Assessing economic values of coral reefs in the Pangkajene and Kepulauan Regency, Spermonde Archipelago, Indonesia

Abstract

Coral reef ecosystems possess tangible and intangible economic benefits to human society that are still underestimated and not fully understood. This study aims: to determine 1) economic benefits and economic losses due to coral reef damage, 2) compensation values as replacement costs for damaged coral reefs as well as references to sustainable coral reef management. Based on the calculation, the TEV of coral reef ecosystems was estimated to be USD 11.96 billion or 2.82 million USD/ha. The economic losses due to coral reef destruction over the 20-year period from 1994 to 2014 were USD 1 billion or 50.18 million USD/yr. We anticipate that the economic loss of coral reefs will continue to rise due to the intensification of destructive fishing practices. Therefore, an effective management policy should be established to prevent further destruction of coral reefs in this area in the future. This study suggests that tangible procedures for compensation for coral damage and law enforcement for destroyers are required to be implemented to reduce the economic losses of coral reefs, and the economic values estimated in this study can be a quantitative reference for various stakeholders to build a concensus for designing coral reef recovery programs in the future.

Full text

Assessing economic values of coral reefs in the Pangkajene
and Kepulauan Regency, Spermonde Archipelago, Indonesia
La Ode Muhammad Yasir Haya
1
&Masahiko Fujii
2
Received: 22 November 2017 /Revised: 12 May 2019 / Accepted: 13 May 2019
#Springer Nature B.V. 2019
Abstract
Coral reef ecosystems possess tangible and intangible economic benefits to human society that are still underestimated and not
fully understood. This study aims: to determine 1) economic benefits and economic losses due to coral reef damage, 2)
compensation values as replacement costs for damaged coral reefs as well as references to sustainable coral reef management.
Based on the calculation, the TEVof coral reef ecosystems was estimated to be USD 11.96 billion or 2.82 million USD/ha. The
economic losses due to coral reef destruction over the 20-year period from 1994 to 2014 were USD 1 billion or 50.18 million
USD/yr. We anticipate that the economic loss of coral reefs will continue to rise due to the intensification of destructive fishing
practices. Therefore, an effective management policy should be established to prevent further destruction of coral reefs in this area
in the future. This study suggests that tangible procedures for compensation for coral damage and law enforcement for destroyers
are required to be implemented to reduce the economic losses of coral reefs, and the economic values estimated in this study can
be a quantitative reference for various stakeholders to build a concensus for designing coral reef recovery programs in the future.
Keywords Coral reefs .Economic benefit .Economic loss .Policy making .Spermonde Archipelago
Introduction
Coral reefs are among the most productive ecosystems in the
marine environment, and have functional roles in supplying
goods and services for human benefits, including fisheries,
tourism, scientific research, shoreline protection, and medi-
cines (e.g., Moberg and Folke 1999; Souter and Linden
2000;UNEP2006; Brander et al. 2007; Tseng et al. 2015).
Regrettably, coral reef ecosystems are severely threatened and
many are in a devastated condition, either due to negative
impacts associated with human activities (e.g., destructive
fishing practices, reclamation, pollution, waste dumping, and
uncontrolled tourism activities) or the effects of climate
change (e.g., ocean acidification, bleaching phenomena, and
sea-level rise) (Pet-Soede 2000; Harley et al. 2006;Brander
et al. 2007; Burke et al. 2011; Yusuf and Jompa 2012;Nasr
2015; Pendleton et al. 2016).
The destruction and loss of coral reefs result in a significant
ecologicalimbalance ofthe marine environment in the form of
dynamic, structural, and functional changes to ecosystems,
especially the abundance and biodiversity of coral fish and
loss of fish species that rely on coral reef ecosystems (Weil
et al. 2006; Komyakova et al. 2013). This leads to a reduction
in the economic value of coral reefs in terms of supplying
goods and services for the benefit of human society.
The factors influencing the destruction of coral reefs men-
tioned above have affected the condition of coral reefs in the
Pangkajene and Kepulauan (PANGKEP) Regency,
Spermonde Archipelago, Indonesia, which was the study lo-
cation selected for this study (Fig. 1). Several previous studies
have indicated that coral reefs in this area are in a seriously bad
condition. The Coral Reef Rehabilitation and Management
Program (COREMAP) in 2005 founded that 74.26% of the
coral reefsin the PANGKEP Regency were ina bad condition,
andonly25.74%ofthemwereingoodcondition.Recently,
Yasir H a y a a nd Fuji i ( 2017) estimated thatlive coral cover had
been reduced from 7716 ha in 1994 to 6885 ha in 2002, and to
4236 ha in 2014, or by 174 ha/yr. during the period from 1994
to 2014. The study was based on the calculation of the per-
centage coral covers using the point intercept transect (PIT)
*LaOdeMuhammadYasirHaya
laode.haya@uho.ac.id
1
Marine Science Department, Faculty of Fisheries and Marine
Science, Halu Oleo University, Jl. H.E.A Mokodompit, Kampus
Baru Tridarma Anduonohu, Kendari 93231, Indonesia
2
Graduate School of Environmental Science, Hokkaido University,
N10W5, Kita-Ku, Sapporo, Hokkaido 060-0810, Japan
Journal of Coastal Conservation
https://doi.org/10.1007/s11852-019-00700-3

