METHODOLOGY

INT

REVIVING THE WESTERN INDIAN OCEAN ECONOMY:Actions for a Sustainable Future

BCG ECONOMIC VALUATION:METHODOLOGY AND SOURCES

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Frontcover Atraditionalfisherwomangleansforoctopusonavastreef flatduringlowtide.Octopusfishingisasourceoffoodand livelihoodformanycommunitiesacrosstheWesternIndianOcean.©GarthCripps TheBostonConsultingGroup(BCG)isaglobalmanagementconsultingfirmandtheworld’sleadingadvisoronbusinessstrategy.Wepartnerwithclientsfromtheprivate,public,andnot-for-profitsectorsinallregionstoidentifytheirhighest-valueopportunities,addresstheirmostcriticalchallenges,andtransformtheirenterprises.Ourcustomizedapproachcombinesdeepinsightintothedynamicsofcompaniesandmarketswithclosecollaborationatalllevelsoftheclientorganization.Thisensuresthatourclientsachievesustainablecompetitiveadvantage,buildmorecapableorganizations,andsecurelastingresults.Foundedin1963,BCGisaprivatecompanywith85officesin48countries.Formoreinformation,pleasevisitbcg.comWWFisoneoftheworld’slargestandmostexperiencedindependentconservationorganizations,withover5millionsupportersandaglobalnetworkactiveinmorethan100countries. WWF’smissionistostopthedegradationoftheplanet’snaturalenvironmentandtobuildafutureinwhichhumansliveinharmonywithnature,byconservingtheworld’sbiologicaldiversity,ensuringthattheuseofrenewablenaturalresourcesissustainable,andpromotingthereductionofpollutionandwastefulconsumption.ISBN978-2-940529-51-3Citationofthismethodologydocument:WWF.2016.BCGEconomicValuation:MethodologyandSources.RevivingtheWesternIndianOceanEconomy:ActionsforaSustainableFuture.WWFInternational,Gland,Switzerland.24pp.

Forallreferencesanddetails,pleaserefertothemainreportavailableatocean.panda.org.TheBostonConsultingGroup:MartySmits,TazChaudhry,JenMcPhillips,DouglasBeal,CamilleAstierLeadauthorofthemainreport:Dr.DavidObura,CORDIOEastAfricaP.O.BOX10135Mombasa80101,KenyaEditor-in-chief:JohnTanzerManagingeditor:PaulGamblinContributingeditors:ValerieBurgener,SianOwen,AimeeGonzalesDesign/layout:StefaneMauris AWWFInternationalproductionThedesignationofgeographicalentitiesinthisreport,andthepresentationofthematerial,donotimplytheexpressionofanyopinionwhatsoeveronthepartofWWFconcerningthelegalstatusofanycountry,territory,orarea,orofitsauthorities,orconcerningthedelimitationofitsfrontiersorboundaries.PublishedinNovember2016byWWF–WorldWideFundForNature(FormerlyWorldWildlifeFund),Gland,Switzerland.Anyreproductioninfullorinpartmustmentionthetitle,theleadauthor,andcredittheabove-mentionedpublisherasthecopyrightowner.©Text2016WWF.Allrightsreserved

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Contents Ocean annual income and asset-valuation methodology & sources ............................................................... 4

Terminology .................................................................................................................................................... 5Total Western Indian Ocean “shared wealth fund” by asset categories.......................................................... 6

Annual Value Generated from the Western Indian Ocean's economy.......................................................... 14Ocean related activities grouped into 4 primary categories .......................................................................... 15

• Direct output of the ocean ................................................................................................................. 16

• Direct services enabled by of the ocean ............................................................................................ 18

• Adjacent benefits of the ocean .......................................................................................................... 21

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Oceanannualincomeandasset-valuationmethodology&sources

ThismethodologydocumentproducedbytheBostonConsultingGroup(BCG)providessupplementalinformationtothediscussionsoneconomicvalueinpart1ofthereportRevivingtheWesternIndianOceanEconomy:ActionsforaSustainableFutureandillustratedbyFigure1ofthesamereport(pp16-17).Theassumptions,analysisanddatasourcesthatinformtheWesternIndianOcean'sannualcontribution(“grossmarineproduct”)andasset-valuation(“sharedwealthfund”)areoutlinedinthismethodologydocument.BCG’sintentwastotriangulateacrossandrefineexistingprimaryresearchattheregionalscale,adaptedfromthemethodologyusedintheglobalreport,RevivingtheOceanEconomy:Thecaseforaction–2015,publishedbyWWFInternational.Thefullreportcanbefoundatocean.panda.org.TheanalysesarepartlybasedoninformationthathasnotbeengeneratedbyBCGandhasnot,therefore,beenfullyverified.Theinformation,opinionsandanalysescontainedherearebasedonsourcesbelievedtobereliableandcomprehensivebutnorepresentation,expressedorimplied,ismadeastotheaccuracy,completenessorcorrectnessoftheoriginalmethodsusedtogathertheprimarydata.Furthermore,theanalysesandconclusionscontainedinthisdocumentarebasedonvariousassumptionsthatBCGhasdevelopedregardingeconomicgrowth,andthecurrentandfuturestateoftheocean(baseduponfactorsandeventsthataresubjecttouncertainty).Ofcourse,futureresultsornetpresentvalues(NPV)derivedfromforecastedresultscouldthusbemateriallydifferent.

