marine make to economic growth in these countries strengthened governance and fishing effort fish resources at levels that are both more (see Box, above). reduction, and, most important, incremental environmentally sustainable and more prof- steps. The scope of the investments needed itable, as well as to reduce illegal fishing and to start the transition to such reforms and to encourage private investments in local This article was prepared by Cedric Boisrobert (cboisrobert@worldbank.org) and John Virdin the potential economic benefits of healthier sustainable fish value chains. There are cur- (jvirdin@worldbank.org) of the Africa Region fisheries and coastal and marine ecosystems rently several World Bank-financed projects under preparation to help countries protect Environment and Natural Resource Management Unit. AFTEN website: www.worldbank.org/afr. annual rEviEw · julY 2007­junE 2008 (fY08) 27 East Asia and Pacific Region Mongolia China Rep. of Korea Lao P.D.R. Myanmar Vietnam Cambodia Thailand Philippines Marshall Islands Malaysia Palau Fed. States of Micronesia Kiribati Indonesia Papua New Solomon Guinea Is. Timor-Leste Samoa Vanuatu Fiji IBRD 31562R FEBRUARY 2009 Tonga yrarbiLotohPknaBdlroW IndonesIa T he East Asia and Pacific region (EPA) is home to about Marine resources of the region suffer, however, from overfishing and 2 billion people, many of whom are economically and depletion, largely as a result of increased fishing capacity, destructive nutritionally dependent on natural resources. Over fishing practices, and loss of critical habitat. For example, from 1980 half of the region's population resides in coastal loca- to 2005, the region's mangrove cover--which plays an important tions and in low-lying islands; these populations depend heavily role in spawning and the growth of juvenile fish--declined by about on agriculture and marine resources. The region has thousands of 22 percent, from 8.6 million to 6.7 million hectares, according to islands and is home to some of the world's most important ma- FAO (for example, see Figure, top of next page). Coral reefs, which rine resources, including coral reefs, a wide range of fish species, provide critical spawning and nursing habitats for many marine and other biodiversity. A notable example is the "Coral Triangle," fishes of economic importance, are also under severe stress. a 6-million-square-kilometer triangle in the Indo-Pacific Sea that These trends have contributed to a decline in catch per unit effort contains about 75 percent of all known coral species, over half the in many areas, but also a decline in the value of what is caught, world's coral reefs, over 3,000 fish species, and the greatest extent since often the more valuable species are the first to be caught and of mangrove forests of any region. It is also the spawning ground overfished. Lower benefits from fishing are also attributed to a lack for the largest tuna fishery in the world. For its biodiversity impor- of postharvest facilities, such as a lack of ice production, process- tance, it has been dubbed the "Amazon of the Seas." It extends from ing, and marketing centers. In addition, in most countries in the eastern Southeast Asia across the central western Pacific Ocean and region, governance is weak, with open access or inadequate fishing includes the Great Barrier Reef in Australia. regulations. In countries where regulations on catch limits and gear 28 EnvironmEnt mattErs · 2008 east asia and pacific region FIGURE Mangrove 600 per year. The demand for live seafood in Asia resource decline in 500,000 ha, 1918 has spawned a lucrative trade in live coral the Philippines 500 s)eratc reef fish, which in 1995 had an estimated 400 global annual retail value of over $1 billion. But the live reef fish food trade poses serious ecological problems stemming from over- exploitation of target species and cyanide Source: D.M. Melana and others, "Mangrove areaevorgnaM hefosdnasuo 300 288,000 ha in 1970 200 175,000 ha 138,000 ha in 1993 fishing, which poisons reefs. More than 80 Management and Devel- (th in 1980 percent of Southeast Asia's reefs are now at opment in the Philippines," 100 140,000 ha paper presentation, in 1988 117,000 ha medium to high risk of destruction, in large Mangrove and Aquaculture in 1995 Management, Kasetsart 0 part from the consequences of the live reef University, Bangkok, 1920 1970 1980 1988 1993 1995 fish trade. Thailand. Feb. 2000. restrictions do exist, there is often a lack of of which about 1.9 million (nearly 50 per- The deterioration of coastal and marine eco- enforcement capacity for local as well as for- cent) were without motors and used by systems also threatens regional tourism, a eign fishers. coastal fishers. In terms of livelihoods, ap- significant source of income in the region. In proximately 36 million people are involved the Hon Mun Marine Protected Area (MPA) Impacts of Depletion in fisheries in Asia, of which about one-third in Vietnam, for example, total recreational are involved in aquaculture. Although this is benefits from the reef-related recreation on Local Livelihoods a relatively small percentage of the region's industry are estimated to be around $4.2 total population--about 1 percent--their million. livelihoods are highly dependent upon sus- In Xiangshan County, a major fishing area tainable management of the resource, which of the East China Sea, fishers have witnessed includes key coastal habitats. Climate Change a sharp decline in yields and are considering a government proposal to establish a marine Fisheries, aquaculture, and marine transpor- Posing Additional protected area that would allow stocks to re- tation industries make a significant contribu- plenish themselves. In southwestern Mind- Challenges to tion to the regional economy. In Indonesia, anao in the Philippines, Bongo Island fishers the fisheries sector amounted to 3.1 percent Coastal and Marine who depend on catches around nearby coral of the country's GDP in 2003. East Asia pro- reefs have become severely impoverished as vides about one-fourth of the world's supply Ecosystems in EAP a result of destructive fishing, particularly of tuna--a total landed value of around $2 through the use of explosives, poisons, and billion a year. Almost half of this catch comes The East Asia and Pacific region is particu- nets with small mesh. In Ha Tinh Province from the waters of Pacific island countries, larly vulnerable to climate change due to its in central Vietnam, a coastal fisher believes with a landed value of $800 million to $900 geography and settlement patterns. Many of that the best option for his family is to edu- million. Catches in 2006, estimated at over its islands are only a few feet above sea level, cate his children for alternative employment 2.3 million tons, were the highest recorded; and several countries--such as Indonesia, elsewhere. These are but a few examples of but two of the most valuable species, yellow the Philippines, and Kiribati--are archipe- the numerous stories commonly told within fin and big-eye tuna, are at serious risk of lagic. Extreme climatic events have already communities of smallholder fishers and ma- being overfished. Illegal, unreported, and rine resource managers over the past two unregulated fishing in Indonesian waters decades throughout the region. costs the state around $2 billion annually in lost revenues. Despite these pressures, smallholder fishing still plays an important economic role in Coral reefs sustain livelihoods in roughly the region. The region's gross catch of fish 10,000 coastal villages across the country. has stabilized at about 24 million tons an- Potential sustainable economic benefits from nually (worth roughly $20 billion). Of the coral reefs in Indonesia--from fisheries, 4 million fishing vessels used in the region shoreline protection, tourism, and aesthetic ShenS. in 2004, about 2.7 million were small boats, value--have been estimated at $1.6 billion annual rEviEw · julY 2007­junE 2008 (fY08) 29 reducing their ecosystem services, which translate to major food security and income issues from lost fisheries and tourism. On the smallest islands, shoreline retreat as a result of sea level rise and the higher fre- quency of extreme weather events poses a threat not only to human populations but to coastal infrastructure and natural amenities, including beaches, thus negatively affecting tourism and fisheries-related livelihoods. The cumulative threats to coastal areas from local stressors and associated climate change are all the more urgent in the East Asia and Pacific Region, given that over 30 megaci- ties (with populations of more than 5 mil- lion) are located on the coast and hence are highly vulnerable to natural hazards such as cyclones and storm surge, in addition to flooding from sea level rise. Zweig.R Response to caused coastal flooding, and wetlands in the population settlements are concentrated in Conserving Coastal major river deltas of Southeast Asia have a narrow coastal band, saltwater intrusion is been substantially affected by land degrada- already theatening the security of drinking and Marine Resources tion and saltwater intrusion from increased water supplies. storm surge. Local and national governments, bilateral Continued warming and ocean acidification and multilateral agencies, and nongovern- The Intergovernmental Panel on Climate threaten to undermine coral reefs, thereby mental organizations have taken various Change (IPCC) predicts that by the end of the century temperature will increase in East Asia above the global average (about 1.5ºC Community-Based Management in Vietnam-- before 2040). In conservative IPCC projec- Hon Mun Marine Protected Area and tions, sea level might rise by 18 to 59 cm. Wetlands Restoration This will likely increase precipitation patterns and heat waves, as well as the intensity of The Hon Mun Marine Protected Area, established through a World Bank/Danida proj- ect (2001­05), is often cited for its diverse coral species community. It is home to about extreme weather events. Delta and estuarine 175 species and other vertebrate, invertebrate, and algal marine species. The project ecosystems, some of which contain unique focused on conserving significant and threatened marine biodiversity, while at the plants and animals, are very sensitive to sea same time improving livelihoods of local island communities. In addition to a major level rise and might become more prone to educational, training, and public awareness program, the project successfully intro- flooding and saltwater intrusion as a result. duced an alternative livelihood program and created a self-financing system that as- Some low-lying atolls are expected to disap- sured the sustained management and protection of the MPA. pear completely. For example, Kiribati could experience inundation of up to 80 percent The Coastal Wetlands Protection and Development Program (1999­2007) focused on the re-establishment of coastal mangrove wetland ecosystems and the sustainable in parts of some islands. Rising seas not only management and protection of the coastal ecosystems of four provinces in the south- inundate wetlands and low-lying islands, ern Mekong Delta. In addition to helping restore biodiversity, poverty rates in vulner- but also erode beaches, intensify flooding, able communes decreased by 38 percent and average annual incomes increased by and increase the salinity of groundwater. In 55 percent. many Pacific islands and in China, where 30 EnvironmEnt mattErs · 2008 east asia and pacific region actions to support the conservation and sus- radation of coastal and marine ecosystems sistance will need to be scaled up significant- tainability of coastal and marine resources in and the vulnerability of tens of thousands of ly to have any real impact. This will require the region. Those activities include improved coastal communities, it is clear that such as- leveraging new resources and partnerships coastal zone planning, coastal and marine among governments, international organi- ecosystem conservation, improved fisher- Indonesia Coral Reef zations, and, most important, local com- ies management, reduced overcapacity, and Rehabilitation and munities. In this context, the Coral Triangle investment in alternative income generation Initiative (CTI) provides a platform to gal- options. Seaweed farming, an