Economic Valuation of Kol Wetlands Binilkumar A.S. A. Ramanathan Indian Institute of Technology Bombay, Mumbai, India A Conference on Ecosystem Services (ACES) December 8-11, 2008 Naples, FL
Economic Valuation of Kol Wetlands
Binilkumar A.S.A. Ramanathan
Indian Institute of Technology Bombay,
Mumbai, India
A Conference on Ecosystem Services (ACES)
December 8-11, 2008
Naples, FL
2
Introduction
Wetlands – Most important ecosystems
Diverse goods and services
Negligence- Undervaluation-Degradation
Need for non-market valuation
Contingent Valuation Method
3
ObjectivesTo study the socio-economic dimensions of the stakeholders of the Kol wetland
To study the relationship between the socio-economic variables with the perception of stakeholders over the improved conservation of Kol wetland
To find out the determinants of willingness of pay of the stakeholders for the improved conservation of Kol wetland
To estimate the total economic value of Kol wetland in a contingent valuation framework.
4
Contingent Valuation Method
Most popular stated preference method
WTP/WTA : non-use/existence values
Gained popularity and legal validity after NOAA Panel report 1993
Open, single-bounded, Double-bounded, Double-bounded with follow up question
5
Focus Group Interviews
3 different areas and stakeholder groups
Major issues discussedDependencies/Benefits
Constraints/Conflicts
Perception on improvement
Willingness to pay
6
Study Area
Part of Largest Ramsar Site in India
Numerous Benefits(Paddy, Fish, Birds, Recreation, etc.)
Facing high rate of degradation (reclamation, sand mining, clay mining, unsustainable agri. practices)
7
Sample of the study
100 urban households – 50 divisions of Thrissur City Corporation
Stratified random sampling
Period of Survey: March to July 2007
8
Results and Discussion: Socio-economics
68.6%
28.9%2.6%
Category wise Classification of the Households
General CategoryOther Backward CommunityScheduled Castes
Majority of Population Belong to General category
0.0
20.0
40.0
60.0
80.0
Below 3 3-6 6-9 Above 9
25.4%
70.9%
3.1%
0.6%
Num
bero
fHou
seho
lds
Family Size(in Nos)
Distribution of Househods Based on the Family Size
Family Size varied between 1 and 14 with a mean of 4.5 and SD of 1.6
9
Results and Discussion: Socio-economics
100 % Literacy found among the decision maker of the households
13.4%
40.6%
10.3%6.0%
23.1%6.6%
Education wise classification of the households
Primary SecondaryHigher Secondary Technical DiplomaBachelors Post Graduation
14.0%
18.9%28.3%
2.3%1.4%
26.0%
5.1% 4.0%Occupation wise classification of the Hosueholds
Govt. Employee Private Employee PensionerFarmer Manual Labourer BusinessHousewife Others (incl Gulf)
Largest component in the Occupation pattern among the decision makers of the household found to be Pensionersfollowed by business
10
Results and Discussion: Socio-economics
Income varies between INR 14400-600000 with a mean of INR 139,608 and SD of INR 106,545. Majority of the households fall under the income category of INR 50000-10000
20.9%
25.4%19.7%
10.0%
10.9%6.3%
6.9%Income wise distribution of households (in INR)
Below 50000 50000-100000 10000-150000150000-200000 200000-250000 25000-300000Above 300000
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Results and Discussion: Socio-economics
Scenic Beauty
1%
Water9%
Paddy Fields32%
All 58%
Selected features of Kol wetland by the Households Majority identified all four
attributes to be important and need to be conserved
High Interest
60%Moderate Interest
35%
No Interest5%
Interest-wise classification of the Households
95 per cent showed interest in the improved conservation of Kol wetland
12
Results and Discussion: Socio-economics
11.43
25.2435.71
17.626.67
3.33
1.61
19.35
29.84
25.8119.35
4.03
0.006.25
31.2531.25 25.00 6.25
0%10%20%30%40%50%60%70%80%90%
100%
Below 1 1-5 5-10 10-15 15-20 Above 20
Perc
enta
ge
Distance from Kol Wetland (in Kms)
Distance wise classification of the perception on wetland Improvement
No Interest Moderate Inerest High Interest
The Distance found to be an influencing factor in formulating perceptions among the stakeholders.