method combined with image processing of LANDSAT
multi-temporal data.
Destructive fishing activities have large-scale destructive
impacts, not only in terms of damage to coral reefs but also
due to loss of biological productivity and economic benefits,
i.e., reef fisheries, marine tourism, coastal protection (White
et al. 2000; Wells 2009), and the livelihood of fishermen. This
has even triggered social conflicts among coastal communities
(DFW-Indonesia 2003; Nurdin and Grydehøj 2014). From an
economic perspective, coral reef destruction leads to a loss of
economic value of coral reefs and has long-term economic
impacts. Coral reefs destruction is results in average economic
loss of between 33,900 and 306,800 USD/km
2
(Pet-Soede
et al. 1999). In Indonesia, the use values (UVs) of coral reefs,
i.e., its contribution to the economic benefits of the fisheries
sector, tourism sector, and coastal protection are 2.2 billion,
258 million, and 782 million USD/km
2
/yr., respectively
(Burke et al. 2011). Those economic values do not include
the value of biodiversity, the value of bequeathing coral reefs,
and the value of their continued existence.
This study aimed: 1) to quantify the values of economic ben-
efits of coral reefs and economic losses due to degradation of
coral reefs, 2) to estimate compensation values as replacement
costs for damaged coral reefs as well as references to sustainable
coral reef management. This study is expected to provide a new
point of view (ecological-economic perspective) for decision
makers at the local level to plan coral reef management in the
future.
Materials and methods
Study site
The study considered 10 sites (islands) in the PANGKEP
Regency, Spermonde Archipelago, Indonesia. The selection of
Fig. 1 Map of the study area in the PANGKEP Regency, Spermonde
Archipelago, South Sulawesi, Indonesia. Points in red show locations
of social survey which are divided into 4 zones, i.e., Inner zone
(Salemo, Saugi and Karanrang Islands), Middle inner zone (Badi and
Sanane Islands), Middle outer zone (Sarappo Lompo and Samatellu
Islands), and Outer zone (Gondong Bali, Pandangan, and Kapoposang
Islands)
L. O. M. Yasir Haya, M. Fujii

the sites used in this study was based on the Hutcinson’secolog-
ical zones (Hoeksema 2012). This consisted of an inner zone
(Salemo, Saugi, and Karanrang Islands), middle inner zone
(Badi and Sanane Islands), middle outer zone (Sarappo Lompo
and Samatellu Lompo Islands), and outer zone (Gondongbali,
Pandangan and Kapoposang Islands), as shown in Fig. 1.
Data source and materials
Data source
The study used both primary and secondary data. The primary
data were collected from questionnaires and direct interviews,
whereas the secondary data were gathered from statistical data,
existing documentation, and previous research reports published
by several formal institutions, i.e., fisheries statistical data, visi-
tation data (tourists and researchers), and data relating to the cost
of coastal protection (Saunders et al. 2007). The respondents
interviewed to obtain the UVs of reef-related fisheries were tra-
ditional fishermen, commercial fishermen, and seaweed farmers,
and were all inhabitants of the selected islands.
A purposive random sampling method was used, in which
the local fishermen were classified into two categories accord-
ing to the fishing gear and fisheries production (Sekaran
2003), with a minimum sample size of 30 for each group
(Sekaran 2003;Howell2016). The respondents interviewed
to obtain the UVs of reef-related tourism and scientific re-
search were dive operators, university lecturers/students, offi-
cials from the marine and fisheries agency of PANGKEP
Regency, and residents from the local communities.
Questionnaire survey
A questionnaire was designed to obtain data and information
related to fisheries, tourism, research, and the respondents’
perspective regarding the value of reef ecosystems (Yasir
Haya 2017). The questionnaire collected selected personal
details of those surveyed (i.e., name, age, education level,
selling price of fish, income level, and the number of family
members), the type of fishing gear used, fishing locations,
operational costs, and the willingness to pay (WTP) for the
continued existence of coral reefs.
Framework valuation of the Total economic value
One approach to evaluate the economic benefits of coral reef
ecosystems is the total economic value (TEV) (Pagiola et al.
2004; Pearce and Moran 2009; Freeman et al. 2014):
TEV ¼UV þNUV ¼DUV þNUVðÞþBV þEVðÞ;ð1Þ
where UV is the use value (USD/yr), NUV is the non-use
value (USD/yr), DUV is the direct use value (USD/yr),
NUV is the non-direct use value (USD/yr), BV is the bequest
value (USD/yr), and EV is the existence value (USD/yr).
The derivative equations of the total economic value (TEV)
of coral reef ecosystems are presented in the following
subsections.
DUVs of coral reefs
DUVs of coral reef ecosystems in this study were a conse-
quence of use by the fisheries, tourism, and scientific research
sectors. The equation used to calculate the value is written as
follows (Fauzi 2006):
DUV ¼∑
N
i¼1
Qi;ð2Þ
where DUVis the total direct use value (USD/yr) and Q
i
is the
DUV of the individual sectors.
Here, Q
1
is the DUVof reef-related fisheries (USD/yr), Q2
is the DUV of reef-related tourism (USD/yr), and Q3 is the
DUV of reef-related scientific research (USD/yr).
a. DUVs of Reef-related Fisheries
DUVs of coral reefs from the fisheries sector were derived
from catching fish and seaweed farming. Coral fishes, crabs,
squids and octopuses, and seaweeds all contribute to the value
of reef-related fisheries, which was estimated using the effect
on production (EOP) method, based on a production approach
(Chee 2004; Adrianto 2006). The calculation of DUVs for
reef-related fisheries involves several steps (Adrianto 2006;
Wahy udin 2007;Wawoetal.2014)asfollows:
1) Determine the demand function for a given resource,
which includes coral fishes, crabs, squids, octopuses, and
seaweed farming, using the following demand Eq. (3):
Q¼βV1aV2bV3cV4d
;ð3Þ
where Qis the total resource gained, V
1
is the market price per
unit of resource calculated in all sites of the study, whereas V
2
,
V
3,
andV
4
are variables regarding the socio-economic status of
respondents or users of reef-related resources, βis the inter-
cept, ais the coefficient of the price, whereas b, c, and dare
coefficients of the socio-economic status of respondents or
users of reef related resources.
2) Linear transformation of the demand function Qto obtain
the coefficient value of each selected parameter using a
linear regression, as shown in Yasir Haya (2017).
3) Approach the tabulated result with a linear regression.
Assessing economic values of coral reefs in the Pangkajene and Kepulauan Regency, Spermonde Archipelago,...

