The Great Barrier Reef is a crucial regional provider of a range of ecosystem services, generating 58,000 jobs and contributing $5.4bn to Australia's annual GDP. Despite its significant value, its relatively robust conservation framework and significant public and private expenditure on remediation, the reef’s coral cover is declining rapidly. This is an outcome of well-understood anthropogenic stressors, particularly resulting from pollutants from diffuse terrestrial sources, but also from marine activities. These stressors reduce the reef’s resilience to rapid and linear phase change to macro-algal dominance and put at risk many of the benefits derived from it. Furthermore, the impact of these stressors diminishes the reef’s capacity to naturally adapt or evolve to climate change and ocean acidification. With significant warming and acidification already ‘locked in’, to adapt and survive in anything like its current state (or better) the reef’s resilience needs to be improved; significantly and rapidly. I show how existing measures, at current levels of funding and scope of intervention, are unlikely to be sufficient to secure the future of the reef. Here, I explore how policy makers can leverage greater value from agents that benefit from reef ecosystem services through the adoption of a highly cost-heterogeneous marketplace for ‘reef resilience’. This marketplace will ensure the most cost-effective measures are secured and a broader range of stressors are made subject to intervention and mitigation.
The Great Barrier Reef Marine Park (GBRMP) is a contiguous series of marine zones regulating use and access to the Great Barrier Reef (GBR) to protect its capacity to sustainably provide ecosystem services and high conservation values. The marine park protects numerous habitats, including coral reefs and cays, the smaller continental islands, mangroves, sea grass meadows, estuaries and open lagoon. It covers 344,400km2; of which just 7% is coral reef. However, these reefs host some the planet’s greatest marine biodiversity and are the park’s economic asset. The presence of the reef contributes AU$5.4bn to Australia’s annual GDP (Pittock, 2010) and supports 53,800 regional jobs, mainly in the tourism and fisheries sectors (McCook et al., 2010). The GBRMP is effectively contiguous with the GBR World Heritage Property; hence protecting its environmental and cultural values is the concern for the Commonwealth governments under international obligations.
The GBRMP has been described as the “best managed coral reef system in the world” (Grech, et al., 2013). Yet paradoxically its ecosystems, particularly the coral reefs, are deteriorating rapidly, following those of global trends. Reef-wide, coral cover has declined 50% since 1985 (De'ath et al., 2012). Some inshore reefs—those most at risk from anthropogenic stressors—have declined 34% since only 2005 (See figure 1). The proximate casual factors are reef-specific, but De’ath et al. attribute aggregate loss to tropical cyclones (48%), Crown of Thorns Starfish grazing (COTS) (42%) and coral bleaching (10%). However, these raw figures for coral loss mask the main drivers of this deterioration: anthropogenic hazards, such as poor water quality exported from agriculture, deforestation, point source pollution associated with urban land use and exploitation of fish stocks. These stressors constrain regrowth following the damaging perturbations and are linked to outbreaks of COTS. In times of high rainfall, flood plumes carry these stressors across the lagoon to envelop the inner and mid-reefs, promulgating turbidity and eutrophication. Furthermore, pesticide residues and disturbed acid sulphate soils (ASS) also have long-term and serious effects, particularly on inshore areas (Haynes, Muller, & Carter, 2000; Kroon, et al., 2012; Powell & Martens, 2005). Additionally and more recently the impacts of intensified coastal development associated with expansion of bulk ports has come under scrutiny. Coastal disturbance and dredging and disposed of marine spoil causes sediment plumes and toxin distribution. The continued and rapid deterioration of the GBR and the intensification of coastal development has prompted criticism from legislators, environment groups and UNESCO, which recently stated unless risks can be better managed, the GBRWHP could be inscribed as ‘in Danger’ (UNESCO). Even the government’s Reef Plan Report Card has highlighted implementation challenges to reducing agricultural stressors and progress towards targets for adoption of mitigating actions in all regions has been slow. Nutrient, sediment and pesticide loads—though now falling—remain above the trend rate required for meeting water quality targets1 (State of Queensland, 2013). In short, the GBR is suffering what many environmental scientists are informally calling ‘a death by a thousand cuts’.
But ultimately it is the impact of rising atmospheric greenhouse gas concentrations and the resultant global warming and ocean acidification that will decide the future of the reef. Regardless of any effective mitigation efforts, significant warming is already ‘locked-in’ from institutional, technological and thermal inertia (Solomon et al., 2009; Ramanathan & Feng, 2008; IEA, 2007), implying the GBR already must adapt to significant changes, the success of which is not guaranteed (Hoegh-Guldberg, 2012; Dubinsky, Stambler (Eds.), 2011). Reefs can and do adapt to both sudden and chronic perturbations—it is part of a natural process of destruction and regrowth—but short-term and flow stressor impacts are robbing the reef of its resilience. Mitigation is urgently required. However, whilst Hoegh-Guldberg’s prognosis is pessemistic, improving the overall health to improve the likelihood of successful of adaptation of the GBR’s coral communities is possible, given sufficient policy focus and resources (Great Barrier Reef Marine Park Authority, 2009).
As the stressors and their effects are well understood, measures to mitigate their impact are already in place. However, even with significant funding, performance targets are not being met2. Without significant additional funding, it is unlikely the current measures will yield stressor abatement levels required to secure the reef’s future. State and Commonwealth legislative and planning controls and research into and action on mitigation of damaging agricultural activities have been met with some success, but have so far not resulted in any slowdown in deterioration in coral cover, nor sufficient improvements in physical water quality measures. Simply doing more of the same is likely to test the tolerance of the government and taxpayer’s willingness to pay. Therefore, punitive measures on a broader range of polluters may be required. Finding the most expedient, politically acceptable and cost-effective3 set of measures is therefore essential.
To recommend improved policy responses it is first necessary to understand the nature of coral reefs, the sources, pathways and impacts of the stressors and expected stressor trends in light of well-established demographic and economic development expectations. Included is an assessment of climate change as a stressor with the potentially to dominate all others. Next I will outline existing policy interventions and their current cost effectiveness to estimate a total abatement cost of anthropogenic stressors to the reef under business-as-usual. Thereafter, I describe how ‘ecosystem marketplaces’ can be designed to achieve improved environmental outcomes at lower cost and how by defining the specific outcome required as ‘reef resilience’ we can broaden the scope of human activities—both positive and negative—that can be subject to policy intervention or incentive to improve scope, efficiency and impact.
