The Response of Developing Island Economies to Coral

4 We investigate the relationship between bleaching induced coral reef degradation and the economies of the U.N. defined small island developing states (SIDS) using panel econometric techniques. We analyze the relationship between this degradation and GDP as a whole, as well as the reef specific activities of tourism and fishing, and find evidence of directionality in these relationships. Specifically we find that overall economic growth is significantly correlated with reef degradation in the SIDS, that tourists are insensitive to reef degradation as a tourism pull and that a bi-directional relationship exists between reef health and SIDS fisheries. Our results indicate that the tourism economies in the SIDS as measured by arrivals have been robust to reef degradation but that this activity is partly responsible for the decline in reef health associated with economic growth in the SIDS. The bi-directional relationship between fish catch and bleaching induced reef degradation also suggests the existence of possible feedbacks between tourism growth, fish catch and the health of the reef. Our findings highlight the striking need for better management of coral reef ecosystems to sustainably maintain the ecosystem services that they provide.