Wewelcomeconstructivecommentsandcontributions(publishedregionaleconomicvaluationpapersregionalvaluationreferences)tohelpimprovetheeconomicanalysisfurther.Wecanalsosharethespreadsheetwhichcontainsourcalculations,uponrequest.

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Terminology

Whatisthe“grossmarineproduct”andhowdoesitrelatetogrossdomesticproduct?Followingthesameapproachastheglobalreport,thisregionalreportintroducesthemeasurement“grossmarineproduct”(GMP)toallowcomparisontothenationaleconomiesintheWesternIndianOceanregion.Asgrossdomesticproduct(GDP)measuresthetotaldollarvalueofgoodsandservicesproducedbyacountryinayear,GMPisthevalueoftheannualeconomicoutputoftheWesternIndianOcean.BCG’seconomicanalysisoffersaconservativeestimateofUS$20.8billionfortheWesternIndianOcean’sGMPTheGDPofacountrycomprisesthesumofvalue-addedbyeachindustry,wherebyoutputisadjustedforintermediateinputsfromotherindustries.GMPdirectlycalculatestheoutputofmarine-relatedindustries.Whatisanocean“sharedwealthfund”?Theocean“sharedwealthfund”leveragestheanalogymadeintheRevivingtheOceanEconomy:Thecaseforaction–2015report.The“sharedwealthfund”isanattempttocalculatethetotalassetbaseoftheoceanintheWesternIndianOceanregion,fromwhichannualeconomicproduction(i.e.theGMP)isdrawn.ForthemarineassetsoftheWesternIndianOcean,thishasbeenconservativelyestimatedatUS$333.8billion.

Whatisthedifferencebetweentheocean“sharedwealthfund"andthe"grossmarineproduct"?

Theocean“sharedwealthfund"istheoverallassetvalueoftheoceanintheWesternIndianOceanregion,basedonmarketvalueofassets(formarinefisheries)oronnetpresentvalue(NPV)ofassets’cashflows(forallotherelementsofocean“sharedwealthfund”),whereastheGMPistheoutputofeconomicactivitiesgeneratedbytheseassetseveryyear.

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TotalWesternIndianOcean“sharedwealthfund”byassetcategoriesvaluedatUS$333.8billion

Six primary 'value-generating' asset categories

Marine Fisheries

Mangroves

Coral Reefs

Seagrass

Productive Coastline

Carbon Absorption

Asset (US$ billion)

Primary Assets of the

Western Indian Ocean

Adjacent Assets

135.06

42.71

18.09

20.78

93.24

23.96

“Shared Wealth Fund” asset base ~333.84

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ThetotalassetvalueofUS$333.8billionisanaggregateofthemostreadilymeasuredoceanassetswithintheWesternIndianOcean.FourofthesixassetsaremarineecosystemsthatgenerateservicesthatcanbeconsumeddirectlyfromtheoceanandarevaluedatUS$216.6.Theremainingtwoareadjacentassets,whichprovidefunctionalbenefitsthatareutilizedindirectly.TheyarevaluedatUS$117.2andincludeproductivecoastlines(focussedontourism)andcarbonabsorption.Alloftheseassetsaredependentonthesoundecologicalfunctionandwellbeingoftheoceanenvironmenttogeneratevalue.Thecalculationsforarrivingatthesesumsareavailableuponrequest.

Thesecategoriesarenotacollectivelyexhaustivelistbutaimtotacklemaincomponentswhereprimaryanalysisexists.Methodology:Inordertovalueeachassetclasstwodifferentmethodswereutilized:

1. MarketBased:Derivedassetvaluelookingatquantityofaresourcepricedatitscurrentmarketvalue

2. ValueBased:Impliedassetvalueascertainedbyidentifyingannualvaluegenerationoftheasset,andconductinganNPVoffutureyears

Forseveraloftheassetcategories,ahybridormodifiedversionofthetwoabovemethodswasemployedtobetterestimateandtriangulatetotalassetvalue.• NetPresentValueCalculations

ForallcalculationsutilizingtheNPVmethod,certainassumptionswereestablishedtoensureconsistencyandaccuracy.

InordertoappropriatelycalculatetheNPVofourassetclasses,weneededtodetermineanappropriateregionalrisk-freerateandregionalriskpremium.WeleveragedWorldBankdata:risk-freetreasurybillrate(lendingrateminusriskpremiumonlending)andriskpremiumonlending.Basedonthesedata,wecalculatedthearithmeticmeanacrosstheWesternIndianOceancountriesforwhich2014datawereavailable(Kenya,Mauritius,Mozambique,Seychelles,SouthAfricaandTanzania;Madagascarwasexcludedduetoanextremelyhighvaluewhichcouldnotbeexplained),todeterminetheregionalrisk-freerate(6.4percent)andregionalriskpremiumrate(6.5percent)forourNPVcalculations.(Source:http://data.worldbank.org/indicator/)

Definitions:Anetpresentvaluerequiresspecificationofthenumberoffutureyearsbeingconsidered(e.g.10years,50years,infinity)andadiscountrate,whichisthesumoftheriskfreerateandriskpremiumtorepresentthefactthatsocietyplacesagreatervalueoncurrentbenefitsthanfuturebenefits.Arisk-freeinterestrateisthetheoreticalrateofreturnofaninvestmentwithnoriskoffinancialloss.Oneinterpretationisthattherisk-freeraterepresentstheinterestthataninvestorwouldexpectfromanabsolutelyrisk-freeinvestmentoveragivenperiodoftime.