Stressors to the GBRMP emanate from both inside the park and outside, therefore despite being well-managed, activities far upstream in catchments, or in coastal areas outside the park, beyond direct supervision of the reef’s management authority have an effect. These activities are controlled by numerous jurisdictions with interlinking legislative and regulatory regimes, which are necessarily responsive to a broader range of political, policy and private interests, beyond reef protection.
There are 38 significant rivers draining into the GBRMP with a total catchment area 424,000 km2. Catchments can be categorized into two broad types: i) Coastal catchments that tend to flow all-year, draining relatively wet, smaller areas. These catchments contain the majority of intensively cropped land, particularly sugarcane; and ii) rangeland catchments that drain large generally grazing regions, which are subject to highly seasonal variations in flow and periodic extremely large floods. Overall, approximately 75% of the area is semi-arid livestock grazing, 1.3% is cropped as sugar cane and 2.7% is grain and cotton cultivation. Around two thirds of the total sediment is exported from the three large rangeland catchments, Burdekin, Fitzroy and Burnett-Mary, while conversely around two thirds of the pesticide export is from the intensively cropped (predominantly cane) catchments of the Wet Tropics and Mackay-Whitsunday regions. Nitrogen and phosphorus loads are evenly spread (calculated from Kroon et al., 2012). The remainder areas are native forest, intensive horticulture and urban and industrial zones (Brodie et al., 2012; Pittock, 2010). These urban areas include 11 major commercial trading ports, associated with 5000 annual shipping movements through the reef each year (State of Queensland, 2012).
Inside the marine park boundaries activities and stressors are regulated by GBRMPA policies, management plans and zoning. However, the cumulative effects of disturbance from industrial, commercial and residential development from tourism, fishing, aquaculture and shipping sectors place pressure on the reef’s ecosystems.
Coral reefs have several characteristics that make them acutely sensitive to stressors. Firstly, coral thrives in marine environments where ambient primary production is low, particularly on continental east coasts and in regions of low run-off. This is known as the ‘Darwin paradox’ (Salin, 1983). For example, inshore reefs affected by nutrient-rich run-off in the Wet Tropics region are significantly less biodiverse [in terms of coral] than reefs to both the north and south (DeVantier et al., 2006). Secondly, reefs require warmth and sunlight for the zooxathanlae algae hosted by the coral to thrive. Therefore, stressors that increase turbidity reduce coral growth (Dubinsky, Stambler (Eds.), 2011). Finally, coral reefs are relatively sessile and cannot readily move nor coral assemblages necessarily adapt to medium- to long-term environmental changes, such as increased temperatures, sea levels or pollutants. And when damage is inflicted, in the presence of stressors, recovery is slow (Hoegh-Guldberg, 2012). Where coral reefs lack sufficient resilience, they are at high risk of a rapid and linear transformation to a species assemblage dominated by macro-algae (Hoegh-Guldberg, 2012; Dubinsky, Stambler (Eds.), 2011). Such transformations are apparent at highly stressed reefs around the world, particularly in the Caribbean and SE Asia. Such ‘stable state’, or ‘phase’ shifts are well established in ecology (Beisner, Haydon, & Cuddlington, 2003) and make risk assessment difficult for policy makers. Putting the ecological tragedy aside, a shift to macro-algal dominance would diminish the value of the GBR as a tourism destination (Rolfe, 2010; Shafer & Inglis, 2000).
The overall health of the coral reefs that are of such economic value to Queensland’s tourism and fishing industries are also dependent the relative health a coastal and lagoon habitats. Dubbed the ‘Blue Highway’ (Kelley & Ryan, n.d.), the importance of mangrove, sea grass beds and isolates (small outcrops in the lagoon) to marine life during various stages in their lifecycles has been well-established (Orth, et al., 2006; Nagelkerken et al., 2000). Collapses in any of these habitat types will have medium-term and chronic impacts on coral health.
Nitrogen and phosphorous are components of proteins and DNA/RNA and thus essential to life. Rivers are natural sources of these nutrients, but their low availability is commonly a limiting factor for marine primary production (Brodie & Mitchell, 2004). With high light levels and relatively warm water, nutrient inputs to the GBRMP are quickly absorbed by food webs so that during stable conditions there is low variability in pelagic nutrient levels and hence little effect on coral reefs (Furnas et al., 2005). Since the introduction of European agriculture nutrient exports from catchments has increased dramatically. Compounding this, the intensity (and thus reach) of flood plumes has increased as deforestation has decreased the catchment’s ability to retain rainfall. In addition, the application of fertiliser to horticulture and cane farms has grown from virtually zero in the 1930s to more than 130,000 tonnes/yr (in 2005), increasing exports of highly-bioavailable inorganic nutrients. Excess nutrient levels risk marine eutrophication, which increases turbidity and restricts light levels (State of Queensland, 2009).
The extent to which European-style agriculture has increased stressor levels in the GBRMP is demonstrated in a number of studies. Using derived baseline values for native vegetation as a proxy for pre-European settlement Brodie and Mitchell (2004) estimate contemporary nutrient levels for all land uses are significantly higher than pre-European settlement. Cropped areas increase nitrogen and phosphorus loads by a factor of 13.7 and 23.8 respectively. Modeling catchment loads (based on landuse, topography and weather) is playing an increasing role in quantifying pre- and post-European settlement nutrient exports and thus deriving the anthrogenic contribution to stressor levels. In a wideranging study, which included direct measurement of estuarine nutrients, sediment and pesticide loads, Kroon et al. (2012) collated a comprehensive dataset for discharges to the GBRMP. The results are summarized in table 1 and show anthropogenic contributions to total nitrogen and phosphorus loads are 83% and 89% respectively. Catchments with the greatest levels of cropping and grazing show the greatest increase in nutrient loads (Brodie et al., 2003).
To a lesser extent, the expansion of residential and commercial development and associated wastewater treatment plants and stormwater run-off has also contributed to exports of nutrients.
