Reef Degradation and Tourism The macroeconomic costs of climate change on Bonaire

Part of the larger The impacts of climate change on Bonaire (2022-present) report available here 

Summary

This paper studies the macroeconomic consequences of climate-induced reef degradation for Bonaire. Bonaire’s coral reefs progressively face the unavoidable reality of climate change, with its effects increasing in severity. Degradation of the island’s reef ecosystems may affect annual tourism arrivals as the reefs form one of the main attractions for visitors to Bonaire. Consequently, the industries that rely on tourist expenditures will suffer and thus the local economy. Coral reef-based tourism creates a unique opportunity to investigate the impacts of global warming on the macroeconomic performance of Bonaire. This paper employs the emission scenarios SSP1-1.9, SSP2-4.5, SSP3-7.0, and SSP5-8.5 of the AR6 IPCC 2021 to study the effects of coral reef degradation on the social carrying capacity of the coral reefs. Subsequently, the potential effects of reduced dive tourism and the induced effects of a change in tourism demand are translated into changes in sectoral outputs by employing input-output analysis. Coral reef degradation is expected under all scenarios, except the SSP1-1.9 scenario where a slight recovery of coral reefs is possible.

This study finds a contraction in GDP between 25 USDm and 173 USDm by 2050 (between 2 to 18 percent of GDP in 2050), depending on the applied climate scenario. Moreover, a tourism income multiplier of 0.85x is found, which indicates a strong interlinkage between tourism income and the local economy, as from every dollar of tourism income 85% enters the local economy. This indicates that any losses in tourism demand will significantly result in macroeconomic damages for Bonaire. It can thus be expected that climate change will have a substantial impact on coral reefs as a vital tourism asset on Bonaire, with more extreme emission scenarios leading to stronger negative effects on the local economy.