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Ariskpremiumisthereturninexcessoftherisk-freerateofreturnaninvestmentisexpectedtoyield;anasset'sriskpremiumisaformofcompensationforinvestorswhotoleratetheextrarisk,comparedtothatofarisk-freeasset,inagiveninvestment.Foreachassetcategory,methodologyandsourcesareprovided:• MarineFisheries

TypeofValuation:MarketBasedCalculation:Totalproductivefishbiomass(intons)multipliedbyanimpliedmarketportsidepricefor1tonoffishmultipliedbytheWesternIndianOcean'sexclusiveeconomiczone(EEZ)shareoftotalglobaloceanareaConsiderations:ThisvaluationbuildsonthemethodologyappliedintheGlobalReport.Itdoesnottakeintoaccountsupplyanddemandelasticity,recognizingthatthelargerthesupplybecomes,lowerpricesareexpected.Additionally,thisfiguredoesnotdistinguishbetweenreadilycatchableandcommonfishvarieties,andthosefishcategoriesthatmaynotbeinhighmarketdemand,orthataretoodifficulttofeasiblycatch(e.g.deep-seavarieties).Duetolackofdefinitivereferencesandquantitativedata,wewereunabletomakeadjustmentstoaccountforregionspecificinformation(e.g.impactofclimatechangeonfishdistribution).Shouldmoregranulardataorregion-specificdatabecomeavailable,amoreprecisevaluationcouldbeperformed.

Primary Sources: • Total Fish:

Wilson RW, Millero FJ, Taylor JR, Walsh PJ, Christensen V, Jennings S and Grosell M (2009) "Contribution of Fish to the Marine Inorganic Carbon Cycle" Science, 323 (5912) 359-362.

• Market Value of fish:

OECD-FAO Agricultural Outlook (Fisheries) 2014-2023 http://stats.oecd.org/

• EEZ area: UBC Sea Around Us database (Industrial, Artisanal) http://www.seaaroundus.org/data/#/eez

• Total ocean coverage: NOAA (National Centers for Environmental Information) database http://www.ngdc.noaa.gov/mgg/global/etopo1_ocean_volumes.html

• Inflation rate: World Bank (consumer price annual inflation rate)

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• MangrovesTypeofValuation:ValueBased(usingsomemarketassumptions–i.e.quantityofresource)Calculation:NPVofallfuturemangrovevaluesbasedonthefollowingassumptions:A. TotalMangroves:769,760hectares

B. Degradationofmangroves:ratevariesbycountry,rangingfrom-1percentto+4per

centyearly.Theaverageregionaldegradationrateis-1percentannually.

C. Valuederivedfrommangroves=US$4,185perhectare(appliedforeachyear,notadjustedforforecastedinflationaswewantNPVincurrentdollars).

D. Discountrate:Averageregionalrisk-freerate

E. Noriskpremium–decisionmadenottoapplyriskpremiumtonaturalassets

(followingthemethodologyappliedinglobalreport:riskpremiumappliedonlyonassetsdirectlyconnectedtoindustrial/marketoutput)

• CoralReefsTypeofValuation:ValueBased(usingsomemarketassumptions–i.e.quantityofresource)Calculation:NPVofallfuturecoralreefvaluesrelatedtocoastalprotection,tourism/recreationandbiodiversityvaluesbasedonthefollowingassumptions:A. TotalCoral:1,205,000hectares

Primary Sources: • Total Mangroves:

Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.

• Value generation: Brander, Luke M., et al.. "Ecosystem Service Values for Mangroves in Southeast Asia: A Meta-analysis and Value Transfer Application." Ecosystem Services 1.1 (2012): 62-69.

• Asset degradation: Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.

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B. Degradationofcoralat-1percentyearlyC. Valuederivedfromcoral=US$849perhectare(appliedforeachyear,notadjusted

forforecastedinflationaswewantNPVincurrentdollars)

Note:Valuederivedtakingintoaccountonlyrelevantbenefits(coastal,tourism/recreation,andbiodiversity)toavoiddoublecountingwithother“sharedwealthfund”assets:

• Totalvalueofbenefitsfromcoralreefsintheworld:US$29,081millionperyearonaglobalcoralareaof284,000km2,thusatotalbenefitvalueofUS$1,050perhectare.

• Relevantbenefitsvalue:81percentoftotalbenefitvalue,henceavalueofcoralreefbenefitsofUS$849perhectare.

D. Discountrate:Averageregionalrisk-freerateE. Noriskpremium–decisionmadenottoapplyriskpremiumtonaturalassets

(followingthemethodologyappliedinglobalreport:riskpremiumappliedonlyonassetsdirectlyconnectedtoindustrial/marketoutput)

Primary Sources: • Total Coral Reefs:

Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. Web. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.

• Value generation: Cesar, Herman; Burke, Lauretta; Pet-Soede, Lida (2003). "The Economics of Worldwide Coral Reef Degradation" Published by: Cesar Environmental Economics Consulting (CEEC) WWF - Netherlands NOTE: Identifying the correct value estimate for 1 hectare of coral reef proved challenging as many widely varying values are reported. We selected Cesar et al as the most applicable source for this calculation as it provided a breakdown of direct benefits. We only included values for coastal protection, tourism / recreation, and biodiversity value to avoid double counting with other “shared wealth fund” assets (e.g. fisheries).

