TED Case Studies

Coral Trade



          CASE NUMBER:          18 
          CASE MNEMONIC:      CORAL
          CASE NAME:          Coral Trade

A.        IDENTIFICATION

1.        The Issue

     "Among the world's most beautiful habitats" are the coral
reefs which are also "among the most threatened ecosystems on the
planet."  Coral, a very sensitive organism, establishes itself in
clear warm waters where there are not enough nutrients to sustain
other marine life.  The coral animal does this by "harnessing"
microscopic algae which provide the corals with food and oxygen
while the corals give the algae carbon dioxide and other necessary
nutrients.  As a coral reef emerges, it provides a home for a
variety of organisms, all dependent on each other for life.  The
coral itself is very sensitive to water purity and temperature
changes; therefore, if the coral is subjected to drastic changes in
these indicators, it may die.  Coral is now being removed from the
ocean for a variety of reasons and concern about trade in coral has
prompted action.  

2.        Description

     Coral has many uses ranging from medicinal purposes to food
supplies to protecting coastlines from storms and erosion. 
However, it has increasingly become exploited, in products such as
filler for concrete, gift shop souvenirs, and decorations for
aquariums.  The coral reef has become an endangered habitat. 
"Among the most biologically diverse ecosystems on Earth," the
coral reefs of ninety-three countries have been subject to damage
and destruction by human beings.  This lowers the benefits that
might be received from a more careful monitoring and harvesting of
coral.  Although covering only 0.17 percent of the ocean floor,
coral provides a home for one quarter of all marine species.  Known
as the "tropical rain forests of the ocean," coral reefs are the
home for "one-tenth of all fish caught for human consumption."

     Coral reef species also provide great contributions to the
world of science and medicine.  Kainic Acid is produced by certain
reef organisms and can be used "as a diagnostic chemical to
investigate Huntington's chorea," a nervous system disease.  Other
chemicals produced by reef species are used in cancer and AIDS
research.  "Corals themselves produce a natural sunscreen" soon
to be marketed, and "their porous limestone skeletons are promising
for bone grafts in humans."  Coral reefs serve to protect 109
countries from storm surges and coastal erosion.

     Humans in some manner have destroyed between five and ten
percent of the world's coral reefs and will succeed in destroying
forty to sixty percent of them in the next sixty years unless
trends change.  This loss comes from a variety of sources,
including:
     (1) dense coastal populations which increase the amount
     of sewage and waste production that affects the purity of
     the water;
     (2) heavy coastal development, logging, farming, mining,
     and dredging which increase the amounts of silt in the
     water that block out light necessary for algae
     photosynthesis and that may smother the coral; and 
     (3) over-exploitation by fishermen looking for new
     sources of income which result in the decimation of the
     reef community.  The coral reef is also vulnerable to
     global warming and the increasing intensity of the sun's
     ultraviolet rays due to ozone depletion.  

     A further source of coral degradation is the tourist industry. 
Ironically, as tourism relies on the coral reefs to draw its
customers, it also contributes to the destruction of the reefs
because of many tourist resorts and the carelessness of the
tourists themselves.  Many people attempting to capture the beauty
of the coral reefs walk on them, stir up sediments around them, or
break off pieces of them for souvenirs.  Also, cruise-liners and
tourist boats often drop anchor over the reefs causing tremendous
amounts of damage that takes years to repair.

     However, two means of degradation are intentional.  They
involve the mining of reefs for building materials and the
exploitation of the coral reefs and their species in order to
satisfy the growing demand for decorative products and salt-water,
home aquariums.  Both Sri Lanka and India as well as the
Philippines and Indonesia mine coral to produce cement for domestic
purposes.  This has resulted in the complete destruction of certain
reefs.  Worldwide, over 1.5 million kilograms of coral are
harvested each year, and the United States "accounts for more than
a third of the world demand for [coral and tropical fish]."  The
coral industry is big business.  For example, "871 species [of
living coral] were imported to the United States in 1984, about
250,000 in 1991."

     Methods used to obtain coral and its related species are also
environmentally atrocious.  One chemical used in the capture of
certain reef species is sodium cyanide.  This not only causes the
fish to become weakened and sickly, but it also kills the coral. 
For the past twenty years, more than one million kilograms (1100
tons) of sodium cyanide has been used in the reefs.  This amount is
"enough to kill five hundred million people." 

     There have been some efforts by many of the countries involved
to stop the degradation and begin to conserve their precious
resource; however, only a limited number of programs currently
exist.  Some believes the solution is in controlling tourism to a
certain degree and putting some of the money tourism makes back
into the conservation programs.