alternative Management Program vanize political commitment and resources livelihood, is an example of a small-scale so- For 10 years, the World Bank-- to safeguard the outstanding coastal and ma- lution to overfishing; the Bank supports pro- with the Global Environment Facil- rine resources of the region for current and grams in Indonesia and the Philippines. The ity, Asian Development Bank, and future generations (see Box, below). Bank is also supporting community-based several environmental NGOs--has coastal, marine, and fisheries management been cofinancing a multi-phased (see Box on previous page and Box at right). coral reef rehabilitation and man- The Coral agement program (COREMAP). The Triangle and Pacific program supports community-driv- The Way Forward en collaborative management or Islands Initiative comanagement in over 500 coastal villages across 12 Indonesian prov- To protect the Coral Triangle from The World Bank plans to continue invest- inces. COREMAP Phase II is focused overexploitation and destructive fishing practices, the Coral Triangle ments in improving management, protec- on supporting coastal communities Initiative seeks to improve the gov- tion, and sustainability of coastal and marine inestablishingreefmanagementsys- ernance of the region's rich marine ecosystems, most likely in conjunction with tems and associated ecosystem re- sources.TheinnovationofCOREMAP resources, with a focus at the village support for adaptation to climate change. II is to support the transformation of level. This approach has proved to While World Bank assistance toward im- women's economic and social sta- be successful in Indonesia, the Phil- proved and comprehensive coastal planning, tus by improving women's capacity ippines, and elsewhere across the monitoring, management, and development to engage in coral reef management Asia-Pacific Region. "If we want to combined with other related interventions and community development. protect coral reefs and rehabilitate fisheries, it is not by planting new can be pivotal in helping to reverse the deg- corals; it is by educating people and changing their mindsets," says Eko Rudianto, CTI's coordinator. The CTI was launched by Indonesian Pres- ident Susilo Bambang Yudhoyono in 2008, designated as the Interna- tional Year of the Reef. The plan of action is expected to be adopted in May 2009 at the World Ocean Con- ference in Manado, Indonesia. The projectissupportedby10participat- ing governments, GEF, international organizations (ADB, UNDP, FAO, and theWB),bilateraldevelopmentassis- tance agencies, and NGOs. This article was prepared by Ron Zweig (rdzweig@ gmail.com), consultant; with contributions from Oliver Braedt (obraedt@worldbank.org), Pawan Patil (ppatil@worldbank.org), Susan Shen (sshen@ worldbank.org),andSamWedderburn(swedderburn@ worldbank.org) of East Asia and Pacific Region CarnemarkC. Sustainable Development Department; and Beata Plonka (bplonka@worldbank.org), consultant. EAP website: www.worldbank.org/eapenvironment. annual rEviEw · julY 2007­junE 2008 (fY08) 31 Europe and Central Asia Region Estonia Russian Federation Latvia Russian Fed. Lithuania Poland Belarus Czech Rep.Slovak Ukraine Rep. Kazakhstan Slovenia Hungary Moldova Romania Croatia Bosnia and Serbia Herzegovina Kos. Bulgaria Georgia Uzbekistan Kyrgyz Rep. FYR Montenegro Macedonia Armenia Azerbaijan Turkey Turkmenistan Tajikistan Albania Cyprus IBRD 35099 FEBRUARY 2009 soloiztaH.M Turkey I n the Black and Mediterranean Seas, excessive nutrient dis- of this invasive species and allowing the population of plankton- charges from agriculture and other point sources of pollution eating fish and foodwebs to recover, bringing back some balance to have created unsustainable conditions, causing periodic algal the ecosystem. In many cases, however, curbing fishing pressure is blooms, or "red tides," which kill fish and irritate bathers, not sufficient to return the ecosystem to its former state; controlling and "dead zones," large submerged areas with too little oxygen to nitrogen and phosphorus pollution and protecting critical habitats sustain marine life in the coastal waters of these semi-enclosed and and species biodiversity also are essential, as is careful management hence highly vulnerable marine systems. of the river basins that drain to the sea. These conditions endanger the economy and livelihoods of many coastal communities. For example, the drastic decline in Black Sea The Black Sea -- fish stocks in the 1970s--a result of overfishing, water quality deg- A Dramatic Recovery radation, and alien species invasion--led to a collapse of the fishing industry and resulted in more than $2 billion in losses over the 1970­90 period. The nutrient-fed algal blooms in the Adriatic Sea The Black Sea coastline has endured serious anthropogenic pressures. in the 1980s caused several million dollars in losses in the Italian Untreated wastewater and agricultural runoff remain major sources tourism industry. of pollution. Nitrogen and phosphorus runoff from agricultural, municipal, and industrial sources has seriously degraded the ecosys- The decline in fish stocks also eliminated the prey of an invasive tem, disrupted fisheries, reduced biodiversity, posed health threats to and highly predatory comb jelly, thus controlling further outbreaks humans, and resulted in billions of dollars of economic losses. 32 EnvironmEnt mattErs · 2008 europe and central asia region All this contributed to the collapse of the nia, Bulgaria, Turkey, Georgia, Russia, and As much as 80 percent of the sea's pollution Black Sea ecosystem in the 1970s and 1980s, the Ukraine) also contributed to the recov- load originates from land sources, mainly in when vast amounts of dead plants and ani- ery. As a result of these efforts, including key the form of untreated discharges of urban mals covered the beaches of Romania and investments supported by the World Bank wastewater from coastal sources and rivers. western Ukraine. Between the 1980s and under the GEF Strategic Partnership for the Lack of sewage collection, treatment, and today, Romania and Bulgaria experienced a Danube/Black Sea Basin, nitrogen emissions disposal infrastructure is still the greatest tenfold drop in the Black Sea fishery catch. have decreased about 20 percent and phos- problem in many Mediterranean countries. From 1973 to 1990, an estimated 60 million phorus almost 50 percent in the Danube/ Nevertheless, despite many donors' initia- tons of bottom animals were lost, including Black Sea basin in the last 15 years. tives, coordination appears to be inadequate, 5 million tons of fish. both in the region and within countries. Only 55 percent of coastal cities with more Losses in fish catch alone might have been The Mediterranean than 10,000 inhabitants have sewage treat- worth $2 billion. In addition, the annual Sea -- Under Threat ment plants, resulting in a large annual dis- loss in tourism revenue from poor bathing charge of more than 3 billion cubic meters water quality was estimated at over $500 from the Land of untreated sewage to the sea. Overall, 66 million. Health impacts associated with million m3 of untreated industrial wastewa- environmental degradation and inadequate ter is discharged to the Mediterranean each infrastructure were also significant across the The Mediterranean Sea is under increasing year. Uncontrolled coastal development, region, with more than 21,000 cases of seri- threat of degradation, and some of its more population expansion and increasing coastal ous waterborne infections a year in littoral enclosed parts, like the Adriatic Sea, already tourism, unregulated and unsustainable fish- states. show some of the signs that preceded the Black Sea ecosystem collapse. Nevertheless, ing, damming, and pollution are the great- est threats to the sea's coastal and marine The economic collapse in Central and East- the Mediterranean coastline is an area of ecosystems. ern Europe that followed the breakup of the valuable biodiversity. It harbors 10 percent Soviet Union in the early 1990s brought of the world's higher plant species, half of about the closure of numerous livestock them endemic to this region, as well as 6 Partnering with the facilities, a dramatic reduction in the use of percent of known marine species, one-third World Bank for the fertilizers, and less pressure on fishing. By of which are endemic. 2007, the "dead zone" in the western Black Recovery of the Seas Sea had been virtually eliminated and the The population of the Mediterranean's coast- invasive alien comb jelly (Mnemiopsis) was al states has doubled in the last 40 years to significantly curtailed. The concerted actions 450 million in 1999 and is expected to reach Launched by the World Bank together with taken by the Black Sea littoral states (Roma- over 600 million in 2050. Between 1970 UN agencies and the European Union (EU), and 2005, international tourist arrivals qua- and cofunded by GEF in 2001, the Strate- drupled, reaching 265 million in 2005, and gic Partnership for Nutrient Reduction in are expected to rise to 350 million in 2025, the Danube/Black Sea Basin was intended MihovS. doubling the population along the coast to support the restoration of the Black Sea during the summer. Twenty million inhab- to pre-1960 environmental conditions. The itants along the sea's southern and eastern initiative addresses the degradation of the shores have no access to drinking water, 47 ecosystem at its roots: in the large agricul- million have no access to sanitation, and 290 tural plains of Romania, along the Danube million could face water shortages by 2050. wetlands of Bulgaria and Romania, and up- Climate change is likely to exacerbate some stream, even reaching the discharges of raw of these trends. The region has been experi- sewage in Budapest and the river basins of encing significant effects of climate change: inland Turkey. air temperatures in the Mediterranean basin rose 1.5­4° C in the last century (the global Through the Black Sea/Danube Basin In- average increased 0.7°C), with an accompa- vestment Fund for Nutrient Reduction, the nying drop of 20 percent in precipitation in World Bank provided $65 million in GEF some areas. grants and leveraged about $200 million in annual rEviEw · julY 2007­junE 2008 (fY08) 33 cofinancing to support investments in both the agriculture sector and municipal and in- Moldova dustrial wastewater treatment sector, as well Agricultural Pollution Control Project as for wetland restoration. Active since 2002, the fund has supported projects in Bosnia The project promotes mitigation measures and Herzegovina, Bulgaria (see Bulgaria Box, BattagliniB. to reduce nutrient runoff into water bodies through manure management techniques, below), Croatia, Moldova (see Moldova Box, promotion of environmentally friendly ag- right), Romania (see Romania Box, bottom ricultural practices, planting forest vegeta- right), and Serbia and Turkey. These projects tion,restorationofwetlands,andmonitoring promoted reforms, innovative investments, water and soil quality. It also strengthens and new approaches, including low-cost national policy and regulation capacity in wastewater treatment methods (Bosnia and the agriculture sector, raises public aware- Herzegovina, Moldova); wetland restora- ness about water pollution, and replicates tion and management (Hungary, Moldova, results from pilot areas at the country level. As a result of the project, 8,250 farmers in Moldova adopted at least one environmen- Bulgaria); restoration of degraded land and tally friendly agricultural practice on 14,028 hectares of land. reduction of soil erosion (Moldova); waste segregation and water quality monitor- See: www.worldbank.org/blacksea ing (Romania); and manure management facilities and support for organic farming Romania (Turkey). Agricultural Pollution Control As of 2007, a number of remarkable im- The project focuses on reducing the discharge of nutrients and other agricultural pol- provements in the environmental conditions lutants into the Danube River and Black Sea through integrated land and water man- of the Black Sea were detected: the "dead agement and ecologically sustainable use of natural resources. Rural communities zone" in the western Black Sea has been vir- increased their ability to control expected nutrient releases by building manure stor- age and