• Asset degradation: Bruno JF, Selig ER (2007) Regional Decline in the Indo-Pacific:

Timing, Extent, and Subregional Comparisons. PloS ONE 2(8): e711. doi: 10.1371/journal.pone.0000711

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• SeagrassTypeofValuation:Valuebased(usingsomemarketassumptions–i.e.quantityofresource)Calculation:NPVofallfutureseagrassvaluesbasedonthefollowingassumptions:A. Totalseagrass:58,704hectaresB. Degradationofseagrass:-1.5percentyearlyC. Valuederivedfromseagrass=US$26,479perhectare(appliedforeachyear,not

adjustedforforecastedinflationaswewantNPVincurrentdollars)D. Discountrate:Averageregionalrisk-freerateE. Noriskpremium–decisionmadenottoapplyriskpremiumtonaturalassets

(followingthemethodologyappliedinglobalreport:riskpremiumappliedonlyonassetsdirectlyconnectedtoindustrial/marketoutput)

Consideration:Benefitsfromprovisioningservicesfromseagrasshavebeenexcludedinordertoavoiddoublecounting(e.g.withmarinefisheries).

• Productive/DestinationCoastlinesNote:productivecoastlineassetvalueiscalculatedastheNPVofcoastaltourismactivity.Coastaltourismincludesconsumptiveandnon-consumptiveactivitiesincoastalzones.Consumptiveactivitiesincludefishing,shellfishing,etc.,whereasnon-consumptiveactivitiesincludeswimming,diving,boating,surfing,wind-surfing,jetskiing,birdwatchingandsnorkelling.

Primary Sources: • Total Seagrass:

Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.

• Value generation:

De Groot, Rudolf et al. "Global estimates of the value of ecosystems and their services in monetary units" (2012) 55

Costanza, Robert et al. "Changes in the global value of ecosystem services". Global Environmental Change 26 (2014) 152-158

• Asset degradation:

Telesca, Luca, et al. "Seagrass Meadows (Posidonia Oceanica) Distribution and Trajectories of Change." Sci. Rep. Scientific Reports 5 (2015): 12505. Web. <http://www.nature.com/articles/srep12505>.

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TypeofValuation:ValueBasedCalculation:NPVofallcoastalproduction(tourism-based)valuesbasedonthefollowingassumptions:A. Totalvalueproducedannually:US$10.4billion(takenfromyearlycalculation)

B. Perpetualgrowthrate:1percent(basedonglobalreportmethodology)

Note:BCG’sanalysisconcludesthatonly27percentofpotentialcoastlinesareutilizedbyhumandevelopment.Itislikelythiswillcontinuetoriseinthecomingdecades,howeverthisalsomaydiminishvalueofthisandotherconnectedassets–thusaconservativeperpetualgrowthof1percentwasused.

C. Discountrate:Averageregionalrisk-freerate+averageregionalriskpremium

D. Riskpremium–decisionmadetoapplyriskpremiumtoallassetsderivingvalue

fromindustrial/marketbasedsources,basedonthemethodologyappliedintheglobalreport.

Consideration:Thereispotentialfordoublecountingbetweenproductivecoastlineassetvalueandmangroves/coralreefsassetvalues.Thiscannotbeavoidedbasedonavailabledata.

Primary Sources: • Coastal tourism value

Coastal Value annual assessment – see below sections for methodology. Secondary Sources: • World Wildlife Fund. Marine Problems: Tourism and Coastal development

http://wwf.panda.org/about_our_earth/blue_planet/problems/tourism/ • UNWTO. Tourism Highlights. 2014 Edition • World Wildlife Fund – Blue Plan: Coasts

http://wwf.panda.org/about_our_earth/blue_planet/coasts/ • Sustainable Development of Tourism – UN World Tourism Organization. Coast Project.

http://sdt.unwto.org/en/content/coast-project • World Ocean Review. Coasts

http://worldoceanreview.com/en/wor-1/coasts/living-in-coastal-areas/2/ • Intergovernmental panel on Climate Change. "Increasing human utilization of the coastal zone"

http://www.ipcc.ch/publications_and_data/ar4/wg2/en/ch6s6-2-2.html • NOAA – State of the Coast

http://stateofthecoast.noaa.gov/population/welcome.html • UN Atlas of the Oceans

http://www.oceansatlas.org/servlet/CDSServlet?status=ND0xODc3JjY9ZW4mMzM9KiYzNz1rb3M~

• Estimates of Coastal Populations http://www.rockefeller.edu/labheads/cohenje/PDFs/256Cohensmall.htm http://www.prb.org/Publications/Reports/2003/RippleEffectsPopulationandCoastalRegions.aspx

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• CarbonAbsorptionCarbonsequestrationrateswereappliedtoareaofnaturalassetsthatsequestercarbon(mangroves,seagrass)andthetotalweightofcarbonmultipliedbythecostofcarbonTypeofValuation:ValueandmarketbasedPrimaryCalculation:NPVoffutureexpectedcarbonsequestrationfromseagrass,mangrovesandsaltmarshesmultipliedbymarketpriceofcarbonA. Estimatedannualvalueofcarbonsequestrationfrombiologicalprocessesoverthe

WesternIndianOcean:US$2.9billionperyear.• Tworeferencesusedforsizing;maximumvaluebetweenthetwoselected,where

applicableo EstimatedyearlymonetaryvalueofbluecarbonstorageinNorthernMozambiqueChannelcountries(2015)fromNunesandGhermandi(2015)

o RegionalStateoftheCoast,WesternIndianOcean(2015)reportB. Discountrate:averageregionalrisk-freerate+averageregionalriskpremiumC. Riskpremium–decisionmadetoapplyriskpremiumtoallassetsderivingvalue

fromindustrial/marketbasedsources,basedonthemethodologyappliedintheglobalreport

Primary Sources:

• Annual value of carbon sequestration:

Nunes, Paolo A.L.D., and Andrea Ghermandi (2015). Understanding and Valuing the Marine Ecosystem Services of the Northern Mozambique Channel. WWF International Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.

