Do open access conditions affect the valuation of an externality? Estimating the welfare effects of mangrove-fishery linkages in Thailand

Mangroves are considered ecologically important due to their role as breeding grounds and nursery habitats for off-shore fisheries. However, mangrove deforestation through conversion to shrimp aquaculture threatens this valuable function. This paper develops a `dynamic' production function approach to analyze the influence of habitat changes on an open access fishery that faces a finite elasticity of demand. The basic model is applied to a case study of the impacts of mangrove deforestation on the artisanal marine demersal and shellfish fisheries in Thailand. By estimating parameters through pooled time-series and cross-sectional data over the 1983-1993 period for the five coastal zones of Southern Thailand, the welfare impacts of mangrove deforestation are estimated under different elasticity of demand assumptions. Under pure open access, the welfare losses estimated for mangrove deforestation in Thailand of 30 km(2) annually ranged from $12,000 to $408,000 depending on the elasticity of demand.