household bunkers and by segregating waste materials. The percentage of tually eliminated (although dead zones in the areaundernutrientmanagementsystemsrosefrom1to34percent.Nutrientdischarge deeper areas of the Black Sea persist); oxygen into surface and groundwater decreased about 15 percent for nitrogen and 27 per- levels were at near-saturation in many areas; cent for phosphorus in 2006. For local communities, the project provided additional income from more effective use of organic waste (manure as fertilizer), crop rotation, Bulgaria organic produce, and improved livestock grazing practices. It also provided improved Wetlands Restoration production efficiency through better farm management. and Nutrient Reduction See: www.worldbank.org/blacksea Active since 2002, the project seeks the number of benthic species increased 1.5­ Plan (the Secretariat of the Barcelona Con- to reduce transboundary nutrient 2 times (since 1980); invasive alien species vention for the Protection of the Mediter- loads and other pollution in the (Mnemiopsis) were significantly curtailed; Danube River and the Black Sea. It ranean Sea) and its regional centers, GEF, conserves biodiversity through the and the upper reaches of the Danube Basin UNEP, and the World Bank supported the restoration and management of two were no longer considered at risk. establishment of an effective partnership wetlands along the Danube. The among key agencies and institutions. The projectalsosupportstheadoptionof The observed recovery is certainly linked to Strategic Partnership for the Mediterranean environmentallyfriendlyagricultural the dramatically reduced use of fertilizers Sea Large Marine Ecosystem was launched practices. Besides providing a mod- that followed the economic collapse in cen- in 2006 to accelerate investments and policy el for nutrient trapping that can be tral/eastern Europe in the early 1990s, but replicated in the region, it led to the also to the significant nutrient reductions reforms that address the threat of dead zones return of several rare animal species. achieved through the investments and gov- in pollution hot spots and protect key natu- The restoration of the two wetlands ernance reforms promoted through the GEF ral habitats. providedaboosttofishingandaddi- Strategic Partnership and the EU accession tional protection against flooding. processes. In September 2008, Bosnia and Herzegov- See: www.worldbank.org/blacksea ina and Croatia signed an agreement with In the Mediterranean, a recently formed al- the World Bank and GEF to work together liance between the Mediterranean Action toward improving environmental quality 34 EnvironmEnt mattErs · 2008 europe and central asia region Kent.V along their rivers and protecting coastal and atia Box, below). With an initial GEF con- Countries eligible for financing include marine biodiversity. The Neretva and Tre- tribution of $25 million, an expected overall Albania, Algeria, Bosnia and Herzegovina, bisnjica River Basin Management Project is envelope of $70 million in GEF grants, and Bulgaria, Croatia, Egypt, FYR Macedonia, the first to receive funding from the World cofinancing of more than $200 million, the Lebanon, Libya, Morocco, Montenegro, Bank­GEF Investment Fund for the Medi- Mediterranean Sea Investment Fund sup- Syria, Tunisia, and Turkey, as well as West terranean Sea, the financing mechanism for ports interventions addressing land-based Bank and Gaza. the Mediterranean Sea Partnership (see Cro- pollution and coastal habitat degradation. The Mediterranean Sea Investment Fund Croatia/ recently approved financing for the Croatia Coastal Cities Pollution Control Program Bosnia and Herzegovina -- (wastewater treatment). Projects in the pipe- Neretva and Trebisnjica Management Project line include the Land and Water Optimi- zation Project (Tunisia), the Coastal Zone The project seeks to reduce pollution discharges into the eastern Adriatic Sea from the Management Project in Alexandria (Egypt), Neretva and Trebisnijca River basin through improved transboundary water resource management. The lower course of the Neretva River contains the largest and most and the Sustainable Tourism Development valuable remnants of the Mediterranean wetlands in the eastern Adriatic coast and is Project (Montenegro). one of the few areas of this kind remaining in Europe. The wetlands serve a number of functions important to water resource management, including water purification, nutrient reduction, sedimentation sink, flood management, and prevention of shore- line erosion. They also provide critical habitats and support the local economy. The This article was prepared by Emilia Battaglini project's expected outcomes include a reduction in nutrient and other pollution from (ebattaglini@worldbank.org) of the East Asia and municipalandindustrialsourcesinselectedmunicipalitiesinthebasin,improvedmain- Pacific Sustainable Development Department; Beata tenance of environmental flows, and a reduction in saltwater intrusion. Plonka (bplonka@worldbank.org) and Andrea Merla of the Europe and Central Asia Sustainable See: www.worldbank.org/medfund Development Department. ECA website: www. worldbank.org/eca. annual rEviEw · julY 2007­junE 2008 (fY08) 35 Latin America and Caribbean Region The Bahamas Haiti Jamaica Dominican Rep. Mexico St. Kitts and Nevis Antigua and Barbuda Belize Dominica Guatemala Honduras St. Lucia Barbados El Salvador R.B. de St. Vincent and the Grenadines Nicaragua Venezuela Grenada Trinidad and Tobago Costa Rica Panama Colombia Guyana Ecuador Suriname Peru Brazil Bolivia Paraguay Chile Uruguay Argentina Falkland Islands (Islas Malvinas) A dispute concerning sovereignty over the islands exists between Argentina which claims this IBRD 31564R FEBRUARY 2009 sovereignty and the U.K. which administers the islands. CLLsegamIkcotsrettuhS Tobago T he global path of CO2 emissions already surpasses the The Bank's Latin America Region has been working on the assess- worst-case standard emissions scenarios of the IPCC. ment and implementation of adaptation measures to address the The current trend may result in a situation that exceeds consequences of climate impacts since 1997 and has developed a the direst of anticipated consequences. Although there large portfolio of adaptation measures. The program on adapta- remain uncertainties, there is high confidence that impacts from tion has focused on regional climate hotspots (see Table, at right). climate change--even under significantly more modest emission Coastal and marine ecosystems are a key area of concern. scenarios--will affect the functioning and integrity of key ecosys- tems worldwide. These impacts will add to the stress already re- sulting from local anthropogenic effects; combined, they represent Climate Change Impacts on an unprecedented challenge to the global biosphere. While the Coastal Ecosystems impacts are being felt globally, some regions will be more acutely affected than others. The effects of increased atmospheric CO2 concentrations--such as changes in ocean chemistry--will adversely affect the physical Relatively modest amounts of carbon dioxide emissions are gener- and biological characteristics of coastal systems, modifying their ated in the subcontinent. Nevertheless, climate change is likely to ecosystem structure and functioning. As a result, coastal nations have a substantial impact on Latin America and the Caribbean, face losses of marine biodiversity, fisheries, and shorelines. Coral which is characterized by a substantial--but intrinsically fragile-- reefs, which are among the most biodiverse ecosystems on Earth, natural capital and a number of climate-sensitive ecoregions. are highly sensitive to increases in sea surface temperature. A 2°C increase, associated with CO2 concentrations of 500 ppm, threat- 36 EnvironmEnt mattErs · 2008 latin america and caribbean region ens to destroy most coral reefs. Along with tion, and water diversion, which increase the America and Caribbean Region has a num- increasing temperatures, more acidic condi- ecosystem's vulnerability to expected climate ber of ongoing or planned activities to build tions in the ocean associated with dissolved change impacts and exacerbate the impacts. resilience to future climate impacts based on CO2 from Earth's atmosphere threaten Land use changes increase the vulnerabil- protection of coastal ecosystems and their to transform living reefs into seaweed- ity of these ecosystems and are expected to services. Some of these are presented below. dominated mounds of rubble. worsen the climate change impacts on wet- lands along the coast. Low-lying coastal areas Climate impacts will also affect wetlands, and associated swamps could be displaced Adaptation to which provide many environmental services, by saltwater habitats, disrupting freshwater- Climate Impacts on including regulation of the hydrological re- based ecosystems as a result of sea level rise. gime; human settlement protection through Such changes may also result in the loss of the Wetlands of the flood control; protection of the coastal important brackish water habitats. Migra- region; help in mitigating storm impacts; tory and resident birds and fish may lose Gulf of Mexico control of erosion; conservation and replen- important staging, feeding, and breeding ishing of coastal groundwater tables; reduc- grounds, which are difficult to replace under The wetlands of the Gulf of Mexico have been tion of pollutants; regulation and protection competing demands for scarce land. This identified by the National Institute of Ecol- of water quality; retention of nutrients, sedi- deterioration of wetland habitat may result ogy / Ministry of Environment and Natural ments, and polluting agents; sustenance for in impacts on commercially important fish Resources of Mexico as the most critical and many human communities settled along the species, seriously affecting the sustainability threatened ecosystem affected by climate coast; and habitats for waterfowl and wild of fisheries. change in the country. The Gulf of Mexico life. is characterized by a very high exposure to As part of the adaptation portfolio and extreme weather events, with populations Coastal wetlands are already subject to land in combination with the development of that live in high-risk areas prone to flooding use changes, mangrove deforestation, pollu- opportunities for carbon sinks, the Latin and other extreme weather events, and the TABLE Some major climate hotspots in Latin America (two correspond to coastal and marine systems) Climate Magnitude of hotspot Direct effect Immediacy Irreversibility physical impacts Economic consequence Coral biome in Bleaching and Now Once temperatures pass Total collapse of ecosystem Impacts on fisheries, tourism, the Caribbean mass mortality of the threshold for thermal and wide-ranging extinction increased vulnerability of coastal corals tolerance, corals will be of associated species. areas. gone. Mountain Warming Now The thermal momentum Disappearance of glaciers, Impacts on water and power ecosystems in in mountain habitats drying-up of mountain supply, displacement of current the Andes will result in significant wetlands, extinction of cold- agriculture. increases in temperature, climate endemic species. leading to major unidirectional changes in mountain ecology. Wetlands in the Subsidence and This century Irreversible sea level rises Disappearance of coastal Impacts on coastal Gulf of Mexico salinization; will submerge coastal wetlands, displacement infrastructure, fisheries, and increased wetlands, affecting their and extinction of local and agriculture. exposure to ecology. migratory species. extreme weather Amazon Basin Forest dieback This century If rainfall decreases in the Drastic change to the Impacts on global water basin, biomass densities ecosystem, leading to circulation patterns, agriculture, would also decrease. potential savannah. water and power supply on a continental scale Source: Modified from W. Vergara, (forthcoming). "Climate Hotspots: Climate-Induced Ecosystem Damage in Latin America." In World Bank. Assessing the Costs of Climate Destabilization in Latin America. Washington, DC: World Bank. annual rEviEw · julY 2007­junE 2008 (fY08) 37 tivity, to rainforests on land. Corals have been around for over 200 million years and have evolved over time to adjust to relatively stable