ECONOMIC VALUATION OF

WETLAND
By Sumeet singh

RAVENSHAW UNIVERSITY

CONTENT

1. Introduction
2. Important Of Study
3. Meaning Of Wetlands
4. Economic Valuation Of Wetland And Need

For It
5. Methodology
a. Wetland Process
b. Functions
c. Benefit
d. Value
6. Quantification Of Economic Values Of
Wetlands
7. Classification Of Total Economic Value
For Wetland
8. N eed For Economic Valuation Of Wetlands
9. Market Price And Wetland Benefit
a. Individual’s Willingness vs Market Price
b. Market Failure
10. Causes Of Market Failure

a. Distribution Of Cost Between Owners And

Non – Owners

b. The Tragedy Of Commons

c. Missing Cost
d. Cumulative Effect
11 . Valuation Procedure

Step 1. Choosing Appropriate Procedure

a. Impact Analysis
b. Partial Valuations
 c. Total Valuations
Step 2. Defining Wetland Area

Step 3. Identifying And Prioritizing Wetland

Measure

Step 4. Relating To Wetland Resources To

Use Value And Gathering

Information

Required For Assessment

12. Quantifying Economic Value

a. Market Price Method

b. Efficiency Price Method

c. Total Cost Approach

d. Contingent Valuation Method

e. Hedonic Pricing Method

f. Production Function Approach

13. Implementing Appropriate Appraisal

Method

14. Data Requirement For Evaluation

15. Other Requirement For Valuation

 a. Resource Required For Valuation

b. Interdisciplinary Coloration

c. Training Programs

d. Resource And Economic Valuation

e. Networking

16. Case Study (Lakes of Bangalore)

17. Challenges And Limitation

18. Action Plan For Conservation Of Wetland

19. Wetland Policy Guidelines

20 . Recommendation For Effective Wetland

Management

21. Conclusion

22. Reference
INTRODUCTION
Natural resources are more important for progress of national economy. Functional
ecosystem represents natural capital upon which our economy depends for many goods and
services. Methods to measure the sociological and economy benefit and wetland show promise
and are beginning to demonstrate the returns on investment from actions to sustain wetlands and
the benefit that may be lost if they are degraded.
Valuing of economic benefit of wetland can set priority and allocate spending on
conservation initiative. Valuing can also be used to consider the public’s values of wetland
system and encourage public participation in certain initiative. For instance valuations may help
to achieve wetland conservation objective under the “GREATLAKE WETLAND
CONSERVATION ACTION PLAN” and may be applicable in Environmental Assessment (EA)
process. More specifically valuations could assist EA decision making by providing a reference
value against which other economic factors could be compared in order to determine the
significant of environmental effect- the bottom line in most EAs.
This paper contains economic valuations of wetland. Before discussing the topic we have
to discuss the following matter those are:

IMPORTANCE OF STUDY
Aquatic ecosystems sustain life on earth, regardless of mankind’s understanding of the
biology, chemistry, and geology involved. Population increase coupled with intense
anthropogenic activities and unplanned development activities have impaired the ecosystem
functions and are resulting in the extinction of these fragile ecosystem. The consequence may be
in the long term and possibly irreversible changes. Such changes reduce the value of the
ecosystem, even affecting the economy. Understanding of functions and values of the ecosystem
is crucial for appropriate decision making. The decision with the holistic ecosystem approach
ensures the sustainability of the ecosystem. Wetland is a major component of our environment.
Being highly productive, biologically rich and providing many ecological services wetlands
particularly important to both biodiversity and economy. But this precious component of earth is
going on decreasing day by day. So it is more important to value economic benefit of wetland for
its efficient allocations reducing its wastage and for its conservations valuations may help to
achieve environmental and wetland conservations objective under the “GREAT LAKE
WETLAND CONSERVATIONS ACTION PLANS” and may applicable in the environmental
assessment process.

MEANING OF WETLANDS Wetland inhabits a transitional zone between

terrestrial and aquatic habitats and is influenced to varying degrees by both. A wetland is
seasonally or permanently covered by shallow water, as well as lands where the water table is
close to or at the earth surface. In either case the presence of abundant water has caused the
formation of hydric soils and favored the dominance of either hydrophytic or water tolerant
plants. These unique areas represents a combinations of terrestrial and aquatic characteristic, and
are further categorized by type as marsh, swamp, fen, and bog. As per the definition adopted at
Ramsar convention(Iran in 1971), “wetlands are areas of marsh, fen, peat land or water, whether
natural or artificial, permanent or temporary, with water that is static or flowing, fresh brackish
or salt, including areas marine water, the depth of which at low tide does not exceed six meters.
They inhabit a transitional zone between terrestrial and inhabitants, and are influenced to varying
degrees by both. They differ widely in character due to regional and local differences in climate,
soils, topography, hydrology, water-chemistry, vegetation and other factors. Depth and duration
of inundation, a key defining force can differ greatly between types of wetland and also can vary
from year to year within a single wetland type.
Wetlands are categorized as inlands (also known as non-tidal, fresh water wetlands)
and coastal (also known as tidal, saltwater or estuarine wetlands Barbier et al, 1997]. In addition
to those manmade wetlands have also been included under wetland classes. Inland wetland
receives water from precipitation, snowmelt, and ground water runoff. Coastal and estuarine
wetland receives water from surface water tides and ground water discharge. Wetland due to
three biological, ecological, cultural and economic values from an important component of an
environment. They provide habitat and support divers range of biodiversity. Wetland undertakes
important biological and ecological process including life support system i.e. water and carbon
cycle. Hence they are important for hydrological functions, economic, sociological and cultural
development.
 Methods to measure the sociological and economic benefit of wetlands show promise
and are beginning to demonstrate the returns on investment from actions to sustain wetlands and
benefits that may be lost if they are degraded. Valuing the economic benefits of wetlands can
help set priorities and allocate spending on conservation initiative. Valuation can also be used to
consider the public’s values of wetlands systems and encourage public participation in certain
initiative.

