Economic Valuation of Ecosystem Services in the Context of Irrigation Presentation at IWMI-WLE Workshop (04- - 09-2015 ) Parakrama Weligamage Agricultural Economics and Business Management University of Peradeniya

Presentation Outline Ecosystem services concept Ecosystem services in the context of irrigation systems Introduction to the concept of economic values Economic valuation methods A case study on contingent valuation?

Why We should do in Valuation? Ecosystems provide services: 1) Identify what are they (Understanding through science) 2) Place a value through economics 3) Use in Policy making or applying market based mechanisms to enable these values to be reflected in decision-making through incentives and price signals.

Ecosystem Services: An application The UK- National Environmental Assessment identified (8) Eight Broad Habitats and give examples of the services derived from each…… [Figure Here]

Services from Enclosed Farmland Food Fiber Bio-fuels Fresh water Climate regulation Pollution control Water quality regulation Pollination Disease and pest control Recreation Aesthetic values Cultural heritage Education Sense of place

Four Categories as, Based on MEA Categories all services into ….. Provisioning services Regulating services Cultural services, and Supporting services.

Categories of Goods/services Excludability Low -----------------High Rivalrory Common goods (Common-pool resources) fish stocks, timber, coal Private goods food, clothing, cars, personal electronics Public goods free-to-air television, air, national defense Club goods cinemas, private parks, satellite television

Defining Economic Valuation All values are anthropocentric Value of satisfaction generated through the changes occurred of the economic agent We use values as a quantitative measure - $ values [ common unit] > can compare across space, time and context using appropriate conversion factors > Can aggregate by categories > make totals

Getting Values from Economic Agents Willingness to Pay ` - Maximum amount a person would pay (willingness & ability to pay) for gains. Sacrifice or trade-off people will make Market prices are WTP for one more unit Willingness to Accept Minimum amount a person would accept to forego a particular ecosystem service in a particular place

Total Economic Value What is the value of all services emanating from a resource?

Components of Total Economic Value Use Values Consumptive Use Non-consumptive Use Vicarious Use Non Use or Passive Use Values Sometimes option value for future use Existence Value To know it exists for oneself or others of current generation Bequest Values to future generations

Economic Valuation Methods How we get the numbers? If goods and services have markets – Then we have market prices If Not? Non-Market Valuation methods

Non-market Valuation Techniques that measure WTP Behavioral Linkages Revealed Preference Hedonic Property Analysis Hedonic Wage-risk Analysis Travel Cost Method Averting Behavior Benefit Transfer

Non-market Valuation Techniques that measure WTP or WTA Behavioral Linkages Revealed Preference Stated Preference Hedonic Property Analysis Contingent Valuation Method (Bundle valuation) Hedonic Wage-risk Analysis Conjoint Analysis (attribute valuation) Travel Cost Method Choice Experiments (attribute valuation) Averting Behavior Benefit Transfer

Understanding Services from Tabbowa Crop Agriculture Livable habitats Fisheries Livestock Domestic Water to Puttalam City and residents Recreation by residents Water for wildlife Habitats for wildlife Other Productive Uses

Extending to other systems Tourism Hydropower Landing for sea planes Boat rides….. Closer to cities/popular destinations Carbon Sequestration

Tissawewa Irrigation Tank: Scenic Beauty

Irrigation and Tourism: Giritale

Irrigation and Tourism: Kandalama

Prospects for Mutual Existence?

Two sides of the story

Two sides of the story stewards, or providers [ beneficiaries, or users Who gets benefits? Local Sub-national National Global

Once values are known… make arrangements for a mechanism for transaction in $ terms Biodiversity offsetting Certification schemes Payment for Ecosystem Services

Appliocation..... Veheragala Diversion Project 75 MCM storage reservoir Diversion: 60 MCM (50 MCM to augment KOISP) YPC

Wildlife at YPC

Changes in flow volumes at YPC

Impact of Veheragala Project on YPC YPC undergoes severe water stress during the dry season Regulated downstream release will increase dry season flow to 165% of current volumes) Therefore the project can be considered beneficial to YPC

Hypothetical Market Good status of the environment can only be achieved by releasing water to YPC during dry season General public of SL will be benefited through Bequest and existence values Water releases should be financed by the public

Procedure and Results Elicitation format Single bounded dichotomous choice contingent valuation aka Referendum WTP Values = 17.5 Billion LKR

Conclusions Irrigation Systems provide multiple benefits They occur to many beneficiaries Values to humans of a resource can be estimated using economic valuation methods These methods can be applied to serices generated by irrigation systems

References The United Kingdom Department for Environment, Food & Rural Affairs. 2013. Payments for Ecosystem Services: A Best Practices Guide. Available online [ https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/200920/pb13932-pes-bestpractice-20130522.pdf] Weligamage, P. 2012. Irrigation in Sri Lanka: Retrospect and prospect. Presidential Address-Section F. SLAAS. Parakrama Weligamage, Walter R Butcher, Keith A Blatner, C Richard Shumway, Mark Giordano. 2010. Non-user Benefits Emanating from Enhanced Water Flow to the Yala Protected Area Complex Proceedings of the National Conference on Water, Food Security, and Climate Change in Sri Lanka, BMICH, Colombo, June 9-11, 2009. Volume 2. Water quality, environment, and climate change.

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