Valuing non-market benefits of human dominated small mangrove forests in Sri Lanka

The inabi lity of economists and policy makers to recognize the values of non-market benefits includingcritical ecological, socio-economic and non-use functions of mangroves has been one of the majorreasons for large scale conversion of mangroves into destructive uses. Recent attempts byenvironmental economists to put values to non-market benefits of ecosystems are far from complete.Non-market benefits of Sri Lankan mangroves have not been studied adequately. Using contingentvaluation method, this study estimated the economic values of non-use benefits of mangroves in SriLanka, local existence value at US$I.7/hh/yr (US$883 ha+yr'); global existence value at US$24/hh/yr (US$1398 ha+yr'); local option value at US$2.9/hh/yr (US$1491 halyr'); global option value atUS$18/hhiyr (US$l 039 hal/yr"); local bequest values at US$3 .3/hh/yr (US$1714 halyr"); foreignbequest value at US$l . I/hh/yr (US$562 halyr'). The socio-economic factors affecting the WTPwere established using tobit model. Using benefit transfer method, economic values of ecologicalfunctions of mangroves were estimated as fish breeding at US$0.55/hh/yr (US$218/ha'lyr'I); erosioncontrol at USO.O l/.hh/yr (US$3 .6/ha'ly['I); biodiversity maintenance at US$0.05/hh/yr (US$18/ha'lyr'I); carbon sequestration at US$0.19/hh/yr (US$75.5ha'lyr,l) and the storm protection at US$0.19/hh/yr (US$76.8/ha,1 yr"), Destruction of small mangroves can be reversed by recognizing the non-marketvalues in mangroves forest use decision making

FINANCING FOR SUSTAINABLE DEVELOPMENT: SOLUTIONS OF WORLD SUMMIT ON SUSTAINABLE DEVELOPMENT

The World Summit on Sustainable Development (WSSD) held in Johannesburg, SouthAfrica 2002 has given significant priority to finance and trade issues since funding hasbeen identified as key constraints for the implementation of Agenda 21. The Summitadopted some ambitious programs specifically for poverty eradication such as halving theproportion of the world's people whose income is less than $1 a day, proportion of peoplewho suffer from hunger, proportion of people who are without access to safe drinkingwater and sanitation by 2015. Obvious.y, the implementation of all its decisions dependson the success of addressing development finance issues that covers a vast range, fromofficial development assistance to tommercialloans by multilateral financial institutionsand private banks, foreign direct investment, domestic credits, investment and governmenttransfers. The objective of this paper is to investigate whether the WSSD presents asolution to the financing for sustainable development taking Sri Lanka as a case study.The study observed that between 1992-2000 Official Development Assistant (ODA) hasfallen steadily from 0.33$ 36 billion in 1991 to US$185 billion in 1999, butdeclined to US$ 175 billion in 2000. This is however is only a small portion of the globalFDI flows, which amounted to US$1.1 trillion in 2000. In 2000, 80$ 129 Mn ill1977 to US$ 82 Mn 2001. Total outstanding foreign debt has rose from Rs. 235,358 Mn in1992 to Rs. 634,622 Mn in 2001. This indicates serious debt crises in developing countries,which is not a favorable condition for attracting further FDI to developing countries.At the same time measures taken by the international community to treat the excessive debtburdens of 41 heavily indebted poor countries (HIPe) have not delivered the expectedresults. Thought the IMF and the World Bank have approved debt reduction programs for22 countries in December 2000, only' Uganda was able to clear the prerequisite thecreditors. This evidently suggests that the proposed financing measures at the WSSD willalso face implementation problems. Unless all debtors and creditors work positivelywithout demanding unreasonable prerequisite for debt relief measures, the objectives of theWSSD cannot be achieved.

