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Research Project Report

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A Study on the Better Polices of Economic Instruments for Coastal Environment & Ecosystem Conservation
Report No. 2013-11 Research Manager Choi Jee Yun
File


A Study on the Better Polices of Economic Instruments for Coastal Environment & Ecosystem Conservation


1. Purpose
○ The study identified current operation of economic instruments and their matters in improving coastal environment. After analyzing and comparing domestic and international cases, the study presented direction for reorganizing economic instruments for coastal environmental improvement.
-It carried out theoretical studies on economic instruments involving natural capital and ecosystem service and analyzed similar cases at home and abroad to draw implications to Korea.
-It examined the current operation of fees for public water occupancy/usage, targets for the Marine Ecosystem Conservation Fund, its computation methods, fund operation, detailed cases and expert opinion to show problems of economic instruments and basic direction for their better operation.


2. Methodologies and Feature
1) Methodologies
○ To analyze statistics on public water occupancy/usage over the last five years (2007~2012) and price of land close to coastal waters based on the KLIS serial cadastral map.
○ To examine similar cases in China, the UK, the US, Germany and Japan and operation of occupancy/usage of public waters in Tongyong City
○ To hold workshops with experts in Chinese water utilization and to analyze domestic experts’ awareness
2) Feature
○ The study presented ways to improve economic instruments for coastal management, such as the Marine Ecosystem Conservation Fund. It also suggested better ways for public water occupancy/utilization for shared future value of coastal ecosystem service, fair benefit distribution and realization of ecosystem-based management.


3. Results
1) Summary
○ Economic valuation of ecosystem service has long been an important issue from perspectives of evaluating natural resources, biodiversity and non-market goods. 
- Economic valuation of ecosystem service is not about considering the service as commodity traded at market, but about helping rational policy decision for economic efficiency of ecosystem and biodiversity, consideration to the future generation and fair use of common asset of the mankind. 
- The economic value of coastal ecosystem service is annually estimated at from KRW 40.46 trillion to KRW 42.54 trillion.
○ Economic instruments are those which determine natural capital and ecosystem service at market price and internalize ecosystem costs and preference of future generation. Examples are allotment, charge, usage fees and environmental subsidies. 
- The Marine Ecosystem Conservation Fund was established in 2006. A total of KRW 37.5 billion was imposed on 162 cases from 2007 to 2011. The money became vested in the Fisheries Development Fund. 
- The Public Water Occupancy/Use Fee was introduced in 1962. As of 2012, the number of permissions was 8,946 and the areas under permission reached 48.84㎢. The total amount of fees stood at KRW 9.8 billion.
-Between 2007 from 2012, the number of cases and areas continued to increase. However, actual fees for usage or occupancy decreased.
○ Similar cases in other countries included the Payment System for Marine Use (China), the Marine License System (the UK) and the Coastal Occupancy/Use Fees (Japan).
-The Payment System for Marine Use was based on the Marine Use Management Act. The fees were divided into the Coastal Occupancy/Use fees and the Fees for Coastal Nature Change. The collected amount was clarified per unit size according to type and areal classification.
-The Marine Management Organization was in charge of the Marine Licensing of the UK. Acts which required the license were construction, landfill, dredging and incineration. The fees were imposed according to development size.
-The Coastal Occupancy/Use Fees were determined and imposed according to areas based on their characteristics.
○ Generally speaking, land price were determined according to policy, socioeconomic and psychological factors. However, occupancy/use fees of public waters were calculated according to land price (Publicly Notified Individual Land Price). Therefore, the fees failed to reflect environmental conditions or usage characteristics.
-According to category of land close to coastal waters, forest accounted for 35.9% of the lot (64.1% in size). As of 2012, the Individual Land Price per unit (㎡) was KRW 9,334/㎡, much lower than the Average Individual Land Price which stood at KRW 37,178/㎡.
-Land price close to coastal waters was far lower than the total land price of City, Gun or Gu which were located in coastal areas.
-An analysis on public water occupancy and usage in Tongyong City showed that many of them were exempted from the fees. Special and environmental values of coastal waters as well as environmental impacts were not reflected.
○ According to an assessment on expert awareness, many agreed that economic instruments didn’t reflect coastal or ecological environmental values. They also said that a separate computation system should be prepared according to marine environment and usage characteristics.
-‘Economic benefits,’ ‘ecological environmental conditions’, and ‘current use of neighboring land and water’ should be considered when the computation system for the Marine Environment Conservation Fund and Public Water Occupancy/Usage Charges are prepared
-A separate account should be prepared to rational operation of the Marine Environment Conservation Fund and Public Water Occupancy/Usage while integrated plan named ‘Coastal Ecosystem Compensation (Charges, tentatively named)’needs to be prepared.
○ The study presented measures to improve economic instruments for better coastal environment. 
- To institutionalize economic instruments which consider value and public benefits of coastal ecosystem service
- To determine use purpose of each unit water and to categorize type of public water occupancy or usage
- To expand projects under the Marine Ecosystem Conservation Fund and to modify targets exempt from public water occupancy or usage
-To consider a possible integration of the Marine Ecosystem Conservation Fund and the Public Water Occupancy or Use Charges
- To calculate and notify economic and ecological values of coastal waters on the regular basis 
- To introduce the traceability system for coastal water usage projects or acts