   The Regional Seas Program was set up by the United Nations
Environment Programme (UNEP) in 1974 in order to enable countries
to "establish goals and negotiate legally binding treaties to
manage coastal waters."  Although ten regional programs now
exist, they are limited because of lack of funding.  In 1985,
"stony corals were listed in Appendix II of CITES (the Convention
on International Trade in Endangered Species), so countries could
begin tracking the trade" (see SWIFT, ELEPHANT, and RHINO cases
relating to CITES).  There are currently trade restrictions on
some corals.  "Seven reefs are now protected as World Heritage
Sites," and the "World Bank plans to put 15-20% of its $3-billion
biodiversity budget into marine and coastal habitats."  Another
proposal has suggested that the world's reefs be mapped using
satellite and aerial surveillance equipment to increase the
information on coral reefs so that countries can better monitor
them.

     In 1975 Australia created the Great Barrier Reef Park to
regulate and monitor the use of the reef so that it remains
healthy.  The reef was divided up into different sections: one for
scientific research, one for tourists, and one each for commercial
fishing and harvesting.  These divisions enabled Australia's
government to keep tabs on how different activities affect the
reef.  The Sudan has "prohibited the export of marine ornamentals." 
Sri Lanka in 1991 "halted trade in coral but not in tropical fish." 
Kenya, New Caledonia, and the Maldives have "licensing and
regulatory systems," and the Philippines and Indonesia have some
restrictions that are not obeyed.  Germany "has banned the sale of
certain corals."  China is also taking action against the
collection and damaging of coral by declaring a National Coral Reef
Reserve in Hainan Island.

     The United States itself has engaged in a variety of
protective measures.  It has acted to preserve its coral reefs by
declaring certain areas as sanctuaries which eliminates oil and gas
activities permanently from these areas.  A House of
Representatives Bill has declared that if reef activities are not
controlled, both the reef and the $50 million tourist business in
Florida will die.  In June 1990, President George Bush declared a
ten-year ban on offshore drilling near the Florida Keys.  In 1989,
Florida shut down its coral industry to protect its reefs.  It
has taken protectionist measures including "licens[ing]
collectors..., in some cases set[ting] limits on catches," and
ticketing tourists who engage in activities abusive to sanctuary
corals including "anchoring in coral, spear fishing, and hanging on
to coral while scuba diving."  In 1990, Hawaii "banned the taking
and selling of stony coral and in 1991, of any 'rock with marine
life attached.'"  Guam outlawed "the import and collection of all
stony coral, living or dead," and Puerto Rico "classes live rock as
protected earth crust."  Although the United States "banned the
import of coral from the Philippines, where export is legal," it
continues to receive coral from Indonesia, Singapore and other
places.

3.        Related Cases

     BAUXITE case
     SEAHORSE case
     BARRIER case

     Keyword Clusters         

     (1): SIC                      = CRAFT
     (2): Bio-geography            = OCEAN
     (3): Environmental Problem    = HABITat loss

4.        Draft Author:  Nicole E. Lewis

B.        LEGAL Clusters

5.        Discourse and Status:  AGReement and COMPlete

     A variety of nations have attempted to regulate the coral
industry and protect the reefs.  However, there is no all-inclusive
international agreement concerning coral reefs.  Although stony
corals were added to Appendix II of the CITES Agreement in 1985,
this action simply allowed countries to follow the trade of the
items.  In that respect, there is agreement that corals are a
species in need of monitoring; however, there is no universal
agreement on what type and how much regulation should be
administered to the coral reefs.  For now, regulation and trade
control is left up to individual states.

6.        Forum and Scope:  CITES and MULTIlateral

     One hundred and nine nations are protected from detrimental
storms and coastal erosion by coral reefs.  Ninety-three countries
have coral reefs which have been damaged and/or destroyed by some
form of human action. 

7.        Decision Breadth:  117 (CITES signatories)

     Some multi-national organizations are following the coral reef
issue such as the members of the CITES and the Regional Seas
Program, the World Conservation Union (involved in studies of the
issue), and the United Nations Environment Programme (UNEP). 
However, the majority of action is being taken unilaterally by
governments wishing to regulate their own resources.  These
include, but are not limited to, the governments of Australia,
China, Germany, the Sudan, Sri Lanka, Kenya, New Caledonia, the
Maldives, the Philippines, Indonesia, and the United States
(including Guam and Puerto Rico).  The U.S. Minerals Management
Service (MMS) and the National Oceanic and Atmospheric
Administration (NOAA) are two U.S. government agencies involved in
the coral issue.