environmental conditions in tropical seas, defined through a narrow range of tem- peratures, salinity, and pH. Because of their stable environment, most corals are also very sensitive to changes in environmental parameters. When stressed by rising tem- peratures, reef-building corals can lose their photosynthesizing symbionts--microscopic algae that live inside the soft coral tissue, converting the sun's energy and CO2 into food and giving the coral its color. Loss of these photosynthetic elements leads to coral bleaching and, eventually, death from star- vation and disease. Corals also play very AcostaJ. important roles for other species, providing feeding grounds and the 3-D structure es- presence of important economic sectors such Pajonal-Machona (Tabasco); and (4) Punta sential for fish populations and a multitude as Mexico's oil industry and tourism. Three Allen (Quintana Roo), including the coastal of other plant and animal species. Mexican national communications reports coral reefs in the region. These were selected and other studies have documented ongoing during the formulation phase of the project Gradual and consistent increases in sea sur- changes in the wetlands of the Gulf of Mex- and respond to the magnitude of the impacts face temperatures have yielded increasingly ico and have raised urgent concerns about induced by climate change, the value of frequent bleaching events (1993, 1998, their integrity. These wetlands perform very compromised economic and environmental 2005), the latest of which caused wide-scale important environmental functions that are services, the readiness of local institutional bleaching throughout the Caribbean Region. critical to economic activity over a wide area capacity, and the participation of the local Under conditions anticipated by the Inter- of the country. community. In addition, the project seeks to governmental Panel on Climate Change, identify national policies to address the im- increased temperatures in the Caribbean are Located in the lower reaches of the Gulf's pacts of climate change on water resources at likely to lead to a collapse of the coral biome main water tributaries, the Gulf wetlands are the national level (global overlay). The total during this century. considered the most productive ecosystem budget is estimated at $25.5 million, with a in Mexico. Changes in the distribution and Bank-GEF contribution of $5 million. In the wake of coral collapse, major impacts characteristics of river flows may affect the on fisheries, tourism, and coastal protec- biological functioning of the wetlands, im- tion are anticipated, as well as severe loss of pacting the economy of coastal areas. Adaptation to biodiversity and species extinction and im- Climate Impacts in pacts on ecosystem integrity. One-third of To address these impacts, the government the more than 700 species of reef-building of Mexico is formulating, with assistance Coastal Zones of the corals worldwide are already threatened with from the World Bank, a project to reduce extinction. It is estimated that between 60 the vulnerability to anticipated impacts of West Indies and 70 endemic species of corals in the Ca- climate change (focusing on integrity and ribbean also are in danger; extinction risks stability) on coastal wetlands and associ- Also of particular concern are the impacts are increasing due to more frequent bleach- ated inland basins of the Gulf of Mexico. on the coral biome in the Caribbean. Coral ing events experienced in recent years and The project will support pilot adaptation reefs support more than 25 percent of all expected in the future due to climate change. measures in four wetlands: (1) Río Panuco marine species, making them the most bio- The cost of adapting corals to anticipated Corredor Sistema Lagunar (Tamaulipas); (2) logically diverse of marine ecosystems and environmental conditions in the Caribbean, Laguna de Alvarado (Veracruz); (3) Carmen- an equivalent, in terms of biomass produc- as well as protecting and recovering affected 38 EnvironmEnt mattErs · 2008 latin america and caribbean region populations, is unassessed but likely to be munities during hurricanes and tsunamis. cover approximately 7,000 ha. The remain- very high. The natural buffering capacity also provides der is mostly covered by upland forest, a cushion against inland flooding. The pro- which surrounds the wetland and could be With Bank assistance, the region is imple- tection and restoration of these coastal eco- interpreted as a buffer/protection belt to the menting a project to support efforts by systems can be seen as an adaptation measure inland areas. Nariva ESA has a very rich mo- Dominica, Saint Lucia, and St. Vincent and to the likelihood of intensified storms in the saic of vegetation communities, including the Grenadines to implement specific, pilot Caribbean basin. tropical rain forest, palm forest, mangroves, adaptation measures addressing the impacts swamp forest, and swamps. of climate change on their natural resource The Nariva RAMSAR wetland targeted by base, focused on biodiversity and land deg- the proposed project has the most varied The Bank is supporting efforts to restore radation along coastal and near-coastal areas. vegetation of all wetlands in Trinidad and and conserve the Nariva wetlands through As part of the effort, work is planned for the Tobago, with distinct zones of swamp forest, the recognition of the services it provides as assessment of alternatives to conserve and palm swamp, herbaceous swamp, and man- a carbon sink and a biodiverse ecosystem. adapt the coral ecosystem in the region. The grove woodlands of distinct global biodiver- This will be done through actions designed project has a budget of $5.5 million, with a sity value. It is especially important for large to restore and conserve about 1,160 ha of Bank-GEF contribution of $2.1 million. numbers of waterfowl, including migratory its associated forest stands. The restoration species, and is the major wetland in Trinidad of the wetlands will result in additional en- Restoration of the that still sustains anacondas (Eunectes muri- vironmental benefits, including reduction nus), blue and golden macaws (Ara ararau- of GHG emissions and the conservation of Nariva Wetland in na), and manatees (Trichechus manatus). endemic species in the area. Trinidad and Tobago On the basis of these characteristics, the Effective restoration and protection of Na- Trinidad and Tobago government has de- riva will also provide for recovery of the pro- Coastal wetlands, in particular mangroves, clared the highest level of protection avail- tection and storm buffering character of the also provide a coastal protection function. able in the nation to Nariva, incorporating wetland. The project was approved with an Mangroves have a natural buffering capac- the wetlands in the "Nariva Environmental estimated carbon sink and GHG mitigation ity to wind and storm surges, thus providing Sensitive Area" (Nariva ESA). This protected asset valued at $2.1 million. Carbon finance protection against extreme weather events. area covers 15,568 hectares of one of the will be used to credit the accumulated bio- Wetlands have been shown to reduce the most important natural habitats in Trinidad mass resulting from the activities of the proj- impact and intensity of wind in inland com- and Tobago. The wetlands, as a landform, ect, as well as the anticipated reduction in greenhouse gas emissions from the wetland once it restores its hydrological balance. Looking forward, there is a need to consoli- date and expand initiatives to protect these valuable coastal and marine ecosystems, par- ticularly to combine traditional conservation efforts with adaptation to climate impact and carbon sink programs. The combination of these resources will increase the ability to respond to the immense challenges and pro- vide a practical example of linkage between the biodiversity and climate change agendas in the region. LLC Images This article was prepared by Walter Vergara (wvergara@worldbank.org) of the Latin America Shutterstock and Caribbean Regional Environment Unit. LAC website: www.worldbank.org/lac. annual rEviEw · julY 2007­junE 2008 (fY08) 39 Middle East and North Africa Region Syrian Lebanon A.R. Malta Morocco Tunisia I.R. West Bank and Gaza Iraq of Iran Jordan Algeria Libya Arab Kuwait Rep. of Bahrain Egypt Qatar U.A.E. Saudi Arabia Oman Rep. of Yemen Djibouti IBRD 31565R FEBRUARY 2009 kramenraC.C TunIsIa T he seas surrounding the Arabian Peninsula--the Red Over the past four decades, the region has also experienced rapid Sea, Gulf of Aden, Gulf of Oman, The Gulf, and the development in the coastal zone, which has led to the degradation Arabian Sea--are an area of striking contrasts. They of the marine and coastal environment and a loss of its potential to are bordered by some of the world's richest and poorest sustain coastal populations. Furthermore, regional wars and inter- countries. The region is globally renowned for its great diversity of nal conflicts have introduced new dimensions to the region's envi- marine and coastal environments, the number of unique species, ronmental problems and stressed both its financial and its natural and the importance of marine resources to the continued social and resources. economic development of the region. Socioeconomic Value Both fisheries and tourism provide significant economic and social value to the region. Fisheries. Fisheries production within the region has expanded greatly over the past 30 years; by 2001, the gross value of fisheries output for all six nations of the Gulf Cooperation Council (GCC) Baldwin.R was $466.7 million. Fisheries are generally artisanal in nature, with the exception of some industrial trawlers operating out of Saudi 40 EnvironmEnt mattErs · 2008 middle east and north africa region Arabia, Oman, and Kuwait. The artisanal tion in the world. Estimated oil pollution about 48 percent of the wastewater dis- sector represents approximately 80 percent in the Gulf is about 3 percent of the global charged into the Gulf. of total fisheries output and the industry total, or nearly 50 times the average for ma- offers a significant investment opportunity rine environments. In addition to spills at oil Habitat Degradation. Most acute ecologi- for the private sector in commercial food terminals, about 1.2 million barrels of oil are cal problems have arisen from the loss and production and export. In Kuwait, the value spilled in the region every year from the rou- degradation of productive coastal habitats, of the artisanal fleet is about $51 million; in tine discharge of ballast water. Regional wars caused by coastal landfills, dredging, and Oman, the traditional sector provides 75 to have also contributed to the degradation of sedimentation. Reclamation has been un- 80 percent of total fish landings, valued at coastal and marine resources. The Iran/Iraq dertaken for residential developments, ports, $180 million in 2004. In Yemen, the fishing war (1980­88) contributed 2 to 4 million bridges, causeways, and tourism. The areas sector accounts for 15 percent of GDP and is barrels of spilled oil, and 6 to 8 million bar- have included intertidal flats with man- considered one of the most promising areas rels were spilled into the Gulf and the Ara- groves, shallow bays, and other biologically for commercial expansion. bian Sea during the First Gulf War. productive areas, which also serve to seques- ter carbon. In some Gulf states, as much as Tourism and Recreation. With an attractive In the northwestern part of the Gulf, about 40 percent of the coastline has now been marine life and favorable climate, tourism is 250 sunken and leaking ships and tankers-- developed, eliminating critical habitat for a major source of revenue for many of the another legacy of regional conflicts-- pose a wildlife and biodiversity. countries in the Gulf and provides a strong threat not only to the marine environment, economic alternative to the petroleum in- but also to maritime traffic. As an indication In the northern Gulf, many important com- dustry. The United Arab Emirates tourism of the possible impact of a major oil spill, the mercial fisheries are dependent on the Shatt sector leads the region with an estimated World Bank estimated that the total cost of Al-Arab waterway, where the waters of the contribution