Using barium:calcium (Ba:Ca) carbonate ratios from long-lived hard coral skeleton cores as a proxy for sediment load in the Burdekin River, McColloch et al. (2002) have estimated that since the introduction of European agriculture suspended sediment export to GBRMP has increased by a factor of ≈5–10. The study reveals how that within one or two decades of the introduction of European agriculture (c. 1870), sediment records fundamentally changed: flood plumes became more frequent and more often reached the middle reefs. The most intense plumes were associated with drought breaking rain events, when it is most likely terrestrial riverbank erosion and overland flow peaks. These results are corroborated by the aforementioned Kroon et al. study (2012) that quantified SS exports from the Burdekin as representing a 7.8 factor increase on pre-European exports, with a 5.5 factor increase in the GBRMP as a whole.
An additional source of sediment is dredging in support of new and expanding bulk port facilities. For example, capital works in Gladstone Harbor associated with LNG facilities stirred up sediment plumes that travelled 32km beyond the harbor, affecting a far wider area than originally assumed in the impact assessment (Petus & Devlin, 2012). The potential for expanded operations is sketched out in the Queensland Ports Strategy (State of Queensland, 2012). Depending on future approvals, conditions and dredge spoil constituents, such operations will contribute significantly to disturbed sediments in the lagoon (Brodie, 2013; Grech et al., 2013).
Being chemically persistent, pesticides present a more chronic problem to GBRMP habitats. Haynes et al. (2000) measured significant levels of a range of agricultural applications in sediment and on sea grass samples along the entire GBRMP coast. Extremely high levels were detected offshore from high rainfall, intensely cropped catchments around Cairns. Two particular residues are of concern: Firstly, Diuron was detected at levels that maybe deleterious to seagrass pastures (0.2–10.1 μg/kg). Diuron is a broad-spectrum photosynthesis inhibitor that can limit growth of seagrass. Secondly, the insecticide DDT (and its break-down product DDE) was detected at 0.05–0.26 μg/kg of sediment. DDT has been banned for use in Australia since 1987, yet residues persist. Kroon et al. (2012) estimate through catchment modeling exports of photosynthesizing inhibiting pesticides to the GBRMP total 28,000 kg/yr, predominantly from the intensively cropped horticultural and cane areas of the Wet Tropics and Mackay-Whitsunday regions.
|Catcment load||GBR total||% of total|
|Total suspended solids (kilotonnes/year)||Natural||3,112||18%|
|Total nitrogen (tonnes/year)||Natural||13,891||17%|
|Total phosphorus (tonnes/year)||Natural||1,748||11%|
ASS are naturally present in approximately 666,000 Ha of the GBRMP coastline. Undisturbed ASS are benign, but when exposed to air (‘activated’), as a result of terrestrial activities, such as agricultural or industrial excavation or draining of groundwater, iron sulphide in the soil reacts to form sulphuric acid (H2SO4) and precipitate metals, including iron and arsenic. Powell and Martens (2005) estimate activated ASS drain 500-3400 kg H2SO4 ha-1 yr-1 into the GBRMP. In a documented case study at Trinity Inlet near Cairns, a single abandoned sugarcane farm is estimated to export 34t H2SO4 Ha-1 yr-1 into Trinity Bay, amounting to 72,000 t since the soils were first disturbed. Once activated, ASS can export toxins to coastal sea grass and mangroves for up to 30 years.
Over-fishing of coral reefs risks ecological phase shift to macro-algal dominance, particularly during re-growth phases after short-term perturbations as it directly competes with new coral recruitment (see section 7.3.1). The GBRMP is a multi-use area, allowing a range of recreational, commercial and research activities. Just 32% of the reef area (and 6% of the marine park) is completely closed to fishing (GBRMPA). Many target species are sustainably fished, however there are significant gaps in data and the shark population is of concern (Brodie & Waterhouse, 2012). McCook (1999) and Olds et al. (2014) argue coral reefs can maintain resilience to external perturbations where healthy populations of herbivorous fish are present. Furthermore, McCook et al. (2010) and Cheal et el. (2010) present good evidence greater fish diversity in no-take zones significantly reduces the risk of COTS outbreaks. Reefs subject to fishing are 7 times more likely to suffer from COTS outbreaks than no-take zones, which leads to significantly greater coral cover (23% compared to 16%). Overall, over-fishing is a key risk factor in coral reef resilience to macro-algal phase change and thus “management of fish stocks is a key component in preventing phase shifts and managing reef resilience” (Hughes et al., 2007).
Current and future bulk port expansion is associated with physical loss and damage to GBR ecosystems, toxic (and non-toxic) contamination, biological disturbance and, perhaps cruelly, associated carbon dioxide emissions that contribute to climate change (Grech et al., 2013). Damage and disturbance associated tourism visitation, particularly from boating, wildlife interaction and in-water activities, is also measurable. Currently, it is highly localized to heavily visited areas, but access to more remote reefs and expansion of the tourism industry could be of future concern (Harriott, 2002).
Increasing atmospheric greenhouse gas concentrations are a chronic threat to the GBR’s coral reefs. Greenhouse gases (GHG) absorb infrared radiation from black bodies (such as Earth) that would otherwise reflect back into space. Greater concentrations of GHGs increase the temperature at which the planet’s energy budget reaches equilibrium, warming the atmosphere and subsequently—though more slowly—the oceans. A biosphere subject to fast elevating GHG concentrations can have dramatic effects on coral reefs. Firstly, rising average ocean surface temperatures increase the likelihood of episodes of localised, severe and sudden warming promulgating coral bleaching events - a potentially catastrophic process whereby the algal symbiont is expelled by the coral host, rendering the coral colourless. Coral can and does recover but whilst ‘bleached’ it remains brittle and more able to physical destruction from wave action (Dubinsky, Stambler (Eds.), 2011). Secondly, warmer ocean surface temperatures are modeled to increase the likelihood of more severe cyclones, which physically damage coral structures (Great Barrier Reef Marine Park Authority, 2013). A residual outcome of severe weather is higher rainfall extremes—promulgating more and further-reaching flood plumes, which encompass more coral reefs further into the lagoon. The Fourth Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC) surmise a 1-in-40 year weather event will become a 1-in-15 year event by the end of the century, diminishing the time for inter-flood coral recovery (Hesselbjerg et al., 2007). Finally, increased atmospheric concentrations of CO2 reduce ocean pH. This increased acidity affects a range of marine aragonite-based organisms by reducing their capacity to build skeletons, manifesting in weakened growth and lower thermal tolerance to bleaching (Anthony et al., 2008).