4) Obtain the total WTP and consumer surplus (CS) using
Maple software. Maple is a math software that combines
the world’smostpowerfulmathenginewithaninterface
that makes it extremely easy to analyze, explore, visual-
ize, and solve mathematical problems (Maple 2015).
5) Calculate the area’s economic value in terms of utilization
activities by multiplying the CS with the number of fish-
ermen/farmers.
6) Obtain the utilization economic value per ha by dividing the
area’s economic value by the total area of live coral cover.
The calculations used in procedures 2) to 5) are given in
detail in Yasir Haya (2017).
b. DUVs of Reef-related Tourism and Scientific Research
The DUVs of coral reefs related to tourism and sci-
entific research were estimated using the travel cost
(TC) method (Chee 2004). In this approach, the average
cost spent by each person to take trips and receive ben-
efits from coral reef ecosystem at certain tourism and
research locations were calculated. The tourism related
cost was estimated and converted to an economic value,
which consisted of a transportation fee, lodging tariff,
food and beverage charges, equipment rental, and an
entrance ticket. The annual DUVs of reef-related tour-
ism were obtained by multiplying the average cost per
trip with the total number of visitors (tourists) per year.
The method used in this study to estimate the DUVs of
reef-related tourism was the TC method, which was also
applied to determine the DUVs for reef-related research
activities.
IUVs of coral reefs
IUVs are indirect benefits gained from coral reef ecosystems,
i.e., coastal protection, and biological support to fisheries, tur-
tles, and other marine life. In this study, the benefit of coral
reefs as a natural form of coastal protection was examined.
An estimation of the benefits of coral reefs as a natural form
of coastal protection was made using the replacement cost
(RC) method, by calculating the construction costs of break-
waters along the shorelines of 31 inhabited islands. Unit costs
and volumes for the breakwater construction were obtained
from the Regional Department of Public Works of the
PANG KEP Re g enc y.
The calculation of IUVs of reef-related coastal protection
consists of two steps as follows.
First, the volume of the breakwater (V (m
3
)) was calculated
as follows:
V¼LSWBHB;ð4Þ
where L
S
is the coastline length (m), W
B
is the barrier width
(m), and H
B
is the barrier height (m).
Second, the coastal protection value of coral reefs (SPV
(USD)) was calculated by multiplying the volume of breakwaters
(V) with the construction cost per unit (C, USD/m
3
)asfollows:
SPV ¼VC;ð5Þ
NUVs of coral reefs
NUVs are the values of coral reefs that people assign to eco-
nomic goods (including public goods) even if they never have
and never will use them. They can be distinguished from the
UVs, which are derived from the direct use of the goods. The
NUVs estimated in this study were the value of bequeathing
coral reefs and the value of their continued existence.
a. Bequest Values (BVs)
BVs are benefit values given by individuals based on their
WTP to save coral reef resources to make them available for
future generations. In this case, this study was used the benefit
transfer (BT) method to estimate the BV. This was based on
Hargreaves-Allen (2004) who estimated the bequest values of
coral reefs off Wakatobi Island, Indonesia, which is close to
the study area. The BV of coral reefs is 412,000 USD/ha/yr.
(2004). In this case, the Hargreaves-Allen’svaluein2004 was
adjusted for inflation to obtain the correct value for 2014 using
the following equation (Unsworth and Peterson 1995):
BV Y i
ðÞ¼ ∑
2014
Yi¼2005
BVHA GDP Y i
ðÞ
GDP Y i−1
ðÞ
;ð6Þ
where BV(Y
i
)and GDP(Y
i
)are the BV and gross domestic
product (GDP) in Indonesia (Organization for Economic Co-
operation and Development (OECD), 2016), and BV
HA
is the
Hargreaves-Allen’sBVfrom2004 (i.e., 412,000 USD/ha/yr).
In addition, the value of BV(Y
i
)was used to estimate the BV
in the study area using the BT method.
b. Existence Values (EVs)
When consmers’s preferences are not revealed by markets,
economists usually use direct questions regarding their WTP
for services or goods to calculate their preferences. One of the
approaches most often used is the contingent valuation meth-
od (CVM), which is favored by researchers due to its applica-
bility to a variety of environmental goods and its capacity to
assess the EV (Aoun 2015). The EV is the value obtained
solely due to the presence of natural resources and the envi-
ronment. The EVs of coral reefs were estimated based on
individuals’WTP for coral reef resources (FAO 2000). The
L. O. M. Yasir Haya, M. Fujii

WTP data among the respondents in this study were obtained
by questionnaire and direct interviews. The EVs were calcu-
lated based on Yasir Haya (2017).
Economic losses of coral reef destruction
The overexploitation of natural resources has a negative im-
pact on ecology and biodiversity. Economic activities may
damage ecosystem functions and, subsequently, ecosystem
services that lead to human wellbeing and balanced ecosys-
tems (Moberg and Folke 1999; Chapin et al. 2000). The eco-
nomic losses due to coral reef destruction were estimated with
the following assumptions: (1) the only changeable variable
was coral reef area (3480 ha degraded during the period of
1994–2014 or a destruction rate of 174 ha/yr. (Yasir Haya and
Fujii 2017); (2) the component of coral reef values used to
estimate the economic losses was the UV; (3) the local curren-
cy (Indonesian Rupiah; IDR) was converted into USD (1
USD = IDR 13,000).
To discount the economic losses from past coral reef deg-
radation, it was determined whether the discounted values
were expressed in real or nominal terms. Real values have
been adjusted for inflation, while nominal values are
expressed in un-inflated terms. This approach was proposed
by the Division of Economics, U.S. Fish, and Wildlife
Service, to assess the resulting damage due to the release of
oil or other hazardous materials to the environment (Unsworth
and Peterson 1995). This approach can be used to estimate the
current value of the economic loss due to coral reef damage in
the study area. To obtain these values in real terms, the infla-
tion rate from 1994 to 2014 was adjusted. Using the GDP
Implicit Price Deflator (Brander et al. 2007), the value of
economic loss due to past coral reef damage was determined
using the following formula (Unsworth and Peterson 1995):
PVEL Y i
ðÞ¼ ∑
2014
Yi¼1994
EL Y i
ðÞ GDP2014
GDP Y i
ðÞ

