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Economic Analysis

Case 1.1: Economic Values for Montego Bay Marine Park, Jamaica

Montego Bay

In the table below, the results of a Total Economic Value assessment of Montego Bay Marine Park in Jamaica are shown. In the first numeric column (under Benefits), the table shows the aggregate total values of the range of associated values in Montego Bay using the Net Present Value (NPV). In the second numeric column, the marginal benefits/costs of a percentage change in the abundance of the resource (e.g. quality of coral reef) is estimated. And in the last column, the marginal benefit of an additional hectare (or costs of the loss of a hectare) of the resource, under current reef conditions, is estimated. This demonstrates the importance of identifying the range of associated values in the MPA. The information can be used as an educational tool to assist policy makers, as well as a planning tool in the formulation of policies (such as investment in the protected area).

Source: Ruitenbeek et al. (1999)



Marginal Benefits*









Artisanal Fishery




Coastal Protection




Local Non-use




Visitor Non-use








Pharmaceutical Bioprospecting (Global)




Total (Global)




Pharmaceutical Bioprospecting (Jamaica)




Total (Jamaica)





*Marginal Benefits shown at typical current reef conditions

Case 1.2: Costs-Benefit Analysis for Portland Bight, Jamaica

Source: Cesar et al. (2000a)

The Portland Bight Protected Area is an integrated marine and terrestrial conservation area located in the southern part of Jamaica. It covers approximately 1900 km2, 72 percent of which is marine. A cost benefit analysis of the area estimated the net present value of the operational costs over a 25-year period at US$19.2 million. The incremental benefits of the MPA over the same time frame were estimated between US$52.6 million and US$40.8 million, based on two different tourism scenarios. This projected outcome justified the proposed management expenditure from an economic feasibility perspective.

Case 1.3: Setting the Correct User Fees in the Seychelles - a case where economic analysis did not lead to increased incomes

Source: Cesar et al. (2000c)

A Willingness-To-Pay (WTP) survey was carried out for the Marine Parks of the Seychelles to determine whether the current user fee of 50 Rp. per person per visit could be increased. The following results were produced:

As a result, the fee was raised, with the potential to provide an additional US$88,000 per year in revenue to the Marine Parks Authority. However, the result in behavior did not match the findings of the survey. Divers went to places outside the park which were similar in quality or diver satisfaction. Therefore actual revenues to the Marine Parks Authority decreased.

Case 1.4: Benefits and Costs of Protected Area Management in Olango Island, Philippines

Source: White et al. (2000)

A case study of Olango Island, Cebu, which has 40 km2 of poor-quality coral reef, together with its wetland habitat and mangrove, analyzed its contribution to the Philippines economy. The current annual net revenue range from the Olango Island reef was estimated at US$38,300-US$63,400 per km2. The wetlands add US$389,000 to the total. This relatively high income reflects the proximity of the Olango reef to Mactan Island, Cebu, a well-known tourist destination. Revenues accrue primarily from on- and off-site expenditures of diving tourists. The costs of managing Olango Island coral reefs and wetland habitats for improved net revenues and conservation would amount to less than US$100,000 per year. This provided a convincing argument to government and the private sector to invest in the management of the Olango Island reef. Improved reef quality and wetland stewardship on Olango could easily result in a 60% increase in annual net revenues from reef and mangrove fisheries and tourism expenditures, it was found.

Case 1.5: The Benefits of Establishing an MPA in Palawan, Philippines

Source: Hodgson et al. (2000)

El Nido is a coastal town located on the Philippine island of Palawan. Marine activities include traditional fisheries and dive-related tourism. Upstream logging was determined to have an impact on the marine environment. In 1986, it was determined that forest logging on the land surrounding the bay could limit the viability of the fisheries and tourism industries. A cost-benefit analysis predicted that over 10 years logging would generate gross revenues of US$8.6 million. The predicted lost revenues from fisheries and tourism (as a result of a degraded environment from logging) were estimated at US$6.2 million and US$13.9 million respectively. Therefore, logging would produce a net negative cash flow. As a result, logging was banned in Palawan by the national government, and the bay was declared a Marine Reserve. A re-survey of the El Nido area was conducted in 1996. It revealed that the predictions about tourism growth were correct, and preservation of the unique forest ecosystem had allowed ecotourism to flourish. However, increased fishing pressures due to a variety of causes had resulted in overfishing and severely reduced populations from most high-value species of fish and shellfish.

This situation shows that coastal resource managers should pay close attention to ecological-social-economic interactions and their economic consequences. The economic analysis done here used some fairly simple assumptions and readily available data, but provided useful and accurate predictions about the likely economic impacts of the two main options (logging or no logging). The analysis helped to convince the government to ban logging in Bacuit Bay watershed in 1988. By 1996, the coral reefs of Bacuit Bay had recovered from the sedimentation damage they previously suffered from the logging. The tourism industry was flourishing. However, haphazard, uncontrolled growth of small businesses and guesthouses, although providing an alternative livelihood to local residents, was become a threat to the ecotourism industry. Furthermore, local population expansion increased demand on the fisheries resources and artisanal fishers had decimated populations of high value marine species. SCUBA divers noticed reductions in numbers of large fish, although they were still attracted by the interesting corals, drop-offs and small reef fish. The government now faces the dilemma about how to control excessive fishing in Bacuit Bay.

Although this study was successful in persuading the government of the economic value of protecting this area, it is clear that adaptive management is key to successful long-term protection.

Case 1.6: Gulf of Castellammare Marine Park, Italy

Whitmarsh et al. (2001)

A year-round trawl ban imposed on commercial fishers in the Gulf of Castellammare in Sicily increased net financial profits for artisanal fishing vessels and indicated that this fishery has the potential to be economically sustainable under current operating conditions. Furthermore, vessels fishing outside the area of the trawl ban generally had poorer operating performance, so clearer the area with higher levels of control provided economic benefits. This information is invaluable for any further policy decisions relating to the trawl ban, as well as for increasing financial support from government for increased enforcement within the marine park.

Case 1.7: Demonstrated Benefits of Kisite Marine National Park and Mpunguti Marine National Reserve, Kenya

Source: Emerton Tessema (2000)

Kisite Marine National Park and Mpunguti Marine National Reserve (KMMPA) cover an area of just under 40 km2 and lie between 3 and 8 km off the south coast of Kenya. Although administered as a single protected area by the Kenya Wildlife Service (KWS), Kisite and Mpunguti are under different conservation regimes. The larger Kisite Marine Park allows no consumptive utilization, while fishing activities using traditional methods are permitted in the smaller Mpunguti Marine Reserve. Both form an important tourist destination, as well as containing important biodiversity.

KMMPA has a demonstrably high economic value. It is estimated that the MPA generates income in excess of US$1.75 million a year in net revenues from fisheries and tourism. These returns are far in excess of the estimated management and opportunity costs associated with the park of some US$190,000 per year. Factoring in other, currently unquantified, economic benefits of the MPA and its component resources such as contribution to shoreline protection, marine productivity, wildlife habitat and nursery, cultural and aesthetic values would increase this surplus of economic benefits over economic costs still further.

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