68797 The World Bank Group Valuation of Environmental Services in Sri Lanka – A Case Study of Soil and Watershed Benefits in the Southern Province 6/30/2010 i Table of Contents Chapter 1 Environmental Services in the Southern Province ....................................................................... 1 1.1 Introduction ........................................................................................................................................ 1 Chapter 2 Benefits of Soil Conservation ...................................................................................................... 4 2.1 Sri Lanka and its ecological geography ............................................................................................... 4 2.2 Soil productivity .................................................................................................................................. 4 2.3 The Approach ..................................................................................................................................... 6 2.4 Modeling soil nutrient loss.................................................................................................................. 7 2.5 Estimates of soil nutrient loss ............................................................................................................. 8 2.6 Replacement cost of soil nutrient loss .............................................................................................. 13 2.7 Soil recovery through conservation measures ................................................................................. 16 2.8 Discussion.......................................................................................................................................... 19 Chapter 3 Valuation of Watershed Benefits ............................................................................................... 19 3.1 Introduction ...................................................................................................................................... 19 3.2 Watershed benefits in Sri Lanka ....................................................................................................... 20 3.3 Total economic value: a framework for defining watershed economic benefits ............................. 24 3.4 Methods for valuing ecosystem benefits.......................................................................................... 25 3.5 Watershed study areas ..................................................................................................................... 26 3.6 Valuation approach ........................................................................................................................... 29 3.61 Wetland benefits ......................................................................................................................... 30 3.62 Mangrove forest benefits ............................................................................................................ 30 3.63 Coral reef benefits ....................................................................................................................... 34 3.64 Value of water for domestic services at the river basin level ...................................................... 34 ii 3.65 Value of water in irrigated paddy production at the river basin level ........................................ 35 3.66 Interpretation of watershed values............................................................................................. 35 3.7 Valuation of watershed benefits....................................................................................................... 36 4.1 Conclusions and discussion ................................................................................................................... 44 Annex 2 ....................................................................................................................................................... 46 Map A2: Soil Map of Sri Lanka ................................................................................................................ 46 Table A2.31 Average annual soil loss rates, by AEZ, soil group and crop (tons/hectare/year) .............. 47 Table A2.32 Average annual soil losses, by AEZ and crop (tons/year) ................................................... 49 Table A2.33 Nutrient content of soils, by AEZ and nutrient type ........................................................... 50 Annex 3 ....................................................................................................................................................... 51 3.1 Commonly-used valuation tools and their application in the adopted case studies ....................... 51 Table A3.11 Valuation of Muthurajawela wetland benefits, Emerton and Kekulandala (2003) ............ 55 Table A3.12 Direct and indirect economic benefits of Muthurajawela Marsh, Emerton and Kekulandala (2003) ...................................................................................................................................................... 56 Table A3.13 Valuation of Mangrove Forests in Sri Lanka, reproduced from Batagoda (2003) .............. 57 Table A3.14 Accumulated net present value of coral reefs in Sri Lanka over 20 years .......................... 59 Annex 4 ....................................................................................................................................................... 60 Benefits of wetlands, mangroves and coral reefs in the study............................................................... 60 Bentota Estuary................................................................................................................................... 60 Maduganga Estuary (Ramsar Site) ..................................................................................................... 62 Hikkaduwa National Park ................................................................................................................... 64 Rumassala Marine Sanctuary ............................................................................................................. 66 Unawatuna Reef ................................................................................................................................. 68 Koggala Lagoon .................................................................................................................................. 70 Weligama Bay & Reef ......................................................................................................................... 72 Rekawa Lagoon & Reef ....................................................................................................................... 74 iii Kahanda Estuary & Kahandamodera Mangrove ................................................................................ 76 Kalametiya Lagoon ............................................................................................................................. 78 Lunama Lagoon................................................................................................................................... 80 Karagan Lewaya.................................................................................................................................. 82 Maha Lewaya ...................................................................................................................................... 84 Lunugamvehera Reservoir .................................................................................................................. 86 Koholankala Wetland in Bundala National Park (Ramsar Site) .......................................................... 88 Malala Wetland in Bundala National Park (Ramsar Site) ................................................................... 90 Embilikala Wetland in Bundala National Park (Ramsar Site) ............................................................. 92 Bundala Wetland in Bundala National Park (Ramsar Site) ................................................................. 94 Mangroves in Ruhuna (Yala) National Park ........................................................................................ 96 Weerawila-Tissa-Pannangamuwa-Debara-Yoda Tanks ..................................................................... 98 Pilinnawa Wetland ............................................................................................................................ 100 Palatupana Lagoon ........................................................................................................................... 102 References ................................................................................................................................................ 104 iv List of Figures Figure 2.1 Agro - Ecological Zones of Sri Lanka ............................................................................................. 5 Figure 3.1 Total Economic Value (TEV) ....................................................................................................... 24 Figure 3.2 Rivers and Basins in Sri Lanka .................................................................................................... 28 List of Tables Table 2.1 Total annual per hectare costs of nutrient losses for paddy, tea, rubber and coconut (USD/ha/year) ............................................................................................................................................... 9 Table 2.2 Total annual per hectare costs of nutrient losses for minor export crops, fruit crops and natural forest (USD/ha/year)................................................................................................................................... 10 Table 2.3 Total annual costs of nutrient losses for paddy, tea, rubber and coconut (USD/year) .............. 11 Table 2.4 Total annual costs of nutrient losses for minor export crops, fruit crops and natural forest (USD/year)................................................................................................................................................... 12 Table 2.5 Summary of nutrient losses and replacement costs (USD in parentheses) ................................ 14 Table 2.6 Costs of soil conservation measures ........................................................................................... 17 Table 2.7 Economic feasibility of soil conservation measures.................................................................... 18 Table 3.1 Ecosystem goods and services provided by watersheds ............................................................ 20 Table 3.2 Basins and rivers in the Southern Region.................................................................................... 27 Table 3.3 Economic value of study sites for wetlands, mangroves and coral reefs ................................... 32 Table 3.4 Value of water for irrigated paddy and domestic water consumption in selected river basins ($USD/year)................................................................................................................................................. 37 Table 3.5 Wetland, mangrove and coral reef benefits for selected river basins ($USD/year) ................... 