Coral Reef Ecosystem Accounting

1. Outcome

This Circular provides comprehensive guidance on compiling ecosystem accounts for coral reef ecosystems within the SEEA Ecosystem Accounting framework. Coral reefs are among the most biologically diverse and economically valuable marine ecosystems, providing critical ecosystem services including fisheries provisioning, coastal protection, and tourism-related recreation. By completing this guidance, readers will be able to: (1) delineate and classify coral reef ecosystem assets using the IUCN Global Ecosystem Typology; (2) compile ecosystem extent accounts that track changes in coral reef area over time; (3) develop condition accounts incorporating metrics for coral cover, species diversity, and bleaching events; (4) measure and value the ecosystem services flowing from coral reefs to economic units and households; and (5) apply appropriate valuation methods to estimate the monetary value of coral reef ecosystem assets and services. This Circular directly applies the methodological principles established in the SEEA Ecosystem Accounting framework to one of the most significant coastal and marine ecosystem types globally.

Coral reef accounts serve critical decision use cases for governments managing coastal resources. They inform MPA effectiveness monitoring by tracking condition changes inside protected areas relative to baseline and reference conditions, enabling assessment of whether protection measures are achieving conservation objectives. They support tourism carrying capacity analysis by quantifying visitor use relative to ecosystem condition, guiding sustainable tourism policy and permitting systems. They enable bleaching damage quantification for insurance by valuing condition losses from mass bleaching events in monetary terms, supporting parametric insurance products and disaster risk financing. They inform reef restoration return on investment by comparing restoration costs against expected ecosystem service value gains, prioritizing sites for active intervention. These functions connect directly to the policy processes described in TG-1.3 OA and Marine Spatial Management, where reef accounts provide the evidence base for MPA designation and adaptive management.

The accounting framework presented here provides the foundation for thematic analysis developed in TG-6.4 Kelp Forest and Temperate Reef Accounting, which extends reef accounting methods to temperate reef systems, and TG-6.5 Pelagic and Open Ocean Accounting, which addresses open-ocean ecosystems whose productivity is linked to reef health through nutrient cycling and species migration. The valuation approaches for ecosystem services and assets are grounded in the methods described in TG-1.9 Valuation, while the spatial data inputs for reef extent mapping draw on TG-4.1 Remote Sensing and Geospatial Data. The asset account structures that underpin extent and monetary accounts follow TG-3.1 Asset Accounts, and biophysical indicators used in condition assessment are addressed in TG-2.1 Biophysical Indicators.

Reef accounts provide the data foundation for several policy-relevant indicators. TG-2.1 Biophysical Indicators derives coral cover indices and composite reef health indicators from the condition variables compiled in reef accounts, supporting headline reporting to decision-makers. Reef extent change and condition decline feed into SDG 14.2.1 (proportion of EEZ managed using ecosystem-based approaches) and contribute to GBF Target 2 indicators on ecosystem restoration. Reef tourism service flows link to TG-2.10 Contributions to SDGs and GBF reporting on nature-based tourism. These upward connections ensure that the detailed accounting work described here translates into tractable summary measures for policy tracking.

2. Requirements

This Circular requires familiarity with:

• TG-0.1 General Introduction to Ocean Accounts -- for the conceptual framework and key components of Ocean Accounts, including the relationship between environmental and economic accounting frameworks that structures the extent-condition-services-valuation sequence applied here.

• TG-3.1 Asset Accounts -- for the foundational methodology for physical and monetary asset accounts applicable to ecosystem assets, including the opening-additions-reductions-closing stock structure used in extent accounting (Section 3.1) and the net present value framework used in asset valuation (Section 3.4).

• TG-1.9 Valuation -- for the valuation methods referenced throughout this Circular, including net present value, resource rent, and avoided damage cost approaches applied to coral reef ecosystem services and assets.

• TG-4.1 Remote Sensing and Geospatial Data -- for satellite-derived inputs used in mapping reef extent and monitoring condition over time, including multispectral imagery from Sentinel-2 and Landsat platforms.

Readers should also be familiar with TG-2.1 Biophysical Indicators, which provides guidance on selecting and interpreting the biophysical metrics used in condition assessment (Section 3.2), and TG-2.4 Environmental Goods and Services, which establishes the methodology for identifying and classifying ecosystem service flows recorded in Section 3.3.

