A Review of the Economic Valuation of Harmful Algal Blooms (HAB): Methodological Challenges, Policy Implications, and Application.

Abstract

In most marine and fresh-water environments, microscopic, plant-like organisms occur naturally in the surface layer, referred to as phytoplankton or microalgae. They form the base of the food chain upon which nearly all other marine organisms depend. Human activity and climate change can increase the nutrients the algae feed, leading to algal blooms. Some of these algal blooms can be detrimental to humans and have been called Harmful Algal Blooms (HABs). This study has three objectives. First, we revisited and updated the literature review on the economic valuation of the impacts of HABs suggested by Adams et al. (2018). Second, unlike Adams et al. (2018), we are particularly interested in identifying whether or not economic valuations have any policy implications. To some extent, many studies account for the economic impact without linking them to any feasible policy interventions and therefore are sterile from a practical perspective. Third, we designed and applied a Stated Preferences (SP) study to evaluate one specific policy. We estimate a “price premium” that could be incorporated into some seafood products and serve as an “insurance-type” policy to create a fund to support monitoring systems and to be used for damage compensation in the presence of HABs to avoid social unrest. Results shows that people in Chile are willing to pay a premium price of mussels of $ 963,28 Chilean pesos. So, this research represents a starting point to make an economic valuation that aims to determine the people’s willingness to pay to compensate the damages of the HABs events.