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Towards an Economic Valuation of the Hauraki Gulf: a Stock-Take of Activities and Opportunities

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Towards an Economic Valuation of the Hauraki Gulf: a Stock-Take of Activities and Opportunities Towards an Economic Valuation of the Hauraki Gulf: A Stock-take of Activities and Opportunities November 2012 Technical Report: 2012/035 Auckland Council Technical Report TR2012/035 ISSN 2230-4525 (Print) ISSN 2230-4533 (Online) ISBN 978-1-927216-15-6 (Print) ISBN 978-1-927216-16-3 (PDF) Recommended citation: Barbera, M. 2012. Towards an economic valuation of the Hauraki Gulf: a stock-take of activities and opportunities. Auckland Council technical report TR2012/035 © 2012 Auckland Council This publication is provided strictly subject to Auckland Council’s copyright and other intellectual property rights (if any) in the publication. Users of the publication may only access, reproduce and use the publication, in a secure digital medium or hard copy, for responsible genuine non-commercial purposes relating to personal, public service or educational purposes, provided that the publication is only ever accurately reproduced and proper attribution of its source, publication date and authorship is attached to any use or reproduction. This publication must not be used in any way for any commercial purpose without the prior written consent of Auckland Council. Auckland Council does not give any warranty whatsoever, including without limitation, as to the availability, accuracy, completeness, currency or reliability of the information or data (including third party data) made available via the publication and expressly disclaim (to the maximum extent permitted in law) all liability for any damage or loss resulting from your use of, or reliance on the publication or the information and data provided via the publication. The publication, information, and data contained within it are provided on an "as is" basis. Contents Executive Summary.................................................................................................................. i 1. The Hauraki Gulf............................................................................................................... 1 2. The Total Economic Valuation Project............................................................................ 13 3. Economic valuation methodologies ................................................................................ 18 4. Preliminary results .......................................................................................................... 27 5. Ports and freight and the Hauraki Gulf............................................................................ 37 6. Cruise ships and the Hauraki Gulf .................................................................................. 44 7. Marine recreation and the Hauraki Gulf.......................................................................... 51 8. Aquaculture and the Hauraki Gulf................................................................................... 61 9. Fishing and the Hauraki Gulf .......................................................................................... 71 10. Tourism and the Hauraki Gulf......................................................................................... 91 11. Events and the Hauraki Gulf......................................................................................... 104 12. Marine reserves in the Hauraki Gulf ............................................................................. 108 13. Sand mining in the Hauraki Gulf ................................................................................... 114 Acknowledgements.............................................................................................................. 116 References .......................................................................................................................... 117 Glossary............................................................................................................................... 122 Executive Summary The Hauraki Gulf is a complex ecological and geographical feature that covers 1.2 million hectares of ocean. It includes a marine park, six marine reserves, 30 major island groups, productive fishing areas, New Zealand’s biggest commercial harbour, hosts the main New Zealand naval base, and contains many smaller ports and numerous marinas. New Zealand’s largest metropolitan area is located on part of its shores and one of the country’s main tourist attractions, the Coromandel Peninsula, is surrounded by the Hauraki Gulf. As a result, the Hauraki Gulf is one of Auckland’s most important assets and is the most important marine asset for the Waikato region. The Hauraki Gulf Marine Park Act 2000 recognised the unique importance of the Hauraki Gulf and established the Hauraki Gulf Forum. The Hauraki Gulf has a vast array of coastal, marine, and terrestrial ecosystems which provide a wide range of benefits to both residents and visitors. Many of them represent necessary inputs to numerous economic activities that contribute a large share of Auckland’s and Waikato’s GDP, support cultural values and social opportunities, and provide a number of important services that support human life and health. The environment, and some of its goods and services, can visibly enhance the quality of daily life and improve property values; while other goods and services are difficult to appreciate until they are compromised or lost. Ecosystem goods and services are defined as ‘the direct and indirect benefits that mankind receives or values from natural or semi-natural habitats’. These benefits are not just economic – they contribute to human well-being and quality of life. Some empirical research has already been undertaken to understand and quantify some of the Hauraki Gulf economic and environmental benefits and values. However, these studies were done in isolation. As a result, Auckland Council launched a long-term research project - the Total Economic Valuation Project - to identify the benefits provided by the Hauraki Gulf and determine its total economic value. Phase 1 of this project aimed to identify the important economic activities supported by the Hauraki Gulf and identify their economic impacts, by scanning the knowledge base and presenting a stock-take of the relevant empirical research. There are many difficulties related to the interpretation and valuation of ecosystem services, as ecosystems themselves are fundamentally complex and intertwined. Although the Hauraki Gulf has a clear geographical boundary, it contains a huge variety of complex ecosystems which interact among themselves. This presents many challenges when trying to include them in valuation frameworks or decision-making processes. Market values are captured in the economic impact of industries that rely on the Hauraki Gulf for their operations. Commonly, an economic impact analysis calculates the value added of an economic activity (ie, values of revenues minus values spent on intermediate goods and services) and its contribution to GDP. However, in order to calculate value added, assumptions sometimes need to be made about the technical structure of a certain sector. In general, these assessments recognise that one form of economic expenditure in an industry generates income for another sector. Existing studies identified three types of economic impact that can occur as a result of growth within a sector: Direct impacts - initial injections of revenue and expenditure that accrue to that specific sector Indirect impacts - net increase of economic activity generated by the provision of goods and services to the study sector Induced impacts - net increase of economic activity due to increased household expenditure in the study sector. Direct, indirect, and induced impacts also occur in relation to employment. Non-market values have no explicit monetary value or price and, therefore, are not captured by standard accounting methods. Many goods do not have a market value because, even though they form part of markets, they are unaccounted for and are treated as externalities. Examples include climate regulation (an unaccounted benefit) and pollution (a commonly unaccounted i cost). In the context of the Hauraki Gulf, non-market values relate mainly to ecosystem benefits, recreation, and cultural and spiritual values. As ecosystem services are not fully captured in commercial markets, they are often given little or no weight in policy decisions. This may ultimately lead to environmental depletion, and undermine the economy and human well-being. The results of phase 1 of this study, provides a stock-take of existing information, presenting a summary of existing knowledge and information gaps. The steps were to: 1. Identify the economic and cultural activities provided by the Hauraki Gulf and the social, environmental and cultural values that the Hauraki Gulf endows. 2. Identify empirical research that estimated the economic impact of the economic and cultural activities. 3. Present the preliminary results. 4. Identify knowledge gaps. The table below summarises the result of this effort to identify the activities and values, and to categorise these into groups where a method to value the economic impact is known, partially known or unknown. These results must be interpreted and used with caution. Table A. Known, partially known and unknown activities and values provided by the Hauraki Gulf. Known Partially known (already Unknowns and gaps captured by some of the recreational knowns) • Port • Navy4 • Cruise industry • Boating and other recreational • Environmental goods and • Recreational marine industry activities1 services not
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