The motivation for this potential changein policy arises from the recognition that theeconomic benefits of mangroves to local com-munities may be substantial and could pos-sibly even outweigh the returns to intensiveshrimp farming that lead to mangrove con-version. However,little is known about theeconomic value of local direct use of man-grove resources in southern Thailand,andthe intangible ecological benefits of man-groves to the local communities in terms ofhabitat–fishery linkages and coastline protec-tion have never before been evaluated. With-out such an assessment,it is not possible tocompare the economic benefits of mangrovesto local communities with the returns toshrimp aquaculture or to determine whetherthere are sufficient benefits from conservingthe mangrove systems to provide the incen-tives for local communities to participate intheir protection.To address these key policy issues,thisarticle assesses the benefits of mangrovescompared to the net returns from convert-ing the areas into shrimp farms in a casestudy area of southern Thailand. The analysiswas conducted as part of a research projectinto land-use conflict and policy issues arisingfrom mangrove conversion conducted by oneof the authors (Sathirathai,1998). The areaselected for the study is Ban Tha Po Moo 2,in Tha Thong subdistrict,Kanjanadit Districtof Surat Thani Province,in which 400 haof mangroves are utilized by the local com-munity,Tha Po Village. The villagers havealso organized their own means of protect-ing some of this mangrove forest area fromoutside encroachment,including from con-version by shrimp farmers.Local direct uses derived from mangroveareas are valued by determining the netincome generated from harvesting timber,fuel wood,and other wood products,as wellas nonwood resources,such as birds andcrabs. In addition,two important ecologicalservices are also assessed: the role of man-groves in serving as breeding grounds andnursery habitats for offshore fisheries and inprotecting the coastline from erosion. Otherpossible ecological functions,including car-bon sequestration and the control of flooding,are not included in the analysis