AR4 estimates a reduction of ocean pH of between 0.15 and 0.25 and a sea surface temperature increases of ∼0.5 – 1.2° C by 2050 (Solomon, et al., 2007; Hesselbjerg et al., 2007). Over the next 100 years, coral reefs will be subject to combined temperature and ocean chemistries not experienced in millions of years (Hoegh-Guldberg, 2012). (See table 2 for a summary of climatic changes.) Wooldridge (2009) argues poor water quality also reduces coral’s thermal tolerance. Thus inshore reefs exposed to poor water quality already experience an equivalent temperature rise of ∼2.0–2.5 °C. To offset even contemporary temperatures, a 50-80% decrease in inorganic nitrogen export is required. AR4 also predicts likely sea level rises of ≈0.26-0.59m by the end of the century, firstly from thermal expansion of oceans and subsequently from the melting of terrestrial ice sheets, which will potentially alter the depth of the photic zone too quickly for stressed reefs to adapt (Solomon et al., 2007).
The concept of ‘locked-in’ or ‘committed’ climate change has been ascribed to institutional, technical and thermal inertia. Institutionally, it is suggested (mainly in the grey literature), the current slow progress towards globally binding and effective agreements on GHG gas abatement makes it likely the deemed moderately safe limit of a 2°C rise will be exceeded (Stavins, 2014; The Australia Institute, 2014). From a technical perspective, new fossil fuel-driven power generation currently being installed is likely to be operation for between 30 and 40 years, thus accounting for a significant proportion of the ‘safe’ carbon budget (IEA, 2007). And finally, the majority of the Earth’s energy imbalance is stored in the oceans and ice sheets, which are slower to respond to mitigation of GHG and will reach thermal equilibrium with the atmosphere on a much longer timescale (Archer, 2008).
|Variable||Regional variation and certainty||Current||Projections|
|IPCC B1 scenario||IPCC A2 scenario|
|Sea surface temperature||Greater increase in southern GBR and winter. High certainty, already observed increases.||23.2°C||+0.5°C||+1.1°C||+0.5°C||+1.2°C|
|Sea level||Up to 0.9m by 2100. High certainty already observed; may accelerate.||2.9mm/yr since 1991 (near Townsville)||+70mm||+130mm||+380mm||+680mm|
|Ocean acification||Decrease in pH of 0.5 units by 2100. High certainty, already observed decrease.||8.2 (global)||-0.06||-0.15||-0.10||-0.25|
|Weather variation||Similar spatial and inter-annual variability. High certainty for increased intensity.||8.2 (global)||No consensus. El Nino Southern Oscillation likely to be a continued source of aperiodic disturbance in the region. Intensity of drought associated with given rainfall deficit will be increased due to higher temperatures. Intensity of high rainfall events will increase with more extremes. Intensity of tropical cyclones expected to increase.|
The processes that export these stressors are likely to intensify. The Queensland Government has declared it is backing a ‘four pillar’ economic development framework, expressly pursuing policies that promote activity in the mining, agriculture, construction and tourism sectors. Implementation of this agenda will have an impact on policy design for securing reef protection. A draft report to the Queensland Government by Marsden Jacob Associates predicted an expansion in the pastoral sector, horticulture (particularly in the Burdekin), urban and peri-urban development and resources, whilst sugar cropping and aquaculture were not expected to experience growth (Marsdon Jacob Associates, 2013). An expansion of these sectors puts even greater pressure on mitigation efforts, as the sectorial mitigation effort must increase at a higher rate than the expansion of the industry.
Damage to the GBR from catchment-borne stressors, coastal development and over-exploitation of fish stocks occurs typically as a result of market failure, where there is a discrepancy between social benefit and social costs. Agents that secure value from the ecosystem services of the GBR today (and into the future) are not compensated for the damage to that asset as result of damaging behaviours from other agents, leading to an inefficient allocation of resources – a classic example of an externality. Emitting pollutants into catchments is undertaken with ‘no-regrets’: agents who undertake best- (or at least better-) practice agriculture do so at a commercial disadvantage to those who over-exploit the land and take advantage of free disposal of wastes into catchments. The ‘free rider’ problem emerges as the ‘commons’ (the environment that disperses, disposes or stores the pollutants) is over-exploited (Hardin, 1968). As illustration, the marginal benefit of an additional unit of unregulated agricultural practice is greater for an individual farmer than the marginal cost to that farmer of environmental degradation, which shared by all (and in most instances happens far downstream in the catchment). Incongruously, from a long-run economic view, unsustainable agricultural practices are likely to accelerate diminishing returns from the land, as soil quality degrades and land erodes, resulting in greater reliance on human and technological inputs to replace natural capital stocks. Sustainable farmers will be more profitable in the future. Soil, at least on human timescale is irreplaceable.
Implicit in environmental degradation is application of generally high discount rates by agents to diffuse, chronic and long-term environmental problems, such as soil depletion and poor water quality. Whilst Sir Nicholas Stern (discussing climate change) argued that applying discount rates “higher than zero” to social policy issues (such as environmental deterioration) is “ethically inappropriate”, it is plausible to do so only from a policy perspective (Stern, 2007). Landowners seeking to maximise profits in the short-run will implicitly apply higher (private) discount rates to future profits. The stochastic characteristics of coral reef resilience and the risk of non-linear phase-shift make choice of discount rate important, due to the nature of sudden ‘tipping points’ and the irreversibility of ecosystem change.
That the Great Barrier Reef should be afforded protection to enable it to adapt to climate change seems self-evident, yet ultimately the level of protection afforded is dependent the value individuals, businesses and governments assign to the benefit they gain from it: Ie. their willingness to pay [for protection] or willingness to be compensated [for loss]. Benefits derived from the reef are popularly termed ‘ecosystem services’, simply defined as “benefits people obtain from ecosystems” (Millennium Ecosystem Assessment (MEA), 2005). The MEA formalised and codified values humans derive from nature as ‘total economic value’ (TEV) and classify the services as provisioning, regulating, supporting and cultural services. (See figure 3 for the relationship between the different streams of ecosystem services) Using the TEV framework it is possible to bring together a range of ‘use’ and ‘non-use‘ values agents derive from the GBR, encouraging non-instrumental or non-exploitative values to be given appropriate recognition and for uses to be measurable in ways more comparable to traditional economic valuations. Figure 4 summarises the TEV framework for the GBR (adapted from numerous sources, including Phillips, 2000 and MEA, 2005).