39 Table 3.6 Value and share of wetland, mangrove and coral reef services ................................................. 41 Table 3.7 Summary of watershed benefits in the Southern Province ........................................................ 43 v Chapter 1 Environmental Services in the Southern Province 1.1 Introduction 1. The Southern Province of Sri Lanka, long considered an economically lagging region, is embarking on a new strategy of promoting greater economic development and creating more income opportunities. As part of this overall plan, several large developments are proposed that will likely have implications for critical ecosystems and environmental service flows on which the Southern population greatly depends.1 While the benefits that accrue under the economic development plan may be substantial, the sustainability of such income generation may be outweighed by the degradation in income derived from those linked to the environment – such as agriculture, forestry, fishing and tourism.2 Ambitious investment programs such as these need to be harmonized with the fundamental sustainability concepts declared in the Government’s 10-year development framework, “land in harmony with nature�, otherwise the benefits of such developments may come at the expense of greater vulnerability for those whose livelihoods depend on natural resources.3 2. The Southern Province comprises three districts: Galle, Matara, and Hambantota; it stretches along the southern coast of Sri Lanka, extending 65 kilometers inland at its widest point (Map 1.1). It has a gross area of 554,200 hectares and is about 250 km long from the town of Bentota in the west to Yala National Park in the east. The total population of the province is about 2.4 million, of which about 90 percent are considered rural and about 28 percent are poor (World Bank, 2007).4 3. The Southern Province is also one of the richest in terms of its environmental service values and biodiversity; itincludes the Hambantota District, which has been declared the model environmental district by the Government of Sri Lanka (GoSL). Among the wide array of environmental service flows in the Southern Province, two of the most significant are the benefits of agriculture and those derived from watershed functions. 4. Agriculture, the predominant economic activity, contributes about 30 percent of provincial Gross Domestic Product (GDP) and about 48 percent of employment. However, the importance of 1 In particular, the plan calls for the development of a harbour in the district of Hambantota and a second international airport. 2See companion policy note on the benefits of recreation and tourism in the Southern Province (World Bank, 2009). 3The Government’s framework called the Mahinda Chintana (MC): Vision for a New Sri Lanka was presented at the Sri Lanka Development Forum in 2007. 4 Using the poverty headcount ratio (%); Galle: 26%, Matara: 27%, Hambantota: 32%. 1 agriculture as an employer varies across the province and increases considerably in the east; 32 percent of the population in Galle is dependent on agriculture as compared with 48 percent in Hambantota (World Bank, 2007). The major export crops grown in the region include tea, rubber, coconut, cinnamon, rice, and various fruits. The province produces 33 percent of Sri Lanka’s tea and 75 percent of the world’s cinnamon (Department of Census and Statistics, 2004). During 1999- 2000, the combined value of annual and perennial farm production in the region was estimated at SLRs25 billion. Map 1.1 – Map of Sri Lanka 5. Critical to continued agricultural productivity is soil conservation. The clearing of forests (i.e., slash and burn) for new lands typically increases runoff and siltation rates in steeply sloped lands, and intensive farming practices have been linked to declining productivity. Key to the sustainable management of soil productivity is nutrient management and the adoption of conservation techniques that can conserve soil depth. Agricultural lands in the Southern Province are particularly vulnerable to the effects of erosion – with steeply sloped lands in the west and dry, arid lands to the east. The costs of soil erosion from development and crop intensification are a serious threat to agricultural livelihoods. 2 6. The protection of watersheds in the Southern Province is also vital to the population and environment. Watersheds provide critical service flows such as supplying water for agricultural irrigation and domestic water use. They also play a major role in regulating water flows for flood attenuation, sediment control, water filtration or purification, forestry, fishing and recreation, just to name a few. Development that alters these regulatory and provisioning services ultimately affects many lives either directly or indirectly. 7. The purpose of this policy note is to quantify the benefits of soil conservation and watershed functions for use in policy and development planning. This will enable policymakers to weigh the benefits from future development activities and to better understand the potential tradeoffs. Without quantifying environmental services, there remains a propensity to neglect their value in development and planning decisions, resulting in ineffective environmental policies and regulations. 8. The valuation of environmental services is important to enable fully informed and efficient decisions regarding the environment and natural resource management. The environment is considered a common property resource; as a public good, most environmental goods and services are not traded in the market and therefore do not have a price (or, are partially priced). Without a price, markets fail to capture the value of environmental goods and services, resulting in their under provision and mismanagement. Therefore, in order to address sustainable economic development and environment protection within a country’s economic policy, the translation of the benefits and costs of environmental services into monetary terms is a difficult but necessary first step. Focusing on the “use-values� of ecosystems in the Southern Province, this study produces results that inform policymakers in making development decisions sensitive to environmental considerations. 9. The policy note is structured as follows. Chapter 2 covers the importance of soil conservation in each of the agricultural growing districts in the Southern Province, and estimates annual soil loss from rainfall erosion. The costs of replacing these lost nutrients are estimated and weighed against the benefits from alternative conservation measures. In Chapter 3, watershed benefits are evaluated for a selected set of river basins in the Southern Province. The benefits are disaggregated into different environmental service flows that have both market and non-market values. Specific values included are the regulatory and provisioning functions of wetlands, mangroves, coral reefs as well as the value of water for supplying drinking water for communities and agricultural irrigation. Finally, the policy note provides conclusions and further discussion in Chapter 4. 3 Chapter 2 Benefits of Soil Conservation 2.1 Sri Lanka and its ecological geography 10. Sri Lanka traditionally has been divided into three climatic zones on the basis of rainfall: the Wet Zone in the southwestern region including the central hill country, the Dry Zone covering mainly the northern and eastern part of the country, and the Intermediate Zone skirting the central hills except in the south and the west (Figure 2.1). The Wet Zone covers the area receiving mean annual rainfall over 2500 mm without pronounced dry periods. The Dry Zone receives less than 1750 mm with a distinct dry season from May to September. The Intermediate Zone receives between 1750 and 2500 mm and has a short and less prominent dry season. Three elevation (and temperature) zones are traditionally recognized: the low country, below 300 m elevation; the mid- country between 300 and 900 m; and the up-country above 900 m. Both Wet and Intermediate zones spread across all three categories of elevation while the Dry Zone is confined to the Low country, so seven agro-climatic zones cover the entire island. 11. Sri Lanka is also divided into 24 Agro-Ecological Zones (AEZ). The differentiation of the Wet Zone into its distinctive agro-ecological regions was governed primarily by differences in rainfall and elevation. In the Dry Zone, on the other hand, the nature of the soil primarily determines the identity of individual agro-ecological regions and in the Intermediate zone rainfall, elevation and soil play an equally important role. 12. The Southern Province is characterized by a wide range of land forms from flat coastal plains in the south to hills in the north. The climate ranges from wet and humid in the west to dry and arid in the east. As a result, the Southern Province covers a wide range of natural ecosystems, and the land and water use patterns as well as the agricultural cropping systems are extremely varied. These range from forests and tea estates in rolling upland country in the north and east, through low-lying coconut and paddy areas in the wetter coastal plains, to semiarid lowland plains in the eastern dry zone. The latter are suitable only for subsistence shifting cultivation or livestock production. 2.2 Soil productivity 13. The soil productivity of agricultural activities is one of the most important environmental service flows in the Southern Province (other than perhaps water). Unless soils are managed in a sustainable manner, exposed lands remain vulnerable to the effects of erosion. Soil erosion has numerous impacts on crop productivity, food production, economic growth, income distribution, and the environment. It can reduce crop yields in several ways such as through the reduction of plant nutrients, degradation of soil structure, and non-uniform removal of soil within a field. When fertile soil is removed, along with it go the nutrients and organic matter which are significant to the growth of plants and crops. 4 Figure 2.1 Agro - Ecological Zones of Sri Lanka Source: Department of Agriculture (2003) 5 14. Previous studies of soil erosion in Sri Lanka suggest that erosion is occurring at a significant rate (Stocking, 1992; Nayakekorala, 1998). However of the handful of assessments that actually quantify the economic losses from soil erosion, none were conducted for areas in the Southern Province. In a study of the Upper Mahaweli Watershed, on-site costs of soil erosion ranged from USD 3.84/ha/year for home gardens to USD 122.75/ha/year for shifting cultivation with a total cost of over USD 14 million per year in 1993 prices (Vieth et al., 2001). Soil erosion losses in the Nuwara Eliya district were estimated to be approximately Rs. 814 million per year (Abeygunawardnea and Samarakoon, 1993). In another study conducted on potato lands in the Nuwaraeliya district of Sri Lanka, the estimated on-site nutrient replacement cost ranged from Rs. 4,251/ha to Rs. 3,443/ha in the Maha and Yala seasons, respectively (Samarakoon and Abeygunawardena, 1992).5 Other, more global, estimates derived from the Global Assessment of Soil Degradation (GLASOD) suggest that nearly 33% of Sri Lanka’s land area is severely or very severely degraded in terms of reduced agricultural productivity (Oldeman et al., 1990, 1991; Oldeman, 1992, 1993).6 2.3 The Approach 15. The direct approach to estimating the on-site costs of soil erosion is to quantify yield losses attributable to erosion, and value these losses using market prices. However, measured data on the relationship between erosion and yield is often difficult to obtain, especially in developing countries. In these data scarce instances it is common to use the simpler replacement cost method (RCM) as an appropriate alternative (Dixon and Hufschmidt 1986). The RCM assumes that the productivity of soil can be maintained if lost nutrients and organic matter are manually replaced. This is of course an over-simplification, as soil fertility actually depends on a host of other inputs in addition to nutrients. Generally, the RCM is assumed to provide a lower limit on costs, unless soils are composed of deep, fertile layers (Hufschmidt et al., 1983). Most soils in the Southern Province are composed of sand and clay which makes soil depth moderately shallow and more erodible. 