Valuation of ecosystem services as a basis for investment in Blue Economies

Abstract

The premise behind the Blue Economy concept is that the natural resource assets in the Caribbean have the potential to contribute to economic growth, poverty reduction, and resilience to climate change, natural disasters and exogenous economic shocks. Public and private sector investment, including investments in new policy interventions, will be required to transition toward this sustainable paradigm. Directing these investments toward their highest and best use will require measurement of the “hidden” benefits derived from natural assets, the economic losses induced by resource degradation and the incorporation of those values into public spending, market prices and national income accounts. The purpose of this chapter is to illustrate how the economic valuation of natural assets and ecosystem services provides a clear path toward these ends. Value estimates can serve to establish baseline measures of natural wealth against which to measure progress, measure the costs and benefits of conservation and development projects, determine appropriate charges for ecosystem use or damage and develop fiscal policy instruments that incentivise sustainable behaviours. Valuation can also support a value-based paradigm for government budget allocations and can help communicate the value of the Blue Economy to society. When spatially mapped, value estimates can serve to identify areas at the greatest risk for loss of value and/or to target areas where investment and interventions could yield the highest economic gains.