Beyond standard consumer and producer surplus reckonings, relatively mature economic analysis tools are available for assigning estimates to indirect use and non-use values (Turner et al., 2003). Taking the TEV approach Oxford Eoncomics (2009) valued the GBR at US$51bn (at present day values) over a one hundred year period using a social discount rate of 2.65% per annum. A further-refined approach, using values calculated for marginal improvements (that is for each additional unit) of reef health is perhaps more relevant. Building on the Oxford Economics study Rolfe (2010) established the value of a 10% improvement in GBR health over 25 years (using a 5% discount rate) was US$6.31bn. Rolfe’s study placed higher value on ‘national non-use’ values, more reflective of the iconic (or ‘priceless’) nature of the GBR to Australians. Thus the additional value of returning the GBR to same level of coral cover (as a proxy for coral resilience) as 1985 (27% - the baseline from the study by De’ath et al. (2012)) would be AU$50.48bn over 25 years (at present day values).
A defensible valuation of the GBR is necessary as socially optimal outcomes occur where marginal social benefit is equal to marginal social cost. These valuations provide some indication of the scope of the current market failure and suggest inadequacies in current expenditure on policy interventions. In the next section, the costs and performance of current programs to improve reef resilience will be considered.
The GBRMP is managed as a multi-use conservation area by the GBRMP Authority, with controls on access, use and exploitation of ecosystem services. In addition, local government development controls and State and Commonwealth legislation can place prohibitions or significant conditions on development approvals, including private contributions to environmental offset projects. However, the flagship reef protection program is the joint State and Commonwealth Reef Water Quality Protection Plan (‘Reef Plan’), implemented at a joint cost of AU$375m over 5 year periods and now into its third period of funding. The plan has set water quality, terrestrial groundcover and landowner engagement targets to be executed through catchment-wide healthy waterways plans. The stated goals are to first “halt and reverse the decline in water quality” by 2013 and by 2020 (ambitiously) to ensure water entering the reef “has no detrimental impact on the health and resilience” of the GBR (Reef Water Quality Protection Plan Secretariat, 2009). The latest report card demonstrates some success in stressor reduction (see table 3). Nitrogen, phosphorous, sediment and pesticide indicators are all falling. However, projections indicate the medium-term (and relatively modest) targets will not be met, with the exception of groundcover and the possible exception of the 2020 suspended sediment target (State of Queensland, 2013). Activities undertaken by the Plan include research and development into agricultural best practice and engagement with landowners, including outreach, training and systems repair (such as erosion control) administered through a series of grants and co-funding proposals. Elements of the program that directly achieve environmental outcomes are the engagement to encourage better sediment and nutrient control, improved application of fertilsers and pesticides and systems repair activities.
|Suspended sediment||6%||20% (2020 target)|
|Engagement and adoption|
|Sugarcane growers engaged||34%||80%|
|Land use targets|
Late dry season groundcover
Data on total reef-wide program costs is difficult to obtain, however, the Wet Tropics Natural Resource Management, which administers Reef Plan grants for the Cairns region, has reported directly on costs and mitigation results from which the cost effectiveness of the program can be deduced and estimated. The figures are based on the reported costs of the program that included AU$18.8m of public funds, $17.1m in co-contributions and AU$7m in in-kind contributions (total: $43.5m) over 5 years between 2008-2013 (Terrain, Wet Tropics NRM). From the data presented the marginal abatement costs (MAC) estimated cannot distinguish between costs of activities that mitigate sediment, nutrients and pesticides in isolation, so the MAC calculated in the table 4 is estimated from the total costs equally shared across each class of stressor5. The MAC and abatement challenge are estimated for both derived Reef Plan estimates (from latest scorecard) and for stressor loads as modeled and published by Kroon et al. (2012) (table 1), which are somewhat higher. Assuming many of the land management improvements are compounding—that is reductions in run-off as a result of a change of landowner behaviour aren’t lost in the following years—using the Wet Tropics NRM marginal abatement costs as guidelines, the total abatement cost for these stresors to the GBR in total would be between AU$2,850m - AU$6,811m for sediment, AU$294m – AU$1,249m for nutrients and AU$206m - AU$410m for pesticides; a total of between AU$3,350m - AU$8,470m, depending on which stressor load estimate is used (Reef Plan or Kroon et al., (2012)).
|Wet Tropics NRM||Great Barrier Reef Total|
|Wet Tropics NRM abatement 2008-2013||Proportion of abatement achieved (%)||Marginal abatement cost ($/t)||Abatement challenge (Reef Plan) (a)||Total abatement cost (Reef Plan) ($ million)||Abatement challenge from Kroon et al.||Total abatement cost from Kroon et al. ($ million) (b)|
|PSII (kg/yr) (c)||1000||8.22||$14,500/t||14,195||$206||28,243||$410|
Given the current and projected financial commitments to Reef Plan, the total abatement costs, even under generous assumptions on compounding benefits, do not meet the lower end costs of fulfilling anthropogenic stressor abatement. While the Reef Plan’s 2013 goal of “halting the decline” has been broadly met (water quality indicators are improving), without additional funding the 2020 goal will not be achieved. Without sufficient incentive on-going improvements are not certain and permanent improvements cannot be locked in, as business-as-usual, without the external costs of pollution built-in, has historically led to increases in the levels of pollutant export. This potentially leaves Reef Plan program short on sufficient stressor abatement to ensure its goals are met.
A fundamental attribute of the current Reef Plan is the voluntary nature of engagement of landholders. The 2011 report card demonstrated the unlikelihood of its own targets for engagement being met. Furthermore, the level of engagement is not a direct proxy for successful abatement as engagement levels reported are generally higher than abatement of stressors. There are no safeguards to ensure improved land management practices secured under Reef Plan are continued beyond the engagement period. Without regulatory penalty or financial incentive, it is unlikely water quality targets and necessary ambient conditions to start re-building GBR resilience will be achieved.
