Total economic value (TEV) can be defined as the integration of values associated

with a natural resource; these values are direct, indirect, option, and non-use values
(Turker, Ozturk, and Pak, 2003). The two main components of a TEV are use and
non-use values (Perman et al, 1995, Adamowicz, 1995). Additionally, use values are
classified as direct use values, indirect use values, and option values, while non-use
values are classified as existence values and bequest values. There are many
different approaches for a TEV. In this paper, a TEV for a hypothetical mangrove
system will be discussed. The approach taken will be analyzing the ecosystem
services provided by mangroves and the value associated with the specific service.
The second part of this approach will entail a discussion of the contribution of
mangroves to key sectors (for example, communities, tourism, businesses).
The term mangrove is non-taxonomic and is used to refer to and assemblage of
tropical trees and shrubs that grows in the intertidal zone. True mangroves
demonstrate the following criteria:
-

They play a major role in community structure.

They have the ability to form pure stands.
They have morphological and physiological specializations that allow them to
adapt to their habitat.
They are taxonomically isolated from their terrestrial relatives.

(Tomlinson, 1986).
Mangrove ecosystems provide a wide variety of goods and services. These include
the provision of plant and animal products, sediment trapping, nutrient uptake and
transformation, protection from floods and storms and stabilization of coastal lands.
Mangrove ecosystem services also offer indirect use benefits by providing a support
base for economic activities. These ecosystem services include the maintenance of
biodiversity, carbon sequestration, maintenance of the gaseous composition of the
atmosphere, water flow and supply regulation, flood control, soil preservation and
regeneration of soil nutrients, pollution filtration and waste assimilation (Dasgupta
and Maler, 2005).
Estuarine and mangrove systems are good nursery grounds for economically
important near shore fish and shellfish species (Hussain and Badola, 2010). One
important feature of mangrove ecosystems is the role they play in ecologically
connecting and interlinking coastal ecosystems. Often along coastlines, mangroves,
seagrass beds and coral reefs are found together and are closely linked. Mangrove
ecosystems provide an intricate habitat for juvenile coral reef fish species (Ogden,
1988). It was estimated by Snedaker and Snedaker (1984) that more than 90% of
near shore marine species were found in mangroves at some point in their life
cycles. Other functions of mangrove ecosystems include the stabilization of nearshore sediments, and coastal erosion mitigation. Mangroves are sinks for organic
and inorganic materials and pollutants, and interrupt freshwater discharge. One of

the essential functions of a mangrove ecosystem is the generation of clear nutrient

poor water that promotes the growth of offshore coral reefs (Ogden, 1988).
Direct benefits of mangrove ecosystems are those that can be consumed directly;
these include the benefits that a community derives from the ecosystem. In a study
done by Hussain and Badola (2010), the benefits and valuation of a mangrove
ecosystem was assessed. The study area was the Bhitarkanika estuary situated in
the east coast of India. Although it is a protected area, the villagers are poor and
depend on the ecosystem for their livelihood. Almost all the households in the area
use fuel wood, farm refuse and cow dung for cooking. Overall, 14.2% of the fuel
needs of each household were being met by the forests; the mean consumption of
wood per annum was 312 kg.
Fishery production for the Bhitarkanika mangrove ecosystem was evaluated in three
stages: inshore, offshore, and its role as nursery grounds for fish and shellfish.
Fourteen species of fishes and three species of shellfish were recorded during the
study. The estimated total catch of the inshore fishery was 3.77 kgh -1 and had a
market price of US $2.25. The offshore fishery catches yielded a higher number of
species and higher income in areas with mangroves (US $44.61 h -1). In total, the
estimated market price of the forestry and fishery products used was US $107 per
household per annum.
For this ecosystem, valuation of the catch was estimated by comparing the prices of
the various species on the local market using the market price method following
Wilson and Carpenter (1999), and de Groot et al (2002). According to de Groot et al
(2002) and Patterson (2002), the exchange value of ecosystem services in trade is
the market price, which is mainly applicable to the goods such as production
functions, but also some regulation and information functions.
In another study, Malik, Fensholt, and Mertz (2015) attempted to estimate the total
economic value (TEV) of mangrove benefits in order to compare it with the benefit
value of commercial aquaculture. In estimating the TEV of the mangrove
ecosystem, direct use values, indirect use values and option values were estimated.
The methods used were replacement costs, market prices, cost-benefit analyses
(CBAs) and benefit transfer value.
The chosen study area by Malik, Fensholt, and Mertz (2015) was the Takalar district
located in south Southern Sulawesi, Indonesia. The district has a coastline of 74 km
and is occupied by mangroves, sea grasses, coral reefs, rocky and sandy beaches,
estuaries, aquaculture ponds, rice fields and tourism and residential areas. This area
is a mangrove hot spot in Indonesia, however, the region is also one of the largest
aquaculture producers in South Sulawesi.
The benefit values of fishery products such as capture of crabs, shrimp and fish, and
forestry products (collection of firewood, production of charcoal, and Nypa palm
crafts) were used to assess the direct use values. The highest direct use benefit

