Economic Valuation of Blue Carbon Ecosystems: Methods, Challenges and Policy Implications

Abstract

Blue carbon ecosystems—mangroves, sea grass meadows, and salt marshes—are exciting nature-based solutions for climate change mitigation and adaptation that offer substantial carbon sequestration potential as well multiple co-benefits. But, because their full value often goes unrecognized in policy and economic decisions, they will continue to degrade. This review synthesizes, evidence on the economic valuation of blue carbon ecosystems in terms of methods used, challenges to valuation and implications for policy. This paper summarizes market-based and non-market valuation approaches (carbon markets, direct use values and revealed as well as stated preference methods) through a literature review. The analysis underscores the immense economic worth of examining these ecosystems, which goes beyond their ability to sequester carbon and includes coastal protection, fisheries enhancement and biodiversity conservation. A set of known valuation challenges is highlighted: the scientific uncertainties surrounding carbon accounting, the complexities involved in monetizing non-market values and various market and financial concerns including price volatility and high transaction costs. The review then delves into the institutional obstacles that includes fragmented policies and insecure tenure rights that can stand in the way of successful blue carbon initiatives. Following up on this analysis, the paper ends with recommendations for moving forward and calls to action — including our collective need to include blue carbon in national and international policy frameworks, harmonize financial mechanisms through new and innovative instruments such as blue bonds and debt-for-nature swaps, and advance governance strategies that are inclusive of stakeholder voices. This review highlights the pressing need to move towards a more holistic, integrated and practical approach for valuation and management of blue carbon ecosystems in order to maximize their potential contributions to sustainable development and climate action.