The implementation of improvement of coral reefs uses

By: Achmad Fahrudin and Christian Noell


Coral reefs have played a significant role in coastal ecosystems and economics in Indonesia. The Government of Indonesia has released regulations and applied projects to manage coral reefs since 1978. Programs and actions to help coral reefs management have been carried out by national and international NGOs since early 1990s. Unfortunately, destructive fishing practices were still continued and have increased since economic crisis in 1997. The aims of this paper are to describe the reasons of destructive fishing practices and to analysis the implementation of better fishing methods. The study shows that the lack of integrated programs among government agencies has led to the open access property right of coral reefs. The improvement of coral reefs uses can be implemented if de facto open access of property right of coral reefs is changed to the more responsible and acceptable common property right. The fishermen and fish traders, coral collectors and coral traders, and tourism operators in certain coral reefs area can be integrated in one institution to share the use rights and responsibilities of coral reefs. This strategy must be followed by re-definition of working mechanisms among institutions involved in coral reefs management.

Keywords: coral reefs management, extended cost benefit analysis, marine resource economics


Coral reefs area in Indonesia is about 14% of the world corals, but coral export is around 41% of world market. Unfortunately the use of destructive method to harvest reef organisms has threatened 71% of Indonesian coral reefs [1]. Destructive method is a major cause of coral reef degradation and is often related to poverty and coastal crowding. Studies based on the bio-economic model indicate that for many coral reef areas, a return to optimal resource use will require a reduction of fishing effort by 60% [2]. Effects of destructive fishing were investigated, and a balance-sheet model indicated that approximately 0.4% of the hermatypic coral cover has been lost by cyanide and 0.03% by coral-grabbing anchors. The potential coral recovery rate reduced by about one third, from 3.8% in the absence of disturbances to 2.4% annually [3].

The damage done by the cyanide fishery for is probably high because the number of target fish per unit reef area is hig. Mechanical reef destruction may be more extensive as large areas of branching corals as broken apart to retrieve the numerous target fish [4]. Commercial coral collection also suggests specific reductions of abundance and colony size range of harvested population [5].

Coral reef degradation will directly affect the abundance of reef fishes. Linear regression analysis showed that there was a highly significant positive relationship between live coral cover and total number of fish species and number of individuals. Species richness of most of coral fishes rose with increasing live coral cover [6]. Multiple linear regression analyses revealed that variation in potential living space accounted for over half of the variation in species richness and total abundance of fish on a coral. In contrast, species composition appeared to be influenced more by the physical setting within the lagoon. Relationship derived from the initial analyses predicted 65-78% of the variation in species richness among a different set of corals [7].


Field surveys were done on Seribu Islands (Jakarta), Menjangan Island (Bali), and Gili Islands (Lombok). The main reason of selecting these three locations was to obtain a representation of different levels of coral reefs uses in Indonesia. The measurement campaigns were conducted over a one-year period, from March 2001 until March 2002. The measurements of physical parameters are important to ensure that the physical parameters, temperature (oC), salinity (o/oo), acidity (pH), and Visibility (%), are in normal condition. The measurements of biological parameters are important to estimate fish and coral abundance. The biological parameters, coral abundance (cm2/genus) and fish abundance (individual/species), are measured by direct observations (visual census) using quadrant transect method.

Cyanide fishermen (76 owners and 149 labours), coral collectors (30 owners and 60 labours), and 19 tourism operators were interviewed to gain the data of fish and coral harvest, fish and coral price, fishing cost, tourism revenue, and tourism cost. Fish and coral harvest, and fish and coral price were collected from daily fish and coral harvest record for each species, which were used to calculate benefit from fishing and coral collecting. This study used US$ as currency to valuing benefits and costs, and during the study period the rate was around Rp10,000.00/US$.

The Extended Cost Benefit Analysis (ECBA) model is used to estimate stochastic net present value, which calculate variances based on assumption of normal distribution of original data. This model consists of linear environmental costs function, net annual growth equation, and stochastic NPV equation.


Physical factor measurements in all sampling locations showed suitable conditions for coral reefs. The growth and functioning of coral reefs is best under the following general conditions, such as: water temperatures in the optimum range of about 23-30oC; clear seas in tropical latitudes; low level of sedimentation; and salinity in the range of 25 to 40o/oo [8]. Thus, there were no natural extreme conditions in study area that affected coral reefs during study period.

The variability of fish distribution on Seribu Islands was affected by the human activities. The high density of inhabitant (19,248 inhabitants/km2) and the lack of alternative for income generating have pushed community to the activities related directly to the coral reefs, no other remains land for agriculture or industry. Compared to Gili Trawangan Island (320 inhabitants/km2), inhabitants have enough land for agriculture, while others have been worked in the field of tourism services. The number of fishermen on Seribu Islands is also higher than other locations. There are 5,440 fishermen on Seribu Islands (63.27% of total manpower), 564 fishermen around Menjangan Island (3.13% of total manpower), and 323 fishermen on Gili Islands (27.87% of total manpower).