• Asset degradation: degradation rates of underlying resources

Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme. Bruno JF, Selig ER (2007) Regional Decline of Coral Cover in the Indo-Pacific: Timing, Extent, and Subregional Comparisons. PloS ONE 2(8): e711. doi: 10.1371/journal.pone.0000711 Telesca, Luca, et al. "Seagrass Meadows (Posidonia Oceanica) Distribution and Trajectories of Change." Sci. Rep. Scientific Reports 5 (2015): 12505. Web. <http://www.nature.com/articles/srep12505>.

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AnnualValueGeneratedfromtheWesternIndianOcean'seconomy(GrossMarineProduct)

TheanalysisinFigure1ofthereportdemonstratestheannualeconomicvalueofocean-relatedactivitiesintheWesternIndianOcean.Iftheoceaneconomywereitsowneconomy,itwouldbefourthlargestintheregionafterSouthAfrica,KenyaandTanzania.Wedeterminedtheannualeconomicvaluerangeusingbothatop-downandbottom-upanalysis.Ourtop-downanalysis(~US$25billion)wasconductedbysurveyingavailablepublicinformationfortheWesternIndianOceannationsregardingtheannualeconomicvalueoftheoceantolocaleconomies.Ourbottom-upanalysis(~US$20.8billion)wasconductedbycategorizingandevaluatingtheannualeconomicvalueforocean-relatedgoodsandservicesintheWesternIndianOcean.Top-downestimateMethodology:Weconductedresearchonthe10WesternIndianOceancountriesandterritoriestosourceforliteratureoneconomicvalueoftheocean.AlldatapointsusedfromtheUnitedNationsEnvironmentProgramme(UNEP)reportwereinUSdollars.TheUNEPreportcalculatesthevalueoftheblueeconomyisUS$25billionforComoros,Kenya,Madagascar,Mauritius,Mozambique,LaReunion(France),theSeychelles,Somalia,SouthAfricaandTanzania.

Primary Sources: • Ocean economic valuation

Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.

• GDP of countries

World Bank database (2014) • Currency exchange rate

Oxford Economics Exchange Rate Database

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Oceanrelatedactivitiesgroupedinto4primarycategoriesAlldirectlydependentontheocean’secologicalfunctionsandwell-being

4categoriesofannualoceanactivities

CategoryTotalvalue(US$billion)

A)Directoutputoftheocean• Activitiesrelatedtothecontentsoftheocean 1.9

B)Servicesenabledbytheocean• Activitiesoccurringin/ontheocean 4.3

D)Adjacentbenefitsoftheocean• Quantifiablebenefitsenabledbytheocean 14.6

E)Otherintangiblebenefitsoftheocean• Allundefinableactivitiesattributedtothepresence

oftheoceann/a

Totalvalue:~US$20.8billion

Thisdemonstratesaclassificationofallecosystemservicesthatrelyontheocean.Asonemovesdownthetable,thecorrelationtotheoceanbecomeslessdirect,movingfromdirectservices,toservicesenabledbytheocean,adjacentbenefitsoftheocean,andotherintangiblebenefitsoftheocean.Categoriesincludethefollowingservices:A)fishingrelatedactivities,marinerenewableenergy,B)education&training,research&development,oceansurvey,cruiseindustry,marinetourism,security&control,C)directimpactofcoastaltourism,carbonsequestration,coastalprotection,andmarinebiotechnology,D)spiritual&culturalbenefits,climatechangebenefits,andoverallutility.Thelattercategory–intangiblebenefits–islikelytoincludehighlyvaluablebenefits,butwefounditdifficulttoascribeadollarvalue.BottomupestimateWeconductedacomplementary"bottom-up"analysistoestimatetheannualeconomicvaluegeneratedbymarinerelatedindustries.Marineindustrieswerebrokendowninto4primarycategories,eachwithrespectiveservicesallocatedwithin.Thelistbelowisnotexhaustiveandonlytakesintoaccounttheprimaryactivitiesrelatedtotheocean.Thisanalysisisdecidedlyconservativeinitsapproach,andonlyvalueswhatwearecapableofassessingandquantifying.Thus,thetrueyearlyeconomicvalueoftheoceanintangibleandintangibletermsmaybemuchhigher.