2) Policy contribution
○ The study can be used as basic material in computing or improving the Marine Ecosystem Conservation Fund and the Public Water Occupancy or Use Charges
3) Expected benefits
○ The study helps rational and effective operation of economic instruments for better coastal environment and ecosystems
?It presents direction for rational operation of economic instruments by reflecting values of coastal ecological service, characteristics of water environment usage and rational fund operation.
○ The study contributes to improving the Marine Ecosystem Conservation Fund and the Public Water Occupancy or Use Charges.
- It presents direction for improving economic instruments for coastal environment and ecological management based on the Causer Pays Principle, the Benefit Principle, Prevention Principles, conservation of public benefits and future value.

Research Project Report 상세보기
A Study on the Better Polices of Economic Instruments for Coastal Environment & Ecosystem Conservation
Report No. 2013-11 Research Manager Choi Jee Yun
File


A Study on the Better Polices of Economic Instruments for Coastal Environment & Ecosystem Conservation


1. Purpose
○ The study identified current operation of economic instruments and their matters in improving coastal environment. After analyzing and comparing domestic and international cases, the study presented direction for reorganizing economic instruments for coastal environmental improvement.
-It carried out theoretical studies on economic instruments involving natural capital and ecosystem service and analyzed similar cases at home and abroad to draw implications to Korea.
-It examined the current operation of fees for public water occupancy/usage, targets for the Marine Ecosystem Conservation Fund, its computation methods, fund operation, detailed cases and expert opinion to show problems of economic instruments and basic direction for their better operation.


2. Methodologies and Feature
1) Methodologies
○ To analyze statistics on public water occupancy/usage over the last five years (2007~2012) and price of land close to coastal waters based on the KLIS serial cadastral map.
○ To examine similar cases in China, the UK, the US, Germany and Japan and operation of occupancy/usage of public waters in Tongyong City
○ To hold workshops with experts in Chinese water utilization and to analyze domestic experts’ awareness
2) Feature
○ The study presented ways to improve economic instruments for coastal management, such as the Marine Ecosystem Conservation Fund. It also suggested better ways for public water occupancy/utilization for shared future value of coastal ecosystem service, fair benefit distribution and realization of ecosystem-based management.