;ð7Þ
where PVEL(Y
i
)is the present value of the economic loss in
year i(value in USD) andEL(Y
i
)is the economic loss in year i
(value in USD).
Furthermore, to obtain the total economic loss (TEL) from
1994 to 2014, real discount rates were calculated using the
following formula:
TEL1994−2014 ¼∑
2014
Yi¼1994
PVEL Y i
ðÞ1þrðÞ
2014−YiðÞ
:ð8Þ
where TEL
1994–2014
is the TEL from 1994 to 2014 and ris the
discount factor.
In this case, this study was set the discount rate to 10%
(White et al. 2000;Cesar2000) to obtain the current value
of coral reef damage or economic loss.
Results
Use values (UVs) of coral reefs
Based on the TEV framework of this study, the UVs of coral
reefs consisted of DUVs and IUVs.
Direct use values (DUVs)
Based on the field survey and the data analysis, the categories
of economic benefits included in the DUVs were set as reef
related fish, crab, squid, and octopus catches, seaweed farm-
ing, tourism, and scientific research. The results of this calcu-
lation are presented in the following section.
a. DUV of r eef-related f isheries
Based on the questionnaire results, average prices (P) var-
ied between 1.63 and 3.05 USD/kg, whereas the education
level (E) was mostly elementary school (60%) and junior high
school (40%). The age of the fishermen conducting fishing
activities in the coral reef areas varied between 41 and 48 years
old, with the number of family members ranging from 5 to 7
people. These data were processed using regression analysis
to obtain the demand function, andthenprocessedusing
Maple software to determine the demand curve (Fig. 2), the
values of the WTP, and consumer surplus. Direct use value
related to fisheries was calculated based on Yasir Haya (2017).
Based on the calculation, the total DUV of coral reef-
related fisheries was 2.9 million USD/yr. (Table 1). Seaweed
farming accounted for most of this fig. (1.3 million USD/yr),
while the rest consisted of coral reef fish, crabs, squids, and
octopus (803,000, 513,000, and 251,000 USD/yr., respective-
ly). These values indicate the production value of the coral
reef fisheries in 2014. The values obtained from demand func-
tion were reflected in the form of a demand curve (Fig. 2).
This figure shows that the production rate was relatively low
for coral reef fish, and squid and octopuses, both of which are
sold for high prices in the market. On the other hand, crabs and
seaweeds were produced in large quantities and were sold at
cheaper prices.
The DUVs of reef-related fisheries was estimated to be as
low as USD 2.9 million or 675 USD/ha, with total coral reef
cover of 4236 ha in 2014 (Table 1). This value is much higher
than that of the Taka Bonerate Marine Protected Area (MPA),
South Sulawesi, Indonesia (7.8 USD/ha) (Sawyer 1992)and
the Great Barrier Reef MPA (4.2 USD/ha) (Driml 1999).
However, the DUVs of reef-related fisheries in this area is
much lower than the global average BVof reef-related fisher-
ies (Costanza et al. 1997), which is 2.2 million USD/ha.
b. DUVs of Reef-related Tourism and Recreation
Assessing economic values of coral reefs in the Pangkajene and Kepulauan Regency, Spermonde Archipelago,...

The DUVs of coral reef-related tourism and recreationwere
determined by calculating the total expenses incurred by tourists
or visitors. The questionnaire results showed that there were two
main tourism destinations in the PANGKEP Regency, the
Kapoposang Marine Park and Panambungan Island. In 2014,
the Kapoposang Marine Park and Panambungan Island received
150 and 50 visitors, respectively (Statistics Indonesia, Regency
of Pangkajene and Kepulauan 2014). The average TC obtained
from the interview respondents was 723 USD/person/trip
(Kapoposang Marine Park) and 154 USD/person/trip
(Panambungan Island), which included fees for round-trip trans-
portation, accommodation, scuba diving equipment, local guides,
boat rental, food and beverage charges, and other costs (Table 2).
Assuming an average duration of four days per trip (Kapoposang
Marine Park) and one day per trip (Panambungan Island), the
DUV of reef-related tourism and recreation in the Kapoposang
MarineParkandPanambunganIslandwasestimatedtobeUSD
108,462 and USD 7700, respectively (Table 3).
Hence, the total UV of reef-related tourism and recreation
in the two largest destinations in 2014 was estimated to be
USD 116,162 or 27 USD/ha (Table 3). This value is lower
than the value reported for several similar tourist destinations,
including the Danajon’s reefs in the Philippines (227 USD
/ha). According to Samonte et al. (2016), the net benefits of
coral reefs from tourism and recreation have high annual BVs
if the coral reefs are well managed and intact. For example, the
BVs of coral reefs are estimated to be 663 million USD/yr. in
the Caribbean, 269 million USD/yr. in Pacific, 779 million
USD/yr. in Japan, 483 million USD/yr. in the USA and 1147
million USD/yr. in Australia (Cesar et al. 2003).
Fig. 2 Demand function of the coral reef benefits related to the fisheries using the effect on production (EOP) method for: (a) the coral reef fish catch, (b)
the crab catch, (c) the squids and octopuses catch and (d) seaweed farming
L. O. M. Yasir Haya, M. Fujii