ECONOMIC VALUATION OF WETLANDS AND NEED

FOR IT
To begin with, it is useful to look at what is meant by economic value. In economic theory value
means exchange value. Since money is the medium of exchange value. Since money is the
medium of exchange, the value of benefit is generally determined through its price- i.e. the
quantity of money for which it will be exchange. However the value of the benefit is not simply
the price of that product in the open market. Rather it is the worth of that benefit to a potential
buyer. This is measured in economic term as willingness to pay. For example- in an over
simplified economy
Where only two commodities are exchanged- bread and rice- the value of a loaf of bread is
determined by how much rice one is willing to give up or exchange, to get that loaf of bread. In
other word the economic value of bread is measured by people’s willingness to pay with rice.

METHODOLOGY
The international literature on economic valuation of wetlands has grown
significantly over the last three decades. A brief discussion of the valuation literature here will be
instructive.
Economic valuation is a powerful tool to aid and improve wide use and
management of global wetland resource by providing a means for measuring and comparing the
various benefits of wetlands [Edward B Barbier et al, 1997]. The following are some of the terms
used while quantifying the wetland benefits.
WET LAND PROCESS
The fundamental hydrological, chemical and physical activities that occur in a wetland that are
linked to its biological productivity. For example- the role of wetlands in the global carbon
cycling.

FUNCTIONS:
The results of the interactions of the wetlands ecological process. Functions are physical,
chemical and biological process occurring in and making up an ecosystem. Process include the
movement of water through the wetland, into streams or the oceans, the decay of organic matters
the release of nitrogen, sediment and organic matter from water moving into the wetland, and the
growth and development of all the organism that require wetland for life.

BENEFIT :
The goods and services made possible by a wetland functions. For example- by reducing wave
energy and stabilizing shorelines, the wetland reduces the chance of property damage. This
reduced risk is a benefit to society.

VALUE :
The economic worth of goods or services, generally measured in terms of what individual are
willing to pay for. For example- the wetland has value because it support commercial fishery.
The value of benefit is determined by its price, i.e. the amount of money for which
it will be exchanged. The value the benefit is the price of that product in open market and the
worth of that benefit to a potential buyer. This is measured in economic terms as willingness to
pay. In other words the economic value of the wetlands services or commodity is measured by
people’s willingness to pay for those benefits. The economic valuation is essentially
quantification of environmental goods and services and the value of human beings for the
environment.

QUANTIFICATION OF ECONOMIC VALUES OF

WETLANDS
 The economic values of an environmental goods and services are measured by the
summation of many individuals willingness to pay for it. In turn this willingness to pay reflects
individual choice for the in question. Therefore economic valuation in environment context is
about measuring the choices of people for an environmental benefit or against environmental
degradation. Valuation is therefore in relation to preference held by people. Moreover the use of
economic value permits the comparison that is required between environmental and
developmental values. The later is expressed in fiscal/ monetary terms either in rupees or as
economic rate of return.
Using other units to measure environmental values would not permit the
comparison with developmental values. The economic value of the wetlands includes both use
and non-use values. Typically use values involve some human interaction with the resources
where as non use values do not. Wetland use values are associated with adverse and complex
array of direct and indirect uses. Wetland values may be derived from outputs that can be
consumed directly such as food, water supply, recreation, timber, indirect uses which arise from
the functions occurring within the ecosystem, such as water quality and flood control, possible
future direct and indirect uses such as biodiversity or conserved habitats, and the knowledge that
such habitats or species exits (known as existence value)[Serageldin 1993].
Values are “an estimate usually subjective, of worth, merit, quality or importance.”
Direct uses of wetlands could involve both commercial (marketed value) and noncommercial
activities where as indirect use values are unmarketed, go financially unrewarded and are only
connected to economic activities. A special category of value is option value, which arises
because an individual may be uncertain about his or her future demands for a resource and\or its
availability in the wetland in future. If an individual is uncertain about the future value of
wetland, but believes it may be high or that current exploitation and conversion may be
irreversible, then there may be quasi option value derived from delaying the development
activities. The quasi option value is the value that the society would place on wetlands, if all
know the complex function of wetlands. Uncertainty is acceptable in non economic valuation,
but must be accounted somehow in economic valuation. Quasi option value is a concept allowing
expert scientist to define wetland value. In contrast non use values, often referred as intrinsic or
existence values are difficult to measure, as they involve subjective valuations by individuals
unrelated to either their own or others’ uses whether current or future. An important subset of
nonuse or preservation values is bequest value, which results from individuals pricing a high
value on the conservation of tropical wetlands for future generation to use. Bequest values may
be particularly high among the local population currently using a wetland, in that they would like
to see the wetland, in that they would like to see the wet land and their way of life that has
evolved in conjunction with it passed on to their heirs and future generations in general. Table-1
shows the list of various use and non use values of wetlands.