3. Guidance Material

Coral reef ecosystems are biogenic structures built by hard coral colonies in warm, shallow, clear tropical and subtropical waters^[1]. They are classified within the IUCN Global Ecosystem Typology as ecosystem functional group M1.3 Photic coral reefs, located within the Marine Shelf biome (M1) of the Marine realm^[2]. As ecosystem assets, coral reefs provide the spatial foundation for recording ecosystem extent, condition, and the flows of ecosystem services to economic beneficiaries.

The SEEA Ecosystem Accounting framework treats coral reefs as ecosystem assets--contiguous areas of a specific ecosystem type that form the basic spatial units for accounting^[3]. For marine ecosystems within the continental shelf, ecosystem assets are recommended to be "delineated based on the areas of the different ecosystem types associated with the seabed, for example, seagrass meadows, subtidal sandy bottoms and coral reefs"^[4]. This approach aligns with standard approaches to coral reef mapping using benthic habitat surveys and remote sensing.

This section examines extent accounting (Section 3.1), condition assessment (Section 3.2), ecosystem services (Section 3.3), and valuation methods (Section 3.4) as applied to coral reef ecosystems. Section 3.5 provides a step-by-step compilation procedure, and Section 3.6 presents a worked example with synthetic data demonstrating how to populate complete reef accounts. The linkages between these four account types are illustrated in Figure 6.1.1 below, which shows how extent data feeds into condition assessment, condition determines service capacity, and service flows are translated into monetary values. The methodology presented here provides the foundation for thematic analysis of temperate reef ecosystems in TG-6.4 Kelp Forest and Temperate Reef Accounting and open-ocean ecosystems in TG-6.5 Pelagic and Open Ocean Accounting, where coral reef ecosystems interact with adjacent habitat types through ecological connectivity and nutrient exchange.

This Circular focuses exclusively on photic (warm-water) coral reefs classified under IUCN GET M1.3. Cold-water and deep-sea coral ecosystems--such as those classified under M3.4 (Seamounts, ridges and plateaus biogenic beds) or M3.7 (Chemosynthetic-based ecosystems)--have fundamentally different ecological characteristics, depth distributions, and data requirements. Accounting for deep-sea ecosystems, including cold-water coral formations, is addressed in TG-6.6 Deep Sea and ABNJ Accounting.

Figure 6.1.1: Coral reef account linkages--extent, condition, services, and monetary valuation chain^[5]

3.1 Extent Accounting

Ecosystem extent accounts record the total area of each ecosystem type within an ecosystem accounting area (EAA), along with additions and reductions during the accounting period^[6]. For coral reefs, extent is typically measured in hectares or square kilometres of reef surface area. Accurate delineation of reef extent provides the foundation for condition assessment and services quantification.

The asset account structure presented in TG-3.1 Asset Accounts applies directly to coral reef ecosystem assets. The key accounting entries--opening stock, additions, reductions, and closing stock--capture changes in reef extent over the accounting period.

Mapping coral reef extent

Coral reef extent mapping combines remote sensing data with in-situ validation. The primary approaches include^[7]:

1. Satellite imagery -- Multispectral and hyperspectral satellite sensors can detect coral reef features in clear, shallow waters. Platforms including Landsat, Sentinel-2, and commercial high-resolution satellites provide recurring observations suitable for monitoring. The Allen Coral Atlas (version 2.0, released 2022) provides standardised reef extent and geomorphic zone mapping at approximately 5-metre resolution derived from Planet satellite imagery, covering shallow tropical reef areas globally. The Global Coral Reef Monitoring Network (GCRMN) publishes regional status reports at multi-year intervals, with the most recent global status report published in 2021. National compilers should reference the most current versions of these products and document the vintage of data used in their accounts. For methodological guidance on satellite data processing, see TG-4.1 Remote Sensing and Geospatial Data.

2. Aerial photography and drone surveys -- Higher-resolution imagery from aircraft and unmanned aerial systems enables detailed reef mapping, particularly for patchy reef systems and areas with complex geomorphology. See TG-4.2 Survey Methods for guidance on survey design and data collection protocols.

3. Bathymetric surveys -- Acoustic and LiDAR bathymetry provides three-dimensional characterisation of reef structure, complementing surface-based optical methods.

4. In-situ surveys -- Ground-truth validation through dive transects, manta tows, and drop cameras is essential for calibrating and validating remotely sensed products.

National compilers should document the data sources, spatial resolution, and temporal coverage used for reef extent mapping to ensure reproducibility across accounting periods.