16. To assess the economic impacts of soil erosion, this report employs a model to estimate soil loss due to water erosion then imputes the replacement cost of this loss. The replacement cost is the amount of money it would take to sustain the soils’ productivity by physically replacing the nutrients lost in the erosion process – in the absence of conservation tillage techniques. The cost implications of two methods of manual replacement are explored. The report also provides cost estimates of three commonly used soil conservation techniques and evaluates the investment payback period of adopting these practices. Section 2.4 below first presents the model used to estimate soil nutrient losses with the results in Section 2.5. Section 2.6 then presents total nutrient losses across all crops for the province and also calculates the cost of two manual nutrient replacement methods. Section 2.7 then evaluates the payback period for three soil conservation methods. 5Maha and Yala seasons are the two main rainfall seasons in Sri Lanka fed by North East and South West Monsoons. 6GLASOD was conducted by the UNEP and the International Soil Reference and Information Centre (ISRIC) in the 1980s. 6 2.4 Modeling soil nutrient loss 17. Models of soil erosion play critical roles in soil and water resource conservation and non- point source pollution assessments, including: sediment load assessment and inventory, conservation planning and design for sediment control, and for the advancement of scientific understanding. The most widely used soil erosion model is the Universal Soil Loss Equation (USLE), an empirically-based model which relates management and environmental factors directly to soil loss and/or sediment yields through statistical relationships. The USLE enables planners to predict the average rate of soil erosion for each feasible alternative combination of crop system and management practice in association with a specified soil type, rainfall pattern, and topography. The USLE is an erosion model designed to compute long-term average soil losses from sheet and rill erosion under specified conditions. 18. The USLE method stands in sharp contrast to process-based (physically-based) models which mathematically describe the erosion processes of detachment, transport, and deposition; through the solutions of the equations describing those processes, the process-based models provide estimates of soil loss and sediment yields from specified land surface areas. The appeal of the USLE is its relatively modest informational requirements in contrast to more complex process- based models. 19. The USLE estimates the average annual soil loss (A) by using a simple multiplicative functional relation expressed as A = RKLSCP where R is the rainfall erosivity, K is the soil erodibility, L and S are slope length and slope angle factors, C is the crop management factor and P is the erosion control practice factor. With site-specific information, the USLE estimates can offer a good first-order approximation of soil erosion due to rainfall events. The basic procedure is as follows: Step 1. Information was initially collected on rainfall, soil type, AEZ area and crop area for each district in the Southern Province.7 Values for each parameter of the USLE were also compiled at the crop and AEZ level in each district.8 Step 2. Estimates of average annual soil loss rates were calculated using the USLE for each crop, soil type, AEZ and district. Results are presented in Table A2.1 (Annex 2). Step 3. Soil loss rates were then matched to Agricultural Census information on crop area to calculate the total loss by crop in each AEZ and district.9 Results are presented in Table A2.2 (Annex 2). 7 Rainfall data were collected from station observations; soil type and AEZ area delineation were from the soil resources inventory and agro-ecological zoning (AEZ) maps; agricultural crop information was assembled from the Agricultural Census in 2002 and updated with information from 2005-06. 8 Several parameter values were from Wijesekera and Samarakoon (2001) and Joshuwa (1977). 7 Step 4. Total soil losses were then associated with crop-level nutrient content measurements to calculate the loss of nitrogen, phosphorus, potassium (N.P.K.) and organic matter.10 Low and high content ranges were developed to account for possible differences in soil nutrient balances in each AEZ. Nutrient levels are presented in Table A2.3 (Annex 2). Step 5. Nutrient losses were then multiplied by current input prices for N.P.K. and organic matter to arrive at a total cost of lost nutrients per hectare per year (Tables 2.1 and 2.2) and annual losses (Tables 2.3 and 2.4) due to soil erosion. This information was then added to labor and transport cost information for a total replacement cost (Table 2.5). 2.5 Estimates of soil nutrient loss 20. Erosion rates (tons/ha/year) are highest in the Wet Zone (districts of Galle and Matara) and some areas of the Intermediate Zone (district of Matara), especially among minor export and fruit crops (Table A2.1). Rainfall patterns in these areas are in excess of 2000 mm/year and feature rolling and undulating terrain which is particularly prone to higher erosion rates. However, when erosion rates are combined with actual cropping area, tea, coconut and rubber plantations become more significant in terms of annual soil losses (tons/year), with fruit crops representing a relatively small share (Table A2.2). 21. Linking annual losses with soil nutrient content, and multiplying by input prices, Tables 2.1 and 2.2 below show the costs of soil nutrient erosion, again with the highest per hectare losses in the Wet Zone areas of Galle and Matera among minor exports crops and fruit growing. After multiplying by actual crop area in each district and AEZ in Tables 2.3 and 2.4 we see that tea, minor export crops and coconut plantations represent the largest costs in terms of soil nutrient loss. Again, it should be re-emphasized that the wide variation in loss estimates stems from the nutrient content of soils, the crop, and the rainfall patterns in each of the Agro-Ecological Zones. In designing extension programs, or evaluating the feasibility of alternative interventions, one would need to take these ranges into account, ideally at the plot-level. 9 Crops included in the analysis included the major crops of paddy, tea, rubber, coconut, minor export crops, fruit crops and natural forests. Minor export crops included cinnamon, coffee, cocoa, pepper, cashews, cardamom, cloves, nutmeg, betel and arecnut. Fruit crops included mango, orange, lime, plantain, papaya, pineapple, rambutan and jackfruit (though not strictly classified as a fruit crop). Natural forests were only included to illustrate soil erosion rates of unmanaged areas. 10Urea is used as a nitrogen-release fertilizer; Triple super phosphate (TSP) is used for phosphorus; and Muriate of potash (MOP) for potassium. Due to the high price of TSP, ERP (eppawala rock phosphate) or IRP (imported rock phosphate) are often used as a substitute. For input pricing in the scenarios we use urea, MOP and TSP. 8 Table 2.1 Total annual per hectare costs of nutrient losses for paddy, tea, rubber and coconut (USD/ha/year) Paddy Tea Rubber Coconut Average Agro-ecological Area Annual District Climatic zone region (km2) Area % rainfall Low High Low High Low High Low High Galle Wet zone Low country WL1a 919.0 56.6 >3200 2.07 9.42 4.48 37.13 3.88 34.28 19.40 34.33 WL2a 706.0 43.4 >2400 1.57 7.14 3.39 28.12 2.94 25.96 14.70 26.00 Matara Wet zone Low country WL1a 459.0 35.8 >3200 2.30 10.43 4.96 41.10 4.30 37.94 21.48 38.00 WL2a 483.0 37.6 >2400 1.74 7.90 3.75 31.13 3.25 28.74 16.27 28.78 Intermediate zone Low country IL1a 166.0 12.9 >1400 0.75 4.94 2.92 24.18 2.53 22.32 5.29 12.47 IL1b 175.0 13.6 >1100 0.60 3.91 2.31 19.13 2.00 17.66 4.18 9.87 Hambantota Intermediate zone Low country IL1b 623.0 23.9 >1100 0.31 2.01 1.19 9.83 1.03 9.08 2.15 5.07 Dry zone Low country DL1b 363.0 13.9 >900 0.24 1.48 0.95 7.84 0.82 7.24 0.84 2.94 DL5 1623.0 62.2 >650 0.18 1.11 0.71 5.88 0.61 5.42 0.63 2.20 Total 9.77 48.36 24.64 204.33 21.36 188.65 84.94 159.64 Note: Calculations based on Step 5 in Section 2.4. 9 Table 2.2 Total annual per hectare costs of nutrient losses for minor export crops, fruit crops and natural forest (USD/ha/year) Minor export Fruit Natural crops crops forest Average Agro-ecological Area Annual District Climatic zone region (km2) Area % rainfall Low High Low High Low High Galle Wet zone Low country WL1a 919.0 56.6 >3200 7.68 63.65 7.88 63.65 2.86 3.80 WL2a 706.0 43.4 >2400 5.81 48.21 5.97 48.21 2.16 2.87 Matara Wet zone Low country WL1a 459.0 35.8 >3200 8.50 70.45 8.72 70.45 3.16 4.20 WL2a 483.0 37.6 >2400 6.44 53.36 6.61 53.36 2.39 3.18 Intermediate zone Low country IL1a 166.0 12.9 >1400 5.00 41.45 5.13 41.45 1.85 9.31 IL1b 175.0 13.6 >1100 3.96 32.80 4.06 32.80 1.46 7.37 Hambantota Intermediate zone Low country IL1b 623.0 23.9 >1100 2.03 16.85 2.09 16.85 0.75 3.79 Dry zone Low country DL1b 363.0 13.9 >900 1.62 13.44 1.66 13.44 0.70 3.02 DL5 1623.0 62.2 >650 1.21 10.07 1.25 10.07 0.53 2.26 Total 42.25 350.28 43.38 350.28 15.87 39.81 Note: Calculations based on Step 5 in Section 2.4. 10 Table 2.3 Total annual costs of nutrient losses for paddy, tea, rubber and coconut (USD/year) Paddy Tea Rubber Coconut Average Agro-ecological Area Annual District Climatic zone region (km2) Area % rainfall Low High Low High Low High Low High Galle Wet zone Low country WL1a 919.0 56.6 >3200 19,094 86,722 73,333 608,030 19,126 168,912 137,631 243,498 WL2a 706.0 43.4 >2400 15,426 70,060 31,385 260,223 5,142 45,412 80,083 141,683 Matara Wet zone Low country WL1a 459.0 35.8 >3200 14,596 66,291 84,019 696,631 1,535 13,558 110,620 195,710 WL2a 483.0 37.6 >2400 17,279 78,478 23,537 195,155 7,380 65,174 88,166 155,983 Intermediate zone Low country IL1a 166.0 12.9 >1400 4,572 29,987 772 6,399 1,700 15,015 9,851 23,230 IL1b 175.0 13.6 >1100 2,310 15,153 502 4,166 867 7,656 8,218 19,378 Hambantota Intermediate zone Low country IL1b 623.0 23.9 >1100 2,762 18,115 522 4,328 73 643 10,644 25,098 Dry zone Low country DL1b 363.0 13.9 >900 947 5,755 - - - - 2,432 8,470 DL5 1623.0 62.2 >650 4,294 26,081 - - - - 8,149 28,382 Total 81,281 396,641 214,071 1,774,933 35,822 316,371 455,793 841,432 Note: Calculations based on Step 5 in Section 2.4. 