CLASSIFICATION OF TOTAL ECONOMIC VALUE

FOR WETLAND

USE VALUE NON-USE-

VALUE

Direct uses Indirect Option and Existence

uses quasi option benefit

value

 Recreation  Storm  Potential  Biodiversity

1.Boating protection future uses(as  Culture
2.fauna (birds  Ground per direct and  Heritage
etc) water indirect uses)  Bequest
3.wildlife recharge  Future value
viewing  External of information
4.walkin ecosystem Example-
support pharmaceutica
 Commercial  Water l education
harvest filtration
1.nuts  Erosion
2.berries control
3.grains  Shoreline
 Fishery stabilization
  Fuel wood  Nutrient
 Wildlife retention
harvesting  Flood
 Agriculture control

(Source- adopted and modified from Barbier et al 1997)

In general the direct uses of marketed products of ecosystems are easier to measure
since marketed products exits and their price may be adjusted for distortion. In contrast
ecological functions such as ground discharge may have indirect use values which are reflected
in the economic activities these functions support. Usually changes in the wellbeing or social
welfare are used to define and quantify economic value. Therefore valuing goods and services
requires one to study the change in a person’s welfare due to a change in availability of
resources. The purpose of economic valuation is to reveal the true cost of using scarce
environmental resources.

NEED FOR ECONOMIC VALUATION OF

WETLANDS
Some specific major reasons for valuation of wetlands are:
➢ The need for economic valuation of environmental impact and asset
arises for pursuing efficient policies and investing in efficient projects
and programmes. At most general level of integrational concern,
valuation is still required. If transfers of resources are to be made
 between generations- with the current generations sacrificing for future
or future benefit being lost for the sake of present gain, then it is
essential to know what is being sacrificed and how much it is that
being surrendered.
➢ Macro economics management records monetary flows and
transaction within the economy. The national account are widely used
to indicate wellbeing and rates of changes and national accounts such
as gross national production(GNP) are widely constructed as a
measure of development. Weather the accounts are designed to record
economic activity or measure wellbeing or both. They are deficient
with respect to their treatment of the environment. Economic activity
involves the use of material and energy and once transformed into
products the same resources become sooner or later waste product.
Any measure of economic activity which ignores these material and
energy flows, will fail to record important activity that affect the
sustainability of economic activity. For these reasons there is a need
for wide spread consensus so that national accounts are modified and
environmental stock and flows are recorded. Depreciation in the stocks
of the natural resources requires proper valuation to ensure
sustainability.
➢ Information on the economic values of policy changes (with regard to
the environment) can greatly assist in identifying the policy and
sectoral priorities. Economic valuation incorporating environmental
aspect helps in evaluating developmental projects, programmes and
policies.
Therefore in considering the value of natural areas such as
wetlands, trying to determine people willingness to pay for benefit
ranging from aesthetic beauty to recreational opportunity to clean
water is very important.

MARKET PRICE AND WETLAND BENEFIT

INDIVIDUAL’S WILLINGNESS VS MARKET PRICE:
In the environmental context, it is required to quantify ecosystem benefits in terms
of priced goods (i.e. private goods which have market value- fish) and unpriced goods (i.e.
public goods which have no market value- clean water, air). Market price is a measure of the
minimum that some people are willing to pay for a benefit- they will buy goods, commodity for
example if their willingness is equal to or more than the market price. There are also many other
forms of value beyond market economic term including subjective and intrinsic values which are
particularly important in environmental conservation in general especially the wetland.
The problem with using willingness to pay to measure the value of wetland is that it
requires a carefully designed survey as it is not as straight forward as market price. Nevertheless,
there is growing evidence of consumers’ willingness to pay for ecological benefits. Trends such
as the growing demand for the ecologically certified wood products, organic foods and other
products and services with an environmental advantage suggests that there is increasing market
recognition of the economic value of preserving natural areas and process. It involves finding a
willingness to pay measure in circumstances where market fails to reveal that information
directly.

MARKET FAILURE
Economic decision developmental projects which exclude ecosystem values, lead to
ecosystem degradation. Economists trace this problem to market failure. In this case of wetland,
the calculation of economic value for converting the wetland area to housing or commercial
layouts does not include costs such as loss of water quality or quantity. Since these ecosystem
services are available free to all and not purchase, there is a tendency to neglect the
quantification of vital function of these ecosystem and indirect benefit derived from them. It is
only when these services are lost the actual financial or commercial costs are incurred. So
paradoxically the zero prices for wetland services is of very high value to human wellbeing.
Since it is difficult for an individual owner to receive direct monetary benefit for those benefits
which a wetland provides to other, the true value of such benefit is generally not taken into
account.

