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What we can learn from the mangrove economy

How much does an ecosystem cost? The World Bank study in Indonesia

Riccardo Silvi
a story by
Riccardo Silvi
What we can learn from the mangrove economy

From coastal protection to climate regulation, from tourism services to fisheries support: a mangrove is not only valuable as a raw material but also for its socio-cultural functions. A model for territories and communities in search of answers

Overcoming the myth of profit alone from the commercialisation of nature and discovering the value, including economic value, of maintaining and conserving ecosystems: the World Bank certified this already two years ago with its study “The Economics of Large-scale Mangrove Conservation and Restoration in Indonesia”. Another economy is possible and it comes from mangroves. 

Economy and Welfare: Two Stories from Indonesia 

Let’s start with two stories. The first is Modi’s1. Modi is a fisherman living in Indonesia, more precisely, he is part of the fishing community of Duano, in the village of Kuala Selat, Riau province. 

Fishing is the thread that binds a hundred-year history made up of generations, wooden boats and paddles and thirty-three families forming a community. Nowadays Duano faces an unprecedented crisis: the fish are no longer there. From the eighty kilos of catch that a single canoe managed to bring ashore every day, today an entire artisanal fleet harvests (when it succeeds) sixty. The result is that only a few families still manage to survive on fishing while many are forced to turn to other activities or emigrate. The reason for this dramatic decline for the Modi community is what they call the “mangrove famine” that separates the land from the sea. 

But people from Kuala Selat also disappear because of more frequent storm surges and tsunamis. For them, in the village, the storms that destroy houses always depend on the removal of mangrove trees from the shoreline, which are the natural defence against the force of the sea and the phenomenon of erosion. If the mangroves disappear, they say, so do the houses and, with them, the people. Young people with no fishing, and therefore no work, leave the coast to earn a living in construction sites or as coconut pickers.

In front of Kuala Selat, in West Kalimantan, also in Indonesia, is the village Batu Ampar, where Nurhadi2 lives and produces charcoal from mangrove wood to survive.

In the province of Riau (first map), Indonesia, there is the fishing community of Duano, in the village of Kuala Selat. Directly opposite, also in Indonesia, is the village Batu Ampar in West Kalimantan (second map). Image source: Wikipedia.

It is a secure, though not lucrative job: it is spread over two furnaces that are active all year round and allows at least twelve other people to have a regular salary. The mangrove wood is abundant, very dense but not very resistant, and is particularly valuable for charcoal production

Sixteen tonnes of mangrove wood produces only three tonnes of coal. Almost half of the 9,000 people in Batu Ampar village rely on this business for a living and have done so for eighty years. 

For some families, like Nurhadi’s, this is the only work they have ever known. In twenty years, the number of mangrove charcoal kilns has increased from 90 to at least 490. At this rate, in about seventy years, the largest mangrove forest in western Indonesian Borneo (where Nurhadi lives) will be gone.

Modi’s and Nurhadi’s are two stories of survival and economy, generative and extractive. Equal and different, they are stories of the mangrove economy.

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The mangrove economy: the World Bank study

Mangrove ecosystems represent one of the most impactful examples of the application of extractive economy principles and one of the best arguments for a new commitment to the generative economy. This was certified by the World Bank in 2022, through its in-depth study on Indonesia, home to around 20% of the world’s mangroves.

Indonesia’s rapid economic development in recent decades, built around the exploitation of its natural resources, has on the one hand allowed for a drastic reduction in poverty, but on the other has put significant pressure on natural capital and especially on mangrove forests. 

The World Bank study (April 2022) aims to inform sustainable mangrove management policies in Indonesia by quantifying the net values and benefits of mangrove conservation and restoration.

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This is why the World Bank decided to develop this important study on the real economic impact of this mining model, with the stated aim of «helping government, the private sector and other stakeholders to identify opportunities for sustainable mangrove management throughout Indonesia and to understand the costs and benefits of mangrove management decisions». 