11 Table 2.4 Total annual costs of nutrient losses for minor export crops, fruit crops and natural forest (USD/year) Minor export Fruit Natural crops crops forest Average Agro-ecological Area Annual District Climatic zone region (km2) Area % rainfall Low High Low High Low High Galle Wet zone Low country WL1a 919.0 56.6 >3200 45,605 378,130 1,052 8,493 33,177 44,083 WL2a 706.0 43.4 >2400 26,536 220,020 612 4,942 19,304 25,650 Matara Wet zone Low country WL1a 459.0 35.8 >3200 24,163 200,340 1,153 9,312 22,895 30,421 WL2a 483.0 37.6 >2400 19,258 159,674 919 7,422 18,248 24,246 Intermediate zone Low country IL1a 166.0 12.9 >1400 5,141 42,629 245 1,982 4,838 24,396 IL1b 175.0 13.6 >1100 4,289 35,561 205 1,653 4,036 20,351 Hambantota Intermediate zone Low country IL1b 623.0 23.9 >1100 2,135 17,706 2,090 16,877 14,853 74,899 Dry zone Low country DL1b 363.0 13.9 >900 992 8,228 971 7,843 8,104 34,807 DL5 1623.0 62.2 >650 3,325 27,571 3,254 26,280 27,155 116,632 Total 131,446 1,089,859 10,501 84,803 152,609 395,485 Note: Calculations based on Step 5 in Section 2.4. 12 2.6 Replacement cost of soil nutrient loss 22. This study compares two alternative scenarios under the replacement cost approach. In the first scenario, eroded soil can be recovered by ploughing and replenishing nutrient losses with chemical fertilizers and organic matter.11 In the second scenario soil from fallow land is transported to the site and chemical fertilizers and organic matter are added. The cost differential is between ploughing the soil on-site and transporting soil from off-site. But there is also another difference: the nutrient content of the cropping soil will be different from that of the newly placed fallow soil – thus there will be a difference in the amount of additional N.P.K. and organic matter required to bring soil productivity to pre-existing levels. Unfortunately, there is no data at this level of detail, so it assumed that the increase in productivity by hauling in fallow soil would be roughly the same as what soil productivity would be after ploughing. Therefore, additional N.P.K. and organic matter requirements would be the same in either case – and the only difference is ploughing versus the transport cost. 23. Table 2.5 below summarizes the impacts of soil erosion and the associated replacement costs for all crops in the Southern Province. Losses of nitrogen, whether low or high in content, represent the largest nutrient cost with total N.P.K. between 1-5 million USD per year (117.9-534.0 million Rs.). Through better nutrient management, this would represent a cost savings to farmers of 14-61 million USD in 20 years using a 5 percent discount rate. 24. Several methods can be undertaken by the farmer to reduce soil erosion and nutrient losses. The first method entails ploughing and adding lost nutrients and the other is to import soil from another location. Under the first method of ploughing, adding fertilizers and organic matter increases the cost to 3.9 - 7.7 million USD per year (426.3-842.4 million Rs.), whereas hauling in new soil is approximately 3.1-6.9 million USD per year (335.0-751.2 million Rs.). Combining the cost savings of better nutrient management with the potential savings from less manual labor costs above, this would represent an overall cost savings of 50-100 million USD over a 20 year time horizon, using a 5 percent discount rate. 11 Ploughing is not required in the case of tree crops. 13 Table 2.5 Summary of nutrient losses and replacement costs (USD in parentheses) Nutrient loss Total cost Rs. (tons/year) Price a (USD) Low High (Rs./kg) Low High Nutrient replacement Nitrogen 787 3,552 84.00 66,105,420 298,368,952 (Urea) (606,472) (2,737,330) Phosphorus 58 250 126.74 7,295,482 31,642,789 (Triple super phosphate (66,931) (290,301) (TSP)) Potassium 208 737 123.00 25,582,275 90,595,257 Muriate of potash (MOP) (234,700) (831,149) Organic matter 18,903 113,441 1.00 18,902,786 113,441,185 (173,420) (1,040,745) Sub-total (nutrients) 19,955 117,979 117,885,963 534,048,183 (1,081,523) (4,899,525) Ploughing Total number of hectares b 154,199 Ploughing charges 2,000/ha 308,397,436 308,397,436 (2,829,334) (2,829,334) Ploughing + nutrient 426,283,400 842,445,620 replacement 14 (3,910,857) (7,728,859) Soil replacement c Total soil loss (tons/year) 1,809,535 Truck rental and soil 600/load 217,144,203 217,144,203 spreading d (1,992,149) (1,992,149) Soil + nutrient replacement 335,030,166 751,192,386 (3,073,671) (6,891,673) a - Fertilizer prices as of July, 2008 (subsidized) b - Not including tree-crops c – It is assumed that imported soil would still require the same level of nutrient replenishment d – Assumes a 5 mile distance, renting a 5-ton truck (Rs. 400) and loading/unloading the soil (Rs. 200) 15 2.7 Soil recovery through conservation measures 25. In addition to field maintenance and nutrient replacement there are a number of other conservation measures that farmers can adopt such as stone terracing12, contour drains13 or SALT (Sloping Agricultural Land Technologies)14, which serve to minimize soil erosion. The Land and Water Resource Center of the Department of Agriculture of Sri Lanka estimates that stone terracing and contour drains can reduce soil erosion by up to 50 percent and up to 90 percent using SALT techniques. Table 2.6 presents the initial investment and recurrent costs of these measures and alongside are the low and high cost estimates of nutrient losses. The savings that these soil conservation investments represent may prove to be more profitable for the farmer in the longer run. 26. When might it pay for the farmer to invest in soil conservation techniques? Table 2.7 compares the net present value (NPV) of the investment versus the annual nutrient loss costs as calculated above.15 The comparison also includes four yield scenarios where the benefits of conservation may be more than just nutrient savings. Assuming that the alternative conservation techniques are effective according to the percentages above, a discount rate of 5%, and covering the 154,000 hectares from the simulation above, it turns out that investments would only pay back in 30+ years in the high nutrient loss scenario, assuming no corresponding yield increase. However, the payback period decreases to less than 10 years with yield increases in excess of 10 percent (in the high nutrient cost scenario). Across measures, lateral drains and SALT methods are more cost- effective over time (i.e. lateral drains because of their lower capital cost, and SALT methods because of their relative effectiveness). Of course, these are very broad and crude averages based on simulating the economic payoff of investments for the entire area in the Southern Province. In reality this calculation should be made at the farm-level where the benefits (avoided losses) and costs of these techniques are scaled to the plot level and would widely differ from the provincial average. 12Terraces are artificial earth embankments constructed on hillsides on contours at regular intervals. Contour terraces are usually built of stone and reduce the length of slope and thus the movement of runoff water. 13Contour drains and terraces are the most popular mechanical soil conservation measures in Sri Lanka. The lock-and- spill lateral drain is the most widely used drain type in tea smallholdings and large plantations. The lateral drains are connected to a leader drain designed to carry away excess runoff. 14 SALT is a technology package of soil conservation and food production that integrates several soil conservation measures. Basically, the SALT method involves planting field crops and perennial crops in bands 3-5 m wide between double rows of nitrogen-fixing shrubs and trees planted along the contour. These minimize soil erosion and maintain the fertility of the soil. Field crops include legumes, cereals, and vegetables, while the main perennial crops are cacao, coffee, banana, citrus and fruit trees. SALT helps considerably in the establishment of a stable ecosystem. The double hedgerows of leguminous shrubs or trees prevent soil erosion. Their branches are cut every 30-45 days and incorporated back into the soil to improve its fertility. The crop provides permanent vegetative cover which aids the conservation of both water and soil. The legumes and the perennial crops maintain soil and air temperatures at levels favorable for the better growth of different agricultural crops. 15 The comparison is made to nutrient losses since it is assumed that the conservation technique would offset nutrient losses and not necessarily all crop productivity losses. 16 Table 2.6 Costs of soil conservation measures Annual nutrient Annual nutrient Lowland loss cost (Low) loss cost (High) (Rs./ha)1 (Rs.) (Rs.) Soil conservation measures Stone terracing Establishment 61,053 Annual maintenance 1,221 117,885,963 534,048,183 Lateral drains Establishment 9,158 Annual maintenance 3,053 117,885,963 534,048,183 SALT Establishment 25,398 Annual maintenance 4,884 117,885,963 534,048,183 Source: Author’s calculations 1 – Values adapted from Ananda and Herath (2001) 17 Table 2.7 Economic feasibility of soil conservation measures Number of years Number of years for investment for investment payback payback Conservation - low nutrient – high nutrient Scenario method cost cost Scenario 1 (No yield increment) Stone terraces - 46 Lateral drains - 31 SALT - 31 Scenario 2 (5% yield increment) Stone terraces 50 24 Lateral drains 45 16 SALT 45 16 Scenario 3 (10% yield increment) Stone terraces 32 18 Lateral drains 28 11 SALT 28 12 Scenario 4 (20% yield increment) Stone terraces 21 12 Lateral drains 17 8 SALT 18 8 Source: Author’s calculations 18 2.8 Discussion 27. The benefits of soil conservation are substantial and critical in maintaining agricultural livelihoods in the Southern Province. The potential cost savings of better nutrient management through the addition of fertilizers and manual labor ranges between 50-100 million USD over a 20 year period using a 5 percent discount rate. Investments in conservation tillage measures to counter the effects of erosion, such as terracing, contour drains, and SALT (Sloping Agricultural Land Technologies), have economic payback periods between 8-30 years depending on crop yield response. 