CAUSES OF MARKET FAILURE

1. DISTRIBUTION OF COST BETWEEN OWNERS AND NON-

OWNERS: unlike other assets a wetland may deliver more benefit to the community
(food, recreation etc) than to individual owner. Compared to the general the individual
owner may receive only a small proportion of benefit, such as ground water replenishment
and there fore will tend to under value of these benefits.

2. THE TRAGEDY OF COMMONS: with a widely share resource there is a little

incentive for an individual to control activities to benefit others. For example-a wetland may
support large population of frogs, but without any sort of limits or fees, there is no incentive
for any individual harvester to limit the number of frogs taken for incentive or bait, food or
class room experiment.

3. MISS ING COST : The market does not includes the lost of economic value of
wetland in the company’s production cost. For Ex if an industry disposes its effluents into a
stream that feeds into a wetland the economic damage done to the wetland is not reflected in
the market price of the goods.

4. CUMULATIVE Effect: When taken together a combination of relatively

small incremental changes to a wetland or a number of wetland within a watershed, can
have more dramatic effects than those recognized when individual changes are made. These
cumulative effects result from past, present and future changes and are difficult to recognize
and asses physically as well as economically in part because of dynamic nature of the
ecosystems. The ability to measure value is also limited by the understanding of the
ecological functioning and the benefits that wetlands provide for ecosystem stability. This
lack of ecological understanding under value wetland benefits that contribute to market
failure.
The economic valuations of wetland also countries act the market failure for
which wetland benefits are express in financial terms. This helps both the individuals and
policy makers to easily compare alternative usages and policy options. A value for the
economic benefit that will be lost through the development of a wetland, for example, could
prompt policy makers to put resources into the conservations of the wetland, instead.
Similarly such evaluations can lead to a better understanding of tax incentives, rebates or
subsidies that could give individual an economic incentive to retain a wetland in effect the
community can purchase the wetland services from the individual, through which one can
provide panacea for market failure to some extent.

VALUATION PROCED URE

STEP-1 - Choosing appropriate procedure-
It is the 1 st step in the economic evaluation process consisting 3 issues
more relevant to the economics of wetland. They are:
1. Impact Analysis - Impact analysis would be appropriate if the problem is a
specific external impact, for example- oil, spills on costal wetland.
2. Parti al Valuations - If the problem is the necessity of making a choice
between wetland use options. For ex- conversion of wetland to residential land or sport
complex.
3. Total valuation - If problems are general, for example- developing a restoration
strategy requires assessment of total net benefit of the wetland system. Total valuation is
expressed as
TEV= Direct use value+ Indirect use value+ option value+ existence value

STEP-2- Defining wetland area -

In the second stage it is necessary to define wetland area based on maps
of land use\land cover, flood extent and soils using remote sensing data and survey of
India maps or any other maps.

STEP-3 - Identifying and prioritizing wetlands

measures
The third step involves using various data sources, including scientific
studies, consultancy reports and national resources inventories to produce a more
definite list of components functions and attributes present in the wetlands, then place
them in their order of importance. This may be in rank order say 1 to10 or expressed as
being high, medium or less significant based on its importance.
STEP-4 - Relating to wetland resources to use
value and gathering information required for

assessment-
The fourth step is to determine whether each of the wetland resources is
associated with direct, indirect or non-use benefit.
Interviews with local communities, census data and consultancy reports
are usually good sources of information of direct uses. For example - obtaining
agricultural yield may involve interviews with farmers, collection of statistics from govt.
offices and visit to markets.
An indirect use value requires detail field investigation, concentrating on
physical link between wetland system functioning and economic activities affected.
Option and quasi option and existence values may be more difficult to
determine and it will often be done with the help of the multidisciplinary team, keeping
in mind the difficulties of quantifying these values.
Data collection begins with a literature survey of available statics’,
existing studies, and their analysis for the regions, which may yield some of the required
information. Next site survey of specific economy activities have to be undertaken. In
the first instance a rapid rural appraisal best on brief interview with farmers or producers
would help to collect basic information on human uses and economic data. More
detailed baseline surveys may be required for in depth data collections for actual
valuation purposes. In all cases, it is important to be clear in advance about the
information required so as to avoid collecting ‘data for data’s sake’.

QUANTIFYING ECONOMIC VALUES

Various valuation techniques are:

MARKET PRICE METHOD -

1. The prevailing prices of goods and services traded in domestic or international
markets are used for quantifying wetland resources.
2. Market price reflects the private willingness to pay for costs and benefits that are
traded(e.g., fish, timber, fuel wood and recreation)
3. Price data are relatively easy to obtain. Market imperfections, policy failures and
seasonal variations may distort market prices, which will therefore fail to reflect the
economic value of goods or services to society as a whole.

EFFICIENCY PRICES METHOD-

1. Use of market prices but adjusted for market imperfection and policy.
2. Shadow prices may also be calculated for non- marketed goods.
3. This reflects the true economic value to society as a whole, ‘artificial’ price may not
be accepted by the decision makers.