The management of coral reefs in study area is an example where open access conditions are approximated. In open access fisheries people compete for resource benefits by fishing as fast as they can and catching as much as they can [9]. Therefore the competition among coral reefs users has led to the destructive methods to harvest reef organisms. Cyanide fishing and coral collecting generated highly destructive effects to the coral reefs. The environmental costs caused by both activities were almost ten times their benefits. Annual benefit of cyanide fishing and coral collecting on Seribu Islands were $235,160.31/km2 and $163,430.00/km2 respectively, and annual environmental costs were $2,506,495.03/km2 and $1,382,552.88/km2 respectively. In contrast, annual benefit of tourism was $1,265,257.30/km2 and annual environmental cost was $39,542.33/km2 (only 3.12% of benefit).

The result from impact calculation showed that 20,218 dives and snorkels on Menjangan Island caused 3.83% coral damage, 11,497 dives and snorkels on Gili Islands generated 2.18% coral damage, and 2,936 dives and snorkels on Seribu Islands caused 0.56% coral damages. These impacts were still within the range of impact from the similar activity in in South Africa [10] and in Northern Red Sea [11].

Environmental cost of tourism was smaller than benefit, but tourism needed high investment costs. These high investment costs could be provided only by far away businessmen. On the one hand, cyanide fishing and coral collecting generated destructive effects to the coral. On the other hand, tourism needed good coral reefs condition. Therefore the conflict between tourism and cyanide fishing and coral collecting could not be avoided, although it was regulated with different use zones. Tourism could provide many jobs for coastal communities, but only for skilled labour. Coastal communities, which have low level education and limited capital, could not initiate innovation for less damaging coral reefs uses. Thus, they only involved in small-scale cyanide fishing and coral collecting. These small-scale fisheries create relatively high value with little capital investment required [12]. Meanwhile, fish and coral traders who received higher benefits can easily moved to other kinds of business. These inequalities are of crucial importance in understanding the causes and consequences of coral reefs degradation [13].

The calculation of improvement of fishing showed that its environmental and operational costs could be reduced about 78.88% and 15.39% respectively. However, fishermen did not change their fishing method because: a) their benefit would decreased about 49.72% (5 fish species could not be trapped by barrier net), b) the operation of barrier net needed extra set up time, and c) fishermen did not bear fish mortality (they sell the fish quickly to the traders). Therefore the price incentive should be given to fishermen up to 40% of prior prices to settle up their benefits as before.

Fish trader might also expend controlling cost to ensure that fishermen did not use cyanide. Thus, the benefit of fish traders would decrease about 3.88% because of controlling cost and 16.76% because of price incentive. However fish trader still received additional benefit, because the total decreasing of benefit (20.64%) was still below the increasing of healthy fishes (30%).

The benefit of coral farm was calculated based on assumptions that the cost, growth and survival rate, and fragment number of coral per hectare are similar to the coral farming in Philippine, and the price of coral is similar to the average price of Indonesian corals ($2.93/piece). The result showed that net annual benefit is $13,212.84/hectare, which is operated by 30 families. Therefore each farmer family can generate an additional income about $440.43 annually. This additional income is higher than the income from coral collecting, which is only $165.37 annually.

Mooring buoys, which will be built in diving and snorkelling zones could reduce 62.02% of negative impact of boat anchor, while investment cost only increased 0.15%. It was also calculated that the cost for patrolling was only 4.89% of operational and maintenance costs. However, the damage from tourist behaviour could be reduced by providing information about coral reefs to the tourist before diving and snorkelling. The raise of awareness of tourists can increase their carefulness in these activities.

The result of ECBA model showed that the expected NPV was negative (‑$14.68 million) on Seribu Islands because there were high intensities of cyanide fishing and coral collecting and low intensity of tourism. In contrast, the expected NPV was positive ($17.25 million) on Menjangan Island because there was high intensity of tourism, and moderate intensities of cyanide fishing and coral collecting. The expected NPV was also positive ($2.26 million) on Gili Islands because there were low intensities of cyanide fishing and coral collecting, and moderate intensity of tourism. If cyanide fishing was imrproved by barrier net fishing, coral collecting was improved by coral farming, and tourism was improved by building mooring buoy, the expected NPV on Seribu Islands will be positive ($41.14 million).

