This section defines the benefits of the Buriganga River cleanup programme within the framework of TEV described in Section 3.1.2 of this chapter. In Table 3.1, an attempt is made to desegregate the economic values (benefits) of the cleanup programme into different components of total value. The components of the TEV are defined on the basis of the ECV scenario which is expected to be the potential benefit of the Buriganga River cleanup programme. The total value is, therefore, the sum of all these components; not just those that can be measured from market information.
Table 3.1 presents the appropriate method to estimate each component of the Buriganga River cleanup programme. Within the framework of TEV, only some direct use benefits will be estimated using market data; all other components of TEV will be measured using the ECVM due to either non-existence or malfunctioning of markets.
In the case of the Buriganga River cleanup programme, benefits are expected to accrue to the households both directly (mainly use values) and indirectly (mainly non- use values) – directly through increased provision of goods and services (e.g. an increase
Table 3.1: Taxonomy of the total economic value of the Buriganga cleanup programme Components of TEV Technique to Measure Value Use Value
Direct Use Values Consumptive Uses
• Water transport (navigation)
• Increased fish production
• Better quality water for domestic and industrial uses
Non-consumptive Uses
• Increased housing and land values
• Jogging and walking along the river
• Tourism and recreation
• Educational, scientific and cultural purposes
• Improved health benefit
• Bathing, washing and boating
Market data Market data Market data Market data ECVM Market data ECVM Market data ECVM
Indirect Use Values
• Riverbank erosion prevention
• Flood control
• Reduced damage to downstream irrigation system
• Biodiversity
• Ecological function (e.g. watershed protection)
• Pollution assimilative capacity
ECVM ECVM ECVM ECVM ECVM ECVM Non-use Values Option Values • Biodiversity
• Future use (e.g. recreation option)
• Potential gene pool
ECVM ECVM ECVM
Existence Values
• Satisfaction from knowledge of existence of clean water
• Aesthetic benefits
• Biodiversity
• Spiritual and religious
ECVM
ECVM ECVM ECVM
Bequest Values
• Value arising from the knowledge that the river remains healthy and viable and will persist for future generation
• Biodiversity
ECVM
ECVM
in the volume of river transportation), improved quality of the existing facilities (e.g. improvement of water quality), and newly created facilities (e.g. use of river water for domestic needs, and tourism and recreation), and indirectly through the existence of a healthier environment both for current and future generations. That is why, except for few use values, all the components of TEV are used to elicit residents’ WTC for the cleanup programme.
3.5 Conclusion
The focus of this chapter is on developing the conceptual basis and theoretical foundation for this study. It analyzes the concept of value from an economic perspective, defines total economic value and then discusses the analytical and theoretical framework within which estimation of economic values are formulated and interpreted. The chapter describes theoretical measures of welfare change derived from responses of hypothetical questions through ECV survey. Responses to direct questions about WTC, both in the form of money and time, can be interpreted as estimates of each individual’s preference for the good in question. The ECV method can be used in a “total value framework” considering the non-market components of the TEV resulting from the cleanup programme.
A review of the literature on the theory and application of CVM reveals that the conventional approach is unable to capture the issue of non-monetization of many economies. This indicates that the respondents’ preference evaluation through asking their willingness to pay might not capture full value elicitation in the context of developing countries like Bangladesh. To overcome this drawback, an extension is proposed, i.e. a question asking respondents’ willingness to contribute time, along with the conventional approach of asking the WTP question. This proposition is examined in the next chapters.
Previous empirical studies on the application of CVM in regard to river cleanup programmes are also briefly reviewed. The contingent market is also defined and resources needed to be valued through ECV survey are identified. These are important for designing the survey instrument and to design a cleanup programme for the Buriganga River, which are the subject of Chapter Four and Six respectively.
As a whole, this chapter lays out the basic premises and value judgements that underlie the economic concept of benefits and presents the basic theory of the measurement of economic welfare changes. How to apply these theories and estimation of values are the subjects of the chapters to follow. An ECV survey procedure is designed in the next chapter and the data generated by the survey is analyzed in Chapter Five. In Chapter Six, all the data and information are compiled together to construct a cash flow to conduct an extended cost-benefit analysis on the basis of the theoretical framework designed in this chapter.
Alam, Khorshed. (2003). Cleanup of the Buriganga River : integrating the environment into decision making. PhD Dissertation. Perth, Murdoch University.