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Results and Discussion: Socio-economicsAge-wise classification of perception of stakeholders on Wetland Improvement
*- Percentage of the horizontal total;**-Percentage of the vertical total
Interest for Wetland
ImprovementAge Group
Highly Interested
ModeratelyInterested
Not Interested Total
Below 40 Yrs 3(100.00)*(4.29)**
0(0.00)(0.00)
0(0.00)(0.00)
3(100.00)(3.00)
40-50 28(71.79)(40.00)
11 (28.21)(37.93)
0(0.00)(0.00)
39(100.00)(39.00)
50-60 23(74.19)(32.86)
8(25.81)(27.59)
0(0.00)(0.00)
31(100.00)(31.00)
60-70 10(52.63)(14.29)
9(47.37)(31.03)
0(0.00)(0.00)
19(100.00)(19.00)
70 and above 6(75.00)(8.57)
1 (12.50)(3.45)
1(12.50)(100.00)
8(100.00)(8.00)
Total 70(70.00)(100.00)
29(29.00)(100.00)
1(1.00)(100.00)
100(100.00)(100.00)
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Results and Discussion: Socio-economicsEducation-wise classification of perception of stakeholders on Wetland
Improvement
*- Percentage of the horizontal total;**-Percentage of the vertical total
Interest for Wetland
ImprovementEducation
More Interested
ModeratelyInterested Not Interested Total
Primary 3(50.00)*(4.29)**
2(33.33)(6.90)
1(16.67)(10.00)
6(100.00)(6.00)
Secondary 24(66.67)(34.29)
12(33.33)(41.38)
0(0.00)(0.00)
36(100.00)(36.00)
Higher Secondary 8(53.33)(11.43)
7(46.67)(24.14)
0(0.00)(0.00)
15(100.00)(15.00)
Technical Diploma 7(87.50)(10.00)
1(12.50)(3.45)
0(0.00)(0.00)
8(100.00)(8.00)
Bachelors 19(82.61)(27.14)
4(17.39)(13.79)
0(0.00)(0.00)
23(100.00)(23.00)
Post Graduation 9(75.00)(12.86)
3(25.00)(10.34)
0(0.00)(0.00)
12(100.00)(12.00)
Total 70(70.00)(100.00)
29(29.00)(100.00)
1(1.00)(100.00)
100(100.00)(100.00)
15
Results and Discussion: Socio-economicsIncome-wise classification of perception of stakeholders on Wetland Improvement
*- Percentage of the horizontal total;**-Percentage of the vertical total
Interest for Wetland Improvement
Annual Income (in Rs)
More Interested ModeratelyInterested Not Interested Total
Below 50,000 7(63.64)*(10.00)**
4(36.36)(13.79)
0(0.00)(0.00)
11(100.00)(11.00)
50,000-100,000 9(47.37)(12.86)
9(47.37)(31.03)
1(5.26)(100.00)
19(100.00)(19.00)
100,000-150,000 16(69.57)(22.86)
7(30.43)(24.14)
0(0.00)(0.00)
23(100.00)(23.00)
150,000-200,000 9(81.82)(12.86)
2(18.18)(6.90)
0(0.00)(0.00)
11(100.00)(11.00)
200,000-250,000 11(68.75)(15.71)
5(31.25)(17.24)
0(0.00)(0.00)
16(100.00)(16.00)
250,000-300,000 6(100.00)(8.57)
0(0.00)(0.00)
0(0.00)(0.00)
6(100.00)(6.00)
Above 300,000 12(85.71)(17.14)
2(14.29)(6.90)
0(0.00)(0.00)
14(100.00)(14.00)
Total 70(70.00)(100.00)
29(29.00)(100.00)
1(1.00)(100.00)
100(100.00)(100.00)
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Results and Discussion-CVM
The Elicitation format of WTP Question
XINR 100
2XINR 200
If Yes
If No
½ XINR 50
If Yes/No
If Yes/No
Maximum WTP
Source : adapted from Markandya et.al, 2002.