TRVEL COST APPROACH

1. Widely used to estimate the value of recreational sites including public parks and
wildlife reserves 9in developed countries.
2. The travel cost approach derives willingness to pay for environmental benefits
(e.g., ecotourism).
3. It needs information on the amount of money and time that to visit the location.

CONTIGENT VALUATION METHOD

1. Contingent valuation surveys directly ask people what they are willing to pay for
something they are willing to receive in compensation for tolerating cost.
2. Personal valuation for increase or decrease in quantity of some goods based on
hypothetical market. The aim is to elicit valuations or bids, which are close to what
would be revealed if an actual market existed.

HEDONIC PRICING METHOD

1. Hedonic pricing has the potential for valuing certain wetland functions (e.g. storm
protection, ground water recharge etc) in terms of their impact on land values,
assuming that wetland functions are fully reflected in land prices.
2. The value of an environmental amenity (such as view) is obtained from property or
labour markets. The basic assumption is that the observed property value (or wage)
reflects stream of benefits (or working conditions) and that is possible to isolate the
value of the relevant environmental amenity or attribute.
3. Application of hedonic pricing to the environmental functions of wetlands requires
these values to be reflected in surrogate markets. The approach may be limited
 where markets are distorted, and choices are constrained by income and information
about environmental conditions is not widespread and data are scarce.

PRODUCTIO N FUNCTION APPROACH

1. Estimate the value of non marketed resources or ecological function in terms of
changes in economic activity by modeling the physical contribution of the resource
or function to economic output
2. This is used to estimate the impact of wetland on deforestation, water pollution, etc

RELATED GOOD S METHOD

1. Utilizes information about the relationship between non-marketed goods or services
and a marketed product to infer value.
2. The barter exchange approach relies on actual exchange of non marketed goods and
this approach requires information on the rate of exchange between two goods.
3. The direct substitute approach simply assumes that marketed goods can be
substituted for non-marketed goods and requires information on the degree of
substitution between two goods.
4. The indirect substitute approach requires the information about the degree of
substitution and direct substitute approach combined with production function
approach.

IMPLIMENTING APPROPRIATE APPRISAL

METHOD
The ultimate step in the economic valuation of wetland should be placed in
appropriate frame work as preferred during the planning for study. The most
appraisal method for valuation is cost-benefit analysis method involving the cost and
benefit of wetlands measure through three sub-methods.
(a) Net present value
(b) Benefit cost ratio
(c) Internal rate of return
There are other methods such as
 A. Environmental impact assessment needs a detail document of impact and
effect of wetland.
B. Cost effective analysis selects land use option that which will minimize cost
of realizing a defined non-monetary objective, in this case there is no need
to value benefits, but focus on cost information.
C. Multicriteria analysis involves mathematical programming technique to
select option based on objective functions including weighted goals of
decisions makers with explicit consideration of constraint and cost.
D. Risk assessment or risk benefit analysis evaluates benefit associated with a
land use option in comparison with risk.
E. Decision analysis involves step by step analysis of the consequence of
choice under uncertainty.

DATA REQUIREMENT FOR EVALUTION

The following are some of the data collecting technique useful in quantifying
various resources or activities
RESOURCES/ ACTIVITY: wetland
VALUATION METHOD: change in productive or contingent valuation method
DATA REQUIREMENT: Type of wetland products
Cost of production and price information for these wetland products
will necessary. For example- fishery
Spatial extent of wetlands (temporal changes in spatial extent)
Number of individual depending on wetland
Extent of wetland damage due to adverse weather condition
RESOURCE/ ACTIVITY: agriculture
VALUATION METHOD: change in productive method or contingent valuation method
DATA REQUIREMENT: area and crop productivity for different crops
Itemised the cost of production per hectare by crops (fixed and
variable cost)
Output prices per type of crop (on- stand price and market price)
 Harvesting cost
Percentage sold in the export market for crop
Time series data on rainfall and production
Incidences of crop damage due to adverse weather condition
RESOURCE / ACTI VITY: Fishery
VALUATION METHOD: change in production method or market price method or contingent
valuation method
DATA REQUIREMENT: catch/effort
Size of the fishing fleet (including the number of fisherman)
Cost of fishing
Prices of fish by species (ex- vessel)
Species composition of catch
Type of fishing gear
Boat of capacity and type
Areas of wetland
Water quality

Other Requirement For Valuation

Resource required for valuation : Economic valuation of the wetland is

based on quality data which in turn depends on availability of resources that is required for
collecting and analyzing the data. For instance primary data collection for several valuation
survey may be required a number of trained office staff, a developed equipment, laboratory,
computers etc.

Inter disciplinary collaboration: Absolute valuation itself is a component of

economics which also requires an understanding of the functions of the wetland and therefore
requires an interdisciplinary approach. Hence economists, ecologists and other experts should
work together as a multidisciplinary team to tackle wetland valuation.
Training programs: Training programes should be undertaken to support staff,
surveyors, and planners in collecting required information. In this regard economist planners
must be trained in economic valuation of wetland.

Research and economic valuation: Research and economic valuation should

be under taken to make sound decision on development option and to set regional national
policies.