8.        Legal Standing:  TREATY

     A variety of nations have included regulatory legislation
concerning the coral reef.  For example, the United States Code of
Federal Regulations for Virgin Islands National Park states:
     No person shall cut, carve, injure, mutilate, remove,
     displace, or break off any underwater growth or
     formation.  Nor shall any person dig in the bottom, or in
     any other way injure or impair the natural beauty of the
     underwater scene.  No rope, wire, or other
     contrivance...shall be attached to any coral, rock, or
     other underwater formation....No watchcraft shall be
     operated in such a manner, nor shall anchors or any other
     mooring device be cast or dragged or placed, so as to
     strike or otherwise cause damage to any underwater
     features.

C.        GEOGRAPHIC Clusters

9.        Geographic Locations

     a.   Geographic Domain : GLOBAL
     b.   Geographic Site   : GLOBAL
     c.   Geographic Impact : GLOBAL

     Badly damaged areas include Japan, Taiwan, the Philippines,
Indonesia, Singapore, Sri Lanka, India, Kenya, Tanzania,
Mozambique, Madagascar, the Dominican Republic, Haiti, Cuba,
Jamaica, Trinidad, Tobago, and Florida in the United States. 

10.       Sub-National Factors:  NO

     Florida, Hawaii, Guam, and Puerto Rico all have their own
restrictions regarding the harvesting and sale of coral.  However,
most agreement is at the national and international levels when the
issue of coral arises.

11.       Type of Habitat:  OCEAN

D.        TRADE Clusters

12.       Type of Measure:  Import Ban [IMBAN]

     There are actually a variety of measures used to protect
coral.
     1.  Import Ban (the United States bans imports of coral
     from the Philippines) 
      2.  Export Ban (the Philippines bans coral exports) 
      3.  Some collection quotas (Florida) 
      4.  Licensing (Florida) 
      5.  Regulatory Standards (Kenya, New Caledonia) 
      6.  Bans on the sale of certain corals (Germany) 

13.       Direct vs. Indirect Impacts:  DIRect

14.       Relation of Measure to Environmental Impact

     a.  Directly Related          : YES  CORAL
     b.  Indirectly Related        : YES  FISH
     c.  Not Related               : NO
     d.  Process Related           : YES  HABITat loss

     Coral legislation also covers certain species of fish which
are unique to the coral reef eco-system, because of over-
exploitation of those fishes. Legislation also concerns the
capture, export, and sale of certain reef fish.  In capturing
certain fish, the chemical sodium cyanide is used to stun the fish
so that they may be collected more easily.  In the process, much of
the coral is damaged or destroyed.  There are regulations
concerning capture methods and the use of such chemicals.

15.       Trade Product Identification:  CORAL

     The trade product is "raw" coral for aquariums, exotic fish
found in the reefs, gift-shop souvenir corals, and cement made from
the limestone.  The products also include coral and animals that
live in and around the reefs, as well as other uses such as coral
reef crafts, lime extraction (useful for making concrete), and fish
tank decorations.  The leading coral exporters are the Philippines,
Sri Lanka, the Caribbean nations, the Red Sea area, East Africa,
Indonesia, the South Pacific, Singapore.  The leading importers are
the United States and Canada.

16.       Economic Data

     The aquarium trade is big business within the United States. 
The United States is "the world's largest consumer of tropical
fish."  There are over 10 million aquarium hobbyists in the U.S.
involving between two and three billion fish.  Worldwide, $4
billion is spent on this hobby, with the United States accounting
for about $1.6 billion.  The new trend is the home mini-reef which
takes between fifteen and several hundred gallons of water; its
cost ranges from $1,000 to tens of thousands of dollars.  The
foundation of such a mini-reef is "live rock," chunks of dead coral
and non-coral limestone that serve as the balance of the captive
ecosystem.  Marine aquariums constitute 15 percent of American
aquarium sales.  North Americans spend $240 million every year on
equipment and animals.

     Florida is a good example of the vastness of the coral
business.  One establishment, Exotic Aquaria of Miami, needs 50
tons of live rock every year to sustain its business.  Florida
alone has 290 licensed coral collectors, 20 percent of which use
coral harvesting as their "primary source of income."  Wholesale
prices of the rock are above $2 million, with the retail price
running at more than five times that amount."  Coral harvesting
is a very lucrative business, especially when there is such a great
demand for the product by countries such as the United States. 
However, if the collectors are not careful, there will be no more
coral to harvest.

17.       Impact of Measure on Trade Competitiveness:  BAN

     An increasing number of coral reefs are being declared
sanctuaries which protects them from any outside exploitation by
humans other than through indirect pollution effects.  The cost of
certain collection regulations applies also to species around the
coral.  As the restrictions on coral and reef species collection
grow, the price of these items will probably also increase.