Engagement for behaviour change with landowners is recognised as difficult and levels of trust between landowners and policy makers are slow to accrue. Cocklin et al. (2007) describe landholders as supporting a ‘preference hierarchy’, such that “strongest support was expressed for voluntary and education-based tools, followed by market-based instruments, with command-and-control regulation identified as a measure of ‘last resort’”. With the targets currently being missed and insufficient funds being made available, the next step in preference hierarchy becomes imperative. Ultimately, the ‘taxpayer pays the polluter to reduce emissions’ model should be superseded by a ‘polluter pays’ approach.
Market-based policy responses are not novel and have been the primary policy response where a regulatory intervention is deemed necessary since the neo-liberal ascendency of the 1980s (Eckersley, 2004; Jack, Kousky, & Sims, 2007). Advocates of market-based approaches argue policy outcomes are more often met with greater efficiency, due to reductions in the information-load required by regulators, particularly compared to ‘command and control’ regulatory responses (as evidenced in Howes, 2005) and by enticing innovative agents to participate through financial incentives. Delegating decision-making to agents to make their own investment and operational decisions to meet emissions or pollution standards generally increases efficiency, as there is greater knowledge of local conditions. Thus, market-based policies provide greater confidence to policy makers that, despite not guaranteeing a target will be achieved, abatement will have been done so in the most efficient manner. There are numerous mechanisms in operation, including lump sum payments, tax concessions, reverse auctions and tradable permit systems, grouped together as ‘payments for ecosystem services’ (PES) (Jack, Kousky, & Sims, 2007). Participation can be both voluntary and non-voluntary (or non-voluntary above certain thresholds), depending on the range and scope demanded by government regulators.
In the context of the GBR, a combination of PES mechanisms is feasible. Fully tradable pollution mitigation policies (‘cap-and-trade’) allow agents to buy additional pollution permits to ‘make good’ on regulatory requirements where the marginal cost of an investment to reduce pollution is more than the unit cost of a permit to pollute6. Conversely, agents may sell surplus permits where marginal costs of abatement are less than unit costs of permits. Such policies have been growing in scope and effectiveness. The pioneering US Clean Air Act 1990 Amendments, which introduced diminishing government supplied tradable permits to emit SO2, was estimated to have saved between US$400m-600m per annum to achieve stated emissions reductions goals (Howes, 2005). A key advantage of tradable permits is regulators can be assured of meeting both stated policy goals (the emissions ‘cap’) at the cheapest marginal abatement price.
Water quality trading is also now also progressing beyond pilot and evaluation stage (Elofsson, 2010; Marsh, Tucker, & Doole, 2014). “[U]se of market mechanisms, like nutrient trading provides not only the greatest overall environmental benefits but also is the most cost-effective strategy. Nutrient trading allows sources with high mitigation costs to obtain credits from sources that can reduce their contribution of pollutants to waterways at a lower cost” (Greenhalgh & Sauer, 2003). Modeling undertaken by the World Resources Institute (WRI) indicated that from a suite of proposed policy options nutrient trading (particularly undertaken in conjunction with carbon trading) attained the greatest reduction of nitrogen and phosphorous being discharged from a river system (the Mississippi). However as previously described, whilst important, reducing nutrient exports is just one aspect of reducing overall stresses to the GBR. The most cost effective options to improving GBR resilience is more likely to found if a broader approach to stressor abatement is considered, such as that presented by an ecosystem marketplace for reef resilience. The conceptual design of an ecosystem marketplace is straightforward, bringing together buyers and sellers of ‘credits’. The main agents are illustrated in figure 5.
|Regulators||Often the government; defines what measures can generate credits, who can buy and sell and emission baselines above which credits are required to be surrendered.|
|Vendors||Agents that can exchange credits. In many cases, agents can be both vendors and buyers of credits.|
|Exchange||The place of exchange, often electronic, which needs to minimise transaction costs. The exchange is required to keep a book of accounts and report to the regulator.|
Tackling emissions from point source polluters has typically been the expedient policy option. Regulators can pinpoint polluters and have, or can demand, data on how much they are polluting. However, regulation at this point—whether through ‘end-of-pipe’ pollution limits or defining technology installations—has typically proven to be less cost effective than reducing pollution from numerous diffuse polluters (Greenhalgh & Sauer, 2003). Pulling in diffuse (urban and rural) polluters into the marketplace would increase the number of potential buyers and sellers. WRI modelling of a theoretical nutrient trading scheme for the Mississippi basin concluded landowners would actually become net sellers of credits, as their mitigation options were often more cost effective (Greenhalgh & Sauer, 2003). Such an economic driver would create greater incentive for rural diffuse polluters (the target stakeholder for Reef Plan) to enter the market and, importantly, to stay in the market.
To supplement an ecosystem marketplace to meet regulatory requirements that currently (if poorly) serve to avoid, mitigate or offset degradation to reef health a supplementary reverse auction system could operate to fund improvements to reef resilience – to rebuild the natural capital stock. Given the Commonwealth and Queensland government’s evident willingness to pay to protect the reef, additional permits could be sold into the market to motivate voluntary funding bids from private landholders, community groups, philanthropic organisations and even perhaps local governments. Fortuitously, policy and capacity in this area are already well-established, with existing programs such as Landcare Australia, the Carbon Farming Initiative (CFI) and a rich network of local catchment and habitat groups coordinated by local government. Given the importance of mangrove and sea grass to carbon sequestration the CFI, when coupled with additional GBR-derived credits, could support private rehabilitation projects in marine environments. Australia wide sea grass sequesters between 0.093-6.15 Mt carbon/yr, which could tip financial incentive to feasibility (Lavery, P. et al., 2013). Similarly, mangrove restoration projects could generate similar sequestration revenues. A transfer of funds to these groups from beneficiaries of GBR ecosystem services is likely to encourage further participation. Initially, the lower unit cost abatement measures will be taken-up, providing more conservation value units for a set budgetary commitment from government. As the most cost effective measures are exhausted, higher unit cost abatement measures are undertaken, providing diminishing returns on investment or submitting pressure on governments to increase funding (see figure 6).