Double-bounded Dichotomous CVM model with a follow up Question of Maximum WTP
17
97%3%
The proportion of the stakeholders' on the basis of their willingness to pay
Willing to Pay Not Willing to Pay
0
20
40
60
zero 1-100100-200200-300300-500Above 500
3 622
46
22
1
Perc
enta
ge o
f Hou
seho
lds
Maximum WTP (in INR)
Classification of the Household Based on the maximum WTP
Majority of the household expressed their WTP for the improved conservation of Kol Wetland
WTP of majority of household ranged between INR 200-300
Results and Discussion-CVM
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Results and Discussion: CVM
0 5 10 15 20 25
Below 50
50-100
100-150
150-200
200-250
250-300
Above 300
1
1
0
1
0
0
0
2
3
1
0
0
0
0
6
5
8
0
2
0
1
2
8
11
7
12
4
2
0
2
3
3
2
7
5
0
0
0
0
0
0
1
Percentage of Households
Annu
al In
come
(in
INR
('000
))
Income-wise classification of the Maximum WTP
0 1-100 100-200 200-300 300-500 Above 500
Positive relationship of WTP with Income
19
Determinants of WTP: A Regression Analysis
The linear forms of the equations are
MAXWTP= α+ β1 AGE + β2 EDULEVEL + β3 FAMSIZE + β4 ANNINCOME + β5 DISTKOL + β6 CONSINTEREST + β7 LOGLAND
MAXWTP= α+ β1 AGE + β2 EDULEVEL + β3 FAMSIZE + β4 LOGINCOME + β5 DISTKOL + β6 CONSINTEREST + β7 LOGLAND
Results and Discussion: CVM
20
Determinants of WTP: A Regression AnalysisSl No Variable Definition Exp. Sign
1 AGE The age of the decision maker of the household
+ve
2 EDULEVEL Education Level of the decision maker +ve
3 FAMSIZE Family size of the household +ve
4 ANNINCOME Annual income of the household +ve
5 DISTKOL Distance of the households from Kol Wetland
-ve
6 CONSINTEREST Conservation interest of the household(1- Not Interested, 2-Moderately interested, 3- Highly Interested
+ve
7 LOGLAND Logarithm of the total land holding of the household
-ve
8 LOGINCOME Logarithm of Annual income of the household
+ve
Results and Discussion: CVM
21
Determinants of WTP: Descriptive AnalysisSl No Variable Mean SD
1 AGE 53.44 9.84
2 EDULEVEL 4.42 1.59
3 FAMSIZE 4.5 1.2
4 ANNINCOME 171300 105772
5 DISTKOL 7.96 5.57
6 CONSINTEREST 1.31 0.49
7 LOGLAND 2.96 0.89
8 LOGINCOME 11.83 0.71
Results and Discussion: CVM
22
Determinants of WTP: A Regression Analysis
Model 1R2- .523 Adj R2-.487 F-14.270*
Variable Coefficients T value StandardizedCoefficients
Constant -311.596 -2.194**
AGE 2.786 1.999** .161
EDULEVEL 13.452 1.312 .125
FAMSIZE 13.693 1.232 .092
ANNINCOME .001 5.078* .470
DISTKOL -5.006 -2.088** -.163
CONSINTEREST 112.816 4.156* .321
LOGLAND -37.978 -2.553** -.197
Results and Discussion: CVM
23
Determinants of WTP: A Regression Analysis
Model 2R2- .503 Adj R2-.465 F-13.145*
Variable Coefficients t StandardizedCoefficients
Constant -1497.560 -5.530*
AGE 3.304 2.315** .191EDULEVEL 15.376 1.464 .143FAMSIZE 9.946 .857 .067
LOGINCOME 109.514 4.579* .454DISTKOL -4.535 -1.853*** -.148
CONSINTEREST 116.819 4.224* -.333
LOGLAND -42.598 -2.763* .221
Results and Discussion: CVM
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Total Willingness to Pay
Mean WTP : INR 239.5 Median WTP = INR 200
SD WTP: INR 170.3
Total Population of Thrissur Municipal Corporation :317,526
Average Family size :4.5
Total Household: Population/Family size =317,526/4.5=70,563
Total WTP/Annum =Median WTP*Total HHs= 200*70,563
= INR 14,112,600/ Annum
Results and Discussion: CVM
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Summary and Conclusions
The assessment of the interest of the stakeholders for the improved conservation of the wetland has shown that more than 95 per cent of the urban stakeholders are interested in improved conservation and management of their nearby wetland (Kol Wetland). It may be noted that 60 per cent of the stake holders are very highly interested.
The stakeholders are also willing to contribute a part of their income annually for the environmental, and thereby, the social cause of preservation of the wetland
26
Summary and ConclusionsThe socio economic features of the households , in general, influence the value perception of the stakeholders :
Annual income is found to have more significant and positive relationship with the maximum WTP
As expected the maximum WTP found to have an inverse relationship with the distance of the household from the wetland.
27
Summary and ConclusionsUsing the Contingent Valuation Method ,it is found
that the maximum WTP of the households varied
between 0 and INR 1,000 per annum with a mean of
INR 239.5 and a standard deviation of INR 170.3. The
median WTP was found to be INR 200. The majority
of the households is willing to contribute an amount
between INR 200 and 300. The total willingness to pay
for the improved conservation is estimated to be INR
14,112,600 per annum.
• Implications of the findings which are, however, theoretical, in nature:
• (i) Insignificance of educational level• (ii) Farmers’ perception & role• [ Based on these points, Government’s &
NGOs’ roles become important]
• (iii) Role of income, urbanization & Age• [Based on the point (iii), the theory of
environmental development in developing countries like India gets propounded} 28
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Thank you