The result of the research is surprising: urban sprawl, agriculture, the commercialisation of mangrove wood for charcoal production, and aquaculture have led to the loss of 600,000 hectares of mangroves from 1990 to 2018, costing at least USD 9 billion, according to the World Bank.

How are these numbers reached? Based on social-ecological systems theories, the value of raw material is defined not only by its use but also by other factors such as its social, economic and cultural functions. Mangroves develop “ecosystem services” that have a great impact on the economy of a region. In particular, the World Bank identifies five: coastal protection, climate regulation, fisheries support, raw material supply and cultural services.

  • Coastal protection: mangroves, by living between land and sea, reduce the risk of flooding and erosion that threaten coastal communities and resources, mitigating storm surges and dissipating wave energy.
  • Climate regulation: losing mangroves reduces a territory’s ability to reduce carbon emissions by between 20 and 25 per cent of the total carbon stored worldwide in a year. This is due to how mangroves capture and store carbon underground (Blue Economy).
  • Supporting fishing and providing raw materials: mangroves play a key role for fish fauna, as a natural shelter, place of care, and source of nutrients. They are therefore an ideal location for commercial fishing. FAO claims that 55% of the fish caught in Indonesia (worth USD 825 million) depend on mangroves. So does the supply of firewood and building materials to local communities.
  • Cultural services, more specifically tourism: the mangroves provide an ideal place for wildlife observation and are natural tourist attractions.

All in all, according to the World Bank study, every hectare less of mangroves harms the economy, understood as a loss of economic value, of at least about $15,000. 

Even more interesting is the comparison between the value of restoration and conservation of mangrove communities in Indonesia. The World Bank has amply shown how mangrove conservation has a higher cost-benefit ratio than any restoration operation, both because of the initial costs of such operations (about USD 3,500 per hectare) and the approximately 30 years it takes for mangroves to acquire their economic-social function.

«Mangrove conservation has a higher cost-benefit ratio due to the high initial costs of restoration and the time it takes for restored mangroves to provide ecosystem services. Furthermore, the success rate of restoration projects is highly dependent on the quality of site assessment and selection, application of appropriate techniques, effective monitoring, mid-course corrections and maintenance, and enforcement».

And so it is based on this data (and after the 2018 tsunami on Sulawesi Island and across the country) that the Indonesian government is pursuing an ambitious mangrove forest restoration project.

 Extractive vs. generative economy

What the World Bank certified through its study on Indonesian mangroves fully confirms the guiding principles of the generative economy, which have been gaining ground in both academic debate and, above all, business models and government policies worldwide for more than a decade. 

In 2012, Marjorie Kelly, vice-president of Democracy Collaborative, a US research institute dedicated to the development of new strategies for a more democratic economy and inspirer of the B Corp model, introduced the concept of generative economy with the book Owning Our Future: The Emerging Ownership Revolution3 (published in Italy in 2021).

To answer the question “What kind of economy is consistent with living inside a living being?”, over the years, Kelly has theorised the differences between extractive and generative economies starting with the main one: purpose. Business models arranged around an extractive economy have a financial purpose: to maximise profits. Organisations on the generative model have another purpose: to create the conditions for the maintenance and spread of life.

In the generative economy model, it is here that the answers to the crises affecting communities and territories must be sought. It is in the answer to the question How does one life live within another life?or”How can we live and develop within a larger system such as our ecosystem?” that the solutions to the stories of Modi and Nurhadi must be found. 

One possible answer is given by the mangrove economy. 

  1. Jacobson, P. (2023, October 25). Sumatran Indigenous seafarers run aground by overfishing and mangrove loss. Mongabay Environmental News. ↩︎
  2. Hankin, B. R. L. a. L. (2023, August 14). Burning mangrove trees for a living: “I’d quit tomorrow if I could.” BBC News. ↩︎
  3. Padroni del futuro, Marjorie Kelly – Aboca Edizioni. (2021, April 14). Aboca Edizioni. ↩︎


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