28. It is clear that interventions to limit the degradation of soils, through better nutrient management or soil conservation techniques should be promoted through greater extension efforts and programs that work with farmers during and throughout the adoption process. The estimates of nutrient loss derived here show significant variation among crops and geographical location – so programs should be catered to the crop and environmental conditions of the area. Crops such as tea, minor export and fruit crops in the Wet zone (districts of Galle and some parts of Matara) experience some of the highest erosion rates (tons/hectare/year) and should be the focus of some targeted conservation efforts. However, after accounting for the extent under production, rubber and coconut plantations also rank as high priority crops in terms of the annual costs of nutrient loss. Chapter 3 Valuation of Watershed Benefits 3.1 Introduction 29. A watershed is an area of land that drains into a common water source. Connecting and encompassing terrestrial, freshwater, and coastal ecosystems, watersheds perform a wide variety of valuable services, including the supply and purification of fresh water, the provision of habitat that safeguards fisheries and biological diversity, the sequestering of carbon that helps mitigate climatic change, and the support of recreation and tourism (see Table 3.1). From an economic standpoint, watersheds are considered natural assets that deliver a flow of goods and services to society. Quite often, however, commercial markets tend to value these services only partially if at all. 30. The failure to adequately incorporate the value of natural services into decisions regarding the use and management of watersheds understates the net benefits that society derives from watersheds. Changes in land-use, from forest to farmland, or from farmland to urban settlements, diminish the ability of a watershed to perform its ecological functions. In much of the world, the conversion and modification of watersheds have already progressed. The calculations presented here suggest that conversion has been excessive. 19 Table 3.1 Ecosystem goods and services provided by watersheds Water supplies for agricultural, industrial, and urban-domestic uses Water filtration/purification Flow regulation Flood control Erosion and sedimentation control Fisheries Timber and other forest products Recreation/tourism Habitat for biodiversity preservation Aesthetic enjoyment Climate stabilization Cultural, religious, inspirational values 31. In Sri Lanka, water is becoming an increasingly scarce resource mainly due to reduced precipitation, growing water demand, inefficient water use and environmental degradation (especially in watersheds). Current and anticipated trends in water use, especially for agricultural irrigation, suggest that areas in all AEZs will experience water shortages in the future unless there is a dramatic shift in water management among users (Amarasinghe et al., 1999). Combined with a growing population demanding an ever increasing amount of water on a daily basis, the role of watersheds in regulating economic, social and environmental services is immediately apparent. In order to create more sustainable water use management, development plans must understand the tradeoffs associated with the different users and beneficiaries. To these ends, policymakers require more knowledge on the benefits (both market and non-market) of current environmental flows that watersheds provide in order to better gauge alternative development tradeoffs. 3.2 Watershed benefits in Sri Lanka 32. Watersheds provide an innumerable array of benefits; this study focuses on the valuation of several major functions - the benefits of water for agricultural irrigation and domestic water use at the river basin level in the Southern Region as well as the environmental service flow benefits from wetlands, mangroves and coastal reef systems. The economic values that accrue to each of these watershed types is important from a macro-economic perspective since each are inextricably linked to key economic sectors in the Southern Region. 20 33. The agricultural sector is a major water user and is responsible for over 90 percent of water withdrawals, mainly for irrigated rice cultivation, and particularly in the Dry Zone of the Southern Province. For the purposes of this study, the value of water as an input to agricultural production is evaluated in the paddy growing areas in each river basin. 34. The services water provides for domestic water use, although relatively small in terms of annual water withdrawals, has an enormous opportunity cost when one considers the investments that would be necessary to sustain a safe and reliable water supply for the population of Sri Lanka. In this case, we measure the benefits attributable to domestic water services by estimating the economic value of water using example data from previous water supply projects and studies in the region. 35. Other important components of watersheds are the wetland values of Sri Lanka. Wetlands are valuable ecosystems that comprise both land ecosystems that are strongly influenced by water, and aquatic ecosystems with special characteristics due to shallowness and proximity to land. Although various different classifications of wetlands exist, a useful approach is one provided by the Ramsar Convention on Wetlands.16 It divides wetlands into three main categories of wetland habitats: (1) marine/coastal wetlands; (2) inland wetlands; and (3) man-made wetlands. The marine and coastal wetlands include estuaries, inter-tidal marshes, brackish, saline and freshwater lagoons, mangrove swamps, as well as coral reefs and rocky marine shores such as sea cliffs. Inland wetlands refer to such areas as lakes, rivers, streams and creeks, waterfalls, marshes, peat lands and flooded meadows. Lastly, man-made wetlands include canals, aquaculture ponds, water storage areas and even wastewater treatment areas. 36. The wetlands of Sri Lanka, which fit into the Ramsar definition, can be divided into similar categories (see also Box 3.1):  Inland natural fresh water wetlands (e.g., rivers, stream, marshes, swamp forests and ‘villus’)  Marine and salt water wetlands (e.g., lagoons, estuaries, mangroves, sea grass beds, and coral reefs)  Man-made wetlands (e.g., tanks, reservoirs, rice fields and salterns) 37. To make the distinction between rivers and wetlands more clear, we evaluate the irrigation and domestic water supply benefits separately from other categories of wetlands, mangroves and coral reefs. For the latter types, wetlands/lagoons/estuaries, mangroves and coral reefs, we measure sub-categories of environmental services flows in detail along four broad themes (Millennium Ecosystem Assessment, 2005): 16As defined by the Ramsar Convention on Wetlands, wetlands are “areas of marsh, fen, peatland or water, whether natural or artificial, permanent or temporary, with water that is static or flowing, fresh, brackish or salt, including areas of marine water the depth of which at low tide does not exceed six metres� (Article 1.1 of the Convention text). 21  Provisioning services: Products obtained from wetlands such as food, water and raw materials for building and clothing  Cultural services: Nonmaterial benefits obtained from wetlands such as recreation, scientific, aesthetic and spiritual information  Regulating services: Benefits obtained from ecosystem processes such as the recycling of nutrients and human waste, watershed protection and climate regulation  Supporting services: Ecosystem functions necessary to maintain all other services such as space for human settlement, cultivation, energy production and habitat for animals 38. Depending on the economic, social and environmental context, each of these service values will be under various degrees of utilization and even over-exploitation. For example, wetland areas that serve as fisheries possess a productive value that is highly dependent on the number of fisherman and the efficiency of equipment they use. Rapid economic development in the area may lead to higher demand and effort beyond the regenerative capacity of the wetlands’ supportive nursery function and fish stocks can be exhausted. This in turn will translate into higher fish prices from higher search and transport costs. This example highlights that since wetlands are biological resources, each of these environmental service values will have (supply service) thresholds that can be crossed without better sustainable resource management. Currently, wetland values are under a number of threats in Sri Lanka:  Habitat deterioration/degradation (e.g., reclamation, clearing of vegetation, water pollution, garbage disposal, regulation of water flow (dams), un-planned irrigation structures and mining (sand/coral))  Direct loss/exploitation of species (e.g., poaching (for consumption), ornamental fish and plant trade and water pollution)  Spread of invasive alien species (e.g., direct exploitation or destruction of native species, superior competitors for resources, deterioration of the quality of wetlands and agricultural pests/weeds)  Natural phenomena (e.g., drought, the 2004 Tsunami, sea level rise, increases in seawater temperature) 22 Box 3.1 Wetland types in Sri Lanka (Kotagama and Bambaradeniya, 2006) FRESH WATER INLAND WETLAND TYPES: Streams and rivers: Sri Lanka has an extensive network of rivers and streams that drains a total of 103 distinct natural river basins. In terms of length, these flowing water bodies cover more than 4500 km. Mahaweli, Walawe and Kelani rivers originate from the central highlands and flow through all three peneplains of the island. The river basins originating in the wet highlands are perennial while many of those in the dry zone are seasonal. The Mahaweli river accounts for the largest basin, covering 16% of the island and thereby has a high socio-economic and ecological value. The streams and rivers that flow through the high and mid altitude areas of the island have resulted in several water fall habitats. The "Villu" wetlands: Although there are no large natural lakes in Sri Lanka, there are several floodplain lakes, commonly referred to as "Villus", which cover a total area of 12500 ha. Often they are cutoff former river bends. Many of the larger "Villus" are located in the Mahaweli floodplain in the East. A typical example is the inter-connected Handapan and Pendiya Villus (796 ha), which is the largest in the entire Mahaweli Villu system. Fresh water Marshes: These are shallow inland depressions located mainly in rural areas either connected to a river or receiving water through surface run-off river floodwater and ground water seepage. Partially decomposed organic material in such marshes form peat, characterized by water logged sticky soil. A typical example is the Muthurajawela Marsh which is the largest peat bog in Sri Lanka. Fresh water Swamp Forest: This is a late successional stage of a freshwater marsh ecosystem, comprising of trees that are adapted to grow in shallow stagnant water. Swamp forests are seasonally inundated with river water. It is the rarest wetland type in Sri Lanka and a good example is the Walauwa-Watta Wathurana Swamp Forest (12 ha) located in the Kalu river basin. SALT WATER/ BRACKISH WETLANDS: Estuaries and Mangroves: These are inter-connected coastal wetland types. Estuaries are formed in places where rivers enter the sea. The daily tidal fluctuation and the intermediate salinity between salt and freshwater (commonly termed "brackish water") are main characteristics of this ecosystem. There are about 45 estuaries in Sri Lanka. The mangroves comprise very diverse plant communities that are adapted to grow in unstable conditions of estuarine habitat. The mangroves are a rapidly diminishing wetland type in Sri Lanka, consisting of less than 10,000 ha of discontinuously distributed patches along the coastline. Typical example of estuaries with mangrove wetlands in Sri Lanka includes Maduganga estuary, Bentota estuary and Kalaoya estuary. The latter is the largest mangrove in Sri Lanka. Lagoons: These are salt or brackish water coastal wetlands separated from