c. DUVs of Reef-related Scientific Research
The economic value of reef-related scientific research was
also calculated using the TC method. The total number of
researcherswhovisitedthestudyareain2014was71
(Statistics Indonesia, Regency of the PANGKEP 2014), which
included researchers, professors, and students. The average
duration of stay to conduct research in the study area was four
days, with an average cost of 231 USD/person/trip. Hence, the
DUV of reef-related scientific research was estimated to be
USD 16,401 or 3.87 USD/ha in 2014.
Indirect use value (IUV)
Based on the calculated length of the coast line of the 31
inhabited islands (37,995 m), barrier width (1 m), and barrier
height (1.5 m), then a volume of the coastal protection barrier
of 56,992.50 m
3
was obtained. If the construction cost of the
barrierwas assumed to be 297 USD/m
3
, then the total UV of
reef-related shoreline protection was USD 16,931,157 or 3997
USD/ha. This amount represents the economic value of coral
reefs functioning as a barrier to prevent coastal erosion.
Non use values (NUVs) of coral reefs
The NUVs investigated in the PANGKEP Regency, Spermonde
Archipelago, consisted of both bequest values (BVs) and exis-
tence values (EVs), respectively. The annual total NUVof coral
reefs estimated in the study area was USD 11,949,932,130. The
estimated NUVs of coral reefs are described below.
Bequest value (BV)
Using the BT method, and by adjusting to the 2004–2014
inflation rate and the GDP Implicit Price Deflator, the BV of
coral reefs in the study area was estimated to be USD
11,947,701,429 (Table 3). The results clearly show that the
high value in the study area was due to the vast area of live
coral cover (4236 ha). The high value in the study area reflects
the significant public concern regardingthe current status of
the coral reef ecosystem, as well as the desire to preserve the
coral reef ecosystem for future generations.
Existence value (EV)
The estimation of coral reef EV in this study was con-
ducted using the CVM. The results of the questionnaire
surveys show that the average age and number of family
members of the respondents were 48 and 6–7, respective-
ly. A statistical analysis of the WTP, which indicates the
incomes and characteristics of local fishermen, resulted in
a value of 66.62 USD/person (Yasir Haya 2017). Using
the total population in the study area (31,983 persons),
Table 1 Direct use benefits of coral reef-related fisheries calculated using the effect on production (EOP) method
Type of direct use
value from fisheries
The number of
respondents (N)
Average price
(USD /kg)
Ratio of
education level
Average age
(years old)
The number
of families
Total number of
fishers/ farmers (N)
Demand
function
Tot al a re a of c or al
cover (ha) (in 2014)
Values of reef-related fisheries (in 2014)
USD USD /ha
Coral reef fish 31 3.05 Ratio 2
**
41 5–6 807 f(Q) = 58.70 Q
-0.52
4,236 803,035 190
Crabs 31 1.63 Ratio 1
*
45 5–6 290 f(Q) = 63.40 Q
-0.53
512,720 121
Squids and octopuses 31 2.22 Ratio 2
**
48 6–7 169 f(Q) = 73.31 Q
-0.56
251,166 59
Seaweeds 30 1.75 Ratio 1
*
46 6–7 231 f(Q) = 219.44 Q
-0.64
1,319,939 312
Total 2,886,860 675
*
Ratio 1 is the ratio of education level in the fishermen group that dominated (>65%) by elementary school
**
Ratio 2 is the ratio of education level in the fishermen group that dominated (>65%) by junior high school
The calculation is presented in detail in Yasir Haya (2017)
Assessing economic values of coral reefs in the Pangkajene and Kepulauan Regency, Spermonde Archipelago,...

the estimated EV of coral reefs was USD 2,130,707 or
503 USD/ha (4236 ha of coral reef cover). The results
clearly show that WTP is driven by age, household size,
monthly income, and education level. These findings
were not surprising because income and education level
are associated with WTP, while age and household size
influence income.
Total economic value (TEV) of coral reefs
It has been reported that approximately 3480 ha of coral reefs
in the study area are in bad condition (Yasir Haya and Fujii
2017), but these coral reefs could still provide as much as
USD 11,969,783,716 EV, which consists of the UV (USD
19,951,580; 0.2%) and NUV (USD 11,949,832,136; 99.8%).
Table 3 Estimated economic value of coral reefs in the study area based on the categorization of the economic value of coral reefs in the PANGKEP
Regency, Spermonde Archipelago, Indonesia
Category of value Component of value USD USD/ ha Ratio (%)
Sub-Use Value (UV) Direct use values:
- Coral fisheries 803,035 190.00 0.2
- Crabs 512,720 121.00
- Squids and octopuses 252,166 59.29
- Seaweeds 1,319,939 312.00
Subtotal: 2,887,860 682
- Tourism and recreation in the Kapoposang Marine Park 108,462 25.60
- Tourism and recreation in the Panambungan Island 7,700 1.82
Subtotal: 116,162 27.42
- Researches 16,401 3.87
Indirect use values: 16,931,157 3,996.96
- Coastal protection
Non-Use Value (NUV) Bequest value 11,947,701,429 2,820,515.00 99.8
Existence value 2,130,707 502.99
Total Economic Value (TEV) 11,969,782,716 2,825,728.53 100.0
The area of coral reefs was fixed to 4236 ha in 2014
Table 2 Components of tourist
expenditure for visitors to the
Kapoposang Marine Park and
Panambungan Island in 2014
Component Expenses (USD)
Kapoposang Marine Park
*
Transportation between Makassar and Kapoposang (round trip) 153.84
Accommodations 107.69
Food and beverages 92.30
Scuba diving equipment rent (one set) 46.15
Air tank charge (one unit) 15.38
Local guides 76.92
Local boat rent 230.76
Tot al 723.08
Panambungan Island
**
Transportation between Makassar and Panambungan (round trip) 76.92
Accommodations 0.00
Food and beverages 26.92
Scuba diving equipment rent 11.54
Air tank charges 3.85
Local guides 19.23
Local boat rent 15.38
Tot al 153.85
*
The average length of stay was four days per person per trip
**
The average length of stay was one day per person per trip
L. O. M. Yasir Haya, M. Fujii