Networking : Networking of experts from various areas can serve as an useful medium
of exchange of ideas and information. Two types of networking are required, first a network by
which researcher can exchange results and discuss basic principle and second a network by
which a practitioners can swap experience of applying method in different wetland types.

CASE STUDY

Valuation of lakes in Bangalore

Bangalore is the heart of southern India situated in Karnataka district with a
geographical area of about 2191 sq k.m. at an average elevation of 900metre above the mean sea
level. The climate of the district has agreeable temperature ranging from the highest mean
maximum of 36.2 degree Celsius in April to lowest mean maximum of 11.4 degree Celsius in
January. It has two rainy seasons from June to September and from October to November
coming one after another but with opposite wind regime i.e. south-west and north-east monsoon.
The maximum rainfall recorded here is 900mm with standard deviation 18.7mm.
Status of wetland depends on its management, anthropogenic activity, solid waste
collection and also attitude of people. Due to the large growth of population and steady
development of urbanization wetlands are disappeared from Bangalore city. It is recorded from
investigation that 35%, of decrease in water bodies from 1973 to 1996 (Deepa et al, 1999).
30% lakes are used for irrigation
25% lakes are used for fishing
36% lakes are used for washing only
3% lakes are used for drinking
 Agriculture is practiced in 21% of lakes. Approximately 35% of lakes are used for
grazing by cattle. Mud lifting was recorded in 30% and brick making in 38% of the lakes
(Krishna et al, 1996).
Economic valuation was undertaken in lakes namely Hebbal, Amruthalli, and
Rachenahalli lakes. Hebbal and Amruthalli lakes are situated in Bangalore north Taluk (east of
Bellary road) while Rachenahalli situated in Bangalore south and north Taluk.

HEBBAL LAKE VALUATION:

To assess the importance of Hebbal lake, a socio- economic survey is carried out in
the catchment areas of lake (Ranjani V.G. and Ramachandra-, T.V., 1999). A random survey was
carried out using questionnaire method with 1k.m. radius from lake. The study was done un four
areas around the lake namely Hebbal, Guddadahali, Bhoopasandra which are semi areas and one
is the U.A.S. layout which is completely urban. The economic valuation of the wetland resources
was done in contingent valuation techniques. Table-2 gives the economic details of lake water
benefit in terms of rupees.

RESULTS OF SOCIO- ECONOMIC S URVEY

Areas Domestic Agriculture (per Livestock
(per1000people ha. Per day) (per 1000 animals every day)
per day)

Water use Fodder

Hebbal Rs.1937.50 Rs.19.00 RS.2170.80 RS.33500.00

Guddadahali Rs.1603.30 Rs.19.00 Rs.1250.00 RS.37500.00

Bhoopasandra Rs.1547.83 Rs.5.00 Rs.1270.80 Rs.16666.90

U.A.S layout Rs1547.00

Live stock : From above table it is known that for fodder and water in every two days
the 1000 animal depend on Rs.33500 Rs.2170.80 in Hebbal areas and in Guddadahali area
dependency is Rs. 37500 for fodder and for water it is Rs.1250 per 1000 animal in every two
days, in Bhoopasandra area dependency for fodder is Rs.16666.70 and for water it is Rs.1270.00.
So in above two areas total economic dependency for livestock is35670.80, 38750.00, 17937.50
per 1000 animal in every two days. Here the people rear cows to earn livelihood by selling milk
in surrounding areas. The fodder available in the local market is very expensive, therefore people
used lake as fodder as a chief source of food.

Agriculture : Agriculture is still in practice in Hebbal, Guddadahali, and

Bhoopasandra. Many of these areas use lake water for irrigation. The dependency on Hebbal lake
for irrigation is Rs.19.00 per hectare and on Guddadahali it is also Rs.19.00, in Bhoopasandra
area it is Rs.5.00 only because farmer in these areas owns a coconut grove and he uses lake water
as well as treated water to irrigate the land.

Domestic sector : The dependency for domestic sector was calculated by

determining the water used per individual i.e. in Hebbal area it is Rs. 1937.50, in Guddadahali it
is Rs.1603.30, in Bhoopasandra it is 1547.80 and in U.A.S layout it is 1547.00 per 1000 people.
Hebbal area depends more on ground water than other area as for the lack of water supply. From
above table it is known that in these four areas economic dependency for livestock is more than
the other dependency, i.e. agriculture and domestic.

RECHENAHALLI AND AMRUTHALI LAKE

VALUATION
Socio economic survey was undertaken in two lakes namely Rachenahalli and
Amruthalli (Rajnikanth R. and Ramachandra, T.V.2000) to assign quantitative values to the
goods and services provided by these wetlands. The economic value is used to assign the value
of particular wetland as a whole in terms of the rupees. This economic valuation concerned
ultimately with the allocation of wetland resources to improve human welfare. Socio economic
survey was conducted to:
1. Quantifies the value of wetland resources
2. Determine the economic dependency of people living in the surrounding areas
of these lake
Valuation of wetlands depend on their use value (human dependency and their
interaction with the wetland resources) and non use value (no interaction with wetland resources)
were determined by conducting interviews with local community using questionnaire format
which contains the information on various uses of wetlands for irrigation, domestic recreation,
food, livestock, energy uses as direct value shown in table-3 and table – 4 provides the non use
values
Five villages were selected in this regard namely Amruthalli (around Amruthalli lake),
Rachenahalli, mestripalaya, Srirampura, Daserahali (around Rachenahalli Lake). The valuation
of wetland products was done using market price method and contingent valuation method with
respect to public willingness to pay. By conducting this study, the requirement of local
communities and their economic dependency on the wetlands can be assessed.