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Onceallprimaryindustrieswereidentified,andplacedintothecategorizationframework,wecalculatedtheannualvaluegeneratedforeachsub-category.Publiclyavailabledatafortheregional/countryvalueforeachoftheindustriesisnotfullyavailableforsomeactivities,withsomedataestimatedfromthepast,orextrapolatedfromaglobalfigureusedintheglobalreport.Multiplepubliclyavailablesourceswereleveragedandtriangulatedtoarriveatafairandestimatedamountforeachrespectiveindustry.Forcertainindustrieswherepastinformationwasavailable,butnotmostrecentdata,historicalcompoundannualgrowthrate(CAGR)wascalculatedandusedtoestimatecurrenteconomicvalue.Additionally,oil&gasproductionrevenueandexpendituresarenotincludedinthisoverallanalysis.Thecontributionofyearlyoffshoreproduction,inconjunctionwithpotentialoffshorereservesandannualoil&gasexpendituressuchasoilrigs,liquidnaturalgascontainers,etc.,wouldinflatethetruevalueofanindustrythatwouldremainoperationalwithorwithouttheocean.Inaddition,shippingandmaritimetransportandinfrastructure,althoughdependentonthesurfaceoftheoceanlikepassageofships,isnotdependentontheecologicalfunctionandwell-beingoftheocean.Hencethesesectorshavebeenexcludedfromtheanalysisaswell.TheexerciseaimsatsizingthevalueoftheoutputgeneratedbytheoceanintheWesternIndianOceanregion,butdoesnottackletheshareofvaluecapturedlocallyversusexternally.Belowisthemethodologyleveragedtoarriveateconomicestimates.Forsourceinformationpleaseseeprimarysourcecitation.

• Directoutputoftheocean

Marinefisheries(Commercial)Comprisesmarinefisheries(offshore),marinefisheries(coastal),andaccessfeesMethodology• Weightoffishmultipliedbypriceoffishfortotalvalueofmarinefisheries,access

feesadded(wheredatawereavailable).• Weightoffishobtainedbyextrapolatingtotalregionalfishcatchin2010byapplying

historical2006-2010UBCcatchCAGRfortheregion,2006-2013FAOcatchCAGRusedforTanzaniaduetoone-offspikeinfishcapture

• 2015priceoffishobtainedfromOECDFAOOutlookdatabase,WorldFishpriceused• Dataon2015AccessfeesandlicensingdataavailablefromtheEuropean

CommissionuseddirectlyPrimary Sources: • Marine fisheries (offshore) and marine fisheries (coastal) fish weight

UBC Sea Around Us database (Industrial, Artisanal) http://www.seaaroundus.org/data/#/eez

• Price of fish: OECD-FAO Agricultural Outlook (Fisheries) 2015-2024: http://stats.oecd.org/

• Access fees: http://ec.europa.eu/fisheries/cfp/international/agreements/index_en.htm

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Primary Sources: • Aquaculture fish weight:

FAO aquaculture data http://www.fao.org/fishery/statistics/global-aquaculture-production/en

• Price of fish aquaculture: OECD-FAO Agricultural Outlook (Fisheries) 2015-2024 http://stats.oecd.org/

• Price of plant aquaculture: Bryceson, I. and Beymar-Farris, B. (2011). Main challenges for coastal aquaculture development in the WIO region – who are the winners and losers? In Mariculture in the WIO Region “Challenges and Prospects” (eds. Troell, M., Hecht, T., Beveridge, M., Stead, S., Bryceson, I., Kautsky, N., Ollevier, F. and Mmochi, A.) No 11, pp. 6-8. WIOMSA Book Series

Marinefisheries(subsistence&recreational)Comprisesmarinefisheries(subsistence)andmarinefisheries(recreational)

Methodology

• Weightoffishmultipliedbypriceoffishfortotalvalueofmarinefisheries• Weightoffishobtainedbyextrapolatingtotalregionfishcatchin2010byapplying

historical2006-2010UniversityofBritishColumbia(UBC)catchCAGRfortheregion,2006-2013FAOcatchCAGRusedforTanzaniaduetoone-offspikeinfishcapture

• 2015priceoffishobtainedfromOCEDFAOOutlookdatabase,WorldFishpriceused

Aquaculture

Methodology• Weightoffishmultipliedbypriceoffishfortotalvalueofaquaculture• Weightoffishobtainedbyextrapolatingtotalregionfishcatchin2013byapplying

historicalCAGR.UseddifferenthistoricalCAGRs–2009-2013forFrenchTerritories,Madagascar,Mauritius,Reunion,Somalia,andSouthAfrica;2011-2013forKenya,Mayotte,andMozambique;and2012-2013forComoros,theSeychellesandTanzania.Growthrateswereselectedtochoosemoreconservativeestimatesduetohighvariabilityincatchdatawhichcouldpotentiallyskewgrowthrates.

• 2015priceoffishaquacultureobtainedfromOECDFAOOutlookdatabase• 2015priceofplantaquaculturewasobtainedfromBrycesonandBeymar-Farris

paper

Primary Sources: • Marine fisheries (subsistence) and marine fisheries (recreational) fish weight

UBC Sea Around Us database (Industrial, Artisanal) http://www.seaaroundus.org/data/#/eez

• Price of fish: OECD-FAO Agricultural Outlook (Fisheries) 2015-2024 http://stats.oecd.org/

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Marinerenewableenergy

Methodology• ReferencedRegionalStateoftheCoastReportsectiononmarinerenewableenergy–nocurrentvalueinthissector.

