January 14, 2006

Who should protect mangroves?

An article in SciDevNet (found via Resilience Science) reports on the current attempt at restoring Asian mangroves, which seem to reduce the damage of tsunamis, cyclones and storms.
Shrimp farms, tourist resorts and urban expansion have devoured 35 to 50 per cent of these 'bioshields' over the entire region. Many of these deforested pockets of prosperity were hit hardest, the tsunami washing away years of economic growth.

Now, governments in India, Indonesia, Malaysia, Sri Lanka and Thailand all want to restore what nature once provided for free: they plan to spend millions of dollars replanting thousands of hectares of mangrove forest.
According to the report, the governments are managing the replanting in a characteristically inept way (messy planting and little post-planting care). Worse still, the factors that have led to the destruction of mangroves are still alive and well. These factors all ultimately derive from the absence of property rights of mangroves. People involved in the shrimp, tourism and fisheries industries, and dwellers of nearby lands, all have different incentives to protect or destroy mangroves. And none of them owns the mangroves. Governments act as owners, and very careless at that.
"Central governments have little interest in protecting mangroves," he [Edward Barbier, an environmental economist at the University of Wyoming] says. "Officials turn a blind eye to private developers or even provide them with 'certificates of ownership' for land that really belongs to the government. Meanwhile, traditional users lose out because they have no 'legal' rights."
If mangroves were private and people could buy and sell them, who would own the mangroves? In a free and efficient market, mangrove lands would end up in the hands of those who most value them. The owners would then use the mangroves in the most profitable way for themselves.

So, someone may think, this is the bad news: if mangroves were private their owners would destroy them and create something else, such as tourist resorts or shrimp farms, and tsunamis or cyclones would eventually destroy all those things as well as lives and property of people who are not owners. But there are alternatives.

The various people who would benefit from mangrove protection could buy mangroves. This raises the question of free-riders. People who benefit from mangrove protection enjoy that protection whether they buy it or not, so they may have insufficient incentive for buying. Perhaps tourist resorts would still have an incentive. They have at least three reasons to buy mangroves and incorporate them to their conventional property - to protect themselves and their clients from disasters, to attract eco-tourists, and to attract "environmentally and socially conscious" clients. If these benefits exceed the costs resorts should not worry about other people free-riding on them.

Another solution to the free-rider problem is to create communities with limited entry. In this case, mangrove property comes bundled with other property. A community, for example, owns mangroves, adjacent land and adjacent sea (or fishing rights). The community limits entry to people who buy a bundle of property that includes mangrove. Free-riders are simply not allowed. Or a community does not own mangrove but limits entry only to people who buy insurance against tsunamis and cyclones. The insurance company then buys mangrove to decrease risk and disaster compensations. Individual people are free to join any such communities or to join communities that do not own mangroves and do not require insurance, and thus face more risks but are cheaper at least in the short run.

The market would sort out the different possibilities. The amount of mangrove that would remain would depend on the value of present mangrove areas to those who benefit from having something other than mangroves, the value people attach to being protected against disasters, and the effectiveness of mangroves as protection.

Either we let markets sort out, or we hold to the current situation of government ownership and inept management. Well, actually two other possibilities come to my mind. We may get governments become responsible and efficient. We may stop tsunamis and cyclones by directly managing tectonics and the climate. Both look implausible to me.

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