ANALYSIS OF THE EMISSION TRADING POTENTIAL IN SRI LANKA FOR GLOBAL GREENHOUSE GAS MARKET UNDER THE KYOTO PROTOCOL

Under the United Nations Framework Convention of Climate Change (UNFCCC) reductionof Green House Gas (GHG) emissions become a global good with shared and differentiatedresponsibility vested with member countries. The Kyoto Protocol was adopted in 191)7 asthe legally hinding instrument to achieve the objectives of UNFCCC. This protocolintroduced three controversial mechanisms namely Joint Implementation (11. Article 6).Clean Development Mechanism (CDM, Article 12) and the emission trading (Article J 7) furthe establishment of markets for GHG emission reduction.Under the Annex I of UNFCCC countries are obliged to reduce their GHG by 5.2'7< fromthe total 1990 level. Global commitments under the common but di Ilcrentiatcdresponsihility principle of UNFCCC for reducing the emissions vary and depends on thecountry's level of emission. Accordingly Annex I countries were given emission reductiontargets c.g. Japan 6Lk. EU 8L.k. and US 7CJL. This issue has drawn attention or the developedcountries since it could alter their lifestyles drastically. The flexible mechanism permitsdeveloped countries to purchase GHG emission potential from developing countriesSelling GHG emission potential (although an income source) has been viewed as sellingdevelopment potential of developing countries. This puts the developing countries in adilemma in making decisions on emission trading. Therefore an in-depth knowledge onmarket potential of GHG is important.The objective of this paper is to review the flexible mechanisms under the Kyoto Protocoli.e. 11, CDM and emission trading along with principles. modalities and procedures inrelation to Sri Lankan environmental conditions and to estimate the total GHG marketpotential for Sri Lanka if the country decides to participate in the global GHG market. Thispaper presents an economic analysis of GHG market in Sri Lanka with an attempt toinvestigate the relationship between rate of emission and economic growth. This ventureessentially creates an equity problem which is discussed using different discount rates.Data from secondary sources. in particular GHG inventories for Sri Lanka for J 1)94 & 11)1)5years arc used to estimate Sri Lankan emission trading potential. These figures will heuseful for predicting Sri Lankan contribution to the emission trading market. Sinks andSources and the sectors of emission are discussed separately in order to identify the mostimportant sectors in terms of emission trading. The paper also discusses the disadvantagesof emission trading, particularly whether this would limit our development potential andsovereignty. the major criticisms against the emission trading. Finally, this paper presentsthe relationship between GHG emission. emission trading potential and economicdevelopment under various scenarios.

POLICY RELEVANT ECOSYSTEM SERVICES VALUATION; RAINFOREST NON·TIMBER PRODUCTS

One recent study has estimated the current economic value of seventeen ecosystem serviceson a biosphere-wide basis at between US$I (i - 54 trillion (1012) per year. representing anaverage annual value some I.X times the current global gross national products (Costanza('I (/1. 1997). Such global aggregate values. while they serve to raise awareness andstimulate dialogue between scientists. social scientists. policymakcrs and citizens. shouldnot be taken too literally. The challenge will he to quantify in monetary terms and provehow valuable ecosystem services arc: as well as to formulate mechanisms by which suchfunction-based values can he realistically appropriated by society. In a much quoted paper(Peters et al.. 19X9) the economic value (net present value) of the fruits and latex harvestfrom an Amazonian forest was estimated to he US$ 6.:nO ha·l. Even more significantly. itwas also claimed that such an economic return was sawntimber extraction/production(NPV = US$I.(JOO ha'). timber and pulpwood extraction/production (NPV = US$ 3.lX4ha·l) or fully-stocked cattle pasture (NPV = US$2.2960 ha-I). This is a strong conclusionwith obvious implications for tropical forest conservation verses development policy. Thetemptation then is that such findings are gcncraliscd.This paper focuses on tropical rainforest ecosystems and the use value of their non-timberforest products (NTFPs) provisions to test whethcr this conclusion is universally valid?The study has rigorously applied its data collection and analysis to validity and reliabilityprotocols in order to estimate the policy relevant NTFPs value derived from the Sinharajarainforest in Sri Lanka. This forest land use has then been compared with alternative lane!us options in a cost-benefit analysis. The results indicate that the NPV of the actual NTFPsnow from the Sinharaja is US$ 147 ha-I which is significantly lower than the landclearance value USS 42XI ha-I (tea cultivation). This means that previous studies havesignificantly overestimated NTFPs value. and consequently that biodiversity conservationpolicy cannot be economically justified (economic efficiency criterion) on the basis ofsustainable NTFPs collection alone. Such a strategy docs. however. also have other widersocial benefits for local forest village communities such as income distribution effects.Conservation of the forest ecosystem would also generate other uses and non-use valueslinked to other 'NTFPs-col11patiblc' forest function services. An economic case for such aconservation strategy will have to he based on the multiple services value that a given'healthy' forest ecosystem can provide sustainably over lime,

The importance of local forest benefits: Economic valuation of Non-Timber Forest Products in the Eastern Arc Mountains in Tanzania

Understanding the spatial distribution of the quantity and economic value of Non-Timber Forest Product (NTFP) collection gives insight into the benefits that local communities obtain from forests, and can inform decisions about the selection of forested areas that are eligible for conservation and enforcement of regulations. In this paper we estimate transferable household production functions of NTFP extraction in the Eastern Arc Mountains (EAM) in Tanzania, based on information from seven multi-site datasets related to the behaviour of over 2000 households. The study shows that the total benefit flow of charcoal, firewood, poles and thatch from the EAM to the local population has an estimated value of USD 42 million per year, and provides an important source of additional income for local communities, especially the poorest, who mainly depend on subsistence agriculture. The resulting map of economic values shows that benefits vary highly across space with population density, infrastructure and resource availability. We argue that if further restrictions on forest access to promote conservation are considered, this will require additional policies to prevent a consequent increase in poverty, and an enforced trade-off between conservation and energy supply to rural and urban households