of 22.6 percent of GDP, valued environmental degradation due to a recent Tigris and Euphrates Rivers join. The marsh at $49 billion in 2008. Recreational activi- oil spill (12,000 to 15,000 metric tons) in and estuarine areas are important spawning ties such as swimming, diving, and fishing Lebanon (a result of the hostilities in July and feeding grounds as well as providing a are a huge draw to the region and provide 2006) was about $203 million in lost rev- nursery habitat. The loss of the Iraqi marshes ample opportunities for small business de- enue from fisheries, beach pollution, damage after the first Gulf war has caused a signifi- velopment and local employment. to recreational facilities and activities, and cant decline in coastal fisheries due to loss of damage to marine life. This represents about spawning grounds, as well as an increase in Threats 1 percent of Lebanon's GDP. pollution. Land-Based Sources of Pollution. Adverse Exploitation of Fisheries and Other Re- Among other things, the region's coastal and ecological effects associated with sewage pol- sources. Fishery production from the Ara- marine resources are threatened by oil pollu- lution have been observed in several areas of bian region has expanded enormously in tion, land-based sources of pollution, habitat the Gulf. In Saudi Arabia, the discharge of the last 30 years. Certain high-value stocks degradation, overexploitation of some fish- raw sewage is as high as 40,000 m³/day. This have been overexploited, however, particu- ery stocks, and climate change. poses a potential threat of eutrophication larly where development of the fishery has in confined areas such as bays, as well as a proceeded more rapidly than legislation Oil Pollution. The Gulf is known as one of potential public health risk. In August and and enforcement to control it. In most of the waterways most vulnerable to oil pollu- September 2001, unusually high sea surface the countries of the Gulf and the Red Sea, temperatures contributed to the develop- landings of valuable finfish species--such as ment of a harmful algal bloom in Kuwait grouper, kingfish, and Indian mackerel-- Bay that killed nearly 3,000 tons of wild declined by as much as 70 percent between mullet and sea bream and resulted in great 1989 and 2001. In Oman, for example, the financial loss to the fishing industry. kingfish fishery declined from a peak catch of 27,000 tons/year in 1988 to under 2,000 Another major source of pollution is from tons/year since 2002. desalination plants, which discharge heated, The Gulf of Aden rock lobster fishery has Willson.A concentrated brine and associated chemicals. Power and desalination plants constitute similarly declined since 1990, virtually col- lapsing in the late 1990s. Total fish land- annual rEviEw · julY 2007­junE 2008 (fY08) 41 Al-Sultan.O ings from the Red Sea declined by around the northwest of the Arabian Peninsula and in the Gulf, including coral reefs, showed 36 percent in Saudi Arabia over the period increases in summer precipitation over most no adverse impacts from the Gulf War oil 1989­2001, despite a more than doubling of the Arabian Peninsula. This may lead to spill, but they were severely affected by el- of the artisanal and industrial fishing fleet. an increase in flash floods, which are already evated SSTs in three major bleaching events a problem in these regions. Many cities in in 1996, 1998, and 2002, causing most in- In shallow waters of the Gulf, unsustainable the Gulf are situated in floodplains and are shore and shallow-water offshore corals to fishing practices, such as bottom trawling, susceptible to torrential flooding. die. There were hardly any signs of recovery contribute to the capture and destruction until 2007. of non-target species and the destruction of Furthermore, extreme weather conditions, productive benthic habitats and associated such as the recent cyclone that affected coral reefs. In the western Gulf, the shrimp Oman in June 2007 (and caused $4 billion Management and fishery by-catch ratio is as high as 74:1, caus- in losses) are likely to increase, causing dam- Conservation ing a depletion of non-commercial fisheries age to life and property onshore, as well as that are valuable in the overall food chain. to offshore oil installations and desalination plants. In addition, large areas of land could Some of the main problems facing the future Climate Change. The Gulf is also prone to be lost at the head of the Gulf in the Tigris- of the region are due to ineffective manage- natural disasters from flooding and sea level Euphrates delta of southern Iraq. ment practices. Most countries currently use rise as a result of climate change. The In- a "command and control" approach through tergovernmental Panel on Climate Change Periodic sustained increases in mean sea sur- national laws and end-of-pipe regulations. models predict increases in both summer face temperature (SST) could result in mas- Enforcement of regulations however, re- and winter temperatures. Some models sive bleaching and mortality for corals in the mains a generic problem for pollution abate- show decreases in winter precipitation for Red Sea and Gulf regions. Sub-tidal habitats ment. The alternative pollution prevention 42 EnvironmEnt mattErs · 2008 middle east and north africa region approach remains largely untried in the socioeconomic benefits to the people of the The Yemen Fisheries Resource Management region. region. It builds on the activities of the first and Conservation Project (IBRD loan, Red Sea project in support of the implemen- $25 million). The project will contribute to An integrated ecosystem approach to the tation of the Strategic Action Plan, particu- one of Yemen's key development objectives, management of the Arabian ecosystem is es- larly in the areas of fisheries governance and namely achieving economic growth through sential. This would require countries to per- marine protected areas. the development of the fisheries sector. By ceive the ecosystem as a regional commons strengthening planning, monitoring, and and approach the management of pollution surveillance functions and controlled de- and other anthropogenic stressors from a velopment of fisheries resources, the project holistic perspective, requiring collective ac- will also help the country to implement its tion. The key objective of this ecosystem Sennett.T National Environmental Action Plan, which approach would be to foster a shared vision focuses on sustainable development of Ye- of the strategic importance of the region's men's natural resources. resources as well as the principles and values relating to sustainable management among While the Gulf countries are not borrow- the stakeholders. The largest constraint to ers, technical cooperation with the World this approach lies in the sectorally oriented Bank has been ongoing for some time. This culture that prevails in the region. is entirely client-driven, and yet the marine environment has not been high on the list Conclusion of priorities. However, this should begin to change with the establishment of the Gulf Environment Partnership and Action Pro- Marine ecosystems in the region are largely gram (GEPAP), which is a new program outside the market and are too often ignored of cooperation between the Bank and the or undervalued. As these services become riparian countries of the Gulf to address and more stressed and scarce due to ongo- effectively manage shared environmental re- ing pressures and any future impacts from sources. The Gulf countries have concluded climate change, their capacity to support that a regional approach is needed to develop coastal communities will gradually dimin- a vision, a common set of principles, a frame- ish. Increased investment in sustainable work for cooperation on a transboundary management of marine resources is urgently dialogue, and actions for developing support required. The World Bank, through some of for the development and conservation of the its planned and future activities, can play a waterway. GEPAP will achieve this objective vital role in addressing this issue. by enhancing cooperation among govern- ments, the private sector, and civil society Current World Bank activities related to the in the Gulf countries, especially through marine environment in MENA are concen- knowledge sharing, collaboration, informa- trating on country-level operations in Yemen tion exchange, and investment promotion and a recently approved GEF-funded project for environmental issues. GEPAP will also focusing on the Red Sea and Gulf of Aden. have a strong public policy impact by help- ing decision makers make informed envi- The Red Sea and Gulf of Aden Strategic ronmental policy decisions and take specific Ecosystem Management Project (GEF, $3 actions to effectively curb environmental million). In partnership with PERSGA (The degradation in the Gulf. Regional Organization for the Conserva- tion of the Environment of the Red Sea and This article was prepared by Samia Al-Duaij Gulf of Aden), this project is focused on the (salduaij@worldbank.org) and Steven Maber conservation and promotion of sustainable (smaber@worldbank.org) of the Sustainable exploitation of the marine resources of the Development Sector Department of the Middle East and North Africa Region. MENA website: www. Red Sea and Gulf of Aden to improve the worldbank.org/mena annual rEviEw · julY 2007­junE 2008 (fY08) 43 South Asia Region Afghanistan Nepal Bhutan Pakistan Bangladesh India Sri Lanka Maldives IBRD 31566R FEBRUARY 2009 ttenneS.T bangladesh S outh Asia's five coastal countries (Bangladesh, India, the as the coral reefs of the Maldives, India, and Sri Lanka, and the Maldives, Pakistan, and Sri Lanka) account for less than dryland mangroves of Pakistan--support thousands of floral and 2 percent of the world's total coastline (see Table, below). faunal species. Yet the low elevation coastal zones of these countries, with an area of about 160,000 km2, contain 135 million people--22.5 This ecological richness, however, has been subjected to great pres- percent of the global population living in such zones (see Table, top sure through overextraction of resources, enhanced pollution, and of next page). The coastal zones also contain about 40 percent of physical alterations in coastal ecosystems. Mangroves have been the economic activities in the region and most of its critical eco- exploited for timber, fuelwood, and other purposes. For about 200 nomic infrastructure. years, large mangrove areas have been cleared for agricultural activi- ties and for shrimp farming, particularly in India and Pakistan (see South Asia's coastal regions are extraordinarily rich in ecological Table, middle right next page). Mangroves, coastal wetlands, and diversity (see Table, bottom of next page). More than TABLE Coasts of the South Asia Region 8 percent of the world's Claimed Exclusive mangrove areas are in Coastal length Continental shelf Territorial sea Economic Zone Country (km) (thousand km2) (thousand km2) (thousand km2) South Asia. The Sundarban Bangladesh 3,306.000 59.6 40.3 39.9 delta is the world's larg- India 17,181.000 372.4 193.8 2,103.4 est continuous stretch of Pakistan 2,599.000 43.7 31.4 201.5 mangroves. These--as well Sri Lanka 2.825 19.2 30.5 55.8 44 EnvironmEnt mattErs · 2008 south asia region TABLE Population & urbanization in the low elevation coastal zones of South Asia The economic resilience of marine ecosys- Area of LECZ Population, Urban % urban in big cities tems in South Asia is heavily dependent on Country (km2) 2001 population (>5 million) the productivity of coastal breeding grounds Bangladesh 54,461 65,524,048 15,428,668 33 and habitats, mainly mangroves and coral India 81,805 63,188,208 31,515,286 58 reefs. Every hectare of the region's mangrove Pakistan 22,197 4,157,045 2,227,118 92 ecosystem is estimated to generate more Sri Lanka 5,536 2,231,097 961,977 ­ than 450 kilograms of marine catch. How- ever, mangrove vegetation, coastal breeding other coastal habitats also have been severely Bangladesh Country Environmental Analy- grounds, and habitat areas are rapidly erod- affected by discharges of untreated industrial sis (CEA) reported that the fisheries sector ing. In the Maldives, the productivity of the and domestic sewage, freshwater intercep- contributes about $1.5 billion (4 percent of tuna fishery, the