Introduction
Nature is fascinating. There are a variety of features mother nature has gifted the universe whose beauty and mystery are mesmerizing. While environmental economics provides valuation to avail useful insight about the relativity of resource scarcity, it is not always accurate, especially for some resources whose value cannot be satisfactorily summed up to a monetary value. Of the most extraordinary natural resources is the world’s largest and most extraordinary coral reef, the Great Barrier Reef, found in Australia. As one of the world’s seven natural wonders, the reef provides a habitat to a plethora of marine life and is made up of more than three thousand different reef systems and coral cays. Additionally, it is surrounded by literally hundreds of lovely tropical islands that are home to some of the world’s most magnificent sun-soaked golden beaches. The reef has become one of the most popular tourist destinations in the world as a direct result of the stunning natural scenery that it contains.
As a valuable and irreplaceable resource, the biggest living structure on the planet, and one of the most complex and diversified natural ecosystems, the reef has elicited debates amongst economists concerning its social and economic value. Given the incomparable beauty and richness of the Great Barrier Reef, placing a value on it may be difficult. Of course, it is priceless on various levels, but pinpointing its worth may aid in understanding its significance and influence future thinking and legislation. The Deloitte Access Economics analysis for the Great Barrier Reef Foundation (with assistance from the National Australia Bank and the Great Barrier Reef Marine Park Authority) determines the entire economic, social, and icon asset worth of the Reef, assigning it a monetary figure of a staggering 56 billion dollars.
Factors Endangering the Great Barrier Reef
Various environmental perils endanger natural resources, even significant ones such as the Great Barrier Reef. Inevitably, human activity and climatic changes continuously cause the depreciation and extinction of many valuable natural resources, making the future of earth’s habitability questionable. The world continues to lose many animal species due to unsustainable environmental conditions. There have been talks about the impending dangers that the human species face; scientist forecast hard times if humans do not work on sustainability. With discussions on impending threats to human life, the world continues to lose various natural resources, such as reefs.
The Great Barrier Reef continues to face unprecedented dangers, and its extinction may be nearing. According to AU, C. O. (2016), Increases in seawater temperature over the previous decade and the coral bleaching disaster that occurred in March 2016 have led to the immense destruction of the Great Barrier Reef. The dangers the reef faces have the ability to make the natural resource less resilient to damage and face the threat of complete destruction. Coral bleaching occurring at greater frequencies, say for two consistent years, could lead to irreversible economic and social impacts on Australia and the rest of the world (O’Mahoney et al., 2017). The report titled “At what price?” written by Deloitte serves as a timely reminder of Australia’s reliance on fossil fuels as well as the financial harm that ignoring the existence of climate change will do to Australia’s capacity to compete internationally in the future. Ignoring factors that endanger natural resources, such as the Great Barrier Reef, is likely to be very costly for the country.
The Great Barrier Reef (GBR) has suffered from extreme bleaching that experts have given up trying to reverse the damage and are now focused on preserving the World Heritage Site. The Deloitte report cites the loss of “around 50% of the corals on the GBR in the last 30 years” (O’Mahoney et al., 2017). The research also points out the “extraordinary pace” of climate change in the area. Because of the extent of the bleaching damage, several specialists consider the eco-structure, which is 25 million years old, to be endangered, with factors such as coal mining accelerating the damage.
Valuating the Great Barrier Reef
Valued natural resources can sometimes be assigned staggering figures, which may or not reflect their actual value. According to the research conducted by Deloitte Access Economics, the Great Barrier Reef is worth $56 billion (O’Mahoney et al., 2017). In addition, the Deloitte report estimates the reef to add around $6.4 billion to the economy annually (O’Mahoney et al., 2017). This statistic, however, is a major understatement of the value of the reef since it focuses a disproportionate amount of emphasis on tourism and the reef’s status as an image of Australia. In other words, the worth of the reef is significantly more than the figure suggested by the group of economists. The research fails to address some aspects of the reef, such as the positive effects of the coral reef on ecosystems. Should these aspects be taken into consideration, it becomes blatantly clear that the value of the reef cannot be compared to anything on earth and cannot be assigned a monetary value.
Many approaches can be used to valuate natural resources. Some economists consider the cost-benefit analysis the ideal method for determining policies and projects that might have an influence on natural resources such as the Great Barrier Reef. This is because this method is backed by putting a price on the unit. One comparison that may be made is between the potential economic benefits of the development of the Abbot Point coal terminal and the associated costs to the environment, specifically to the Great Barrier Reef. Other groups of economists seem to have different ideas on valuating the reef, and Deloitte economists use contingent valuation to estimate the value of the Great Barrier Reef.
Contingent Valuation
Deloitte’s research uses the contingent valuation approach, a method based on surveys, to evaluate the value of non-market natural assets such as endangered species and national parks and quantify the consequences of occurrences such as oil spills. The Deloitte economists conduct research to determine the number of people willing to pay for the reef in the form of a tax or another kind of charge, determining that the cost to be approximately $67.60 for each person annually (O’Mahoney et al., 2017). In addition, the research makes use of the travel-cost method, which determines tourists’ willingness to pay for the Great Barrier Reef based on the amount of time and money they are willing to spend going there (O’Mahoney et al., 2017).