VALUATION OF RECHENAHALLI AND AMRUTHALI LAKES

Items Quantity of Amruthalli lake Quantity of Rachenahalli lake
Amruthalli lake values in rupees Rachenahalli lake value in rupees
Resources

Domestic 277.9/1/house/da 1.667/house/day 214.97/1/house/day 1.289/house/day

consumpti y
on

Live stock 59.28/cow/day 35.5/100cows/da 60.39/1/cow/day 36.18/100cows/day

consumpti ys
on

Agricultura 7201.02/hectare/d 43.19/hectare/da 12087.8/1/hectare/d 72/hectare/day

l ay y ay
consumpti
on

Agricultura 21140/ha/0.5yea 44814/ha/year

l products r

32.00/ha/year

Paddy 4560/ha0.5year
15.1q/ha/0.5 year 7500/ha/year
Ragi 12.5q/ha/year
7.6q/ha/0.5 year 19920/ha/year
Flower 3.95q/ha/year 11847.9/ha/year 6.64/ha/year 30050/ha/year

Guava 74.23q/ha/year 37115/ha/year 60.1q/ha/year 10381.5/ha/year

Vegetables 11253/ha/year 7.69/ha/year 19125/ha/year

Coconut 3000 no./ha/year 5100.2 no. s

/ha/year

Energy 0.47k.g/person/da 117.5/1000/per 1.298k.g/person/da 324.5/1000/persons/

resources y day y day

Fishing 75k.g./day 900k.g/day

products

From above table it is clear that dependency on Rachenahalli lake is about Rs 10435/-
during cropping and fishing seasons which is only rupees 20/- in case of Amruthalli lake shows
that the economic dependency in case of Rachenahalli lake is more than that of people living
around the Amruthalli lake due to better water quality and ecosystem which is explained below:-

AGRICULTURE
Wetlands are important source of water for agricultural use. The dependency on
Rachenahalli lake for irrigation is about Rs 9173.00 per day during cropping season while in
case of Amruthalli it is zero, because for its poor quality and quantity of water due to the
eutrophication and drying in summer season.

FUEL
For fuel people depends on both the lake i.e. Rachenahalli provides Rs 325/- per day
and Amruthalli provides Rs13/- per day fuel wood.
FISH
Wetlands provide food to local communities in form of fish. The dependency on
Rachenahalli Lake is Rs900/-per day due to higher concentration of oxygen in it, but in this case
Amruthalli lake has no value.

LIVESTOCKS
The economic dependency for live stock in the Rachenahalli lake water is about
Rs37/- per day and in Amruthalli lake it is about Rs7/- per day.
The ground water table of Rachenahalli Lake ranges from 50 feet immediate vicinity
and 250 feet at farther places (2-3 k.m.), while in the surrounding regions of Amruthalli Lake
ground table range from 180-400 feet. But Amruthalli lake degraded due to excessive inputs of
domestic sewage, industry wastage which reduce the dependency of people also. To avoid
eutrophic conditions and to improve the economic dependency of people residing closer to the
lake, appropriate conservation and restoration strategy are needed. The result which is shown in
table-4 below is obtained through secondary data gathered from material published by
governmental and non governmental agencies and primary data collected through two surveys:-
1. Collect the data from outsiders
2. Collect the data from local people having different questionnaire
The collected information will be processed with the help of standard statistical
tools to draw inference with respect to the stated objective.

VALUATION OF AMRUTHALLI AND

RACHENAHALLI LAKES
Lake Direct use Indirect use value Existence use value

(value in rupees)

RACHENAHALLI Agriculture – 9173.00 1.Ground water 1.Birds and

table varies from 50 migratory birds
Fuel - 324.5
(vicinity of Lake) 250
2.Cultural and
Fish - 900.00 feet(2-3 k.m. away
heritage value
from the lake )
 Livestock 2.It has a greater 3.Pooja during
capacity to festivals
Consumption - 37.50
Retain flood water
from heavy rain fall
and disposal

Of treated water
from

JNCASR

RESULT Total value is Ground water Functional aspects

recharge and flood biodiversity and
Rupees 10435 per day
protection is cultural recreational
During cropping and increased due to aspects indicates
fishing lakebed importance of
perviousness.
Seasons. The wetlands

In the ecosystem

AMRUTHALLI Use Value Ground water table Existing lake has no

varies from180 feet culture, heritage and
Fuel 12.5
(vicinity of bio diversity value
Live stock
Lake) 400 feet (3
Consumption 7.5 k.m. away from the
lake)

It has a lower flood

protection

Value.
RESULT Total value is rupees It has no ground This is due to the
20/- per water recharge and pollution on account
fewer flood control of anthropogenic
Day. Lower value is
values mainly due activity in and
due to
around the lake.
To the impervious
Eutrophic condition
lakebed
of the lake
Resulting from the
Which is made the
accumulation of silt.
wetland

Resource unused.

