Ecosystem services valuation and payment for

ecosystem services in small islands

& the role of corporate sector in supporting a
sustainable economy in the small island community

Assoc Professor Tapan Sarker, PhD

Department of Business Strategy and Innovation
Agenda

• Ecosystems services and its role in small island

context
• Theories of sustainability and intergenerational
justice
• The role of the business sector
• Bridging natural and cultural values between the
corporations and the small island community
• Where we stand ..
Ecosystems services
• There has been a growing public interest in the role and
economic value of natural ecosystems and how they
contribute to our quality of life and to human wellbeing
particularly in the small island community (Laurans et al.
2013; Mukherjee et al. 2014; Suwarno et al. 2016).

• There are both use values and non-use values that comprise
the total economic value, including both the intrinsic values of
ecosystems and biodiversity and the market values of goods
and services (Australian Government’s Department of
Agriculture, Water and Environment, 2010).
Ecosystems services
• During recent years, governments, communities and natural
resource managers are taking a broader ecosystem approach
to decision making for natural resource management issues
that can achieve multiple benefits for landowners and society.

• However, applying ecosystem services valuation to the

specific ecological, social, economic and cultural contexts of
the South Pacific is not straightforward (Laurans et al. 2013).
Ecosystems services
• In this region, and in Indonesia in particular coral reefs,
mangroves and sea grass are essential assets for small island
developing states.

• Among these, the economic valuation of coral

reefs ecosystem services is currently seen as a promising
approach to demonstrate the benefits of sustainable
management of coral ecosystems to policy-makers and to
provide useful information for improved decisions (Laurans et
al. 2013).
Theories of sustainability and
intergenerational justice

Achieving long term economic growth rather than short term gains, will benefit
future generations (Sarker, 2013; Cadman et al, 2015))
The role of private sector in Indonesia
My past projects and publications
• Assessment of policy options to use fiscal instruments to promote private
sector engagement in REDD+ and benefits to smallholders in Indonesia
ACIAR Project FST/2012/040

• Cadman, T., Sarker, T., Muttaqin, M., Maraseni, T., Nurfatriani, F., &
Salminah, M. (2019) The role of fiscal instruments in encouraging the
private sector and smallholders to reduce emissions from deforestation and
forest degradation: Evidence from Indonesia, Forest Policy and Economics,
Special Issue on Land Use Change in Indonesia
https://doi.org/10.1016/j.forpol.2019.04.017

• Nurfatriani, F., Salminah, M., Cadman, T., & Sarker, T. (2018). Incentives and
Disincentives for Reducing Emissions under REDD+ in Indonesia. In Pathways to a
Sustainable Economy: Bridging the Gap between Paris Climate Change
Commitments and Net Zero Emissions, Springer International Publishing (pp.
191–208)
Private sector engagement

• The participation of the private sector in emissions

reductions / bio-diversity conservation is important in island
states (Nielsen and Jorgensen, 2015).

• For instance, partnerships between natural-area managers

and the tourism industry in the context of Australia have been
suggested to contribute to sustainability in protected areas
(Sharron et al. 2011).

• In the forestry and plantation sector in Indonesia in particular,

tariffs are the main fiscal instruments used (Government
Regulation (GR) No. 12 of 2014) to regulate businesses to act
on behalf of environment (Cadman et al. 2019).
Private sector engagement

• Importantly, the Paris Agreement also welcomes the role of

non-state actors in reducing emissions including civil society,
business, finance, cities and other jurisdictional authorities at
the subnational level (UNFCCC, 2015).

• However, in the case of businesses involved in carbon-related

activities, there are also transaction fees on carbon
sequestration and stocking.

• Our study results in the context of Indonesia show that

current fiscal instruments actually encourage deforestation
and degradation, with a small majority (55%) expressing the
view that they encouraged them (Cadman et al. 2019).
Bridging natural and cultural values

• Cultural landscapes and their relationship with environmental

components and their enhancement are topical issues in
many countries since they represent a new way of
constructing the relationship between people and nature, and
can create new insights for tourism development of a territory
(Coratza et al. 2016).

• Partnerships have a positive impact for the sustainable

development of small islands developing states (SIDS), mainly
through protection of marine and terrestrial environments
(UN, 2019)
Where we stand ..
Where we go …………
• Although ecosystem valuations have been effectively used as
a means to raise awareness with respect to coral reef
conservation, methodologies will have to be further
developed, with multidisciplinary inputs, if they are to provide
valuable inputs in local and technical decision-making.

• Partnership dialogues involving businesses can generate

opportunities for peer to-peer learning from challenges, and
contribute towards development of good partnership
practices.

• The sharing of information between parties can also generate

a renewed interest in, and momentum in supporting a
sustainable economy in the small island community.
References
1) Australian Government’s Department of Agriculture, Water and Environment,
(2010) Ecosystem services: Key concepts and applications, Occasional Paper Series
No.1, ISBN 978-0-9807427-5-6
2) Cadman, T., Sarker, T., Muttaqin, M., Maraseni, T., Nurfatriani, F., & Salminah, M.
(2019) The role of fiscal instruments in encouraging the private sector and
smallholders to reduce emissions from deforestation and forest degradation:
Evidence from Indonesia, Forest Policy and Economics, Special Issue on Land Use
Change in Indonesia https://doi.org/10.1016/j.forpol.2019.04.017
3) Coratza, et al. Bridging Natural and Cultural Values of Sites with Outstanding
Scenery: Evidence from Gozo, Maltese Islands, Geoheritage 8, 91-103
4) Laurans et al. (2013) Economic valuation of ecosystem services from coral reefs in
the South Pacific: Taking stock of recent experience, Journal of Environmental
Management, Volume 116, Pages 135-144
5) Mukherjee et al. 2014, Ecosystem Service Valuations of Mangrove Ecosystems to
Inform Decision Making and Future Valuation Exercises, PLoS ONE(Vol. 9, Issue 9)
References
6)Nielsen and Jorgensen, 2015 Sustainability analysis of a society based on exergy
studies – a case study of the island of Samsø, Journal of cleaner production, 2015,
Volume 96
7) Sarker, T. (2013) Taxing for the Future: An Intergenerational Perspective, In Hossain,
M., Sarker, T. & McIntosh, M. (Eds) The Asian Century, Sustainable Growth And Climate
Change, Cheltenham: Edward Elgar, UK.
8) Sharron et al. 2011. Tourism Partnerships in Protected Areas: Exploring
Contributions to Sustainability, Environmental Management, 10/2011, Volume 48,
Issue 4
9) Suwarno et al. 2016, Who Benefits from Ecosystem Services? A Case Study for
Central Kalimantan, Indonesia
10) UN (2019) Partnerships for small island developing states, SIDS Partnerships, May
2019.
11)UNFCCC, 2015, Paris Agreement as Contained in the Report of the Conference of
the Parties on its Twenty-First Session
Thank You!