Term paper on

ECONOMIC EVALUATION OF WETLANDS OF DHAKA CITY

C 314 Environmental Economics

Submitted to:

Abdul Jalil Choudhury Associate professor, Bangladesh Institute of Bank Management Adjunct faculty, Department of Development studies, University of Dhaka

Submitted by:

Manik Kumar Saha MDS, 9th batch,

Submission date: December 27, 2012

Department of Development studies

University of Dhaka

Economic evaluation of wetlands of Dhaka city

1. INTRODUCTION
Dhaka, the capital of Bangladesh has been developed on the bank of the Buriganga as a commercial center about 400 years ago. Dhaka is one of that city which have rivers on every side. Apart from this river there are so many wetlands which played an important role by acting as a water retention pond during heavy rainfall. Wetlands of Dhaka have long been facing serious degradation and loss, due to many natural and anthropogenic factors. Besides natural causes, factors like overuse of resources, lack of property rights, human encroachment, conversion to other uses and absence of effective enforcement of laws are some of the most important factors for the decline in wetland biodiversity of the country (Islam, Irfanullah 2005). But these wetlands have great importance in natural ecosystem which we ignore most of the time. The study will mainly focus on placing the significance of wetlands of Dhaka city both by estimating its economic value and by establishing the connection in natural order.

2. OBJECTIVES OF THE STUDY

The main objectives of the study is 1. To find the inter linkages between environmental and economic function of a wetland ecosystem 2. To find out the economic value of a particular wetland 3. To examine the existing policy guideline for the protection of existing wetland of Dhaka city.

3. RATIONAL OF THE STUDY

Wetlands are the resources that interface between land & water systems. They are amongst the most productive & biologically rich ecosystems and are also amongst the most endangered. Wetlands include lakes, ponds, mangroves, swamps, marshes and coral reefs. Wetlands are complex ecosystems that are responsible for providing a wide array of unmeasured goods and services that benefit people. The livelihoods of millions of people in Bangladesh are also dependent on these ecosystems. Despite all these benefits from the wetlands they have been mismanaged and are often neglected. Many decision-makers and even so called stakeholders think of wetlands as wastelands. These so-called wastelands are

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Economic evaluation of wetlands of Dhaka city

continued to be drained, depleted at an alarming rate through conversion to what some would term as better alternate use like agriculture, industrial activity and residential housing development. At many a places they have been converted into a cesspool as they are considered as most accessible sink for throwing various wastes. So it is necessary to estimate the economic value of wetlands. 3.1 WHY ESTIMATE ECOSYSTEM VALUE? Environmentalists sometimes question the need to always put a price tag on nature and assert that nature has an intrinsic value, that it is our long-term life support system and that this is reason enough to protect it. They are of course totally right but the reality of life on this planet unfortunately shows that many people do not share this view. Especially (but not only) those who suffer from hunger and understandably try to get the most out of wetlands in the short term. If they are hungry today, they will not care about what happens tomorrow - even less in 20 years from now! But people in developing countries do not have the privilege of this short term approach. People in developed countries often also have restricted vision and prefer to maximize their immediate benefits rather than to secure them for the long term. This being a realistic view of life on Earth, we have to work with it. We therefore think that when one cannot reasonably expect to change a situation in the short term, it is better to try to make the best of it and exert influence to mitigate its negative effects on the environment. There are at least two good reasons for evaluating wetland services and goods. 1. In difficult financial times, it is not easy for government decision makers to spend taxpayers money on environmental activities, especially if there is no broad support from the public. Wetland valuation is a way to estimate ecosystem benefits to people and allows financial experts to carry out a Cost-Benefit activity which might be in favour of environmental investment. Cost-Benefit analysis compares the benefits and costs to society of policies, programmes, or actions to protect or restore an ecosystem. It is therefore an important tool for environmental managers and decision makers to justify public spending on conservation activities and wetland management. 2. The other good reason is that people are not always aware of the values of wetlands. Many think that they are no more than mosquito breeding areas! By giving objective evidence to skeptical managers and the public of the monetary and non-monetary benefits of wetlands, environmentalists will gain their support. Most people only care about what they love or what brings economic benefit to them. By helping people to

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Economic evaluation of wetlands of Dhaka city

improve their living conditions by using and selling wetland goods and services, we will gain strong supporters for our cause. Economic valuation is but one of many ways to define and measure values. Other types of value (religious, social, cultural, global, intrinsic) are also important but the economic value is the most important in most countries when decision makers have to make difficult choices about allocation of scarce government resources. It is not an easy and non-conflictive exercise. It often depends on human preferences. In other words, it depends on what people perceive as the (positive or negative) impact wetlands have on their wellbeing. In theory, the economic value of any good or service is measured in terms of what we are willing to pay for the commodity less what it costs to supply it. In this case, the value is provided by the estimation of the willingness to pay, whether or not we actually make any payment.