Classification within IUCN GET

The IUCN Global Ecosystem Typology recognises M1.3 Photic coral reefs as a distinct ecosystem functional group within the Marine Shelf biome^[8]. Key ecological characteristics include:

• Distribution in tropical and subtropical waters between approximately 30 degrees N and 30 degrees S latitude
• Shallow depths, rarely exceeding 60 metres, with adequate light penetration for zooxanthellae photosynthesis
• Clear, relatively nutrient-poor waters with salinity between 3.0-3.8%
• Sea temperatures generally between 17-34 degrees C, with optimal conditions around 25-29 degrees C
• Reef geomorphology varying from atolls, barrier reefs, fringing reefs, and patch reefs depending on geological and hydrological conditions^[9]

For national accounting purposes, coral reef ecosystem types may be further disaggregated based on geomorphological class (fringing, barrier, atoll, patch), depth zone (reef flat, reef crest, fore-reef slope), or dominant benthic community (hard coral dominated, soft coral dominated, algal dominated)^[10]. This disaggregation follows the principles for adapting the SEEA Ecosystem Type Reference Classification to national circumstances described in SEEA EA paragraphs 3.22-3.24^[11].

Structure of extent accounts

The ecosystem extent account for coral reefs follows the standard SEEA EA format^[12]:

Table 1: Structure of ecosystem extent account for coral reefs with illustrative synthetic values (SEEA EA Table 4.1)

Additions to extent for coral reefs are primarily through unmanaged expansion, as natural reef growth and recovery processes gradually extend reef area where conditions permit. Managed expansion includes active restoration initiatives such as coral gardening, larval enhancement, and artificial reef structures, though these typically represent small additions relative to natural processes^[13].

Reductions in extent may be managed (e.g., coastal development, dredging, land reclamation) or unmanaged (e.g., storm damage, bleaching-induced mortality, chronic degradation). The SEEA EA specifies that unmanaged reductions represent decreases in area of an ecosystem type associated with natural processes, and that such reductions "can be influenced by human activity, for example, the loss of coral reefs due to the effects of climate change"^[14]. This distinction is important for coral reef accounting because climate-driven bleaching mortality, while triggered by anthropogenic warming, is classified as an unmanaged reduction in the SEEA EA framework because it is not the result of a deliberate management decision affecting the reef directly.

Ecosystem type change matrix

Where reef ecosystems convert to other ecosystem types (e.g., rubble, algal flats, seagrass), or other types convert to reef, these transitions should be recorded in an ecosystem type change matrix^[15]. Such matrices enable tracking of ecosystem conversions within marine environments and support analysis of degradation pathways and recovery trajectories.

Common transitions for coral reef ecosystems include:

• Coral reef to algal-dominated rubble (following mortality events)
• Coral reef to seagrass meadow (where substrate conditions permit colonisation)
• Degraded reef to recovering coral reef (during natural or assisted recovery)
• Sandy substrate to new reef (through artificial reef establishment)

The ecosystem type change matrix complements the extent account by providing detailed transition information between ecosystem types within the EAA.

3.2 Condition Assessment

Ecosystem condition accounts record the quality or health of coral reef ecosystems relative to a reference condition. The SEEA EA defines condition as "the quality of an ecosystem measured in terms of its abiotic and biotic characteristics"^[16]. Condition assessment requires selecting appropriate condition variables, establishing reference levels, and deriving condition indicators.

The principles for selecting and interpreting biophysical indicators are addressed in TG-2.1 Biophysical Indicators. This section applies those principles specifically to coral reef ecosystems.

Condition variables for coral reefs

Condition variables are quantitative metrics that characterise different aspects of ecosystem state. The SEEA EA organises condition variables within the Ecosystem Condition Typology (ECT), which distinguishes six classes of characteristics^[17]:

• Class A1: Physical state -- abiotic characteristics (water temperature, pH, turbidity, dissolved oxygen)
• Class A2: Chemical state -- nutrient concentrations, pollutant levels, aragonite saturation state
• Class B1: Compositional state -- species composition, functional diversity, presence of indicator species
• Class B2: Structural state -- coral cover, rugosity, reef accretion rates
• Class B3: Functional state -- primary productivity, nutrient cycling, bioerosion rates
• Class C1: Landscape and seascape characteristics -- connectivity, patch size, fragmentation

For coral reef condition assessment, the following variables are recommended based on SEEA EA Table 5.7 examples and the scientific literature^[18]. The reference levels presented are indicative values derived from global scientific literature and should be adapted to regional and national contexts. Compilers should establish reference levels based on available baseline data, regional reference sites, and consultation with coral reef scientists, as ecological baselines vary substantially across biogeographic regions (e.g., Caribbean, Indo-Pacific, Red Sea).

