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This report was prepared by Cesar Environmental Economics Consulting under awards CRI-3, 4 and 5 from the US Department of the Interior and National Oceanographic and Atmospheric Administration. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Department of Interior, NOAA, or the government of the CNMI.

The Leuser Ecosystem in Northern Sumatra is officially protected by its status as an Indonesian national park. Nevertheless, it remains under severe threat of deforestation. Rainforest destruction has already caused a decline in ecological functions and services. Besides, it is affecting numerous economic activities in and around the Leuser National Park. The objectives of this study are twofold: firstly, to determine the total economic value (TEV) of the Leuser Ecosystem through a systems dynamic model. And secondly, to evaluate the economic consequences of deforestation versus conservation, disaggregating the economic value for the main stakeholders and regions involved. Using a dynamic simulation model, economic valuation is applied to evaluate the TEV of the Leuser National Park over the period 2000-2030. Three scenarios are considered: 'conservation', 'deforestation' and, 'selective use'. The results are presented in terms of (1) the type of benefits, (2) the allocation of these benefits among stakeholders, and (3) the regional distribution of benefits. The economic benefits considered include: water supply, fisheries, flood and drought prevention, agriculture and plantations, hydro-electricity, tourism, biodiversity, carbon sequestration, fire prevention, non-timber forest products, and timber. The stakeholders include: local community members, the local government, the logging and plantation industry, the national government, and the international community. The regions considered cover the 11 districts involved in the management of the Leuser Ecosystem. With a 4% discount rate, the accumulated TEV for the ecosystem over the 30-year period is: US $7.0 billion under the 'deforestation scenario', US $9.5 billion under the 'conservation scenario' and US $9.1 billion under the 'selective utilisation scenario'. The main contributors in the conservation and selective use scenarios are water supply, flood prevention, tourism and agriculture. Timber revenues play an important role in the deforestation scenario. Compared to deforestation, conservation of the Leuser Ecosystem benefits all categories of stakeholders, except for the elite logging and plantation industry. © 2002 Elsevier Science B.V. All rights reserved.

Coral reef ecosystems provide many functions, services and goods to coastal populations, especially in the developing world. A variety of anthropogenic practices threatens reef health and therefore jeopardises the benefits flowing from these services and goods. These threats range from local pollution, sedimentation, destructive fishing practices and coral mining to global issues like coral bleaching. Economic valuation can help to shed light to the importance of the services and goods by ‘getting some of the numbers on the table’. Valuation techniques are discussed and a summary of economic studies on coral reefs is presented. The concepts of Total Economic Value and Cost Benefit Analysis are used to illustrate the valuation of marine protected areas (national parks, etc.) and of threats. Published

The mean temperature on the planet is increasing. The rate of this increase appears to be accelerating and is at present approximately 2 degrees per century. 1998 was the warmest year since temperature recordings started some 150 years ago. Similarly the 1990s was the warmest decade. In addition, 1997 and 1998 saw the strongest El Niño ever recorded. As a consequence of this, very high water temperatures were observed in many parts of the oceans, particularly in the tropical areas. Due to the high water temperatures, the corals over much of the world bleached and subsequently died. In 1997–98, massive mortality occurred particularly among corals of the Indian Ocean. The reefs of Sri Lanka, Maldives, India, Kenya, Tanzania, and Seychelles were particularly hard hit, with mortalities of up to 95%. Reefs in other parts of the Indian Ocean showed mortality rates up to 50%. Hence the coral mortality during 1998 was the unprecedented in severity. The secondary effects on the socio-economic condition in the coastal communities of the Indian Ocean are presently studied as a part of the CORDIO Program (Coral Reef Degradation of the Indian Ocean). Published

Coral reefs are a vital resource to many areas of the Indian Ocean. Coastal populations are continuously increasing (Table 1) and relying on this resource as the basis of the economy. Across the region, the two common socio-economic reef based activities are fisheries and tourism. For local subsistence fishermen, reef fisheries often represent their only livelihood. Degradation of coral reefs will first impact the reef fishery and subsequently, the local fishing community. Tourism also is often heavily dependent on coral reefs as the main attraction.