For the UV, coral reefs as a source of goods (i.e., direct
benefits as fisheries) provided economic benefits of USD
2,887,860 or 682 USD/ha. The benefits of the coral reefs as
a source of services (i.e., tourism, recreation, and research)
also contributed to their economic value in 2014 (USD
132,563 or 31 USD/ha). The DUVs of reef-related fisheries,
tourism, recreation, and research, and the IUV of coral reef-
related coastal protection had the highest UV, with a combined
value of USD 16,931,157 or 3996.96 USD/ha. This indicates
that coral reefs in the study area provide a significant DUV to
the community when they are properly managed.
The Bnon-use^benefits related to the coral reef conserva-
tion for future generations (i.e. bequest value) consisted of
98% of the total economic value of coral reefs in the
PANGKEP Regency. The high portion was estimated because
of the relatively wide area of coral reefs of 4236 ha and high
bequest value. According to a previous study (Boutwell and
West ra 2013), there were no references for the bequest value
of coral reefs in the PANGKEP Regency, and therefore, the
bequest value in the Wakatobi MPAs with similar characteris-
tics and geography was referred to Hargreaves-Allen’svalue
in 2004 (Hargreaves-Allen 2004).
The high bequest value indicates that coral reefs in the
PANGKEP Regency could be the source of livelihood for future
generations when the local community within the area shows
great awareness and activities of saving coral reef ecosystems.
In general, the TEV of coral reefs in the study area
(2.8 million USD/ha) was within the range of typical
values for Southeast Asian coral reefs (2.3–27 million
USD/ha (Burke et al. 2011). This indicates that the cor-
al reef ecosystem in the PANGKEP Regency could still
provide economic value in the form of goods and ser-
vices, even though the coral reefs have been continu-
ously degraded by destructive fishing. The TEV does
not consider all economic activities in the study area,
such as small-scale businesses, i.e., stalls for primary
needs, boat rental, and carpentry (Driml 1999).
Total economic loss (TEL) of coral reefs
To estimate the economic loss of coral reefs due to coral reef
damage in the PANGKEP Regency, the total area of reef
destroyed from 1994 to 2014 (3480 ha) can be used as input
data. The destruction resulted in a direct loss of benefit ofcoral
reefs, which also meant a loss of income for fishermen, tour-
ism services, and coastal protection. Using the GDP Implicit
Price Deflator and a discounting factor, the TEL of coral reefs
due to coral reef damage from 1994 to 2014 was estimated to
be USD 819,500 (Table 4).
The TEL of coral reefs due to reef destruction shown
in Table 4was obtained by multiplying the destruction
rate (174 ha/yr) with the benefit of the UV in 2014
(4710 USD/ha) (Yasir Haya and Fujii 2017). After
adjustment for inflation using the GDP Implicit Price
Deflator and a discounting factor in each year, the cur-
rent value of annual damages was obtained.
Based on the calculation, the economic loss was found to
have fluctuated over the period from 1994 to 1995 to 2013–
2014. In the period 1994–1995, the economic loss due to coral
reef damage was USD 54,147,209, and it then increased rap-
idly to USD 90,442,098 in the period of 1995–1996. In the
period of 1996–1997, the financial loss rose significantly to a
peak of USD 109,557,342. It then gradually decreased to USD
16,390,800 from the period of 1996–1997 to 2013–2014. The
total value of the economic loss due to coral reef damage from
1994 to 2014 was USD 1 billion or 50 million USD/yr.
Our results indicated a loss equivalent to 288 USD/ha,
which was low compared to the value of the economic
losses estimated by Cesar (1996). According to Cesar
(1996) the financial loss due to damage to Indonesia’s
coral reefs over a 25-year period ranged from 981 to
7612 USD/ha (by blast fishing) and from 428 to 4756
USD/ha (by cyanide fishing). There may be several rea-
sons for the differences with the results of this study,
including: 1) the difference in the size of coral reef area
considered by the two studies; 2) the difference in the UV
of coral reefs included as input data in the two studies; 3)
the difference in the period of calculation, i.e., 20 years in
this study and 25 years in Cesar (1996); 4) the difference
in the number of fishermen active over the period of the
two studies; and 5) differences in the kinds and amounts
of fishing gears and vessels used. Although there were
differences between the estimated results of the two stud-
ies, our results indicate that there has been a decrease in
the economic value of coral reefs in the study area due to
a decline in the coral reefs’function as a source of fishery
products in the last 20 years (1994–2014), which has been
caused by destructive fishing practices.
Based on these results, there have been large eco-
nomic losses due to the substantial decline in coral cov-
er over the 20 years from 1994 to 2014. Although reef
fisheries production data during the period are unavail-
able, this study referred to the results of Yasir Haya and
Fujii (2017), which estimated a loss of 3480 ha of coral
reef area over the period of 1994–2014, i.e., a destruc-
tion rate of 174 ha/yr. These conditions would have a
negative impact on the productivity of coral reef-related
fisheries. It is likely that economic losses will continue
to accrue if destructive fishing persists and better man-
agement of coral reef resources do not materialize.
Theseresultscouldalsobeusedasthebasisfor
calculating rehabilitation costs, compensable losses, and
compensation costs, and for establishing an educational
campaign for fishermen. To provide compensatory wel-
fare for the 31,983 fishermen in the study area, the
compensation cost would be 31,382 USD/person.
Assessing economic values of coral reefs in the Pangkajene and Kepulauan Regency, Spermonde Archipelago,...