second largest export in- tions for irrigation, and dredging and re- Bangladesh'sgrossdomesticproduct),andthe dustry in the country, is dependent on good suspension of contaminated silts. Oil pollu- seafood export sector is the country's second management, including of bait fish stocks tion also increasingly threatens coral reefs, largest source of foreign exchange. Similarly, from coral reefs, which are increasingly at often located in areas where large-scale pe- the Bank's Maldives Climate Investment Re- risk from climate change and ocean acidi- troleum industries, tourism, and fishing port estimated that the fisheries industries flourish. Most of the shallow- sector generates almost half of the TABLE Mangrove areas in South Asia water coral reef habitats of Sri Lanka, the Maldives' merchandise exports Area of mangrove (ha) Country 1980 1990 2000 Maldives, and India have been severely dam- ($60 million annually), which is Bangladesh 596,300 609,500 622,600 aged as a result of bleaching. The northern a very significant portion of the India 506,000 492,600 479,000 Indian Ocean is one of the 10 hotspots of country's foreign exchange earn- Pakistan 345,000 207,000 176,000 the world's threatened coral reef areas. The ings. In Sri Lanka, the fisheries Sri Lanka 9,400 8,800 7,600 entire coral reef area in Bangladesh is under sector represents approximately 2.4 percent fication. Significant tourism infrastructure threat, as are most of the reefs in India (61 of the GDP. also is at stake. Coastal and marine resource- percent) and Sri Lanka (86 percent). based ecotourism accounts for 70 percent of From a livelihood perspective, it is estimated the Maldives' gross domestic production. Economic Value of that four out of five rural citizens of Bangla- desh (over 85 million people) are directly or Coastal and Marine indirectly dependent on aquatic and marine Climate Change resources. The fisheries sector provides di- Ecosystem Services rect employment to about 9 percent of the Risks to Coastal country's labor force. Over a million people Communities and In South Asia, the fisheries industry is a fish full-time and another 11 million are Infrastructure major driver and safety net for economic de- part-time fishers. In India, coastal fishing velopment and rural livelihoods. The Bank's employs a million people full time (includ- ing 200,000 workers According to the Intergovernmental Panel TABLE Biological diversity of the coasts and seas of South Asia in the mechanized on Climate Change (IPCC), Asia will be Species 26 Species 94 sector, and 630,000 Seabirds % of All 9 Shrimps % of All 27 one of the most severely affected regions of in the informal Endemics n/a Endemics n/a the world as a result of "business-as-usual" sector). The post- Species - Species 23 global warming. South Asia is likely to have Pinnipeds % of All - Lobster % of All 15 harvest fisheries sec- increased exposure to extreme events, includ- Endemics n/a Endemics n/a tor employs another Species 5 Species 58 ing cyclones and tropical storms, floods, and 1.2 million people, Turtles % of All 71 Sharks % of All 17 severe vector-borne diseases. Sea level rise Endemics n/a Endemics 6 of which 25 percent might cause large-scale inundation along the Species 9 Species 28 are rural women. In coastline and recession of flat sandy beaches. Seagrass % of All 19 Cetaceans % of All 32 the Maldives, about Endemics n/a Endemics n/a The ecological integrity of mangroves and 30 percent of work- Species 246 coral reefs would be at risk. Molluscs % of All 6 ers are employed in Endemics n/a fishing. Studies notice a significant acceleration Note: n/a = data not available. Source: UNEP. in sea level rise in Asia, an average rise of annual rEviEw · julY 2007­junE 2008 (fY08) 45 3.1mm/year over the past decade, compared freshwater aquifers, alteration of tidal ranges, through declining production, as well as with 1.7­2.4mm/year over the 20th cen- and changes in sediment and nutrient through reductions in arable land area and tury. There has also been an increase in the transport. Rapid urbanization--which has food supplies for fish. Climate change also frequency and intensity of extreme weather led to the enlargement of natural coastal poses substantial risks to human health in events. A number of studies in the region inlets and dredging of waterways for naviga- Asia. Within the region, empirical studies have explored linkages among the observed tion, port facilities, and pipelines--has exac- project that the largest population at risk of changes in mean climate variables, extreme erbated saltwater intrusion into surface and dengue fever will be in India. weather events, and changes in biophysical ground waters. The areas protected by man- and human systems. groves, deltas, low-lying coastal plains, coral islands, sand beaches, and barrier islands are Improved The IPCC goes on to estimate that even un- less likely to be impacted by sea level rise Governance of der its most conservative scenario, sea levels compared with the built-up areas. However, in 2100 will be about 40 centimeters higher these areas and resources are already under Coastal and Marine than today, which will cause an additional 80 stress. Most of the sandy beaches are erod- million coastal residents in Asia alone to be ing. Sand dunes are disappearing due to an- Ecosystems flooded. The majority of those flooded will thropogenic activities, such as the stoppage be in South Asia, particularly in Bangladesh in the supply of fresh water and sediments In South Asia, as in many regions in the and India. A 1-meter sea level rise would in the coastal estuaries. All such degradation world, coastal and marine ecosystems have flood nearly 6,000 km2 in India alone. By of coastal ecosystems will aggravate climate- largely been managed in a piecemeal fashion including the effect of ice-sheet dynamics, change-induced sea level rise by increasing and do not balance the protection of fragile other studies suggest a 3­5m rise in sea levels shoreline retreat or by coastal flooding. coastal resources with rapid economic de- by 2100. Such an increase would have a dev- velopment in coastal areas. As a result, the astating impact on the region. In South Asia, The most vulnerable communities will in- added "piecemeal" regulation of coastal and large coastal cities such as Dhaka, Mumbai, clude those having maximum exposure to marine ecosystems has led to unsustainable and Kolkata are at average elevations of these stresses, as well as those with the least pressures on natural resource services and 2­10 meters above mean sea level. Overall, capacity to respond and ability to recover. some 47 million people live in urban areas These physical changes will take place in in low-elevation coastal zones, half of them abrupt, nonlinear ways as thresholds are Economic and in cities larger than 5 million in population. crossed. The least resilient communities-- Environmental Damage A 3­5 meter rise in average sea level could for example, those dependent on subsistence from Extreme Events on effectively de-urbanize the region along the fishing--will be the first to experience "tip- South Asia Coasts coast. Whether the eventual sea level rise is ping points" in their life systems; they will as low as about 40 centimeters or as high as have little choice but to abandon their homes The 2007 Cyclone Sidr caused 3­5 meters, a large urban and rural popula- and search for better prospects elsewhere. 3,447 deaths and damage esti- tion will be affected. Significant population mated at $1.8 billion. The storm damaged 25 percent of the for- movements will likely occur toward other Extreme climatic and nonclimatic events ests and the agricultural industry large urban settlements in the interior of the have already caused coastal flooding result- in the Sundarban area in Bangla- country rather than get dispersed in the hin- ing in substantial losses and fatalities (see desh. The 1999 cyclone in Orissa terland of existing coastal cities. These will Box, at right). The frequency of cyclonic caused 9,803 deaths and eco- put considerable stress on coastal and inland events (especially during November, the nomic damage estimated at $5.1 urban areas. Further, the large infrastructure month of severe cyclones) has increased by billion. It left 1.67 million people investments in ports, industries, and other 25 percent in the Bay of Bengal and by 100 homeless, destroyed 17,110 km² facilities are at greater risk due to rising sea percent over the north Indian Ocean over ofcropland,anduprooted90mil- lion trees.The 2004 Indian Ocean levels. a period of about 100 years (1877­1998). tsunami took more than 225,000 Salt water from the Bay of Bengal is reported lives in 11 countries. It damaged Sea level rise will affect the coastal zone in to have penetrated 100 kilometers or more mangroves, coral reefs, coast- multiple ways, including the inundation inland along tributary channels during the al wetlands, sand dunes, rock and displacement of wetlands and lowlands, dry season. Climate change has the potential formations, biodiversity, and coastal erosion, increased coastal storm to exacerbate water resource stresses in most groundwater. floods, increased salinity in estuaries and regions of South Asia, affecting agriculture 46 EnvironmEnt mattErs · 2008 south asia region growing conflicts among development uses. This problem is further exacerbated by the Sundarban Coastal & Marine Protection Initiatives institutional regulatory framework, which The Sundarban in the Ganges Delta in India and Bangladesh is the world's larg- spreads the management of coastal and est contiguous stretch of mangroves. These mangroves are breeding grounds marine resources across multiple agencies forshrimpandfish,which feedhighertrophicmarineorganisms.Itisalsohome without adequate coordination, technical to the Royal Bengal tiger, the endangered Olive Ridley turtle, some of the larg- capacity, or enforcement. To promote the est estuarine crocodiles, and a variety of avifauna. The Bangladesh and Indian sustainability of coastal and marine ecosys- portions of the forest are listed separately in the UNESCO World Heritage list as tems, the Bank has supported several region- the Sundarban and the Sundarban National Park, respectively. The continued al initiatives for improved governance. existence and management of the Sundarban mangrove forest is of critical im- portance to the entire marine fishery in the Bay of Bengal. A management re- gime has been developed and adopted. The Bank will be supporting efforts to In India, an expert committee chaired by better assess and manage the marine assets in the Sundarban through several Professor M.S. Swaminathan reviewed the initiatives, including (a) the proposed India Integrated Coastal Zone Manage- country's coastal laws and regulations (see ment Project, (b) nonlending technical assistance for preparation of astrategic Viewpoint, page 8). It found that ensuring action plan for the biodiversity conservation and socioeconomic development the long-term sustainability of coastal and of the Sundarban area of India, and (c) through the ongoing transboundary re- marine ecosystems will necessitate an inte- view of priority environmental issues that need to be addressed in a strategic grated coastal zone management approach action plan for the Bay of Bengal. that simultaneously addresses resource pro- tection, infrastructure planning, and com- framework with an integrated coastal zone marine resources, such as fisheries and coral munity livelihoods. The government of India management approach and has requested reefs; and (d) preparing a regional strategic is proposing to replace the current regulatory Bank support for an integrated coastal zone environmental assessment. management project that will (a) map and delineate a hazard line and ecologically sensi- Finally, the Bay of Bengal is one of the most tive areas as a basis for preparing integrated important large marine ecosystems in the management plans for all coastal zones in the world, affecting approximately 400 million country; (b) help build capacity in integrated people in a catchment area in eight countries. coastal zone management at the state and na- The absence of a collaborative approach to tional levels, including setting up a national transboundary challenges--for example, mi- coastal zone management