18.       Industry Sector:  CRAFT

     While fish keeping is a hobby belonging to the arts and crafts
industry, there are several ways coral is used.

19.       Exporter and Importer:  MANY and USA


E.        ENVIRONMENT Clusters

20.       Environmental Problem Type:  HABITat loss

     The coral reef problem has implications for many other related
environmental problems.  The most obvious ones are trying to
preserve the world's most important and sensitive resources (the
coral reef) and attempting to maintain bio-diversity by regulating
the ecosystem.  Further, there are implications for pollution
control and slowing the progress of other global problems such as
global warming and ozone loss.  These three variables affect the
coral reef in tremendous ways and may harm the reef habitat if they
are not controlled.

21.       Name, Type, and Diversity of Species 

          Name:          Coral
          Type:          Animal/Radiata
          Diversity:     NA

22.       Impact and Effect:  HIGH and PRODuct 

     The effects of pollution on the coral reefs are constantly
being studied.  Coral is not very sensitive to water purity and
temperature; therefore, as pollution increases, the coral reefs are
at a greater risk of being damaged or destroyed.  Also, if
collection techniques and policies are not regulated or stopped
completely, the species among the coral reefs and the reefs
themselves will be depleted before they have a chance to regenerate
themselves.

23.       Urgency and Lifetime:  MEDium and 100s of years

     Much of the coral reefs could be destroyed within the next 50
years.  Many coral reefs are hundreds of years old and can be
permanently decimated within a matter of minutes.

24.       Substitutes:  SYNTHetic products 

     Large commercial organizations which use aquariums as
exhibits, for example, Epcot Center, use artificial substitutes for
their coral reefs.  There are also attempts to establish an
aquaculture where certain demanded species can be raised in
captivity.  However, it has not yet been possible to get a stony
coral to spawn or to establish a coral colony in captivity.  Also,
it takes an extremely long time for a coral colony to form.

VI.       OTHER Factors

25.       Culture:  YES

     Keeping aquariums is thought by Chinese to lead to good health
and therefore are kept in many homes.  For Americans and Canadians
it is a hobby and is said to provides a calming effect.  Perhaps it
is reminiscent of sitting by an ocean. 

26.       Trans-Border:  NO

27.       Rights:  NO

28.       Relevant Literature

Allen, William H.  "Increased Dangers to Caribbean Marine 
     Ecosystems."  Bioscience 42/5 (May 1992).
Baquero, Jaime.  "There's a Tankful of Environmental Trouble in 
     Aquariums."  The Ottawa Citizen (December 15, 1992).
Brower, Kenneth.  "State of the Reef."  Audubon 91
     (March 1989).
"China Moves to Protect Coral Reefs in South China Sea."  Agence
     France Presse (August 20, 1992).
Derr, Mark.  "Raiders of the Reef."  Audubon (March/April,
     1992).
"An Ecology Agency Is Proposed."  The New York Times
     (September 21, 1980).
"Fishy Trade for Home Aquariums Destroys Coral Reefs."  New 
     Scientist 108 (19/26 December 1985).
Gittings, Dr. Steve.  "Historic Data on Gulf of Mexico Shows 
     Compatibility with Drilling, Production."  Offshore (May
     1992).
International Environment Reporter Current Report 11/7  
     (July 13, 1989).
Jackson, Derrick Z.  "Trouble Comes to a Deep-Water Paradise."
     The Boston Globe (November 4, 1990).
Kanamine, Linda.  "Some Fear Ecosystems in Jeopardy."  USA Today 
     (June 12, 1992).
Mathews, Jay.  "Gulf Oil Spills Defy Easy Cleanup, Experts 
     Conclude."  The Washington Post (March 9, 1991).
Reed, Stanley.  "A Coral Reef in Your Living Room."  Business
     Week (May 7, 1990).
"Sanctuarial Movement Growing in U.S. Waters."  Offshore  
     (September 1991).
Schmich, Mary T.  "Coral Reef War Pits Nature vs. Tourists."  
     Chicago Tribune (July 22, 1990).
Smucker, Philip.  "Thailand: Sea Gypsies Survive on Fringes of 
     Tourist Industry."  Inter Press Service (April 25, 1991).
Tsuruoka, Doug.  "Vanishing Coral Reefs."  Far Eastern Economic 
     Review 156/1 (January 7, 1993).
"U.S. Justified in Attaching Environmental Strings to Foreign 
     Aid," Kasten Says."  PR Newswire (May 12, 1989).
Weber, Peter K.  "Saving the Coral Reefs."  The Futurist 
     27/4 (July 1993).
Worldwatch Institute.  State of the World, 1993.  New York:  W.W.
     Norton and Company, Inc., 1993.

                           References



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