the sea by a low sand bank with one or more relatively narrow permanent or seasonal outlets to the sea. These can also harbour other coastal wetland types such as mangroves, mud flats and sea grass beds. About 42 lagoons are found around the coast in Sri Lanka. Examples include the Bundala Lagoon, Mundel Lake, and Kalametiya Lagoon. Coral reefs and Sea grass beds: These are two important sub-tidal marine wetlands (below 6 m in depth) in Sri Lanka. Coral reefs consist of calcareous structures secreted by a group of marine invertebrates. Coral reefs are famous for their spectacular beauty. The rich biological diversity of coral reefs could be compared to that of a tropical rainforest. Extensive coral reef habitats can be found in the Gulf of Mannar region, Trincomalee to Kalmunai in the east coast and in several areas of the south and south-western coast, including Rumassala and Hikkaduwa. Sea grass beds are composed of rooted, seed bearing marine plants. These are found in shallow, sheltered marine waters, as well as in lagoons and estuaries. Most extensive sea grass beds are present in the northwest coastal waters of Sri Lanka (eg. Kalpitiya to Mannar). Inland Salt Villus: Salt water containing Villus within the Wilpattu National Park is a unique ecosystem, which appears as shallow lakes (referred to as ‘vila’) in sandy soils. MAN-MADE WETLANDS: Tanks and Reservoirs: Although there are no natural lakes in Sri Lanka, an array of ancient irrigation tanks has substituted the former wetland type. Numbering nearly 10,000, these man-made wetlands depict the rich cultural heritage of Sri Lanka. The major irrigation reservoirs (each more than 200 ha) cover an area of 7820 ha, while the seasonal/minor irrigation tanks (each less than 200 ha) account for 52250 ha. Typical ancient irrigation tanks include the Parakrama Samudraya and the Minneriya tank. Rice Fields: Rice fields are characterized by the presence of a standing water body, which is temporary and seasonal. Hence, flooded rice fields can be considered agronomically managed marshes. They are temporary and seasonal aquatic habitats, managed with a variable degree of intensity. The total area under rice cultivation at present is about 780,000 ha (approximately 12% of the total land area), which is distributed over all the agro-ecological regions except for areas located at very high elevation. Approximately 75% of rice lands in Sri Lanka are located within inland valley systems of varying form and size while the rest are found in alluvial plains and also on terraced uplands in the interior. 23 3.3 Total economic value: a framework for defining watershed economic benefits 39. Watersheds possess many different market and non-market values. Benefit-cost analyses of investment projects in the past typically under-estimated the environmental service flow values of watersheds; practitioners had viewed the value of natural ecosystems only in terms of the raw materials and physical products that generate income for human production and consumption, especially focusing on commercial activities and profits. These direct uses however represent only a small proportion of the total value of watersheds, which generate economic benefits far in excess of just physical or marketed products. 40. The concept of total economic value (TEV) has now become one of the most widely used frameworks for identifying and categorizing ecosystem benefits. Instead of focusing only on direct commercial values, it also encompasses the subsistence and non-market values, ecological functions and nonuse benefits (Figure 3.1). As well as presenting a more complete picture of the economic importance of ecosystems, it clearly demonstrates the high and wide-ranging economic costs associated with their degradation, which extends beyond the loss of direct use values. 41. Looking at the total economic value of a watershed essentially involves considering its full range of characteristics as an integrated system − its resource stocks or assets, flows of environmental services, and the attributes of the ecosystem as a whole. Broadly defined, the total economic value of water ecosystems such as wetlands, mangroves and coral reefs includes: Figure 3.1 Total Economic Value (TEV)  Direct values: raw materials and physical products which are used directly for production, consumption and sale such as those providing energy, shelter, food, agricultural production, water supply, transport and recreational facilities.  Indirect values: the ecological functions which maintain and protect natural and human systems through services such as maintenance of water quality and flow, flood control and storm protection, nutrient retention and micro-climate stabilization, and the production and consumption activities they support. 24  Option values: the premium placed on maintaining a pool of species and genetic resources for future possible uses, some of which may not be known now, such as leisure, commercial, industrial, agricultural and pharmaceutical applications and water-based developments.  Existence values: the intrinsic value of ecosystems and their component parts, regardless of their current or future use possibilities, such as cultural, aesthetic, heritage and bequest significance. 3.4 Methods for valuing ecosystem benefits 42. The simplest and most commonly used method for valuing any economic good or service is the consideration of its market price, which indicates how much it costs to buy the good or service, or what it is worth to sell. In many cases market prices can provide an accurate indicator of the value of ecosystem goods, when they are freely bought or sold. 43. However market prices do not necessarily reflect the real economic value of the ecosystem. Many wetland goods and services are never traded, are under-valued by market prices, are subject to prices which are highly distorted, or have public good characteristics which imply that they cannot be accurately allocated or priced by the free market. Conventional wisdom now recognizes that market prices may be insufficient for valuing ecosystem services and functions which tend to be under-priced or not priced at all, as well as for subsistence-level use of natural resources which are consumed within the household or are not traded through formal markets. Yet these categories of benefits typically contribute a large proportion of the total economic value of wetlands, and failing to consider them runs the risk of seriously under-valuing wetlands in economic development decision making. 44. For these reasons, it is often necessary to find alternative or additional techniques for valuing ecosystem goods and services, for their total economic value to be more comprehensively measured. Parallel to the advances made in the definition and conceptualization of total economic value, techniques for quantifying environmental values and expressing these in monetary terms have also moved forward over the last decade. 45. Today a wide range of methods for valuing ecosystem benefits are available and used, which move beyond the use of direct market prices. These methods include approaches which elicit people’s preferences directly (such as through contingent valuation methods) as well as approaches which use indirect methods to impute people’s preferences through their purchase of related goods and services (e.g., through production functions, dose-response relationships, travel costs, replacement costs, or mitigative or avertive expenditures). 46. The background studies carried out in this assessment used a combination of the above methods to elicit ecosystem service values for wetlands, mangroves and coral reefs. Given the complex and comprehensive nature of each study’s computation of valuing ecosystem benefits, Annex 3 provides much more detail on their use and applicability for this study. 25 3.5 Watershed study areas 47. Sri Lanka is comprised of approximately 103 river systems, 27 of which reside in the Southern Region with a combined catchment area of 10,429 km2 (Table 3.2 and Figure 3.2). In this study we cover watershed benefits for a selected number of the larger river basins that also contain important wetland, mangrove, and coral reef areas in the Southern Province (river basins are highlighted in Table 3.2). The primary reason for this selection was dictated by the public availability of river basin data and the availability of research studies for use in the Southern River Basin Region. 26 Table 3.2 Basins and rivers in the Southern Region (Study basins highlighted) No. Name of Basin/River Catchment area (km2) 4 Bentota Ganga 622 5 Madu Ganga 59 6 Madampe Lake 90 7 Telwatta Ganga 51 8 Ratgama Lake 10 9 Gin Ganga 922 10 Koggala Lake 64 11 Polwatta Ganga 233 12 Nilwala Ganga 960 13 Soinimodera Oya 38 14 Kirama Oya 223 15 Rekawa Oya 755 16 Urubokka Oya 348 17 Kachigal Ara 220 18 Walawe Ganga 2,442 19 Karagan Oya 58 20 Malala Oya 399 21 Embilikala Oya 59 22 Kirindi Oya 1,165 23 Bambawe Ara 79 24 Mahasilawa Oya 13 25 Buytawa Oya 38 26 Menik Ganga 1,272 27 Katupila Ara 86 28 Kurunde Ara 131 29 Namadagas Ara 46 30 Karambe Ara 46 27 Figure 3.2 Rivers and Basins in Sri Lanka Source: Central Environment Authority (2000) 28 3.6 Valuation approach 48. Comprehensive studies, which elicit all environmental service flows, are not available for all of the selected sites, consequently it was not possible to estimate economic values of river basins, wetlands, mangroves and coral reefs directly. This would require surveying each site for each of the benefits described above and involves a longer term research effort to monitor the status of the watersheds. Instead the results of similar studies performed in Sri Lanka and other countries were used employing the benefit transfer method (BT) to infer values. The benefit transfer method is not a valuation methodology per se, but rather refers to the use of values or functions obtained in one context (a study site) to estimate values in a different context (a policy site). In the absence of detailed policy site information, the benefit transfer method provides a low cost way of obtaining values when time and resources do not allow for full valuation (Ruijgrok 2001; World Bank, 1998). Although all BT studies are subject to uncertainties, in addition to those that exist in the results of the original valuation study (Brouwer, 2000; Rosenberger and Stanley, 2006), it should be re- emphasized that in this exercise BT study site estimates were from Sri Lankan studies, with few exceptions. In the few instances which required international BT transfers, an income adjustment was made to the estimated values.17 In addition, for Sri Lankan studies conducted in the past, adjustments were made by indexing estimates to the current value of the Rupee.18 49. The economic value of the study sites for wetlands, mangroves and coral reefs is summarized in Table 3.3. The first column lists the different types of provisioning, cultural, regulating and supporting services discussed earlier and columns 2 through 5 lists the estimates from the selected study sites. For comparative purposes, the second column presents the unit values of wetland services from the Millennium Ecosystem Assessment (MEA) (MEA, 2005). It is likely that these values are gross over-estimates of the overall value of wetlands due to the use of global average unit values, thus these values are not considered in the total value of benefits in the Southern Region. 