institute; and (c) gratory species and coastal flooding--could invest in promoting state-level approaches to lead to disastrous consequences for national integrated coastal zone management. economies and coastal communities in the region. The Bank--through the Global En- In the Maldives, marine ecotourism--the vironment Facility and in partnership with country's number one industry--is increas- the Food and Agriculture Organization of ing population densities in some areas; the United Nations and other donors-- at the same time, growing threats to the is supporting a transboundary diagnostic marine ecosystem are key impediments to analysis of the priority environmental issues sustainable development. Revenues from that will need to be addressed in a strategic ecotourism support large investments in action plan for the Bay of Bengal. The Bank public education, health, and infrastructure. is also providing nonlending technical sup- To ensure the sustainability of these invest- port to preparation of a strategic action plan ments, the Bank's Maldives Environmental for adaptation to climate change risks in the Management Project will support improved Indian part of the Sundarban ecosystem (see governance of coastal and marine resources Box, above). by (a) establishing a regional solid waste This article was prepared by Tapas Paul (tpaul@ management program; (b) strengthening worldbank.org) and Jane Nishida (jnishida@ the regulatory and community capacity for worldbank.org) of the South Asia Sustainable Sennett.T environmental management; (c) expanding Development Sector Department. SAR Sustainable Development Sector Department website: www. the knowledge base for monitoring critical worldbank.org/sar. annual rEviEw · julY 2007­junE 2008 (fY08) 47 T he International Finance Corpora- ploratory technical advisory projects involv- tion's (IFC) current investment port- ing coastal and marine resources, including folio affecting coastal and marine (a) the Komodo Collaborative Management resources comprises a small number Initiative (KCMI) in Indonesia; (b) the Asian of projects, including coastal hotels Conservation Company (ACC) in Palawan/ and resorts, agribusiness projects such as Philippines; (c) the Maldives Resorts Coral shrimp ponds, and offshore oil and gas. IFC Reef Rehabilitation Project; and (d) an also supports a range of innovative and ex- IFC small-and-medium enterprise project Private Sector Komodo Collaborative Management Initiative Pt. Putri Naga Komodo (PNK), a joint venture company, supports the Komodo Na- tional Park Authority in management of the Komodo National Park in eastern Indo- Contributions nesia. PNK shareholders are The Nature Conservancy (TNC) and Jaytasha Putrindo Utama. PNK, with the Komodo National Park Authority, is supported by a seven-year grant (2005­12) provided by IFC with matching funds from TNC. The Komodo Collab- to Improved orative Management Initiative, which is the basis for the business model, is a ground- breaking experiment by the government of Indonesia involving the following policy elements: (a) new park management and financing models; (b) collaborative manage- Coastal ment approaches; (c) adaptive management approaches, and; (d) socioeconomic de- velopment programs. and Marine The PNK business model relies on incremental and sustainable ecotourism revenues to sustain ongoing management and conservation. Through the provision of resourc- es and facilities for park and tourism management and the collection of revenues from Resource tourists, the company works with KCMI to support (a) basic park management activi- ties such as community outreach, communications, monitoring, surveillance, and en- forcement of the park zoning system; (b) development of a comanagement structure Management maximizinginvolvementoflocalstakeholders;(c)sustainablecommunitydevelopment through microfinancing and microenterprise development; and (d) destination market- ing. Project outcomes include protection of the national park's resources, sustainable development of local communities living in and around the park, and a contribution to sustainable financing of park management through ecotourism development. PNK/ PNK/ ylieWJ. O'HareJ. 48 EnvironmEnt mattErs · 2008 IFC involved in seaweed production in eastern Indonesia. The Boxes on these pages describe Conserving Coastal and Marine Biodiversity in some of these projects. Palawan, Philippines All of these projects are subject to the re- The Asian Conservation Company Project--a partnership between a private equity quirements of IFC's sustainability policy and investment holding company (ACC) and a local NGO (El Nido Foundation)-- aims to conserve coastal and marine biodiversity in the El Nido-Taytay Managed Resource Pro- performance standards. The policy and the tected Area, a 92,303-hectare terrestrial and marine park in Palawan, Philippines. The standards help the private sector (and IFC) project relies on cofinancing from several stakeholders, including local government; integrate social and environmental sustain- private sector operators, including an ecotourism resort operation and a charter air- ability into their projects while simultane- line; the El Nido Foundation; and donors, including IFC. ACC component interventions ously addressing social and environmental include conservation partnership; conservation management; conservation enforce- risk and maximizing the development op- ment; information, education, and communication; sustainable livelihoods; sustain- portunities of the projects. They make the able institutions and financing; and biodiversity research and monitoring. The project's consideration of ecosystem services more ex- conservation efforts have focused on a small area and have not been extended to the overall park. The sustainability of revenue streams that allow investment in conserva- plicit and reinforce positive investor behav- tion remains a key issue. ior regarding conservation of these services. Maldives Resorts Coral Reef Rehabilitation Project In 1998, the Maldives suffered extensive damage to its coral reefs resulting from increased ocean temperatures brought about by the global El Niño phenomenon. Shallow cor- al reefs in the central and northern atolls of the Maldives Hilliard.R have been gradually recovering from the widespread coral bleaching but remain prone to a number of localized phys- ical impacts from tourism activities, including reef walk- ing, snorkeling, and diving in the vicinity of island resorts. A number of resort companies in the Maldives recognized the commercial value and environmental benefits of main- taining healthy, attractive coral and fish populations on their local reefs. These companies became interested in enhancing coral recovery rates and reducing the risk of their resorts becoming sur- rounded by extensive algae-covered rubble fields. Since October 2004, in collaboration with Villa Hotels and Taj Maldives Private Limited (Taj MPL), IFC has supported a demonstration- based training and research project on the management of resort reefs. The project aimed to provide demonstration-based training and technical assistance for resort reef management and rehabilitation trials. The project focused on testing active and passive meth- ods designed to enhance the growth and recovery of hard corals in areas frequently accessed by snorkeling and diving guests at resorts operated by Villa and Taj MPL. Coralnurserieswereestablishedatthreeresortsbycollectinglooseandprecariouscoralfragmentsfromrepresentativecolonies,attaching them to concrete plugs on 1 x 2-meter tables, and setting them on the lagoon floor in shallow water (2­5 meters deep) in sites where good tidal water and channel flow would maximize survival and growth rates. Once the nursery stock reached maturity, the concrete plugs were distributed Hilliard.R randomly across the "house" reef. The nursery and reef enhancement trials were monitored regularly. A national workshop held at the conclusion of the project aimed to disseminate the project results to a broad range of stakeholders and to build community awareness. Proj- ect outcomes included (a) an ongoing commitment to house reef management, (b) improved capacity of resort staff, (c) physical improvements to resort house reefs, and (d) interest from other regions, including Sri Lanka and Zanzibar/Tanzania. annual rEviEw · julY 2007­junE 2008 (fY08) 49 Promoting Seaweed Production in Eastern Indonesia Between 2004 and 2008, IFC focused on the promotion of small-and-medium enterprise development in Indonesia. The program ad- dressed various sectors, including handicraft production, agribusiness, and supply chain linkages in the extractive industries. In the agribusiness sector, IFC supported a project to improve the transparency of the seaweed marketing network and demonstrate profitable seaweed production and processing to increase the incomes of poor coastal communities. (Seaweed is a source of carrageen- an, which is primarily used as a food additive.) Typically, seaweed production involves the cultivation of seaweed in bottles placed in "owned" and managed marine plots. Cultivators are responsible for the crop from seeding to harvest, a growth period of 40 to 45 days. At harvest, the farmers process and dry the seaweed before selling it to middlemen or end-users. The project was initially tested in coastal communities in Sulawesi but was subsequently expanded to cover eastern Indonesia. It in- volved three distinct areas: (1) a farmer cooperation project to demonstrate best practices and improve productivity and household in- comes; (2) attracting investment into establishing mini-processing facilities near growing areas to allow farmers to retain more of their value-added; and (3) a market information and crop forecasting service linking farmers and end-users. The project was successful in farmer outreach but less successful in promoting investment in processing. TheestablishmentoftheSEAPlantNetworkFoundation(SPNF) (www.seaplant.net) provided the basis for improved transpar- ency between producers and markets and ongoing outreach Foundation) to producers. The managed cultivation associated with sea- weedproductionimpliesadegreeofprotection/conservation Network that increasingly is attracting attention from other maricul- (SEAPlant ture projects, including giant clam, abalone, and sea cucum- NeishI..Dr ber. Finally, the project raised awareness of the opportunities offered by seaplant cultivation and has stimulated donor in- terest in funding work (often with the SPNF) in Indonesia and the Philippines. Conclusion These approaches share an important attri- ingly willing to invest in the protection and bute, namely that where individual enter- restoration of coral reefs. This commitment These projects present different approaches prises and the sectors in which they operate to sustainability requires a long-term invest- through which the private sector can con- are reliant upon the sustainability of ecosys- ment horizon and a sense of environmental tribute to and create incentives for the sus- tem services, they are more likely to invest in and social corporate responsibility. tainable management of coastal and marine conservation. In the face of coral bleaching ecosystems and resources. The first approach and rising sea levels, for example, tourist re- Where there are appropriate incentives, the attempts to bring together commercial and sort operators in the Maldives were increas- private sector may internalize externalities conservation interests at the ecosystem level. and adopt sustainable management practices Unique ecosystems with high biodiversity for ecosystem goods and services. At larger value and significant tourism potential be- scales, where there are increasing numbers come the core resource for the project. The of stakeholders with competing demands, a second approach (the Maldives project) in- greater private sector contribution to coastal volves private sector stakeholders with vested and marine resource management would interests in marine resource conservation en- require development of local, regional, and gaging in the management of the resource national management frameworks that de- on their doorstep. The third approach relies fine the roles and responsibilities of all par- on commodity-based interventions through ties involved. the identification of existing