3. Results
1) Summary
○ Economic valuation of ecosystem service has long been an important issue from perspectives of evaluating natural resources, biodiversity and non-market goods. 
- Economic valuation of ecosystem service is not about considering the service as commodity traded at market, but about helping rational policy decision for economic efficiency of ecosystem and biodiversity, consideration to the future generation and fair use of common asset of the mankind. 
- The economic value of coastal ecosystem service is annually estimated at from KRW 40.46 trillion to KRW 42.54 trillion.
○ Economic instruments are those which determine natural capital and ecosystem service at market price and internalize ecosystem costs and preference of future generation. Examples are allotment, charge, usage fees and environmental subsidies. 
- The Marine Ecosystem Conservation Fund was established in 2006. A total of KRW 37.5 billion was imposed on 162 cases from 2007 to 2011. The money became vested in the Fisheries Development Fund. 
- The Public Water Occupancy/Use Fee was introduced in 1962. As of 2012, the number of permissions was 8,946 and the areas under permission reached 48.84㎢. The total amount of fees stood at KRW 9.8 billion.
-Between 2007 from 2012, the number of cases and areas continued to increase. However, actual fees for usage or occupancy decreased.
○ Similar cases in other countries included the Payment System for Marine Use (China), the Marine License System (the UK) and the Coastal Occupancy/Use Fees (Japan).
-The Payment System for Marine Use was based on the Marine Use Management Act. The fees were divided into the Coastal Occupancy/Use fees and the Fees for Coastal Nature Change. The collected amount was clarified per unit size according to type and areal classification.
-The Marine Management Organization was in charge of the Marine Licensing of the UK. Acts which required the license were construction, landfill, dredging and incineration. The fees were imposed according to development size.
-The Coastal Occupancy/Use Fees were determined and imposed according to areas based on their characteristics.
○ Generally speaking, land price were determined according to policy, socioeconomic and psychological factors. However, occupancy/use fees of public waters were calculated according to land price (Publicly Notified Individual Land Price). Therefore, the fees failed to reflect environmental conditions or usage characteristics.
-According to category of land close to coastal waters, forest accounted for 35.9% of the lot (64.1% in size). As of 2012, the Individual Land Price per unit (㎡) was KRW 9,334/㎡, much lower than the Average Individual Land Price which stood at KRW 37,178/㎡.
-Land price close to coastal waters was far lower than the total land price of City, Gun or Gu which were located in coastal areas.
-An analysis on public water occupancy and usage in Tongyong City showed that many of them were exempted from the fees. Special and environmental values of coastal waters as well as environmental impacts were not reflected.
○ According to an assessment on expert awareness, many agreed that economic instruments didn’t reflect coastal or ecological environmental values. They also said that a separate computation system should be prepared according to marine environment and usage characteristics.
-‘Economic benefits,’ ‘ecological environmental conditions’, and ‘current use of neighboring land and water’ should be considered when the computation system for the Marine Environment Conservation Fund and Public Water Occupancy/Usage Charges are prepared
-A separate account should be prepared to rational operation of the Marine Environment Conservation Fund and Public Water Occupancy/Usage while integrated plan named ‘Coastal Ecosystem Compensation (Charges, tentatively named)’needs to be prepared.
○ The study presented measures to improve economic instruments for better coastal environment. 
- To institutionalize economic instruments which consider value and public benefits of coastal ecosystem service
- To determine use purpose of each unit water and to categorize type of public water occupancy or usage
- To expand projects under the Marine Ecosystem Conservation Fund and to modify targets exempt from public water occupancy or usage
-To consider a possible integration of the Marine Ecosystem Conservation Fund and the Public Water Occupancy or Use Charges
- To calculate and notify economic and ecological values of coastal waters on the regular basis 
- To introduce the traceability system for coastal water usage projects or acts

2) Policy contribution
○ The study can be used as basic material in computing or improving the Marine Ecosystem Conservation Fund and the Public Water Occupancy or Use Charges
3) Expected benefits
○ The study helps rational and effective operation of economic instruments for better coastal environment and ecosystems
?It presents direction for rational operation of economic instruments by reflecting values of coastal ecological service, characteristics of water environment usage and rational fund operation.
○ The study contributes to improving the Marine Ecosystem Conservation Fund and the Public Water Occupancy or Use Charges.
- It presents direction for improving economic instruments for coastal environment and ecological management based on the Causer Pays Principle, the Benefit Principle, Prevention Principles, conservation of public benefits and future value.

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