Table 2: Condition variables for coral reef ecosystems

Reference levels and condition indicators

Condition variables are converted to condition indicators through normalization against reference levels^[19]. The SEEA EA describes the approach as follows:

"Second, the transformed data are converted to ecosystem indicators. The simplest conversion uses two reference levels to reflect a high or low condition score. In this case, the indicator is calculated by applying a linear transformation"^[20]

The formula for deriving condition indicators is:

Indicator = (V - VL) / (VH - VL)

where V is the observed variable value, VH is the upper (high condition) reference level, and VL is the lower (low condition) reference level^[21].

For coral reefs, reference conditions may be established based on:

• Historical baselines -- documented reef condition from historical records, photographs, or palaeoecological evidence (e.g., pre-1950 baseline)
• Contemporary reference sites -- condition observed at minimally impacted reference reefs within the same biogeographic region
• Scientific thresholds -- ecologically meaningful boundaries such as the 30% coral cover threshold commonly associated with reef functionality and ecosystem service provision
• Policy targets -- condition levels consistent with management objectives (e.g., national marine park standards)

The SEEA EA notes that "reference levels applied to the same variables are likely to differ for different ecosystem types"^[22]. For coral reefs, regional variation in baseline condition necessitates context-specific reference level selection.

Bleaching as a condition indicator

Coral bleaching--the expulsion of symbiotic zooxanthellae in response to thermal stress--is a critical condition indicator for coral reef ecosystems^[23]. The IUCN GET notes that warmer temperatures "cause coral symbiosis to break down (i.e. bleaching)"^[24]. Bleaching events represent a key link between climate pressures and coral reef condition.

Bleaching may be recorded as:

• Bleaching prevalence (% of colonies affected)
• Bleaching severity (degree of tissue colour loss using standardised colour charts)
• Post-bleaching mortality (% of colonies that died following bleaching)
• Recovery status (return to baseline coloration following bleaching)

Repeated mass bleaching events driven by marine heat waves represent a major threat to coral reef condition globally. NOAA Coral Reef Watch provides satellite-derived bleaching alerts and degree heating week (DHW) products that can be integrated with in-situ monitoring data^[25].

Where bleaching leads to substantial mortality, this may also be recorded as a catastrophic loss in extent accounts, consistent with the SEEA EA treatment of "exceptional and significant reductions in the natural resource due to discrete events"^[26].

Structure of condition accounts

Condition accounts may be presented at multiple levels of aggregation^[27]:

1. Variable accounts -- tracking individual condition variables over time (SEEA EA Table 5.3)
2. Indicator accounts -- presenting normalised indicators derived from variables (SEEA EA Table 5.4)
3. Index accounts -- aggregating indicators into composite condition indices (SEEA EA Table 5.5)

For coral reefs, a condition index aggregating structural, compositional, and functional indicators provides a comprehensive overview of ecosystem health. The aggregation approach should follow the principles described in SEEA EA paragraphs 5.77-5.88, which discuss weighted averaging and other combination methods^[28].

3.3 Ecosystem Services

Ecosystem services accounts record the flows of services from coral reef ecosystems to economic units and households^[29]. Coral reefs provide a diverse array of services spanning provisioning, regulating, and cultural categories. The methodology for identifying and measuring ecosystem services is described in TG-2.4 Environmental Goods and Services.

Provisioning services

Fisheries provisioning -- Coral reefs support important fisheries for reef fish, invertebrates (lobster, sea cucumber, trochus), and associated pelagic species. The SEEA EA records provisioning services as the contribution of ecosystems to the production of fish and other harvested species^[30]. Key metrics include:

• Fish biomass on reefs (kg/ha)
• Sustainable yield estimates (tonnes/year)
• Actual harvest (retained catch in tonnes)
• Species composition of catch

The ecosystem service is the contribution of the reef ecosystem to fish production, distinct from the human inputs (fishing effort, gear, vessels) that enable harvest. The SEEA EEA Technical Recommendations note that "provisioning services relate to the extraction and harvest of materials from the environment including timber, fish and water. These will largely be inputs to primary industries, e.g. agriculture, forestry and fisheries"^[31].

For guidance on fisheries accounting, see TG-6.7 Fisheries Accounting: Integrating Stock Assessment and the physical asset account methodology in TG-3.1 Asset Accounts.

Genetic and biochemical resources -- Coral reef organisms provide sources of pharmaceuticals, cosmetics, and other biochemical products. While difficult to quantify, these potential services represent significant option value for future applications.

Ornamental resources -- Live coral, reef fish, and other organisms collected for the aquarium trade represent a distinct provisioning service flow.