Traditional ecosystem marketplaces have focused on the trading of pollutants per se (carbon, SO2 or nutrients, for example). Mitigating emissions of pollutants evidently improves environmental outcomes, however, improvements to coral reef health can be met by mitigating numerous different—and at face value—incomparable stressors. Thus, by concentrating on ecosystem marketplaces for achieving environmental outcomes, rather than mitigating defined polluting output, ‘bundles’ of ecosystem benefits as units of exchange can be formulated to meet a broader set of conservation goals. Bundling refers to “merging multiple values” to generate a singularly measured credit type, which is then sold in the marketplace to agents that exceed regulatory requirements. Where the conservation goals are clear, the types of services that can be bundled together can be determined and the value of such services to ecosystem benefits accounted for. Bundling can reduce transaction costs, however, most importantly it recognizes ecosystem services are often synergistic and damage to one can amplify through another (Deal, Cochran, & LaRocco, 2012). At face value, some of the implementation challenges may seem considerable, however as discussed later, significant technological improvements in the monitoring of stressors begins to make such a scheme feasible.
Boyd & Banzhaf (2007) argue ecosystem services can only be objectively (and therefore, presumably, usefullly) considered as components of welfare, where the measure is standardised and conceptually the value of that measure is seperated from the quantity traded, thus providing a measure of welfare that can be accurately tracked over time. Improving the resilience of the GBR can be implemented in a range of ways and to an extent is reliant on improvements in reducing all stressors. For example, improving water quality will improve coral resilience to macro-algal state change, but risk of phase change will remain if a reef remains over-fished or there is a collapse of in-shore sea grass from pesticide emissions, as these beds play an important role in many fish species lifecycles. “Failing to recognize the interconnectedness among ecosystem services […] can lead to their degradation, and emphasis on one service could undermine provision of another” (Salzman & Ruhl, 2000). In overlaying Boyd and Banzhaf’s theory, intermediate ecosystem services, such as improved water qaulity in catchments and in the lagoon, producer surpluses from exploitation of fish stocks, the accounting for destructive practices (as ‘negative ecosystem services’ that depreciate assets) and even the mobilisation of human labour (such as physical removal of COTS during outbreaks) can all be accounted for and ‘priced’ into evaluating the flow of final ecosystem benefits or disbenefits to the GBR, which is a proxy measure for its resilience. In addition the flow of services through different trades can, by implication, provide a measure of ecosystem assets, from which all future flows emanate.
A well-designed policy that allows the trading of ecosystem credits encourages allocative, productive and dynamic efficiency in pollution mitigation, where the most cost effective options are tackled first. Allocative in the sense it will drive investment in towards the least cost (low pollution) options; productive in that it will encourage efficient use of existing practices and infrastructure; and dynamic to encourage innovation (MacGill, Outhred, & Nolles, 2003). The WRI model concluded “[g]iving farmers the flexibility to choose mitigation options best suited to their operations not only increases cost effectiveness but may also increase the likelihood of acceptance and adoption of these programs.” And similar to any theoretical market in pollution abatement, the efficiency of the policy will be greatly dependent on its reach. Therefore implementation decisions that seek to include more (and varied) players into the market will drive greater cost effectiveness. Therefore greater heterogeneity in abatement costs encourages greater incentive for liquidity and thus optimality in the marketplace.
The proportion of coral cover on any reef is a result of natural and anthropogenic influences and is naturally dynamic. Growth and recruitment of coral is counteracted by short term and severe damaging impacts (from storm damage, bleaching and COTS outbreaks) and the rate of regrowth, which is affected by the presence of stressors, such as sediment, nutrients and pesticides. Figure 7 illustrates Bellwood et al.’s (2004) analogical synthesis of ecological and engineering resilience (adapted from Dubinsky & Stambler (Eds.) 2011). The impact of any perturbation is a function of the current temporal location of the reef in its damage/recovery cycle, the strength of the disturbance and the influence of compounding factors. The current state of the reef is represented by the location of the ‘ball’ in the well of the curve. A fully-recovered reef sits deep in the well of the downward curve (ball a) situating the reef at its highest possible level of ecological resilience. External perturbations, such as coral beaching storm damage or COTS outbreaks are represented by the force applied to ball a, pushing it up the side of the well towards ball b. The intensity of the perturbation is represented by the angle Ɵ°. Thirdly, the capacity of the reef to resist linear state change is represented by the height of the lip of the well. Once a state change is underway, it requires greater energy to move back to the original state than was required to drive the first shift.
A reef subject to few chronic stressors has high resistance to an external perturbation that ‘pushes’ up the lip of the well. External stressors, such as over-fishing or the presence of eutrophic or turbid conditions from nutrients and suspended sediments lowers the height of the lip. Implicit in this representation is reefs subject to greater stresses are ‘tipped out’ the well by external perturbations with lower intensity. The hazards of climate change and ocean acidification can also neatly fit into this analogue. Greater storm (cyclone) intensity as modeled for AR5, or warmer oceans leading to more frequent bleaching conditions increased the strength of force pushing the ball up to the lip of the well and slow its recovery (descent to the base). Acidification acts as a stressor, lowering the intensity of the perturbation required to invoke state change. Within the framework of improving reef outcomes ecosystem service credits would be earned through actions that increase the ‘height of the lip’ of the well by mitigating the effects of the chronic stressors to the reef, on the assumption the intensity or regularity of the perturbations will inevitably increase as the effects of climate change begin to become more apparent. From an economic perspective, the value of a higher lip rises through time as the frequency and severity with which the height of the lip is tested both become more acute.
Given the importance of health coral cover to the environmental, cultural and economic values of the GBR and the dynamic nature of coral growth and destruction and given the current state of knowledge around the relative impacts of stressors, it is possible to establish the resilience potential for given ecosystem trading units, to ensure (as near as possible) the marginal benefit of the ecosystem service is standardised. As an example, it has been established that the recent rezoning of the GBRMP and the expansion of no-take and no-visit zones improved the quantity of coral cover by reducing the incidences of COTS outbreaks (McCook, et al., 2010)7. It is also established no-take areas are net exporters of fish larvae and larger fish that travel between reefs, thus continually adding to the flow of ecosystem benefits for wild fish harvesting. McCook et al. were able to quantify improvements to fish stocks and thus to coral reef resilience and establish the approximate costs of the rezoning. From here, a resilience potential, expressed in $/unit of resilience could be established, satisfying Boyd and Banzhaf’s need for finding a common measure, with a separation of value from quantity. This principle could be extended to a broad range of mitigation measures.