17Benefit transfer involves two possible methods – the benefit value or function approach. In order to convert an estimate in one country (X) to a value in another country (Y), an adjustment to reflect differences in real income is needed. A typical adjustment is: Valuey = Valuex (PPP GNPy /PPP GNPx )E (1) where PPP GNP denotes the purchasing power parity GNP per capita and E is the elasticity with respect to real income. For simplicity we adopt an elasticity of 1.00, which implies a 1.0% change in WTP relative to a 1% change in real income. This method was adopted by Batagota (2003) for estimating the non-use benefits of mangroves. 18For values derived in Sri Lankan Rupees, these were adjusted to the current exchange rate in 2009 USD values. For example, if a study conducted in 2003 used an exchange rate of approximately 90 Rupees to one USD, this value was converted to the current exchange rate of 116 Rupees to one USD. 29 50. Wetland, mangrove and coral reef benefits are highly site-specific and depend on a host of economic and environmental characteristics. The study acknowledges the limits of using constant $/ha measures across sites, however it does not preclude their use when the study and policy sites are from similar geographical or socio-demographic areas. The background studies used here were either in the actual policy area, or from credible studies that produced internally-consistent results from rigorous local data collection in other areas of Sri Lanka. While far from ideal, the use of locally generated results is generally preferred to using coefficients derived from other regions or even countries. 3.61 Wetland benefits 51. The selected study site for wetland benefits (column 3 in Table 3.3), Muthurajawela Marsh, is a coastal wetland located between 10 and 30 km to the north of Colombo. It covers an area of 3,068 hectares and its total economic value was estimated to be approximately $8.1 million a year, or $2,700 per hectare (Emerton and Kekulandala, 2003). Flood attenuation accounted for $5.4 million; industrial wastewater treatment $1.8 million, support to downstream fisheries $220,000, firewood $88,000, fishing $70,000, leisure and recreation $60,000, domestic sewage treatment $48,000, freshwater supplies for local populations $42,000, and carbon sequestration $8,700. As is typical for urban wetlands, ecosystem services contributed to most (90%) of this value, followed by fisheries (36% of total resource use values). These values were converted to per hectare units and multiplied by the wetland catchment area of subsequent policy site wetlands covered by the study. One additional adjustment was made to the estimates of leisure and recreation. Muthurajawela Marsh is close to an urban center while many of the policy sites can be considered “rural�. In these instances, some services provided by policy sites may be less significant and so services were discounted by this rural effect. For example, some sites are highly visited by tourists, and derive a significant use value, whereas some rural sites’ recreational visitation may be quite low. In these cases the cultural service values are assumed to be only 10% of the value of Muthurajawela. Ten percent was selected only to avoid any possible over-estimation of these benefits. 3.62 Mangrove forest benefits 52. Mangrove forests provide critical and important economic, social and ecological services for the existence of biophysical and socio-economic subsystems, particularly tropical mangroves that are rich in both floral and faunal biodiversity. Mangrove forests provide fish, fruits, medicinal plants, construction materials, timber, firewood, woodchips, charcoal and dyes to coastal communities. The use of mangroves for tourism and recreation is also increasing. Mangroves protect tropical coastal areas from hurricanes, floods, saline water intrusion and coastal erosion while maintaining the water table and biodiversity. They provide habitats for migratory species, nursery and breeding grounds for marine life. Most importantly, mangrove forests treat pollutants and protect marine ecosystems from land-based activities. They may also have significant non-use values such as cultural, aesthetic and spiritual. 30 53. The study used for the valuation of mangrove benefits (column 4 in Table 3.3) is from Batagoda (2003), which evaluated three distinct mangrove forests namely, Kiralakele mangrove forest in the Hambantota District, Maduganga mangrove forest in the Galle District and Ranweli village mangrove forest in the Puttalama District. Each of the valuation studies quantified the benefits of non-wood forest resources, local and global recreation benefits, local and global option/bequest/existence values, the provision of breeding grounds for fish, erosion control, biodiversity maintenance, carbon sequestration, storm protection and pollution treatment. 54. The appeal of this study is two-fold: 1) Kiralakele and Maduganga are mangrove forests within the Southern Province, and 2) the valuation of non-use benefits (i.e., option, bequest, and existence values) used more than one method across both local and international respondents.19 This produced a wider range of estimates under alternative surveying methods, of which this study adopted the most conservative value as a lower bound.20 Other valuation studies of mangroves, especially assessments of the damage caused by the 2004 Tsunami, have been conducted but with a more limited coverage of all the possible benefits of mangroves (Gunawardena and Rowan, 2005; IUCN, 2007; Ranasinghe and Kallesoe, 2006).21 55. Similar to the wetlands assessment, per hectare unit values were multiplied by the mangrove area of the policy site. In some instances recreational values were only valued at 10% of the full service value, owing to the rural location of the mangrove and to guard against exaggeration. 56. One important note should be made at this point on the inclusion of non-use values. Since non-use values measure the willingness to pay to preserve an area for future use or existence they are not currently realized in any market or contribute to any economic activity. They only represent future earning potential and therefore should not be added to the other direct and indirect values in this assessment. Although they appear in the following economic analysis they will be discussed separately since they point to a potential source of revenue that could be realized as part of a tourism strategy for the area. 19The contingent valuation exercise used a payment card and open-ended approach to calculate a person’s Willingness-to-Pay (WTP) for mangrove benefits. The payment card approach yielded a lower estimate and this value was subsequently used in this study (see Annex 3 for details). 20One cautionary note is warranted for future detailed studies. Since an individual’s utility of mangroves is conditioned by their socio-economic characteristics, socio-economic variables of users should be collected and used to calibrate estimates for the evaluation. 21For example, a 2005 Total Economic Value (TEV) assessment of the Rekawa mangrove lagoon ecosystem found that it was worth $1,088/ha/year, or $217,600 per year, based on 200-ha of mangrove. Forestry net benefits accounted for $4,800 per year, lagoon fishery $53,600 per year, coastal fishery $98,600 per year, erosion control and buffer against damage from storms $60,000 per year, and existence, bequest and option values to local communities $520 per year. 31 Table 3.3 Economic value of study sites for wetlands, mangroves and coral reefs MEA average Muthurajawela Mangrove Wetland, mangrove or coral reef area value Marsh Forests Coral Reefs ($/ha/year) ($/ha/year) ($/ha/yr) ($/km2/yr) Catchment area (ha) 3,068 Mangrove area (ha) Reef area (ha) Provisioning services 601 136 75 3,017 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 85 57 - Fishing 374 18 11 3,017 Hunting 123 - - - Water supply 45 11 - - Raw materials (thatch, timber, fodder, fertilizer, etc.) 45 - 3 - Fuelwood 14 22 4 - Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 1,373 15 7,548 89,655 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 881 - - - Recreation and tourism 492 15 89,655 Local - - 764 - International - - 979 - Option value Local - - 1,221 - International - - 851 - Bequest value Local - - 1,404 - International - - 460 - 32 Existence value Local - - 723 - International - - 1,146 - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 1,086 1,978 4,856 530,172 (benefits obtained from ecosystem processes) Flood control/water regulation 464 1,364 65 530,172 Water treatment 288 - 4,592 2 - Industrial wastewater treatment - 456 - - Domestic sewage treatment - 12 - - Nursery function 201 - 134 3 - Climate regulation of mangroves 133 89 62 - Other (e.g., sediment control, biological control) - 56 1 34 - Supporting services 214 - 14 - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 214 - 14 - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 3,274 2,128 12,494 622,845 Exchange rate ($1USD = Rs. as of Apr. 2009) 116 116 116 116 Total value (Rs.) 379,784 246,892 1,449,271 72,250,000 Notes: 1 - Support to downstream fisheries; 2 - Pollution treatment and nutrient retention; 3 - Breeding ground for fish; 4 - Erosion control Rural factor = 0.10 33 3.63 Coral reef benefits 57. Tropical coastal zones contain a variety of ecosystems such as coral reefs, mangroves, and sea grass beds, which are all utilized as resources. The coral reef is the most diversified and complex marine ecosystem. It provides many benefits including food from reef fish, recreation for tourists, coastal protection and lime for the building industry. Hence, many people depend on coral reefs for their livelihood as a source of income in monetary terms, as well as for subsistence. 58. The study used for valuation of coral reef benefits (column 5 in Table 3.3) is from Berg et al. (1998), which estimated the value of Sri Lanka’s coral reefs to be between $140,000 and $7.5 million per km² over a period of 20 years. They developed three types of benefit functions to characterize several of the direct and indirect benefits. Direct economic benefits of resource use were modeled through the use of a fish-habitat function (through fishing or ornamental fish collection) and a tourist attraction function (from the value of tourism expenditures). 22 59. Indirect economic benefits of coral reefs were modeled through a physical-structure function which measured the value of protection against coastal erosion. Benefits were calculated through the use of two different methods - a preventive-expenditure approach (PE) and through the loss of property-values (PV). The PE approach calculated the cost of replacing the coral reef with protective structures (e.g., groynes, revetments, and underwater wave-breakers off the coast), and the PV approach estimated the cost of land loss (i.e., price of lost land, buildings, roads, etc) as a result of coastal erosion plus the loss of income resulting from lost land-use opportunities (e.g., loss of agricultural land). The latter approach is likely to be very sensitive to property values established in relatively inefficient rural markets, while the PE approach is based on actual costs of physical structures. Thus for the purposes of this study we adopt the estimates derived from the PE approach. Unit values are expressed in $USD/km2/year and were multiplied by the area of the reef. As with wetlands and mangroves, all values taken from the study were initially adjusted to current prices. 