The Role of the Ocean Economy in the National Income Accounts of Indonesia

This paper presents the role of the Ocean Economy in the National Income Accounts of Indonesia including the concept and methodology used to estimate the contribution of this ecosystem to Indonesian value added. Currently, the national income account of Indonesia only recognizes the fishery sector. Fishery activities have been considered as one of the sub-sectors of agricultural sector together with sub-sectors of farm food crops, plantation or non-food crops, forestry, and livestock. There are some drawbacks in the concept of national income accounts, since it follows the UN system of national accounts (SNA) that recognize only economic sectors or activities which produce the value added, while it does not recognize the ecosystems such as lakes and river ecosystems, forests as well as terrestrial and ocean ecosystems as production sectors. The present concept of the SNA produces an undervaluation of forest and ocean sectors, which in turn may direct the policy makers to have a tendency to deplete the forestry and fishery resources in order to increase the contribution of those two sectors to the national income accounts. Otherwise, the two sectors will be allocated small national budget for their operations. Therefore the paper concludes that a new concept of national income accounts based on ecosystem products and services to be developed, as a satellite account to the national income account is needed. Furthermore the new concept of national income account for the ocean economy should adopt the UN System of Environmental and Economic Accounts, which takes into account the extractive and non-extractive products as environmental and biological services in to the ocean income account. The new concept of ocean accounting based on both extractive and non-extractive products instead of only based on the extractive one which have market values may guarantee the sustainability of the ocean in particular and will be good for the whole economy of the country in generally. Hence the national income accounts of the ocean economy will show how the blue economy or the ocean economy really function as one of the important sectors for the whole economy of the country.

Measurement of the Ocean Economy From National Income Accounts to the Sustainable Blue Economy

The widespread efforts to incorporate the economic values of oceans into national income accounts have reached a stage where coordination of national efforts is desirable. A symposium held in 2015 began this process by bringing together representatives from ten countries. The symposium concluded that a definition of core ocean industries was possible but beyond that core the definition of ocean industries is in flux. Better coordination of ocean income accounts will require addressing issues of aggregation, geography, partial ocean industries, confidential, and imputation is also needed. Beyond the standard national income accounts, a need to incorporate environmental resource and ecosystem service values to gain a complete picture of the economic role of the oceans was identified. The U.N. System of Environmental and Economic Accounts and the Experimental Ecosystem Service Accounts provide frameworks for this expansion. This will require the development of physical accounts of environmental assets linked to the economic accounts as well as the adaptation of transaction and welfare based economic valuation methods to environmental resources and ecosystem services. The future development of ocean economic data is most likely to require cooperative efforts at development of metadata standards and the use of multiple platforms of opportunity created by policy analysis, economic development, and conservation projects to both collect new economic data and to sustain ocean economy data collection into the future by building capacity in economic data collection and use..

The Economics of Adaptation to Climate Change in Coasts and Oceans: Literature Review, Policy Implications and Research Agenda

Sea level rise and other effects of climate change on oceans and coasts around the world are major reasons to halt the emissions of greenhouse gases to the maximum extent. But historical emissions and sea level rise have already begun so steps to adapt to a world where shorelines, coastal populations, and economies could be dramatically altered are now essential. This presents significant economic challenges in four areas. (1) Large expenditures for adaptation steps may be required but the extent of sea level rise and thus the expenditures are unknowable at this point. Traditional methods for comparing benefits and costs are severely limited, but decisions must still be made. (2) It is not clear where the funding for adaptation will come from, which is a barrier to even starting planning. (3) The extent of economic vulnerability has been illustrated with assessments of risks to current properties, but these likely significantly understate the risks that lie in the future. (4) Market-based solutions to reducing climate change are now generally accepted, but their role in adaptation is less clear. Reviewing the literature addressing each of these points, this paper suggests specific strategies for dealing with uncertainty in assessing the economics of adaptation options, reviews the wide range of options for funding coastal adaption, identifies a number of serious deficiencies in current economic vulnerability studies, and suggests how market based approaches might be used in shaping adaptation strategies. The paper concludes by identifying a research agenda for the economics of coastal adaptation that, if completed, could significantly increase the likelihood of economically efficient coastal adaptation.