Discussion
Values of coral reefs
Coral reef destruction in this area is considered to be a result of
low appreciation of the value of the ecosystems by the local
stakeholders. In other word, the local stakeholders still under-
value the real worth of benefits produced by coral reef eco-
systems, which leads to the degradation. Economic valuation
is an approach used to measure the degree of local apprecia-
tion to the coral reefs by comparing the prices of service or
good given by the local stakeholders with the real whole
values of the coral reefs.
In spite of the degradation, the coral reefs in the PANGKEP
Regency still benefit to the local community and the environ-
ment. Direct benefits could be calculated using monetarily, while
the indirect benefits could not be quantified monetarily.
However, as the whole, it is concluded that the coral reefs in this
area possess high tangible and intangible value. Tangible values
generally consist of consumable or non-consumable use values,
e.g. fishery and tourism, while intangible values are non-use
benefits or costs needed for long-term ecosystem maintenance.
The value of coral reefs related to fisheries in the study sites is
much higher than the coral reefs inside of the MPAs. This dis-
crepancy is possibly caused by differences in the management
systems. In MPAs, the use of coral reefs has been regulated
according to a zoning system (i.e., core zone, buffer zone, use
zone, etc.), with fishing activities only permitted in the use zone.
In contrast, there is no zoning system for the use of coral reefs
implemented in the area investigated in this study. Coral reef
management without a zoning system tends to encourage exces-
sive exploitation of coral reefs by fishermen throughout the year.
Therefore, effective management of coral reefs will initially re-
duce the income of fishermen, but will provide a more sustain-
able option in the long term. These results are consistent with the
income model proposed by Pet-Soede et al. (1999)intermsofa
comparison of fishermen’s net income when practicing either
destructive or non-destructive fishing.
However, the value is considered to be relatively low com-
pared to Costanza et al. (1997), which is 2.2 million USD/ha.
There are several reasons for this discrepancy, including an
annual increase in the number of local fishermen, which
causes a significant loss of production value in the coral reef
fisheries. The high price of fish as a commodity in the
Table 4 Estimated current values
of economic loss (USD) due to
the destruction of coral reefs from
1994 to 2014 in the PANGKEP
Regency, Spermonde
Archipelago, Indonesia
Period GDP Implicit
Price Deflator
Adjustment for
inflation (GDP
Deflator in current
year / GDP Deflator
in previous year)
Economic loss
(in 2014;
USD)
Calculation
of discount
damages
Present value of
economic loss
(in 2014; USD)
1994–1995 11.42 10.80 8,853,501 6.12 54,147,209
1995–1996 12.43 9.92 16,266,806 5.56 90,442,098
1996–1997 13.99 8.82 21,675,336 5.05 109,557,342
1997–1998 24.52 5.03 16,488,981 4.59 75,766,420
1998–1999 27.99 4.41 18,054,494 4.18 75,418,102
1999–2000 33.72 3.66 17,987,422 3.80 68,307,205
2000–2001 38.54 3.20 18,360,553 3.45 63,385,610
2001–2002 40.81 3.02 19,815,176 3.14 62,188,512
2002–2003 43.05 2.87 21,132,446 2.85 60,293,334
2003–2004 46.73 2.64 21,630,895 2.59 56,104,972
2004–2005 53.43 2.31 20,811,348 2.36 49,072,069
2005–2006 60.96 2.02 19,899,904 2.14 42,657,212
2006–2007 67.82 1.82 19,376,690 1.95 37,759,687
2007–2008 80.13 1.54 17,661,658 1.77 31,288,704
2008–2009 86.76 1.42 17,477,024 1.61 28,146,922
2009–2010 100.00 1.23 16,173,403 1.46 23,679,480
2010–2011 107.47 1.15 15,990,406 1.33 21,283,231
2011–2012 111.50 1.11 16,318,444 1.21 19,745,317
2012–2013 117.04 1.05 16,410,100 1.10 18,051,110
2013–2014 123.34 1.00 16,390,800 1.00 16,390,800
Total economic losses for the past 20 years (1994–2014) 1,003,685,337
The GDP Implicit Price Deflator (Organization for Economic Co-operation and Development (OECD), 2016)
was used, and a discount rate of 10% was applied for the estimation. The destruction rate and economic loss of
coral reefs was assumed to be 174 ha/yr. and 819,500 USD, respectively, during the study period
L. O. M. Yasir Haya, M. Fujii