4. LINKAGE BETWEEN WETLAND AND ECOLOGY

Wetlands, as defined by the Ramsar Convention, cover a wide variety of habitat types, including rivers and lakes, coastal lagoons, mangroves, peat lands, and even coral reefs. In addition, there are human-made wetlands such as fish and shrimp ponds, farm ponds, irrigated agricultural land, salt pans, reservoirs, gravel pits, sewage farms, and canals. Wetlands are among the worlds most productive environments. They are cradles of biological diversity, providing the water and primary productivity upon which countless species of plants and animals depend for survival. They support high concentrations of birds, mammals, reptiles, amphibians, fish and invertebrate species. Of the 20,000 species of fish in the world, more than 40% live in fresh water. Wetlands are also important storehouses of plant genetic material. Rice, for example, which is a common wetland plant, is the staple diet of more than half of humanity. The interactions of physical, biological and chemical components of a wetland, such as soils, water, plants and animals, enable the wetland to perform many vital functions, for example: water storage; storm protection and flood mitigation; shoreline stabilization and erosion control; groundwater recharge (the movement of water from the wetland down into the underground aquifer); groundwater discharge (the movement of water upward to become surface water in a wetland); water purification through retention of nutrients, sediments, and pollutants; and stabilization of local climate conditions, particularly rainfall and temperature.

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Economic evaluation of wetlands of Dhaka city

Fig 1: Wetland near Dhaka city

5. ECONOMIC VALUE OF WETLAND

Wetlands provide tremendous economic benefits, for example: water supply (quantity and quality); fisheries (over two thirds of the worlds fish harvest is linked to the health of coastal and inland wetland areas); agriculture, through the maintenance of water tables and nutrient retention in floodplains; timber production; energy resources, such as peat and plant matter; wildlife resources; transport; and recreation and tourism opportunities. Translating these many values into economic terms is of primary importance if we are to convince of the importance of these ecosystems as life-supporting systems. This is a relatively new science but promising progress is being made. Figure 2 below taken from R.K. Turner et al., Ecological Economics 35 2000, p.12, very well summarizes the complex relationship between the different levels of intervention. The total economic value (TEV) of wetlands is

defined as the total amount of resources that individuals would be willing to forego for increased amount of wetland services. The TEV is divided into different kinds of components: Fig 3: Different components of wetland economic value
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Economic evaluation of wetlands of Dhaka city

Fig 2: Connections among wetland functions, uses and values

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Economic evaluation of wetlands of Dhaka city

5.1 THE USE VALUES 1. The Direct Use Values (DUV) are the benefits derived from fish, agriculture, fuel wood, recreation, transport, wildlife harvesting, peat/energy, vegetable oils, dyes, fruits.

Fig 4: Direct use values (Fisheries)

Fig 5: Direct use values (Recreation)

2. The Indirect Use Value (IUV) are the indirect benefits derived from the wetlands functions like nutrient retention, flood control, storm protection, groundwater recharge, external ecosystem support, micro-climatic stabilization, shoreline stabilization, etc.

Fig 6: Indirect use values (Ground water recharge)

Fig 7: Indirect use values (Flood protection)

3. The Option Value (OV) in which an individual derives benefits from ensuring that a resource will be available for future uses.

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Economic evaluation of wetlands of Dhaka city

5.2 THE NON-USE VALUES The Non-Use Value (NUV) is derived from the knowledge that a resource (biodiversity, cultural heritage, religious site, and bequest) is maintained. This value is strongly advocated by environmentalists who support the concept of the pure intrinsic value of nature. The next question is how to adequately put a monetary value on wetland products or services. The idea behind the evaluation of wetland products and services is to show that, in some cases, maintaining the natural functions of the ecosystem as untouched as possible can be economically valuable and generate profit. Of course, to adequately do so, one has to compare the price of the wetland product originating from a well preserved wetland with the price of producing similar goods or services in an environmentally less friendly way: building dykes or irrigation schemes, promoting input-intensive agriculture, transforming lands into grazing fields. The key to this exercise is to internalize cost externalities. Most of the products and services produced on Earth are subsidized, frequently without the consumers knowledge. The fact that the fruit producer using chemical fertilizers does not have to pay the cost of water treatment needed to take out the excess of nitrates caused by his use of fertilizers to provide clean drinking water does not reflect the real price of the product and the farmer who intensively irrigates his field does not have to pay for the damage (erosion, pollution) caused by the running of the water he is using on watershed slopes and finally increasing river water turbidity does not reflect the real price of the of water he is using. In these cases, both chemical fertilizers and water are being heavily subsidized. This kind of subsidy leads to little consideration being given to environmental protection. And of course, someone has to pay for the damage caused. Who pays? The whole community, as taxpayers, pays for unwise use of common goods by private individuals. A series of methods have been developed to try to quantify the monetary values of wetland services and goods. The easiest way to do this would be to apply the market price method (the law of supply and demand) but this is unfortunately not always possible because for some wetland products there is simply no market or because some wetland values are intrinsically non-marketable.. Market failures related to ecosystems include the fact that many wetlands (1) provide services that are public goods, (2) many wetlands services are affected by externalities and (3) property rights related to ecosystems and their services are often not clearly defined.

