Task 2, Element 1 in a project for Developing a Decision-making Framework for Narragansett Bay and Coastal Rhode Island

A decision-making framework for Narragansett Bay and coastal Rhode Island, especially one that embraces the notion of sustainability, requires a complete understanding of the economic values of the marine/coastal ecosystem. This project will review and consolidate all major economic studies conducted for the ecosystem consisting of the Narragansett Bay watershed and Coastal Rhode Island, identify gaps and make recommendations to fill those gaps.

APPROACH

This project will identify and review all major economic assessments of marine and coastal resources in Narragansett Bay and coastal Rhode Island, categorize the findings according to the ecosystem service flows they address and summarize the findings using two concepts of economic value.

The utilitarian philosophy will be used as a basis for valuing the Bay and coastal resources. This philosophy maintains that natural resources have value to the extent that they confer satisfaction to humans. An alternative philosophy, that of intrinsic rights, maintains that natural entities have value independent of whether they provide satisfaction to humans.

Despite its inability to deal with certain ethical issues, the utilitarian philosophy leads to a thoroughly developed approach to economic valuation that provides a systematic method for focusing attention on the values of different ecosystem services relative to one another.

Natural resources are categorized by the specific services they provide to humans in a so-called "ecosystem service framework" A tentative framework is presented as Table 1. By comparing existing research studies to this framework we can determine where ecosystem information gaps exist. Some of the "ecosystem services" listed in the framework will link immediately to measurable local economic activity. These include food production, raw material extraction, recreational amenities, cultural, and commercial and industrial services. A second group of ecosystem services can be linked to local activity, but their economic values are difficult to measure. These include gas regulation, disturbance regulation, erosion control and sediment retention, waste treatment, biological control and refugia. A third group of ecosystem services are linked only very indirectly to local activity and are very difficult to value. These include climate regulation, soil formation, nutrient cycling, pollination, and other genetic resource services. In this study we shall organize the findings from available studies according to ecosystem services in an attempt to determine the relative economic values of the service flows.

Sometimes economic value "expresses the utility of some particular object and sometimes the power of purchasing other goods" (Adam Smith.) These two meanings suggest two different concepts for valuing the Bay's ecosystem service flows. The first is based on the "willingness to pay" for a good or service by a consumer and the "willingness to sell" that good by the producer. Together these concepts are sometimes referred to as the "Gains from Trade" since value is only obtained after a consumer receives and a producer delivers a particular good or service. This concept of value describes the satisfaction received from any good or service that an individual receives whether from food ingested or a beautiful view appreciated. It does not require that a good or service actually be purchased with money, only that it be consumed. The difficulty with this concept is with its measurement.

The second concept of value is based on the power to purchase goods and services. This is regarded as the "income" concept of value since it describes the general capacity to obtain goods and services, independent of the amount satisfaction received. The income concept encompasses wage, employment and economic output measures and is the basis for describing the economic linkages between industrial sectors in Input-Output analysis. The income concept is also the basis for state and national indexes of economic performance (e.g. GNP). The income concept is easier to measure but the "Gains from Trade" concept comes much closer to describing quality of life. Both can be important to decision-makers.

This project will attempt to identify gaps in information about the Bay and coast not only among the types of ecosystem services studied but also between the two concepts of economic value.

Plan of Work

* Define an ecosystem service flow framework for the Narragansett Bay watershed and coastal Rhode Island.
* Summarize and consolidate findings of economic papers, projects and studies that have addressed these marine ecosystem service flows.
* Identify gaps in economic measurements using the concepts of the "income" or "gains from trade" associated with each ecosystem service.
* Produce a white paper, an article for the Narragansett Bay Journal and an oral presentation.

Principal Investigators

Timothy Tyrrell, Professor, URI Department of Environmental and Natural Resource Economics
Andrada Pacheco, Doctoral Student, URI Department of Environmental and Natural Resource Economics

Services most directly linked to local economic activity.

Services directly linked to local activity but difficult to value.

Services not directly linked to local activity and difficult to value.