commodities (seaweed) and/or market mechanisms (prod- uct certification) to create greater value and This article was prepared by Robert Gerrits (rgerrits@ thereby promote improved management of Hilliard.R ifc.org) of the International Finance Corporation. the resource. IFC website: www.ifc.org. 50 EnvironmEnt mattErs · 2008 LEGEN P ayments for ecosystem services1 (PES) ful for the development of a PES scheme. are generally viewed as a voluntary For example, the Convention on Biological arrangement between a provider of Diversity (CBD) requires in Article 8 that environmental services (such as sus- each Contracting Party "establish a system of tainable land or water management) protected areas or areas where special mea- and those that benefit from such services. sures need to be taken to conserve biological Under this scheme, a service provider is com- diversity" and "promote the protection of pensated by those who benefit; in turn, this ecosystems, natural habitats and the main- encourages continuation or improved provi- tenance of viable populations of species." At sion of these services beyond what would a meeting of the CBD in Bonn in 2008, the have been provided without the compensa- Parties agreed to "explore new and innovative legen tion. To date, PES has been applied largely financial mechanisms at all levels" to achieve to terrestrial/freshwater ecosystems and is in the goals of the Convention. The decision its infancy with respect to coastal and marine (Decision IX/11) identified PES schemes as ecosystems. one such mechanism. The institutional framework for a success- ful PES scheme usually includes a number of national and local organizations, as well as mechanisms that support the implemen- tation of the scheme, including (a) public institutions responsible for environmental A Policy management, (b) community-based orga- nizations and NGOs involved in the man- agement of natural resources, and (c) and Legal public/private financial institutions provid- ing resources for the improvement of natural resources management. The institutional Framework framework should be inclusive, with broad engagement of local communities in the de- sign and implementation of the plan. laznoGoileruAocraMSupporting The legal framework for the implementa- Payments for tion of a PES instrument should clarify land and resource tenure, provide specific rules and transaction mechanisms, and determine Ecosystem compliance and enforcement mechanisms. These requirements include (a) the rights Services over the resources in terms of ownership and access to the resources, (b) the payment of fees, and (c) the use and sharing of benefits among the stakeholders. The International Context LLC Nicaragua Images Several multilateral environmental agree- ments lay out a broad framework for the Shutterstock protection of biodiversity that may be help- annual rEviEw · julY 2007­junE 2008 (fY08) 51 51 The UN Convention on the Law of the Sea (UNCLOS) provides in Article 192 that "states have the obligation to protect and preserve the marine environment." The treaty acknowledges the sovereign rights of coastal states to explore and exploit the natural resources in their exclusive economic zone, subject to the requirement of "proper conservation and management measures" so that the maintenance of the living resources is not endangered by overexploitation (Ar- ticle 61). The 1995 FAO Code of Conduct contains nonmandatory principles for sus- tainable fishery management and provides a framework for national and international akoukamT.P efforts to ensure sustainable exploitation of aquatic living resources. Specifically, Article of Protected Areas and the National Forest Dong Nai River Basin, which was chosen 6 provides that "States and users of living Financing Fund, which was established as a for its large supply of water and heavy con- aquatic resources should conserve aquatic decentralized body of the forestry adminis- centration of forested areas. This project ecosystems. The right to fish carries with tration to handle financial issues for forests involves collaboration among Vietnamese it the obligation to do so in a responsible and natural resources. government bodies, industry, and local manner so as to ensure effective conserva- people, with support from the International tion and management of the living aquatic The implementing regulation of the Forest Union for Conservation of Nature, Winrock resources." Article 6 also states: "All critical Law provides that the government enter into International, and the U.S. Agency for In- fisheries habitats in marine and fresh water multiyear contracts with landowners for re- ternational Development. Under this pilot ecosystems, such as wetlands, mangroves, forestation, sustainable forest management, project, hydroelectricity plants, government reefs, lagoons, nursery and spawning areas, and forest protection. On average, landown- water companies, and ecotourism compa- should be protected and rehabilitated as far ers receive $63/hectare/year for forest con- nies provide financial and other incentives as possible and where necessary." servation, $41/ha/yr for forest regeneration, to upstream communities to keep the down- $816 over five years for reforestation, and stream watershed clean. After the pilot phase PES Schemes at the $1.3/tree for agroforestry. The bulk of fund- (2008­10), this policy is expected to be ap- ing for Costa Rica's PES program has been plied elsewhere in the country as a financial National Level derived from a fossil fuel sales tax; a newly tool for achieving the 2020 Forest Targets, established water fee will provide additional which seek to increase forest cover from the resources in coming years. Support has also 12.7 million hectares identified in 2006 to Several countries have developed and imple- been received from GEF and from Ger- 16 million hectares by 2020. Vietnam also mented a PES scheme at the national level, many, Norway, international environmental has a PES scheme for marine protected ar- including Costa Rica, Vietnam, and China. NGOs, and several local and international eas. For example, the Nha Trang Bay Marine companies. The contracts are renewable, and Protected Area is supported by fees on sight- Costa Rica. The PES Program in Costa Rica the landowners are free to renegotiate or sell seeing and a service charge for divers and was created in 1987, and the legal basis was their rights to other parties. As of the end snorkelers. provided in Forest Law 7575 adopted in of 2008, approximately 280,000 hectares-- 1996. This law recognizes four environmen- more than 10 percent of the country's forest China. The Sloping Land Conversion tal services provided by forest ecosystems: area--were under contract. Program--initiated by the Chinese cen- (1) climate change mitigation; (2) watershed tral government in 1999 in response to protection; (3) biodiversity protection; and Vietnam. The Pilot Policy on Payment for the historic 267-day Yellow River drought (4) landscape beauty. Several institutions are Forest Environmental Services--Pilot Policy in 1997 and the Yangtze River floods in entrusted with the management of the PES 380, signed on April 10, 2008--is the first 1998--is the largest land retirement pro- program to ensure that these services are of its kind in Southeast Asia. One of the new gram in the developing world. The primary protected, including the National System program's pilot projects is in the Southern goal of this program is to reduce water and 52 EnvironmEnt mattErs · 2008 LEGEN soil erosion by retiring steeply sloping land schemes, countries need appropriate legal been used for watershed protection, carbon (greater than 25 degrees) from cropland and institutional frameworks. sequestration, biodiversity benefits, and and turning it into forests and grassland. landscape conservation. It may be possible The central government compensates farm- An effective legislative framework for PES to broaden the PES scheme to services pro- ers that participate with an annual in-kind would define the institutional arrangements, vided by coastal areas. For example, man- amount of grain, a cash payment, and free responsibilities, contract requirements, and groves may be protected through a PES seedlings. By the end of 2003, 7.2 million mechanisms for ensuring payments and the scheme that compensates those who steward hectares of cropland had been enrolled in the resolution of conflicts. The critical aspects of them for the economic value they provide as program, which covered more than 2,000 governance are the recognition and protec- a fish nursery or carbon sink. counties in 25 provinces, mainly in western tion of the rights of local communities over and central China, the most underdeveloped the resources, the sharing of responsibilities While PES schemes are still relatively new, areas of China. between the national and local institutions countries should exchange lessons learned. through decentralization, the conditions of In an effort to develop appropriate institu- Recommendations the public/private transactions, the financial tional and legal frameworks for PES, it is mechanisms, and sharing of the benefits equally critical to provide necessary technical As these examples suggest, the PES concept among stakeholders. and financial support, particularly to ensure has been established in many countries not the sustainability of effective PES schemes. via law but through specific programs or The PES schemes described here also dem- projects. However, to ensure sustainable PES onstrate that the PES approach has mainly Bibliography Di Leva, Charles. 2002. "The Conservation of Nature and Natural Resources through Legal and Market-Based Instruments." RECIEL 11(1): 84-95. FAO (Food and Agriculture Organization of the United Nations). 2004. "Electronic Fo- rum on Payment Schemes for Environmen- tal services in Watersheds." Final Report. Rome: FAO. Pagiola, S., and G. Platais. 2007. Payments for Environmental Services--From Theory to Practice. Washington, DC: World Bank. Note 1. "PES" in some cases has also been used for the term "payments for environmental services." For the purposes of this article, the term "payments for ecosystem services" is used. LLC Images This article was prepared by Patrice Talla Takoukam (ptallatakoukam@worldbank.org) and Sachiko Morita (smorita@worldbank.org) of World Bank's Shutterstock Environment and International Law Unit. Website: www.worldbank.org. annual review · julY 2007­june 2008 (fY08) 53 Assessing the Development and Environmental, Forest, and Climate Change -- Other Natural Resource A Strategic Framework Aspects of Development for the World Bank TIONS Policy Lending -- Group: Technical Report A World Bank Toolkit December 2008 by Muthukumura Mani, Anil 100 pages Markandya, Incola Cennachi, Environment Department Sunanda Kishore, and Viju Ipe Report number 47893 December 2008 PUBLICA 78 pages Environment Department Report number 47655 wne The Sunken Billions -- Gender in Agriculture The Economic Justification Sourcebook, Module 13 for Fisheries Reform -- Gender in Fisheries and by Kieran Kelleher, Rolf Aquaculture Willmann, and Ragnar Arnason by The World Bank, Food and February 2009 Agriculture Organization, and 100 pages the International Fund for Agriculture and Rural Agricultural Development Development October 2008 ISBN: 978-0-8213-7790-1 550 pages $25.95 Agriculture and Rural Development ISBN: 978-0-8213-7587-7 $45.00 A Future for Wild Tigers Strengthening Policy by Richard Damania Dialogue on January 2008 Environment -- Learning 36 pages from Five Years of Country Environment Department Environmental Analysis South Asia Region, East Asia Environment Department and Pacific Region Paper no. 114 Report number 44064 Institutions and Governance Series by Poonam Pillai February 2008 114 pages Report number 42821 Climate Change -- Poverty, Health, & Environment -- Adaptation and Mitigation Placing Environmental Health on in Development Programs: Countries'Development Agendas A Practical Guide Poverty-Environment Partnership by Muthukumura Mani, Anil Joint Agency Paper Markandya, and Viju Ipe June 2008 December 2008 60 pages 78 pages Report number 47620 Report number 47653 For information on obtaining these publications, please call the World Bank Environment Department at 202-473-3641, or e-mail us at ematters@worldbank.org