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Economic evaluation of wetlands of Dhaka city

Another limitation of the market price method is that it does not always and automatically reflect the real value of a good. There are many cases where the actual willingness to pay is much higher than what the customer actually pays. However, several (non perfect) methods have been devised to help quantify or give an order of magnitude for specific wetland values. By the secondary source calculation it is estimated that the Annual Value (TK) of the Ashulia wetland in the year 2010 is as follows. Agriculture Fisheries Recreation Flood Control Ground Water Recharge = 125,212,039 = 342,049,513 = 180,809,942 = 60,621,519 = 50,803,967 = 759,496,980 = 7,06,501 = 0.71 million

Total Annual Value Total Annual Value per Hectare

6. POLICY GUIDELINE REGARDING WETLAND

The major act, rules and regulation regarding wetland of Bangladesh are as follows National Water Management Plan, 2004 Bangladesh Water Development Board Act 2000 Urban Water Body Protection Law 2001 Irrigation Water Rate Ordinance 1983 National Water Policy, 1999 Water Resources Planning Act 1992 National Environment Policy 1992 Environment Conservation Act 1995 Environment Conservation Rules 1997 Environment Court Act 2000 Wetland Protection Act 2000 National Policy for Safe Water Supply and Sanitation 1998 Groundwater Management Ordinance 1985 Water Supply and Sewerage Authority Act 1996 National Forestry Policy 1994

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Economic evaluation of wetlands of Dhaka city

National Fisheries Policy 1998 National Agriculture Policy1999 Industrial Policy 1999 EIA Guidelines for Industries1997 Dhaka Metropolitan Development Plan, 1997 Municipal Ordinance, 1993

The formal planning to build Dhaka as a habitable place was started by First Master Plan in 1959 covering an area of 829 sq. km. After that, the strategy plan was prepared in 1980 was not implemented. But it is a matter of hope now that in 1992, RAJUK (Rajdhani Unnayan Kotripokha) took the project DMDP (Dhaka Metropolitan Development plan) and it was published in 1997. There were three components of DMDP. Structure Plan: It provides a long term strategy for the 20 years (1995-2015) for the development of Metro Dhaka (Fig 8). The Urban Area Plan (UAP): It presents an interim midterm strategy for 10 years (1995-2005) and covers for the development of urban areas within Metro Dhaka. Detailed Area Plan (DAP): It provides detailed planning proposals for specific sub-areas of Dhaka

The detailed area plan is now in the implementation phase. It is a great challenge to implement this due to the illegal business of land grabbers around the Dhaka city. But once the DAP is fully implemented it is our hope that at least we can retain the existing wetland from being filled.

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Economic evaluation of wetlands of Dhaka city

Fig 8: DMDP structure plan

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Economic evaluation of wetlands of Dhaka city

7. CONCLUSION
Valuing wetlands is not limited to valuing the economic and monetary benefits wetland ecosystems can bring to humans. It is about attributing a value to all kinds of benefit to humans and/or to nature, including religious values, social values, environmental values (biodiversity, climate change, intrinsic value ), aesthetic values, economic values and any other. Today, most planning and development decisions are made on economic grounds and, more and more, on the basis of the forces at play in the free-market system. While this new paradigm has its own limitations and dangers, it would be unrealistic to ignore it and to base our quest for the conservation and wise use of wetlands on a completely different set of values. Hence, wetland goods and services must be given a quantitative value if their conservation is to be chosen over alternative uses of the land itself or the water which feeds the wetlands. All values are important but the challenge is to set priorities according to local realities and for the benefit of both humans and nature.

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Economic evaluation of wetlands of Dhaka city

REFERENCES
Dewan, A. K., (2010) Spatial Development Trend of Industries within Dhaka Metropolitan Development Plan (DMDP) Area. Unpublished masters thesis, Bangladesh University of Engineering and Technology, Department of Urban and Regional Planning.

DMDP (1995-2015). Dhaka Metropolitan Area Development Plan (1995-2015) Structure Plan (1995-2015) Vol: I. Dhaka : RAJUK.

Islam, I. (2012, September 26). Retrieved December 16, 2012, from http://cseindia.org/userfiles/Ishrat%20Islam_BUET_E-Sept26-2012.pdf Islam, I. (2009) Wetland of Dhaka City: A Study from Social Economic and Institutional Perspective, A H Development Publishing House: Dhaka

Islam, I.; Kanegae, H.; Takao, K. (2005). Urbanization Process and Loss of Wetland of Dhaka, paper presented and published in the proceeding of Pacific Regional Science Conference held in Tokyo July 25-27.

Lambert, A. (2003, 05). Retrieved December 15, 2012, from http://www.unepscs.org/Economic_Valuation_Training_Materials/06%20Readings%20on%2 0Economic%20Valuation%20of%20Coastal%20Habitats/07-Economic-Valuation-WetlandsManagement.pdf Thomson, P. M. (n.d.). Retrieved December 25, 2012, from iasc2008.glos.ac.uk/.../papers/T/Thompson_220701.pdf Zareen, A., & Sumon, M. A. (n.d.). Retrieved December 15, 2012, from www.bioeconnetwork.org/pages/13th_2011/Zareen.pdf

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