Regulating services

Coastal protection -- Coral reefs attenuate wave energy, reducing coastal erosion and flood risk^[32]. The SEEA EA identifies coastal protection as a regulating service that "mitigates the risk of damage caused by extreme events, including storm surges and coastal flooding"^[33]. This service is particularly significant for small island developing states and low-lying coastal communities.

Quantification approaches include:

• Wave energy attenuation (% reduction in wave height)
• Avoided damage costs (currency units per year)
• Length of coastline protected (km)
• Population and assets in protected zones

The value of coastal protection services depends on the extent and condition of the reef (affecting wave attenuation capacity) and the exposure and vulnerability of coastal assets and populations. Degraded reefs with reduced structural complexity provide less wave attenuation than healthy reefs^[34].

Water quality regulation -- Reef ecosystems filter particulates and process nutrients, contributing to water quality in adjacent waters. This service supports human health and other ecosystem types such as seagrass meadows.

Carbon cycling -- Coral reefs participate in marine carbon cycles through calcification, primary production, and organic carbon storage. SEEA EA Table 13.4 identifies aragonite saturation state and dissolved oxygen as key variables for coral reef biogeochemical cycling^[35]. The carbon balance of coral reef ecosystems is complex and requires careful treatment in accounting. Reef calcification (the process of building calcium carbonate skeletons) releases CO2 as a byproduct, while primary production by reef organisms and their symbionts fixes carbon through photosynthesis. Over annual timescales, coral reefs may be net sources of CO2 to the atmosphere when calcification effects dominate, though they simultaneously store substantial amounts of carbon in reef framework structures over geological timescales^[36]. For accounting purposes, compilers should record both the carbon stored in reef structures (a stock) and the net annual carbon flux (a flow), with clear documentation of the methods and assumptions used. This nuanced treatment avoids overstatement of carbon sequestration benefits while recognising the long-term carbon storage function of reef framework.

Cultural services

Recreation and tourism -- Coral reefs are major attractions for diving, snorkelling, glass-bottom boat tours, and coastal tourism^[37]. The SEEA EA states that ocean accounts can provide "a detailed picture of marine ecosystem extent and condition to support a range of applications including...coastal tourism"^[38]. Recreation-related services are measured through:

• Visitor numbers (annual person-visits)
• Trip expenditure attributable to reef access (currency units)
• Consumer surplus (willingness-to-pay above costs)
• Recreation days or diving hours

The SEEA EEA Technical Recommendations note that "the measurement of total recreation-related services in a region can provide an indicator of the dependence of tourism on ecosystems and also be compared to measures of the carrying capacity of the ecosystems"^[39].

Cultural heritage and spiritual values -- Coral reefs hold significant cultural importance for coastal communities, including traditional fishing grounds, spiritual sites, totemic species, and elements of cultural identity. These non-material values may be recorded qualitatively or through participatory valuation approaches.

Education and research -- Reef ecosystems support marine science, environmental education programmes, and citizen science monitoring initiatives. The value of this service includes research expenditure and educational outcomes.

Structure of services accounts

Ecosystem services flow accounts record the quantity and, where feasible, the monetary value of services provided during the accounting period^[40]:

Table 3: Structure of ecosystem services flow account for coral reefs with illustrative synthetic values (adapted from SEEA EA Table 7.1)

3.4 Valuation Methods

Monetary valuation enables aggregation of diverse ecosystem services and assets into common units, supporting integration with economic accounts and policy analysis^[41]. The SEEA EA establishes that "monetary valuation of ecosystem services is based on the exchange value concept"^[42], focusing on values that would be reflected in market transactions. Detailed guidance on valuation methods is provided in TG-1.9 Valuation.

Valuation of ecosystem services

Different valuation methods are appropriate for different service types:

Fisheries services -- Market-based valuation using resource rent approaches. The value attributed to the reef ecosystem is the resource rent (market value of catch minus costs of labour, capital, and other inputs)^[43]. This approach isolates the ecosystem contribution from human inputs in the production process. See TG-1.9 Valuation for the methodology for calculating resource rents.

Tourism and recreation -- Several approaches are applicable:

• Market-based methods using tourism expenditure data and producer margins
• Travel cost methods estimating willingness-to-pay from observed travel expenditure
• Contingent valuation or choice experiments eliciting stated preferences
• Simulated exchange values derived from expenditure and producer analysis

For accounting purposes, methods that yield exchange values consistent with SNA principles are preferred^[44]. The SEEA EA notes that distinguishing ecosystem contributions from human inputs in recreation services "helps in identifying the appropriate target of valuation since the final ecosystem services that contribute to marketed products (e.g. crops, timber, fish, tourism services) will only represent a portion of the overall value of the corresponding benefits"^[45].

