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The Economic Issues of Estuaries

Dr Dave Alden - Australian Fisheries Management Authority

Disclaimer: Although Dave Alden currently works for the Australian Fisheries Management Authority, the views that he expresses here are not necessarily those held by the Authority.

Note: Due to technical difficulties, only the second half of Dr Alden's presentation is available, however the following slides from Dr Alden's presentation are available.
.So the impact of jetskiing or any other activity will have a pollution impact and in the context of jetskis for example, we can think how it not only has an impact on the biophysical aspects and the seagrass beds etc in the estuary but it also has an impact on the other human users and non-users of the estuary: be they canoeists; swimmers; be they local residents who hear the noise from jetskis. Now economic theory tends to tells us that the optimal level of pollution, in a strict theoretical perspective, tends not to be zero. It depends upon weighing-up those total net-benefits from the activity with a total net disadvantages - those externality impacts - that the activity is having on the recipients of the pollution i.e. the noise pollution, and the impact it has on the environment. Also, even if we accept that perhaps some level of usage of jetskis is a socially optimal outcome, it still requires that where we're using a user-pays model it requires that compensation of the sufferers of that pollution still has to be distributed to those who suffer. Of course we know that doesn't usually take place. So even in a theoretical sense, it is questionable whether the optimal outcome is achieved. It also requires that the sufferers have their dissatisfaction with the pollution aspect expressed in terms of dollar values and that those can then be received and compensated by those that are having the impact which is often impossible.

Moving along a little following from a brief outline about economics in general we've picked up the issue about "Who should we ask?", we've picked up "What sort of info should we consider?", and now I'm trying to focus the latter part of the presentation on how should that info be considered.

Now we all know about cost benefit analysis and how we need to weigh up the costs and benefits of a particular policy proposal and in this case focussing on "Should Jetskis go away or should they stay". It's often argued that you just weigh up the 'pros' and 'cons' and you try and get an implication from that. When costs benefit analysis came to the fore as a policy tool to weigh-up those pros and cons from an economic perspective, it tended to focus on the weighing-up of those costs and benefits in terms of the dollar values. Hence you often see the notion that X-millions-of-dollars will flow from a particular policy in terms of the economic outcomes. However, the down side is that the analysis finds it difficult to assess the impact of that economic activity on the environment, and on the sufferers and to actually give those compensating dollar value disadvantages (the 'con' side of it) to be able to make those comparisons. So it's very difficult to do that strict dollar value cost and benefit analysis of a particular policy options.

So moving to a broader context of cost benefit analysis one tends to move into what one calls 'extended cost benefit analysis' and there we start with a cost benefit analysis framework and then try and put dollar values on those associated environmental impacts from either undertaking an activity or not undertaking an activity i.e. banning jetskis, or allowing jetskis to stay. But as I say, even though there are research techniques out there that can try to provide dollar value equivalence of the impact that people gain or experience from a detrimental economic activity, e.g. jetskiing, they are fraught with danger in terms of the precision of methodology. So the third and what I'm really suggesting here is the real economic contribution to this type of analysis is really to say, we've got a huge range of data and there are beginning to be ways of analysing that data that doesn't just requires us to try and weigh up everything in terms of dollars. There are a whole range of non-dollar value indicators that allow the incorporation of those judgements, values, attitudes, or political analysis of a particular policy being introduced or not. It doesn't require everything to be in dollars. Some of those things that are in dollars can be incorporated. Other things that are just "Well we think it's pretty good", or, in terms of rank order, "This option's going to be better than this one, better than this third one", then those types of things can all be incorporated. It's a much more flexible tool. So I'd certainly encourage that type of analysis - multicriteria analysis.

When those options are also looked at - and we do want to have an impact on affecting peoples activities, jetskiing or otherwise - we can look at the policy levers to influence the particular usage and its impact. So I've highlighted here the market and the non-market mechanisms that can be used, along with the types of examples of those that can be used to influence the types of usages and the way in which those particular civilities can be undertaken. The sorts of things you see here include a variety of what may be seen to be non-traditional economic factors: moral suasion, a brilliant tool to be able to influence people's behaviour and attitude towards the use of particular recreational activity.

So coming to the question of "Should jetskis be allowed in an estuary?". Well, as I said, I'm not giving you an answer. I'm just suggesting that real economics can give you a framework for answering the question. This type of multi-criteria analysis can provide a framework for that decision-making, can allow the incorporation of a vast array of information across those different ESD categories, can allow for the inclusion of not just the worth but the value of assessment of those different impacts and can allow you to consider the market and non-market tools that are perhaps available to influence the types of usages within an estuary and the impacts they have.

Thank You
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