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

2. 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?

3. 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.

4. 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]

5. 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

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

7. 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

8. 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

9. 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

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

11. 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

12. 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

13. 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

14. 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

15. 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

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

17. Tissawewa Irrigation Tank: Scenic Beauty

18. Irrigation and Tourism: Giritale

19. Irrigation and Tourism: Kandalama

20. Prospects for Mutual Existence?

21. Two sides of the story

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

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

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

25. Wildlife at YPC

26. Changes in flow volumes at YPC

27. 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

28. 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

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

30. 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

31. References
The United Kingdom Department for Environment, Food & Rural Affairs Payments for Ecosystem Services: A Best Practices Guide. Available online [
Weligamage, P 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 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, Volume 2. Water quality, environment, and climate change.

32. Thank you for your attention