Coastal protection -- Avoided damage cost methods estimate the value of protection by comparing expected damages with and without the reef^[46]. This approach requires:

• Hazard modelling (storm surge heights, wave energy, flood extent)
• Exposure mapping (coastal assets, infrastructure, populations at risk)
• Vulnerability assessment (damage functions relating hazard to loss)
• Scenario comparison (expected damages with and without reef protection)

Alternative approaches include replacement cost methods (cost of engineered alternatives such as seawalls and breakwaters) and hedonic pricing (property value premiums associated with reef-protected coastlines).

Non-use values -- Non-use values (existence, bequest, option) are not captured in exchange value-based accounting but may be relevant for welfare analysis and policy evaluation. The SEEA EA notes that "the scope of SEEA EA includes those ecosystem services that relate to benefits accruing through use by people either directly or indirectly"^[47], while recognising that additional welfare values exist outside this scope. For coral reefs specifically, non-use values may be substantial given the iconic status of reefs in public awareness and conservation discourse. Where national policy analysis requires estimates of total economic value (including non-use components), compilers may compile complementary welfare valuations using stated preference methods (contingent valuation, choice experiments) alongside the exchange value-based accounts required by the SEEA EA. Such complementary estimates should be clearly distinguished from the exchange values recorded in the core accounts and presented in supplementary tables to avoid double-counting. Guidance on the distinction between exchange values and welfare values is provided in TG-1.9 Valuation.

Valuation of ecosystem assets

The monetary value of coral reef ecosystem assets represents the present value of expected future ecosystem services^[48]. The net present value (NPV) approach applies:

Asset value = Sum of (Expected annual services x Discount factor)

Key considerations for reef asset valuation include:

• Projection of future services -- accounting for expected changes in reef condition and services flows, including climate change scenarios
• Discount rate selection -- social discount rates (typically 3-5%) are used for ecosystem assets rather than private discount rates
• Asset life -- coral reefs are long-lived assets, but climate projections may affect expected service duration
• Treatment of uncertainty -- scenario analysis or Monte Carlo approaches may be used to characterise valuation uncertainty

The SEEA EA describes the discount factor as linking "future resource rents to the present value of the asset"^[49]. Selection of appropriate discount rates is discussed in TG-1.9 Valuation and SEEA CF Annex A5.2.

Restoration cost approaches -- As a complement to NPV-based valuation, restoration cost approaches estimate the cost of returning degraded reefs to reference condition^[50]. This approach is particularly relevant where:

• NPV estimates are unavailable or uncertain
• Policy focus is on restoration and rehabilitation
• Degradation costs are to be estimated independently

The SEEA EA notes that "the restoration cost concept incorporates the monetary inputs (e.g. labour and materials) required to physically restore a degraded or polluted ecosystem to the reference condition (e.g. a natural or sustainable state)"^[51].

Accounting for degradation

Ecosystem degradation represents the decline in condition of an ecosystem asset, reflected in reduced capacity to provide services^[52]. For monetary accounts, degradation is valued as:

Degradation = Asset value (opening) + Enhancements - Asset value (closing) - Revaluations

This approach values degradation as the loss in asset value attributable to physical deterioration rather than price changes. Recording degradation in monetary accounts parallels the treatment of depletion for natural resources (see TG-3.1 Asset Accounts) and depreciation for produced assets.

For coral reefs, degradation may result from:

• Climate-induced bleaching and mortality
• Ocean acidification reducing calcification rates
• Sedimentation and water quality decline
• Destructive fishing practices
• Crown-of-thorns starfish outbreaks
• Disease outbreaks

Recording degradation enables quantification of the environmental costs of these pressures in monetary terms.

3.5 Compilation Procedure

This section outlines the step-by-step procedure for compiling coral reef ecosystem accounts, from data collection through account entry and integration with national reporting frameworks.

Step 1: Data collection and source identification

The compilation process begins with identifying and assembling the data sources required to measure reef extent, condition, and ecosystem service flows. Primary data sources include:

Extent data:

• Satellite imagery (Sentinel-2, Landsat, Planet) for reef extent classification
• Allen Coral Atlas v2.0 for standardised reef mapping
• National benthic habitat mapping programmes
• Historical reef extent records for baseline establishment

Condition data:

• Field survey data from reef monitoring programmes (transects, manta tows, photo quadrats)
• NOAA Coral Reef Watch for thermal stress and bleaching alerts
• GCRMN regional reports for comparative condition benchmarks
• Water quality monitoring data from coastal stations

Services data:

• Fisheries catch statistics from national agencies
• Tourism visitation data from protected area authorities
• Coastal infrastructure inventories for protection service valuation
• Expenditure surveys for recreation service measurement

Data quality should be assessed following TG-0.7 Quality Assurance, with particular attention to temporal consistency, spatial coverage, and measurement uncertainty.