Amongst its advantages is its wide usage in approximating values of different types of environmental and ecosystem resources and services. It has also proven critical to economists as it lessens the burden of assigning both use and non-use values. Additionally, economists enjoy its simplicity as it directly gets people’s feedback on the amounts they can willingly pay for natural resources and environmental services. Economists also hold dear to this method since it is, at times, the only one they can use to attach a monetary value to non-use factors of the environment (Vossler & Holladay, 2018). Even more sensibly, the Contingent approach does not involve purchases, and direct participation is not a must. Economists have widely used the method to assign values to even the basic life support activities emaciating from the environment that contribute to health and biodiversity. These can be anything from a scenic vista to a national park visit or picnic bird watch.
Even with its pros, terming the contingent method as accurate may be challenging since there are limits to each and every method that may be used to place a monetary value on environmental assets. For instance, it may be difficult to verify whether or not respondents are giving accurate price ranges for their level of readiness to spend. If respondents are under the impression that they would, in fact, be required to pay a Great Barrier Reef tax, they may choose to reply strategically. They could group all of the environmental problems together under a single heading. More importantly, the methodology the study applies completely disregards the ecosystem services, which are the non-economic value of the reef _ which is the most significant. For instance, coral reefs protect against erosion and storm damage and provide hibernation sites and habitats for a significant percentage of all marine animals. Each of these plays an essential role in terms of both economic and social aspects. Leaving them unaccounted for would lead to an inaccurate monetary value for the reef.
A study from 2014 included in the Deloitte report estimates the value of the ecosystem services provided by coral reefs at $352,249 per hectare per year in the United States (but does not give a reference for it) (O’Mahoney et al., 2017). The Great Barrier Reef Marine Park has a total area of 35 million hectares and is home to 2,900 individual reefs (Riebl, 2022). This suggests that the ecological services it provides have a value that is measured in billions of dollars per year. According to one estimate provided by Deloitte, the value of the reef is equivalent to that of 12 Sydney Opera Houses, a comparison made by The Australian newspaper (O’Mahoney et al., 2017). Even though both the Opera House and the building it is attached to are landmarks, the Opera House may be rebuilt, a stark contrast to the Great Barrier Reef. Any kind of loss on the reef is irreversible! To put it in simple terms, it is close to incalculable in value. Even if the contingent technique successfully assigns a value to the reef, it is not the best method since the reef is both irreplaceable and invaluable. Instead, the precautionary principle may provide more accurate data, valuable in making decisions pertaining to the reef.
The precautionary principle
When environmental assets are irreplaceable, and their loss is irreversible, the Precautionary Principle is the best option to set a framework for decision-making. The principle asserts that if there is uncertainty about the effects that new development will have on an environmental asset, those in charge of making decisions need to exercise caution and work to minimize the amount of damage that will be done. For instance, if there is even the slightest possibility that the expansion of the Abbot Point coal terminal may result in the severe destruction of the reef, then it would be prudent not to proceed with the plan to expand the facility (Hamylton et al., 2022). In accordance with the Precautionary Principle, it is still appropriate to assign a value to the reef in order to estimate the loss occurrences. However, this would necessitate the pricing of all values, most notably those associated with ecosystem services.
Although it has received a great deal of criticism due to the fact that it appears to be biased against development, the Precautionary Principle is an essential component of the idea of Ecologically Sustainable Development as outlined in Australia’s Environment Protection and Biodiversity Conservation Act 1999 (Saunders et al., 2020). It is probably desirable to leave a priceless resource like the Great Barrier Reef as “priceless” and act in a manner consistent with that designation. In the end, if the Precautionary Principle is ever going to be used in opposition to cost-benefit assessments and contingent valuations when thinking about Ecologically Sustainable Development, it will surely be for the world’s most prominent environmental gain.
Conclusion
Even if Deloitte economists successfully assign a value of 56 billion to the Great Barrier Reef, there exist controversies in the field of economics over whether the environment and its resources should even be valued. Reasonably, value is generated so that all of the impacts, such as those that result from new development, may be expressed using a single unit of measurement, which in this case is a monetary value. A cost-benefit analysis may now be carried out as a result of this. However, giving the Great Barrier Reef a monetary worth conceals the fact that it is a one-of-a-kind ecosystem, which means that its value cannot be compared to that of other assets in the same way. Ultimately, the protection and prioritization of the Great Barrier Reef is a political issue that requires political will, as opposed to being a problem that can be solved by pricing and economics.
References
AU, C. O. (2016). AUSTRALIA’S CORAL REEFS UNDER THREAT FROM CLIMATE CHANGE.
Hamylton, S. M., Hutchings, P., Sims, C., & Ward, S. (2022). The Australian Coral Reef Society: the last 40 years of a century working with Australia’s coral reefs. Historical Records of Australian Science.
O’Mahoney, J., Simes, R., Redhill, D., Heaton, K., Atkinson, C., Hayward, E., & Nguyen, M. (2017). At what price? The economic, social and icon value of the Great Barrier Reef
Riebl, C. (2022). Greening Australia: Innovator and Collaborator in Achieving Nature-based Solutions through Restoration.
Saunders, M. E., Bower, D. S., Mika, S., & Hunter, J. T. (2020). Condition thresholds in Australia’s threatened ecological community listings hinder the conservation of dynamic ecosystems. Pacific Conservation Biology.
Vossler, C. A., & Holladay, J. S. (2018). Alternative value elicitation formats in contingent valuation: Mechanism design and convergent validity. Journal of Public Economics, 165, 133-145
write