came from fish production, which estimated at US $53 000 per year. Following this
was charcoal production, which estimated at US $9 000 per year. The total direct
use value of the mangrove ecosystem was valued at US $82 000 per year.
Mangrove services such as coastline protection, prevention of seawater intrusion,
provision of nursery grounds, and carbon sequestration were used to derive the
indirect use value. Replacement costs and benefit transfer methods were used in
assessing the indirect use values of the mangroves. A 10-year breakwater
construction project was used to estimate the cost of coastline protection.
Protection of seawater intrusion was estimated by the cost of the water supply
needs of the people if the availability of fresh water was reduced. The nursery
ground provisioning service was estimated by the benefit foregone from fishery.
Finally, carbon sequestration was estimated be using transfer rates of carbon
storage of mangroves.
The estimated rate of prevention of coastline erosion was US $694 to US $3 767 per
hectare. Seawater intrusion protection was estimated at US $277 per hectare. For
the provision of nursery services, the cost was estimated at US $2 292 per hectare,
while carbon sequestration services was in the range of US $550 to US $1 100 per
hectare. The total estimated cost of the indirect use values was in the range of US $
4017 k to US $10, 245 k.
The option value of the mangrove system was calculated using the benefit transfer
value method. This option value includes the potential of mangroves as a
pharmaceutical resource in the future (Jusoff and Taha, 2008). Most of the
mangrove species have the potential to be of medicinal value. Medicinal material
from mangrove ecosystems was estimated from transferring the value from
Sribianti (2008). The annual benefit was US $157 per hectare or US $269 883.
For commercial aquaculture purposes, the total estimated costs were US$ 57 k. the
average cost of one pond was estimated at US $2 488. During a ten-year period, the
estimated costs of the revenue of aquaculture ponds was US $ 1 227. Hence over
the ten-year period the total estimated cost would be US $12 270.
Unlike the Takalar region, the hypothetical mangrove ecosystem is not used for
commercial aquaculture and is of a smaller size and range than the examples
outlined above. The hypothetical mangrove ecosystem supports a large number of
communities and coastal ecosystems, such as coral reefs and seagrass beds.
This hypothetical mangrove ecosystem provides the usual direct use benefits and
indirect use benefits. Option values for this ecosystem will include the potential for
pharmaceutical use and aquaculture use. Hence, the estimated option value cost of
this ecosystem will include both the costs of pharmaceutical use and aquaculture
use.

If we estimate the size of the hypothetical mangrove ecosystem to be half of the

Takalar region, we can estimate the costs to be halved as well. The total area of the
hypothetical mangrove system is 860 hectares.
Table 1: Direct use value of the hypothetical mangrove ecosystem

Product

Net use value

(USD/year)

Fish catch
Crab catch
Shrimp catch
Sub total

26 256
3 266
30 932
60 454

Net use
value
(USD/ha/ye
ar)
16
2
1
19

Firewood
1 690
1
Charcoal
4 405
3
Nypa palm crafts
3 902
6
Sub total
9 997
10
Total direct use
70 451
29
value
Table 2: Indirect use values of the hypothetical mangrove system
Service
Coastline protection
Seawater intrusion
prevention
Provision of nursery
grounds
Carbon sequestration
Total

Use value
(USD/year)
596 238 3 237 500

Use value
(USD/ha/year)
347 1 884

238 057

139

701 388

115

472 725 945 448

2 008 407 5 122 392

275 550
1 907 3 718

Table 3: Option value of the hypothetical mangrove ecosystem

Service
Pharmaceutical
Aquaculture
Total

Use value (USD/year)

134 942
6 135
141 077

Tables 1 3 show the estimated cost of the direct, indirect and option use values of
the hypothetical mangrove ecosystem. These values are for an ecosystem that is
half the size of the Takalar region. These values do not take into account changes in
market value, or the changes in perception of persons, or changes in land use, for
example, if instead of aquaculture production, the mangrove lands were reclaimed

to build industries or a tourist attraction complex. In such cases, the option value of
the hypothetical mangrove ecosystem will change.
These values also do not take into account the level of use associated with the
ecosystem. According to Chadah and Kar (1999), unsustainable practices are
responsible for the decline in mangrove ecosystems. These unsustainable practices
include human encroachment (for example, residential areas), land reclamation,
aquaculture, and bad fishing practices.
For example, the valuation of the uses and ecological services provided by the
Bhitarkanika mangrove ecosystem was based on the perception of the local people
regarding the service provided by the ecosystem, and their general attitude towards
the forest, as well as market prices of fish species. Valuation of the Takalar district
was based on market pricing.

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Chadah, S. & Kar, C.S. 1999. Bhitarkanika, Myth and Reality. Dehradun, India: Natraj
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de Groot, R.S., Wilson, M.A. & Boumans, R.M.J. 2002. A typology for the
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