Step 2: Reef extent classification and mapping

Once source data are assembled, reef extent is classified using the IUCN GET M1.3 category, with optional national sub-classification by geomorphology (fringing, barrier, atoll, patch) or depth zone (reef flat, crest, slope). Remote sensing classification is validated using field survey data at representative sites.

Compilers should:

• Define the EAA boundary and reef classification system
• Process satellite imagery to identify reef areas
• Validate classifications using ground-truth surveys
• Document accuracy assessment results and confidence levels
• Generate extent maps and area statistics

The spatial data integration methods described in TG-4.1 Remote Sensing and Geospatial Data provide detailed guidance on classification workflows.

Step 3: Condition variable measurement

For each reef ecosystem asset (or spatially aggregated unit), condition variables from Table 2 are measured using appropriate field methods. The SEEA EA recommends that "for each ecosystem type, at least one variable is selected for each of the six ECT classes"^[53], ensuring comprehensive condition coverage.

Compilers should:

• Select condition variables relevant to national reef contexts
• Establish monitoring protocols aligned with ECT classes
• Measure variable values at opening and closing accounting periods
• Calculate area-weighted averages for ecosystem types
• Document measurement methods and data quality

Step 4: Reference condition establishment and indicator derivation

Reference levels for each condition variable are established based on historical baselines, reference sites, or scientific thresholds. Condition indicators are derived by normalizing observed values against reference levels using the formula:

Indicator = (V - VL) / (VH - VL)

Compilers should:

• Document reference level selection rationale
• Apply consistent reference conditions across reef types
• Calculate indicators for all condition variables
• Aggregate indicators into composite condition indices
• Validate indicator values through expert review

Step 5: Ecosystem service quantification

Ecosystem service flows are quantified in physical units using the service classification in Table 3. For provisioning services, harvest statistics provide direct measurements. For regulating and cultural services, biophysical models and survey methods are applied.

Compilers should:

• Identify beneficiaries of each service flow
• Quantify service flows in appropriate physical units
• Document service measurement methods
• Link service flows to ecosystem extent and condition
• Validate service estimates against administrative data

Step 6: Monetary valuation

Monetary values are estimated for ecosystem services using the methods outlined in Section 3.4 and TG-1.9 Valuation. Ecosystem asset values are calculated as the NPV of expected future service flows.

Compilers should:

• Apply valuation methods appropriate to each service type
• Calculate annual service values in national currency
• Select discount rates for asset NPV calculation
• Estimate asset values at opening and closing periods
• Document valuation assumptions and sensitivity analysis

Step 7: Account integration and balance sheet compilation

The final step integrates physical and monetary accounts into the standard SEEA EA account formats. Extent, condition, services, and monetary asset accounts are compiled following the structures in Sections 3.1-3.4, ensuring accounting identities are satisfied.

Compilers should:

• Populate account tables following SEEA EA templates
• Verify accounting identities (closing = opening + additions - reductions)
• Cross-check consistency between physical and monetary accounts
• Prepare metadata documentation for all accounts
• Integrate reef accounts with national ocean accounts

3.6 Worked Example

This worked example demonstrates the compilation of coral reef ecosystem accounts for a hypothetical atoll system representative of a Pacific small island developing state. The example follows the extent-condition-services-valuation sequence and illustrates the key accounting entries and calculations.

Setting: A national EAA containing an atoll with 4,850 hectares of coral reef ecosystem classified as M1.3 Photic coral reefs. The reef system includes fringing reefs (2,900 ha), patch reefs (1,200 ha), and barrier reef sections (750 ha).

Step 1: Extent account (year t to t+1)

Interpretation: The atoll reef system experienced net loss of 55 ha (1.1%) during the accounting period. Unmanaged reductions from cyclone damage and bleaching-induced mortality exceeded managed and natural additions. The port development represents a permanent managed conversion of reef to artificial structure.

Step 2: Condition account

Condition indicators are derived from field survey data using the reference levels in Table 2:

Composite condition index (equal weights): (0.77 + 0.73 + 0.80 + 0.65) / 4 = 0.74

Interpretation: The atoll reefs are at 74% of reference condition based on the selected variables. Structural complexity (rugosity) is the limiting factor, suggesting historical degradation has reduced three-dimensional reef architecture.