With reef resilience as the measure of conservation outcome, credits can be generated from a range of activities, in accordance with quantities demanded by regulators or from voluntary entrants to the marketplace. As an illustration of how a GBR ecosystem marketplace could operate agents and bundles of goods have been identified in figure 8.
Potential buyers and/or vendors of creditsAgents that produce both ecosystem service credits (for achieving below baseline emissions) and/or choose to purchase ecosystem credits (for above baseline emissions).
Vendors onlyNon-extractive agents that are likely to only to produce ecosystem service credits. Both voluntary and non-voluntary.
Buyers onlyNew or extractive agents that are likely to have a negative impact on reef ecosystem resilience. Agents benefiting from non-extractive, but nevertheless damaging use of the GBR. Governments acting as public interest agents by purchasing credits.
Notwithstanding the conceptual simplicity of an ecosystem marketplace for GBR resilience, implementation faces significant legal, technical and political challenges.
As stressors can be compounding or synergistic, regulators will need to ensure necessary baselines for components of ecosystem service bundles are established. For example, it possible highly productive mitigation measures for reducing sediment and nutrient loads emitted into reef catchments can be purchased by commercial fishing operators to offset over-exploitation of reef fish stocks, thus potentially undermining the integrity of reef resilience, regardless of the ambient water quality. Therefore, it is likely specific ecosystem services as part of bundles will need to be monitored to ensure ecological thresholds are not breached. Conversely, ceilings maintain liquidity in the ecosystem services marketplace, ensuring the clearing price does not discourage buyer agents to the marketplace. Ceilings and floors can be managed directly (by controlling the flow of trades) or indirectly by regulating basket prices.
A major challenge is defining the equivalency of the effects for the range of activities that raise either credits or debts. For example, the hazards of stressor release from agriculture is dependent on the i) location: discharges high up in the catchment can be mitigated by in-stream processes; ii) nature of pollutant: some sources of nitrogen and phosphorus generate more bio-available forms that risk eutrophic conditions; iii) timing: nutrients and sediments discharged in flood plumes cause greater damage; iv) location of specific impacts: some environments can be nitrogen-deficient, others can be phosphorus –deficient; and v) unintended consequences: Reductions in the amount of suspended sediment may increase incidences of algal blooms, as sunlight penetrates to a greater depth (Adapted from Arup, 2007). An adaptive approach to monitoring equivalency is required, however, care will be required to ensure agents are not discouraged by uncertainty in the market.
The technological challenge of measuring diffuse pollution sources has often been the barrier to their introduction. Kroon (2009) describes improvements to catchment modeling to measure expected emissions of nutrients, sediment and pesticides. However, engineering and scientific advances suggest in-situ remotely operated monitoring and reporting of water-borne pollution is possible, as advocated by Hunt (2014). Nutrient, sediment and pesticide loads could be measured above riparian properties, thus providing a more direct measure of emissions, effectively transforming diffuse sources of pollutants into point source. The eReef program8, funded via Reef Plan, is currently developing real (or near real) time tools to assist in modeling and monitoring water quality indicators .
Vendors should be required to demonstrate additionality in their purchases of ecosystem service credits. For example, a proponent for a new coastal development that would destroy a section of sea grass bed cannot seek to purchase ecosystem services credits through the protection of another existing nearby sea grass bed. The net result is still a net loss of sea grass bed. Eliminating counter-productive direct offsetting will remain an implementation challenge, with several of pitfalls identified by the Environmental Defenders Office Queensland (2013).
Despite the promise of finding the most cost-effective ecosystem improvement measures, implementation of a broader ecosystem services market nevertheless involves political effort from government to compel new participants to participate. Nominally, ecosystem service payments are already made (to an extent) by agents in the form the additional costs of implementing conditions on development approvals, pollution control regulations or opportunity costs of prohibition on extractive activities, such as mining and fishing. Therefore, a transition to a framework as proposed here is dependent on the political implications of community willingness to pay and businesses seeking to protect economic rents.
The current Reef Plan is well-intentioned and represents a significant annual investment on behalf of the Commonwealth and Queensland State governments. Stressor loads are reducing, however the relatively modest targets to 2013 (2020 is the target date for sediment) are likely to have been missed9. At the same time physical indicators, such as coral health and water quality remain poor. Furthermore, the GBRMP continues to face additional stressors from intensification in sectors not covered through Reef Plan policy actions, such as dredge spoil disposal, bulk shipping and recreational and commercial fishing. Broadening and accelerating the policy interventions to support improved reef resilience is therefore essential to the survival of the GBR in the face of hazards presented by locked-in climate change and ocean acidification and a likely future of even more damaging impacts (Hanson, et al., 2013). Whilst the efforts and outcomes of the Reef Plan are to be applauded and have led to some abatement of nutrients, pesticides and sediments, simply bolstering existing interventions in an attempt to meet environmental targets is likely to be prohibitively expensive. It is even doubtful it can arrest the slow decline. Modelling of conditions on the GBR with no GHG mitigation but good progress with Reef Plan stressor mitigation still records a 5% reduction in coral cover (Brodie & Waterhouse, 2012). More importantly Reef Plan interventions are likely to be too slow to bring the reef to a level of resilience to resist the medium- to long-term impacts of climate change. Therefore broadening the sectors that are subject to policy intervention and accounting for their impact in support of reef resilience enable faster progress towards reef resilience, importantly most cost effectively.
The GBR is of immense cultural and economic value to Australia and of importance to the rest of the world, as declared through its status as a World Heritage Property, and is subject to stringent and effective management for its protection. Yet, like many reefs around the world it is suffering from the impacts of human habitation and enterprise. Coral reefs supply important ecosystem services to approximately 500 million people worldwide (Bruno & Selig, 2007). A collapse of these services will have significant welfare consequences. Finding adaptive, transferable, feasible and morally justifiable interventions to improve reef health is of global importance.
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