domestic market encourages fishermen to intensify their fish-
ing activities, which in turn leads to overexploitation and a
loss of coral reef value. The low economic benefit regarding
thedirect value of this overexploitation has resulted in massive
coral reef degradation in the region.
In the marine ecotourism sector, the number of domestic
and international visitors to the PANGKEP Regency which
was 200 in 2014 is considered to be low compared to that to
the Wakatobi Regency which amounted to 14,270 in 2014
(Statistics Indonesia, Regency of Wakatobi 2016). There were
several factors responsible for thesmall number of tourists
who visited the PANGKEP Regency: (1) the Kapoposang
Island as a destination for marine ecotourism is located in
the outer zone of PANGKEP Regency and is far from the
mainland of Sulawesi, from either Makassar City or
PANGKEP Regency. It requires a 6–8 h boat journey to reach
the location. (2) There is no public transport available for
tourists and, therefore, extra fees are required to rent boats.
(3) Destructive fishing (e.g., blast and cyanide fishing) is
practicedintensively at Kapoposang Island. This has resulted
in many issues with visitors who are concerned about safety.
Tourists have therefore been encouraged to visit other loca-
tions where destructive fishing is less widely practiced.
Therefore, a new policy for improving marine transporta-
tion infrastructure is needed to be implemented. Also, efforts
to prevent destructive fishing practices are required tobe made
by the policy makers and relevant stakeholders in this area.
Socio-economic factors
Socio-economic factors related to fishermen living with-
in coral reef area in the PANGKEP Regency affect the
coral reef ecosystems as natural resource. Low educa-
tion level and lack of awareness about the importance
of coral reefs trigger the destructive fishing practices
that cause long-term economic losses. Other triggers in-
clude low income level and no alternative livelihoods.
In the study area, these were the boosting factors for
individuals (fishermen) to conduct destructive fishing to
fulfil daily needs of their family without any significant
consideration of its long-term ecological impact. A so-
cial survey to key stakeholders revealed that perpetrators
of the DFP was primary resulting from low education
level, lack of awareness and no alternative livelihood
and low income.
To solve this issue, planning of new comprehensive
policies is considered to be necessary. The policy must
be responding several crucial points: 1) lack of educa-
tional facilities and teaching staffs, 2) lack of access to
business capitals, 3) high operational costs of fishing, 4)
further fishing locations from the settlements of tradi-
tional fishermen, 5) high prices of commodities which
leads to capital loss of fisheries people.
Sustainability of coral reefs
To anticipate the continuing loss of economic value of coral
reefs and to ensure the sustainability of ecosystem function in
study area, establishment of MPAs is considered to be neces-
sary. The MPAs have been established in various coral reefs to
manage fisheries, biodiversity conservation, habitat restora-
tion, tourism and the other human activities in effective and
sustainable ways (e.g. Sumaila and Charles 2002;Wardand
Hegerl 2003; Christie and White 2007).
Specifically, the benefit expected by the presence of MPAs
is the restoration of fish stock and ecosystem function. The
sustainable benefit includes the spillover effect of fish larvae
from MPAs to the surrounding non-MPAs. The spillover ef-
fect enables to provide additional fish stocks outside of the
MPAs while maintaining the fish stocks inside the MPAs
(Bohnsack 1994). Even though the expectation had been re-
view in several references (Lauenroth and Burke 2008;
Carpenter and Springer 2005; Roberts et al. 2002; Weeks
et al. 2010), several empirical studies had been conducted to
elucidate the real function of MPAs. Therefore, integrated ap-
proaches are needed to design future MPAs by involving local
communities. Local involvement in the planning, designing,
establishing and managing MPAs is considered to be crucial to
make MPAs effective in long term period.
Coral reef exploitation inside the MPAs are not only related
to fisheries but also to tourism since the environment-friendly
nature of this sector, and it is considered that tourism could
improve the economic condition of local people which may
lead to coral reef protection. In this study, economic value of
coral reefs related to the tourism both inside and outside MPAs
was calculated for 2014. The result shows that the economic
value was estimated to be USD 108,462 inside the MPAs (i.e.
in the Kapoposang Island), while the value was around USD
7700 outside the MPAs (i.e. in the Panambungan Island).
Therefore, coral reefs within MPAs could provide relatively
high economic value compared to those outside MPAs, show-
ing the effectiveness of MPAs for saving coral reefs.
Conclusion
The PANGKEP’s coral reefs are valuable resources, providing
many functions and benefits as economic goods and services,
e.g., fisheries, tourism, recreation, research, and protection of
the coastal environment and marine biodiversity for many
generations of fishermen and the local community.
In 2014, the total economic benefit of coral reefs was USD
12 billion or 3 million USD/ha. In contrast, during the period
between 1994 and 2014, the coral reefs experienced a loss in
economic value of USD 1 billion or 50 million USD/yr. The
loss was due to extensive coral reef use, especially related to
fisheries (i.e., coral reef fish, crabs, squids and octopuses, and
Assessing economic values of coral reefs in the Pangkajene and Kepulauan Regency, Spermonde Archipelago,...

seaweed farming), tourism and recreation, research, and coast-
al protection. The economic value of coral reefs has continued
to decline and economic losses will continue to rise in the
future due to the intensive use of destructive fishing practices.
The value of economic losses estimated in this study can be
used as a quantitative reference for various stakeholders to
build a concensus for designing coral reef recovery programs
in the future, such as by determining the number of replace-
ment costs or compensation. In addition, a policy to expand
MPAs is essential and is needed to accelerate recoveryof coral
reefs. The principle of MPAs is the spill-over effect or over-
flow effect, where inside the MPAs, fish stocks grow well, and
the overflow of growth spreads to outside of the MPAs. The
breakthrough policy is able to become an alternative strategy
that could be implemented to protect, rehabilitate, and recover
coral reef ecosystems in the study area.
Acknowledgments We would like to thank Drs. Masahiro Nakaoka,
Shunitz Tanaka, Teiji Watanabe, Masaaki Kurasaki, and Junichi
Kurihara and the reviewers for their fruitful comments. This study was
conducted under the BProgram for Risk Information on Climate Change
(SOUSEI Program)^and the BIntegrated Research Program for
Advancing Climate Models (TOUGOU Program)^of the Ministry of
Education, Culture, Sports, Science, and Technology in Japan (MEXT).
L.O.M.Y.H. acknowledges support received from the Indonesia
Endowment Fund for Education Scholarship (LPDP), the Ministry of
Finance of Indonesia.
Author contributions L.O.M.Y.H was the primary analyst, author, and
correspondence of author for this work. MF contributed as a supervisor
and revising of the paper.
Compliance with ethical standards
Conflict of interest The authors declare no conflict of interest.
Certification of proofreading The English in this document has been
checked by at least two professional editors, both native speakers of
English. For a certificate, please see: http://www.textcheck.com/
certificate/az2ZaC
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Assessing economic values of coral reefs in the Pangkajene and Kepulauan Regency, Spermonde Archipelago,...