• Directservicesenabledbyoftheocean

Marinetourism

Methodology• Totalmarineandcoastaltourismcalculatedbyapplyingthepercentageoftourism

attributabletomarineecosystemstototaltourismreceipts• Totaltourismreceiptscompriseinternationaltourismreceiptsanddomestictourism

spendingo InternationaltourismreceiptsunavailableforFrenchTerritories,Mayotte,

andSomalia.o DomestictourismreceiptsunavailableforFrenchTerritories,Mayotte,

Reunion,andSomalia.• Wherelatesttourismreceiptnumberswerenotavailable,historicalCAGRforeach

countrywasappliedtothelatestavailabledatapoint• PercentageoftourismattributabletomarineecosystemsbasedontwoUNEPreports.• Marineandcoastaltourismsplitisbasedonmarine&coastaltourismproportion

fromtheglobalreport(marinetourism–27percent,coastaltourism–73percent)

Note:ForSouthAfricaitwasnotpossibletoseparatetourismreceiptsontheIndianOceancoastfromrevenuesontheAtlanticcoast.ForthepurposesofthisanalysisithasbeenassumedthatthemajorityofmarineandcoastaltourismactivitiesareoccurringontheIndianOceancoast.

Primary Sources: • Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer

(2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.

• Hammar, L., Ehnberg, J., Gullstrom, M. and Molander, S. (2009). Ocean energy in combination with land-based renewable energy sources: appropriate technology for smaller electricity grids in Africa? Proceedings of the 8th European Wave and Tidal Energy Conference. Uppsala, Sweden

19

Cruiseindustry

Methodology• Cruiseindustryvaluecalculatedbyaggregatingdirectandindirectrevenuesfortotalcruisemarket(dataonlyavailableforMauritius).

Education&training

Methodology• Scaleddownglobaleducation&trainingnumbertotheWesternIndianOceanbased

onthetop-downregionalGMPestimateasapercentageofglobalGMP(1.0percent)• Globaleducation&trainingvaluebasedonannualexpendituresderivedfrom

"Marineindustriesglobalmarketanalysis"reportandgrownathistoric5yearCAGRrateof3percent.DatafoundinEurosandconvertedtoUS$at2014exchangerate.

Primary Sources:

Marine Industries Global Market Analysis. Vol. 1. Douglas-Westwood Limited, Mar. 2005. <http://oar.marine.ie/bitstream/10793/559/1/Foresight%20Series%201%20Marine%20Industries%20Global%20Market%20Analysis.pdf>.

Primary Sources: • Direct and indirect cruise industry revenues

Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.

Primary Sources:

• International tourism receipts World Bank http://data.worldbank.org/indicator/ST.INT.RCPT.CD • Domestic tourism spending WTTC http://www.wttc.org/datagateway/ • % tourism attributable to marine ecosystems Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme. Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.

20

Research&development

Methodology• Scaleddownglobalresearch&developmentnumbertoWesternIndianOceanbased

ontop-downregionalGMPestimateasapercentageofglobalGMP(1.0percent)• Globalresearch&developmentvaluebasedonannualexpendituresderivedfrom

"Marineindustriesglobalmarketanalysis"reportandgrownathistoric5yearCAGRrateof2percent.DatafoundinEurosandconvertedtoUS$at2014exchangerate.

Oceansurvey

Methodology• Scaleddownglobalresearch&developmentnumbertoWesternIndianOceanbased

ontop-downregionalGMPestimateasapercentageofglobalGMP(1.0percent)• Globaloceansurveyvaluebasedonannualexpendituresderivedfrom"Marine

industriesglobalmarketanalysis"reportandgrownathistoric5yearCAGRrateof3percent.DatafoundinEurosandconvertedtoUS$at2014exchangerate.

Security&control

Methodology• Scaleddownglobalsecurity&controlnumbertoWesternIndianOceanbasedon

top-downregionalGMPestimateasapercentageofglobalGMP(1.0percent)• Globalsecurity&controlvaluebasedonannualexpendituresderivedfromtotal

expendituresonmaritimerelatedsecurityfor2014.

Primary Sources: • Marine Industries Global Market Analysis. Vol. 1. Douglas-Westwood Limited, Mar. 2005.

<http://oar.marine.ie/bitstream/10793/559/1/Foresight%20Series%201%20Marine%20Industries%20Global%20Market%20Analysis.pdf>.

Primary Sources: • Marine Industries Global Market Analysis. Vol. 1. Douglas-Westwood Limited, Mar. 2005.

<http://oar.marine.ie/bitstream/10793/559/1/Foresight%20Series%201%20Marine%20Industries%20Global%20Market%20Analysis.pdf>.

Primary Sources: • Marine Industries Global Market Analysis. Vol. 1. Douglas-Westwood Limited, Mar.

2005. <http://oar.marine.ie/bitstream/10793/559/1/Foresight%20Series%201%20Marine%20Industries%20Global%20Market%20Analysis.pdf>.

21

• Adjacentbenefitsoftheocean

Coastaltourism

Methodology• Totalmarineandcoastaltourismcalculatedbyapplyingpercentageoftourism

attributabletomarineecosystemstototaltourismreceipts• Totaltourismreceiptscompriseinternationaltourismreceiptsanddomestictourism

spendingo InternationaltourismreceiptsunavailableforFrenchTerritories,Mayotte,

andSomaliao DomestictourismreceiptsunavailableforFrenchTerritories,Mayotte,and

Somalia• Wherelatesttourismreceiptnumberswerenotavailable,historicalCAGRforeach

countrywasappliedtothelatestavailabledatapoint• PercentageoftourismattributabletomarineecosystemsbasedontwoUNEPreports.• Marineandcoastaltourismsplitisbasedonmarine&coastaltourismproportion

fromtheglobalreport(marinetourism–27%,coastaltourism–73%)Note:ForSouthAfricaitwasnotpossibletoseparatetourismreceiptsontheIndianOceancoastfromrevenuesontheAtlanticcoast.ForthepurposesofthisanalysisithasbeenassumedthatthemajorityofmarineandcoastaltourismactivitiesareoccurringontheIndianOceancoast.