Step 3: Ecosystem services (annual flows)

Interpretation: Coastal protection is the largest service flow by value (53% of total), reflecting the vulnerability of low-lying atoll settlements to storm surge. Tourism is the second-largest service (32%), followed by fisheries (15%). Services not valued in monetary terms (genetic resources, cultural values) remain recorded in physical/qualitative terms.

Step 4: Asset valuation

Applying a 4% social discount rate over a 25-year projection horizon with stable service flows:

Asset value = 15,400,000 x present value annuity factor (4%, 25 years) Asset value = 15,400,000 x 15.62 = 240,550,000 USD

Interpretation: The atoll reef system has an estimated asset value of USD 240.6 million based on the NPV of expected future services. This represents approximately USD 50,000 per hectare, consistent with global reef valuation literature for actively used reef systems in the Indo-Pacific region.

Step 5: Integration with national accounts

The completed reef accounts integrate with national ocean accounts as follows:

Upward connections to policy (TG-1.x and TG-2.x):

• The 1.1% extent decline and 74% condition index feed into TG-2.1 Biophysical Indicators as headline reef health metrics
• The USD 15.4 million annual service flow contributes to TG-2.4 Ecosystem Goods and Services for marine ecosystem service assessment
• The 42 km of protected coastline links to TG-1.3 OA and Marine Spatial Management for MPA effectiveness analysis

Downward connections to data (TG-4.x):

• Sentinel-2 imagery provided the primary data source for extent mapping (see TG-4.1 Remote Sensing)
• Field transect surveys at 35 monitoring sites provided condition variable measurements (see TG-4.2 Survey Methods)
• Integration of extent, condition, and fisheries data within a common spatial framework enabled service flow attribution

Cross-account consistency:

• Reef fisheries provisioning of 750 tonnes corresponds to harvest recorded in TG-6.7 Fisheries Accounting
• Coastal protection service beneficiaries correspond to settlement exposure mapping
• Monetary service flows aggregate to asset value through NPV calculation

This worked example illustrates the full accounting sequence. Actual compilations will require country-specific data, locally appropriate reference levels, and detailed valuation studies for each service type. The example values are illustrative and should not be used as benchmarks for specific national contexts.

4. Supplementary Materials

4.1 Data Sources

Key data sources for coral reef ecosystem accounting include:

• Allen Coral Atlas (allencoralatlas.org) -- global reef extent and geomorphic mapping at approximately 5-metre resolution derived from Planet satellite imagery; version 2.0 released 2022
• Global Coral Reef Monitoring Network (GCRMN) -- standardised reef condition monitoring protocols and regional reports; sixth global status report published 2021
• NOAA Coral Reef Watch (coralreefwatch.noaa.gov) -- satellite-derived bleaching alerts, sea surface temperature, and degree heating weeks; updated daily
• Reef Check -- volunteer reef monitoring data using standardised protocols
• World Resources Institute Reefs at Risk -- global threat and value assessments
• National reef monitoring programmes -- country-specific monitoring systems (e.g., Australian Institute of Marine Science Long-Term Monitoring Program)
• FAO fisheries statistics -- reef-associated catch data

5. Acknowledgements

Authors: [Names and affiliations]

Reviewers: [Names and affiliations]

6. References

See the SEEA Ecosystem Accounting framework (2021) and related technical guidance for detailed methodological specifications. Key references include:

• United Nations and others (2021). System of Environmental-Economic Accounting--Ecosystem Accounting (SEEA EA).
• NCAVES and MAIA (2022). Monetary valuation of ecosystem services and ecosystem assets for ecosystem accounting: Interim Version 1st edition.
• Keith, D.A. and others (2020). IUCN Global Ecosystem Typology 2.0: Descriptive profiles for biomes and ecosystem functional groups.
• Sheppard, C., Davy, S., Pilling, G. and Graham, N. (2018). The Biology of Coral Reefs. Second Edition. Oxford University Press.
• Ferrario, F., Beck, M.W., Storlazzi, C.D., Micheli, F., Shepard, C.C. and Airoldi, L. (2014). The effectiveness of coral reefs for coastal hazard risk reduction and adaptation. Nature Communications, 5, 3794.
• GCRMN (2021). Status of Coral Reefs of the World: 2020. Global Coral Reef Monitoring Network/International Coral Reef Initiative.
• Allen Coral Atlas (2022). Allen Coral Atlas v2.0. Vulcan Inc./Arizona State University. Available at allencoralatlas.org.