The Hindu Business Line : Valuing wildlife and environment

CRITICISM of the failure of conventional economics to recognise the impacts of growth upon the environment has led some economics to examine how it can be more inclusive of the environment, and subsequently attempts have been made to develop methodologies to give a value to the environment. One method is based upon expressed consumer preference for the environment, although to many environmentalists the idea of determining its value may seem abhorrent, failing to recognise its intrinsic value.

As Economist Frances Cairncross comments: "Nothing so annoys environmentalists about economists as their attempt to put a price on nature's bounty." Putting an economic value on environmental assets is difficult but, as Cairncross points out, society puts values on environmental assets by deciding which policies to pursue.

The reality is that ethical arguments about the `right' of nature seem to have little credence in development decision-making; government policy advisers are more likely to be trained economists than environmentalists or philosophers. It is important to demonstrate the economic value of environmental assets in their existing form as accurately as possible.

"In a world where money talks, the environment needs value to give it a voice." Economist David Pearce comments, "If, on the other hand, conservation and the sustainable use of resources can be shown to be of economic value, then the dialogue of developer and conservationist may be viewed differently, not as one of necessary opposites, but of potential complements."

The willingness of individuals to give money to, and become members of, non-governmental organisations aiming to protect the environment — such as the World Wide Fund for Nature (WWF) or the World Society for the Protection of Animals (WSPA) — suggests that the worth of the environment can be expressed in economic terms. One method of aggregating individual preferences, or measuring the gains and losses of well-being is by looking at what people are `willing to pay' for somethingTurner comment: "A measure of an individual's preference for a good in the market-place is revealed by their willingness to pay (WTP) for that good."

The level of willingness to pay can be assessed through direct questioning: "What would you be willing to pay to ensure the survival of a lion as a species?"; or "What would your be willing to pay to protect the ozone layer?" This technique, based upon asking the beneficiaries "what they would be willing to pay to protect the ozone layer?" This technique, based upon asking the beneficiaries what they would be willing to pay for the environmental benefit under consideration, is called the contingent valuation method. The temptation would be respond that such species or environmental assets are `priceless'; however, it is unlikely that many of us would be willing to give all our worldly possessions to preserve the lion. So in this sense there is an economic value attached to its preservation.

One study that tried to estimate the economic value of the lion was conducted in the Amboseli National Park in Kenya, which found that each lion was worth $27,000 per annum in the1980s values, expressed in terms of visitor pulling power. It was found that wildlife tourism was economically preferential to the other main development option of agriculture. The parks net earnings from tourism were found to be $40 per hectare per year, fifty times higher than the most optimistic projection for agricultural use. Environmentalist Shackley recommends the following approaches to valuing wildlife:

* Calculating total gate or licence fees to estimate the value of tourism in a particular destination;

* Estimating visitor expenditure on equipment, lodging, food and transport within a designated area;

* Looking at employment generated.

The Department for International Development (DFID), in the United Kingdom, commissioned a study to look at the revenue that was being lost from three national parks in three different countries (the Komodo National Park, Indonesia; the Keoladeo National Park, India; and the Gonarezhou Park, Zimbabwe). In all three parks the price of entrance fees to the parks was not market determined and it was suspected that visitors would be willing to pay considerably more to visit them.

The extent of this user surplus was assessed using the `contingent valuation' method, which explored the response of visitors to hypothetical rises in entrance fees. For each park, questions concerning tourists' `willingness to pay' were included in tourist surveys. Interviewees were surveyed in the park and asked how much they would be prepared to pay for the current experience. The results revealed that price elasticity (defined as the ratio of fractional or percentage change in demand to the fractional or percentage change in price), is appreciably more elastic at Gonarezhou than Keoladeo or Komodo.

The case study indicates that there is a potential to raise income through raising fees, and that any tourism strategy aimed at maximising revenue needs to take into account the types of visitors it wishes to attract, not interpreting the tourist market as being homogeneous.

Debt-for-nature swaps usually involve the co-operation of national government, international and local NGOs, and banks. They have been used in Madagascar, where the Agency for International Development (AID) paid US $1 million to purchase a part of the government's debt in exchange for the support of local environmental groups; and in the Philippines and Zambia in conjunction with the World Wide Fund for Nature.

(The author is a Chennai-based management consultant.)

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