CHALLENGES AND LIMITATIONS:

Although economic valuation of wetland allows a better measure of
overall economic efficiency but in certain cases economically efficient choice is not necessarily
most socially applicable or environmentally beneficial choice.
Wetlands simultaneously produce a number of benefits from clean
water and nutrient cycle to food control and recreation. Unlike many traditional economic
benefits a number of people can enjoy these benefits without the value to the individual being
any way diminished. For example a community gains from the clean water produced by the
wetland, but only a few would prosper from the housing built on a filled wetland. Wetlands here
provide multiple benefits simultaneously is often overlooked in comparison with more traditional
economic benefit.
The science of calculating economic values for wetlands is still
relatively new and evolving and methods are continually being refined and enhanced. Putting
values on naturally occurring services such as water filtration, erosion control, or sediment
trapping in particular is much newer concept than valuing traditional consumptive or extractive
uses like fishing or hunting.
ACTION PLAN FOR CONSERVATION OF

WETLAND
Investing economic benefit of wetland conservation action plan formulated taking
both governmental and nongovernmental organization to create, reclaim, and protect wetland.
The goals of wetland conservation act programmes are:
a. Increase public awareness and commitment for protection of wetland,
b. Develop wetland database and increase understanding of wet land
dynamics
c. Promote co-ordination among state, district, regional government and
nongovernmental partners
d. Give a place to the protection of wetland
e. Improve planning between governmental and nongovernmental partners
f. Promote the wetland state protected areas
g. Strengthen the legislation, policy. Agreements and compliance
h. Evaluate the outcome of programes and ensure a sound scientific basis for
policy.

WETLAND POLICY GUIDELINES

The goal of wetland policy guidelines are:
1. Maintenance of functions and values derives from wetlands
2. No net loss of wetland functions in regional land and water
3. Enhancement and rehabilitation of wetland where the continued
loss or degradation of wetlands or their functions reach critical
level
4. Recognition of wetland function in resource planning,
management and economic decision making, in all national state
 Programmes, policies and activity
5. Securement of wetland significance
6. Recognition of sound, sustainable, management practice in
sectors such as forestry, agriculture that make positive
contribution to the wetland conservation
7. Efficient utilization of wetland
8. Undertake cost benefit an analysis of the wetland resources
derived by the society and economic evaluation caused due to
the loss of wetlands
9. Advise government to provide fund fort wetland research and
conservation programmes

RECOMMENDATIONS FOR EFFECTIVE WETLAND

MANAGEMENT ARE:-
A. Integration of different government agency for effective
implementation of activities related to conservation of wetland
B. A national committee for lake and wetlands reclamation restoration
and development should be formed to formulate national policy for
wetland conservation and utilization
C. A comprehensive plan be prepared to study selective,
representative wetland in a phased manner to create database with
regard to their present status, sustainable use, management and
conservation and to formulate strategy for their long term
management.
D. Mass awareness through governmental and nongovernmental
organization
E. Fishermen’s socio economic aspect be taken into consideration
While formulating wetland policy
 F. Providing better education training, financial support to those
people who work in this field.

C O NCLUSION :

Wetland a precious gift of nature is going on decreasing day by day, so it is

necessary to evaluate wetland and this economic evaluation of wetland help a layman to
understand the value of wetland and come forward for its conservation. Decision making
processes are increasingly considering the economic value of natural systems, including
wetlands. It is providing to be useful tool through which the value of wetlands can be
understood. Yet as illustrated given the complexity and variety of valuation method one
should only conduct wetland valuation with a full awareness of its challenges and
limitations.
REFERENCE
1. Deepa R.S. Ramachandra, T.V. and Kiran, R.1988. Antropogenic stress on
wetlands of Bangalore, in proceedings of National seminars on
“Environmental pollution: causes and remedies”, P.E.S institute of
Technology, Bangalore, pp 166-182.
2. Edward B Barbier, Mike Acreman and Duncan Knowler, 1997, Economic
Valuation Wetland, A guide for the policy Makers and Planners, IUCN
Publication Unit, Ramsar Convention Bureau Gland, Switzerland. pp-1-
46, 81-97, 110-127.
3. Krishna, M.B., Chakrapani, B.K. and Srinivasa, T.S. 1996. Water birds
and wetlands of Bangalore, Karnataka State Forest Department,
Bangalore, pp 4-10, 17-25, 42-43 and 49-57.
4. Rajnikanth. R and Ramachandra, T.V., 2000. Restoration of lakes in
Bangalore based on status and Socio Economic aspects of wetlands,
project report, November 2000
5. Ranjani V.G. and Ramachandra, T.V. 1999. Bathymetric Analysis and the
characterization of Hebbal Lake to Explore Restoration and Management
Options, Project report, September 1999.
6. Serageldin, 1993. Making Developmental Sustainable. Finance and
Development, December 1993. Vol 30:(4):6