Abdul Rahim, Norhuda

Awang Noor, Abd Ghani

Baharuddin, K.

Othman, Mohd Shahwahid

Zulkifli, Y.

Universiti Putra Malaysia Institutional Repository

UPM Research Report 1998: Volume 2ECONOMIC VALUATION OF FOREST CATCHMENTCONSERVATION: TRADE-OFFS BETWEENPROTECTION AND ALTERNATIVE USESRO. Mohd Shahwahid, A.G. Awang Noor,N. Abdul Rahim, Y. Zulkifli and K. BaharuddinFaculty of Economics and ManagementUniversiti Putra Malaysia, 43400 UPM, Serdang, Selangor,MalaysiaKeywords: economic valuation, forest catchment,trade-offs, on site and off-site costs, externalities.IntroductionForested catchments provide multiple goods and services,many of which are joint-production activities. Joint-production is characterised by inter-dependency whereby oneuse can impose externalities upon others. The objectives ofthe study were: (i) To identify the stakeholders or users ofthe forested catchments; (ii) to model sediment yield in for-ested catchments under total protection and alternative landuse options; (iii) to value the benefits and costs of managingforested catchments under protection and alternative land useoptions; and (iv) to determine the trade-offs between thesedifferent land use options.Materials and Methods-Two study sites were selected, (i) Hulu Langat Forest Re-serve (HLFR), Selangor and (ii) Sungei Ikan Catchment(SIC), Cameron Highlands, Pahang. In the HLFR site thestudy determines the economic trade-offs between total pro-tection and logging while in the SIC site the study establishesthe on-site and off-site economic costs of converting forestedcatchment for vegetable farming. Soil erosion and sedimen-tation were computed using data from field measurement aswell as from literature review. The physical impacts of theseerosion and sedimentation rates were determined. Thesephysical impacts were monetised using economic valuationtechniques. Off-site costs upon hydro electric power (HEP)and water treatment plants were evaluated using the changein productivity technique while the on-site costs of erosion-was computed based on the replacement cost and net valuemarginal product of fertiliser input. ..344Results and DiscussionAnalysis at the compartment level in the HLFR, suggests thatthe central issue of joint production in forested catchment isnot the intensity of logging methods to adopt. Rather thepoint is which water use can be combined with timber pro-duction that can generate the net present values greater thanthe status quo total protection option. The returns from tim-ber cannot meet that from the status quo production oftreated water but complementing water uses with reducedimpact logging in forested catchments is efficient in hydroelectric power (HEP) catchments. The analysis does not in-corporate the effects of logging options on the other attrib-utes of natural forests such as recreation, bio-diversity valuesand non-timber forest products (NTFP). This factor may bean important consideration in future evaluations. Findingsfrom the SIC site suggests that the on-site cost of soil lossfrom erosion can be quite large. Farmers have to make re-placement costs in the form of additional fertilisers, other-wise they would incur losses in the form of foregone netvalue marginal products (of nutrients). The soil erosion fromfarming causes sedimentation of the waterways, which im-poses externalities upon downstream users. An important af-fected user is the HEP company which run a cascade ofpower plants downstream. The analysis values the variousexternal costs being borne, including investments on sedi-ment traps and desanders, incremental maintenance costs,foregone HEP revenues during idled maintenance days, andincremental cost of differential power production by otherindependent power plants to compensate for the reduction inpower generation by the plants in Cameron Highlands.ConclusionsThe study establishes that soil erosion and sedimentation arenot costless. External costs are being borne upon down-stream users which ought to be accounted. Otherwise a proj-ect such as logging and vegetable farming on cleared for-ested catchment would have been passed as financially viablewhich in fact is incurring substantial social cost upon society.It is recommended that any economic activity that generateslarge impacts on soil stability would have to undergo morecomprehensive evaluation particularly on the externalitiesthat it can impose upon society.Supported by IRPA Grant 05-02-04-0008

Economic valuation of forest catchment conservation: trade-offs between protection and alternative uses

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Economic valuation of forest catchment conservation: trade-offs between protection and alternative uses

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