Primary Sources: • International tourism receipts

World Bank http://data.worldbank.org/indicator/ST.INT.RCPT.CD

• Domestic tourism spending

WTTC http://www.wttc.org/datagateway/

• % tourism attributable to marine ecosystems Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.

Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.

22

CarbonsequestrationComprisescarbonsequestrationfromseagrass,mangroves,andsaltmarshes.

Methodology• Sumofcarbonsequestrationvaluesforsaltmarshes,mangrovesandseagrassesin

eachWesternIndianOceancountry.o 2differentsourceswereused,withmaximumvalueselectedwherethe2

wereavailableo FortheRegionalStateoftheCoastvalues:wheneverarangewasprovided,

medianvaluewasused.

Coastalprotection

Methodology• Coastalprotectionvaluestakenfromvaluationsoftheannualcoastalprotectionvaluesofmangroves,saltmarshesandcoralreefs(noestimateavailableforseagrass),multipliedbythesurfaceareaofmangroves,saltmarshesandcoralreefsinWesternIndianOceancountries.

Mangroves:A-Estimatedaveragevalueofcoastalprotection:US$1,088/ha/yearB-TotalMangrovesarea:769,760hectaresSaltmarshes:A-Estimatedaveragevalueofcoastalprotection:US$8,236/ha/yearB-TotalSaltmarshesarea:2517hectaresCoralreefs;A-Estimatedaveragevalueofcoastalprotection:US$317/ha/year

• Valuederivedfromworldcoastalprotectionfromcoralreefsvaluedividedbyworldcoralsurface

B-Totalcoralreefarea:1,205,000hectares

NOTE:Identifyingthecorrectvalueestimationperhectareofcoastalresourcesprovedchallengingasmanywidelyvaryingvaluesarereported.Weonlyincludedvaluesforcoastalprotectionforthisportionoftheeconomicanalysis.

Primary Sources: • Annual value of carbon sequestration

Nunes, Paolo A.L.D., and Andrea Ghermandi (2015). Understanding and Valuing the Marine Ecosystem Services of the Northern Mozambique Channel. WWF International Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme.

23

Marinebiotechnology

Methodology• Marinebiotechnologymarketestimatedbyscalingdownglobalmarketformarine

biotechnologytotheWesternIndianOceanbasedonthetop-downGMPestimateasapercentageofglobalGMP(1.0percent)

• Globalmarketformarinebiotechnologywasprovidedfor2018,andadjustedtogetto2015basedongrowthrateprovided(4percent)

Primary Sources: • Total areas:

o Mangroves & Salt marshes :Bosire, Jared, Louis Celliers, Johan Groeneveld, José Paula, and Michael H. Schleyer (2015). Regional State of the Coast Report: Western Indian Ocean. Rep. Ed. José Paula. N.p.: United Nations Environment Programme

o Coral reefs: Transboundary Diagnostic Analysis of Land-based Sources and Activities in the Western Indian Ocean. Rep. United Nations Environment Programme, 2009. Web. <http://www.unep.org/NairobiConvention/docs/UNEP(DEPI)_EAF_CP_6_INF_6_Transboundary%20Diagnostic%20Analysis%20of%20Land-based%20Sources%20and%20Activities.pdf>.

• Value generation: o Mangroves: Cesar, Herman et al (2008), Economic Value of Coral Reefs,

Mangroves, and Seagrasses: A global compilation. Note: A 2005 assessment of the Rekawa mangrove-lagoon ecosystem, Sri Lanka, found that the Total Economic Value was about $1,088/ha/year

o Salt Marshes: Barbier, Edward et al (2011), The Value of estuarine and coastal ecosystem services, Ecological Monographs, 81(2), 2011, pp. 169–193 Note:Coastal protection attenuates and/or dissipates waves. Important controlling components are tidal height, wave height and length, water depth in or above canopy, marsh area and width, wind climate, marsh species and density, local geomorphology

o Coral Reefs: Cesar, Herman; Burke, Lauretta; Pet-Soede, Lida (2003). "The Economics of Worldwide Coral Reef Degradation" Published by: Cesar Environmental Economics Consulting (CEEC) WWF – Netherlands

• Asset degradation: Bruno JF, Selig ER (2007) Regional Decline of Coral Cover in the Indo-Pacific: Timing, Extent, and Subregional Comparisons. PLoS ONE 2(8):e711. doi:10.1371/journal.pone.0000711

Primary Sources: • Global marine biotechnology market

Global Industry Analysts Inc. (2013). Marine Biotechnology: A Global Strategic Business Report., http://www.strategyr.com/marine_biotechnology_market_report.asp (Referenced in Regional State of the Coast Report: Western Indian Ocean, page 407)

INT• REVIVING THE WESTERN INDIAN OCEAN ECONOMY - METHODOLOGY

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60 MILLION

US$333.8BN

4TH2.4%

About 60 million people live within 100km of the coast across the Western Indian Ocean

The economic output of the Western Indian Ocean makes it the fourth largest economy in the region Only 2.4 per cent of

marine areas are under some form of protection in the Western Indian Ocean

The overall value of ocean assets in the Western Indian Ocean is more than US$333.8 billion

The Western Indian Ocean in numbers

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