The potential of improvement of coral reefs uses can be implemented if fishermen, coral farmers, tourism operators, and fish and coral traders receive a guarantee that they will be gratified over a certain period. Therefore they should be protected to manage their own coral reefs resource. Thus de facto open access property rights must be reformed to common-property rights where they can share the property rights of coral reefs. The share of property rights can be easier specified and distributed among them if they are integrated in one institution. Although rights are further specified than in the case of open access resources, some scientists argue that it is still not fully assigned to one individual so that external effects persist [14]. Of course each member might then apply different investment, but the aim of this common property rights is to share use rights and responsibilities based on previous activities. Moreover there are also prior informal culturally embedded rules on Menjangan Island and Gili Islands that restrict the use of resources to some extent.

The integration of stakeholders is possible since there are separated informal group, such as fishermen group (including fish traders), coral collectors group (including coral trader), and tourism operators group. These groups have been formed based on similarity of activity and administrative level (village), while certain coral reefs area might covers more than one village. There is also a gap between traditional groups (fishermen and coral collector groups) and modern group (tourism operator group). Therefore local NGOs are needed to initiate the integration of these groups into one formal institution based on coral reefs area. Local NGOs are also important to link this institution to the expert groups, and then the expert group can help to initiate motivation of innovation of a new technique of resource uses (see Figure 3).

Local NGOs can help stakeholders to seek information on improved coral reefs uses and encourage local leaders to embark on the management of coral reefs area. In short time, in the process of resource management there are three streams of thought which must be reconciled: the wish of the stakeholders to share in the benefits from coral reefs resources while protecting their coral reefs area from outsiders, the desire of local governments to extract resource rents and the push by expert groups and other participants to develop viable local coral reefs management.

It is also necessary to define the institution structures, powers and responsibilities within the framework of provincial and national legislation, to provide local institutions with more capacity to deal with external threats and become involved in development planning, execution and evaluation. Therefore in the short time it is needed transaction costs for gathering information, coordinating users, organizing decision making and enforcing rules (price incentive, monitoring and controlling costs) [9][14]. However, the transaction costs of managing the common property are lower than under a purely government management regime [15]. This research proved that transaction costs of managing the proposed common property ($3.26 million for 25 years) are lower than the government project for coral reefs management ($171.74 million for 20 years).

Besides direct regulation, a strategy to manage coral reefs can be achieved by stimulating voluntary agreements of market participants and moral suasion via conveying information to the public, direct communication, and education [16]. International NGOs can connect this new institution to the consumers of coral reefs to promote their green products. International NGOs can also carry out joint works with local NGOs and government institutions, but the past experiences showed that most of successful collaborations were the first format. Thus on one side it is important to increase the role of NGOs in Indonesian coral reefs management. On the other side NGOs are not allowed to make deeper interventions, because the self-management motivation will decrease.

The successful common property management often occurs in areas where there are a well-defined and limited community; locally-defined management rules; locally-developed institutions that are accepted; higher levels of authority which support local institutions and help to monitor and enforce compliance; and the right to exclude others from participating in the fishery [17]. Therefore government should protect this mechanism by acknowledgment of this common property right. The new institution must be acknowledged by government as an independent institution to reduce the government intervention in coral reef management. Of course the willingness of government to accept this new institution is low because the government power will be reduced. But the willingness of government can be increased by the international public awareness, which can be formed as a demand of a green product (certification issue).


Cyanide fishing has been identified as the most destructive method to harvest coral reefs organisms, which was more than ten times its benefit. In contrast tourism only generated environmental cost less than five percent of its benefit. The destructive effects of cyanide fishing and coral collecting were higher than the results from other similar study, while destructive effect of tourism was still within the range of other similar study.

The environmental cost of cyanide fishing can be reduced more than half if it is changed by barrier net fishing, while coral farming has been proved as the less damage method to change coral collecting. The installation of mooring buoys in tourism zones can reduce the environmental cost of tourism more than fifty percent, while the cost of investment only increases less than one percent. Therefore these technical improvements of coral reefs uses can reduce the environmental costs of major activities in Indonesian coral reefs. The ECBA model shows that if these anthropogenic threats are not quickly reformed, long-term economic loss of coral reefs uses in Indonesia will be very high. The improvement of coral reefs uses can reduce economic loss to be economic gain.

The improvement of coral reefs uses can be implemented if de facto open access property right of coral reefs is changed to more responsible and acceptable common property right. The fishermen and fish traders, coral collectors and coral traders, and tourism operators in certain coral reefs area can be integrated in one formal institution to share the property rights of coral reefs.


We would like to express special thanks to The German Academic Exchange Service (DAAD) that gave financial support.

We wish to thanks to Prof. Dr. Franciscus Colijn for discussion of biological parts.

We acknowledge Department of Agricultural Economic (University of Kiel), Marine Nature Reserve Authority of Seribu Islands, West Bali Park Authority, and Marine Nature Tourism Authority of Gili Trawangan that gave facilities to do our work. The people around Seribu Islands,

Menjangan Island, and Gili Islands are acknowledged for their friendship and cooperation.


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