3.64 Value of water for domestic services at the river basin level 60. The value of water for domestic uses was calculated using information from a recent study by Molle and Renwick (2005) which estimated the benefits from drinking water wells in the context of the Uda Walawe Irrigation and Resettlement Project (UWIRP). Benefits were valued by estimating the average replacement cost of providing an equivalent amount of water to the volume abstracted. Similar communal water supply projects in the region, mostly based on wells, found a cost of Rs 14/m3, assuming a project lifetime of 20 years. Molle and Renwick (2005) used an 22 The fish-habitat function utilized an effect-on-production approach (EOP), where the net value of fish production was calculated using fishing revenue, expenses, catch rates per unit effort and assumptions on the fishery’s Maximum Sustained Yield (MSY). The tourist-attraction function was defined through two different methods - a financial-revenue approach (FR) and through a contingent valuation approach. For the purposes of this study estimates from the contingent valuation approach were adopted since this method of valuation also includes additional social values captured in consumer surplus. 34 average cost of Rs 15/m3 which seems reasonable when compared to other water schemes in the area, such as the Lunugamwehera Water Supply Scheme in the neighboring Kirindi Oya basin, which provides drinking water at a cost of Rs 21/m3. The total replacement cost is calculated as the average replacement cost of Rs 15/m3, times the average current domestic usage of 20 l/capita/day, times the population without access to piped water in the basin. 3.65 Value of water in irrigated paddy production at the river basin level 61. The benefits of irrigation water for paddy production were from a study conducted by Renwick (2001), which valued water as an intermediate input to a producer-level profit maximization problem. The value of the intermediate good (water) is defined as the net economic contribution of that good to the value of the final output. The residual method is then used to calculate the value of irrigation water in irrigated paddy production by identifying of the incremental contribution of water to the value of total output. Under this approach, all costs of production, except water, are subtracted from the value of production. This remaining (or residual) value provides a proxy measure of the value of irrigation. The farm-level survey conducted in the Kirindi Oya basin area found that the average per hectare economic return to water was approximately Rs 16,748 (US$144 in 2009 prices). In our study we multiplied the value of water by the number of hectares under irrigated paddy production in each river basin. 3.66 Interpretation of watershed values 62. Owing to the variety of elicitation methods and underlying data used to calculate benefits above, some values can be interpreted as being more accurate. For example, implicit values of water for agricultural and domestic services are calculated using market data on production and prices which are observable - so the final estimates are likely to be close to the actual value. Wetland, mangrove and coral reef estimates are also derived from background market observations on provisioning and cultural services however there may be some overlap between certain regulating or supporting service functions. For example, migratory fish species may spend part of their life in mangroves and another in coral reefs. Similarly, mangroves and coral reefs provide important coastal protection functions, but in areas where both co-exist, what is the appropriate benefit partition between the two? 63. The conservative approach taken in this study is to attribute these service benefits to only one of the geographical types (mangroves or coral reefs) when there is co-existence. For example if the benefits of coastal protection are estimated to be $100 from mangroves and $50 for coral reefs, we only use the mangrove estimate (i.e. the maximum between the two). Or in the case of fishing benefits, we only take the higher benefit of the two. By incorporating this rule, we avoid the possibility of double counting of benefits. 35 3.7 Valuation of watershed benefits 64. The value of water for paddy irrigation and domestic water use is presented in Table 3.4 and the service values of wetlands, mangroves and coral reefs, along with total river basin benefits in Table 3.5. Summaries by ecological service value are provided in Tables 3.6 and 3.7. Benefit details on each wetland, mangrove and coral reef attribute are given in Annex 4. Irrigated paddy area and the population without piped water access were not available for all river basins since most statistics are normally compiled at the administrative level. Nonetheless, we were able to compile information for some of the largest river basins in the Southern Province. 65. Not surprisingly, the largest water values for irrigated paddy production occur in two of the largest catchment areas - Walawe Ganga and Kirindi Oya, with several million USD in annual water service flows. Domestic water service benefits are also significant in these river basins where the average percentage of households with access to piped water is only 33.4% (Department of Census and Statistics, 2001). The largest domestic water consumption benefits, of the areas with information, take place in the Nilwala Ganga owing to the rural population base and piped water coverage rates of only 28%. Total irrigation and domestic water use benefits across the 10 river basins amount to over 7 million USD per year with over 80% of this value derived from irrigated paddy. 66. The annual environmental service flow benefits of wetlands, mangroves and coral reefs amount to over 33 million USD per year, with the majority stemming from the services provided by flood control and regulation (columns 5-8 in Table 3.5 and Table 3.6). One-third of the regulating service benefits accrue in the Lunugamvehera Reservoir with a catchment area of over 7400 hectares, which services numerous other tanks and reservoirs in the area. Cultural service values are high in areas where there exists a large and robust tourism sector, such as the Bentota and Manduganga Estuaries. Currently Yala derives significant direct use values from the recreational benefits of park visitation and wildlife safaris, but also possesses tremendous non-use values from the extensive mangroves areas (see Annex 4). 36 Table 3.4 Value of water for irrigated paddy and domestic water consumption in selected river basins ($USD/year) Irrigated Irrigated Pop without piped Domestic Industrial uses River Basin Location Total value paddy (ha) paddy ($USD) water access services (MCM) Bentota Ganga 166,320 1,155 166,320 - - - Bentota Estuary Maduganga Estuary R Gin Ganga 705,600 4,900 705,600 - - - Hikkaduwa National Park Rumassala Marine Sanctuary Unawatuna Reef Polwata Ganga 235,872 1,638 235,872 - - - Koggala Lagoon Weligama Bay & Reef Nilwala Ganga 1,194,018 4,700 676,800 547,920 517,218 Walawe Ganga 2,560,470 15,000 2,160,000 424,242 400,470 3.23 Rekawa Lagoon & Reef Kahanda Estuary & Kahandamodera Mangrove Kalametiya Lagoon Lunama Lagoon Karagan Oya 82,656 574 82,656 - - - Karagan Lewaya Maha Lewaya 37 Koholankala Lewaya (Bundala National Park) R Malala Oya 49,666 - - 52,614 49,666 0.06 Malala Lewaya (Bundala National Park) R Kirindi Oya 2,056,211 12,904 1,858,176 149,850 198,0351 0.22 Lunugamvehera Reservoir Embilikala Lewaya (Bundala National Park) R Bundala Lewaya (Bundala National Park) R Menik Ganga 259,295 1,220 175,680 88,578 83,615 0.39 Kataragama religious festival Ruhuna (Yala) National Park Yala Fishery Management Area Mangroves in Ruhuna (Yala) National Park Weerawila-Tissa-Pannangamuwa-Debara-Yoda Tanks Pilinnawa Coastal Wetland Bambawe Aru - - - - - Palatupana Lagoon Total 7,310,106 42,091 6,061,104 1,263,204 1,249,002 3.90 Notes: MCM – million cubic meters; R - Ramsar Site; Current exchange rate 116 Rs./$USD (as of Apr. 2009) 1 – Calculated using a cost of Rs 21/m3 38 Table 3.5 Wetland, mangrove and coral reef benefits for selected river basins ($USD/year) (Shaded total value = irrigation and domestic benefits + wetland/mangrove/coral reef benefits) Irrigation and Provisioning Cultural Regulating Supporting Domestic River Basin Location Area (ha) Total value services services services services services Bentota Ganga 62,200 5,804,193 166,320 Bentota Estuary 1,700 3,556,578 84,885 87,179 3,383,792 722 Maduganga Estuary R 915 2,081,294 117,940 217,947 1,743,601 1,806 Gin Ganga 92,200 4,049,205 705,600 Hikkaduwa National Park 104 335,622 5,260 39,897 290,465 - Rumassala Marine Sanctuary 1,707 2,384,077 30,026 25,325 2,328,726 - Unawatuna Reef 100 623,907 4,079 89,655 530,172 - Polwata Ganga 23,300 1,636,409 235,872 Koggala Lagoon 727 1,235,809 89,930 34,872 1,110,719 289 Weligama Bay & Reef 100 164,728 12,507 8,966 143,256 - Nilwala Ganga 96,000 1,194,018 1,194,018 Walawe Ganga 244,200 5,162,092 2,560,470 Rekawa Lagoon & Reef 250 1,113,765 25,366 34,872 1,050,638 2,889 Kahanda Estuary & Kahandamodera Mangrove 51 160,296 5,811 3,888 150,274 322 Kalametiya Lagoon 604 1,008,447 81,111 2,964 924,127 246 Lunama Lagoon 192 319,111 25,804 872 292,363 72 39 Karagan Oya 5,800 2,433,533 82,656 Karagan Lewaya 835 1,321,874 113,300 12,388 1,196,185 - Maha Lewaya 260 411,601 35,279 3,857 372,465 - Koholankala Lewaya (Bundala National Park) R 390 617,402 52,919 5,786 558,697 - Malala Oya 39,900 1,078,669 49,666 Malala Lewaya (Bundala National Park) R 650 1,029,004 88,198 9,643 931,162 - Kirindi Oya 116,500 15,235,789 2,056,211 Lunugamvehera Reservoir 7,438 11,675,650 1,009,253 11,035 10,655,362 - Embilikala Lewaya (Bundala National Park) R 430 680,725 58,346 6,380 616,000 - Bundala Lewaya (Bundala National Park) R 520 823,203 70,558 7,715 744,930 - Menik Ganga 127,200 3,845,396 259,295 Kataragama religious festival - 12,375 - 12,375 - - Ruhuna (Yala) National Park 151,200 85,645 3,430 82,215 - - Yala Fishery Management Area - 111,274 111,274 - - - Mangroves in Ruhuna (Yala) National Park 326 124,152 24,562 - 94,880 4,709 Weerawila-Tissa-Pannangamuwa-Debara-Yoda Tanks 1,590 3,242,253 215,745 23,589 3,002,918 - Pilinnawa Coastal Wetland 100 10,402 3,299 1,484 5,620 - Bambawe Aru 7,900 24,983 Palatupana Lagoon 160 24,983 13,618 2,374 8,992 - Total 40,464,287 2,282,499 725,277 30,135,345 11,056 7,310,106 Notes: R - Ramsar Site; Current exchange rate 116 Rs./$USD (as of Apr. 2009) 40 Table 3.6 Value and share of wetland, mangrove and coral reef services Value (USD/year) Percent Provisioning services 2,282,499 (products obtained from wetlands/ mangroves/ reefs) Agricultural production 1,294,071 56.7 Fishing 440,861 19.3 Hunting - 0.0 Water supply 174,741 7.7 Raw materials (thatch, timber, fodder, fertilizer, etc.) 2,507 0.1 Fuelwood 370,319 16.2 Other (genetic, medicinal, and ornamental resources) - 0.0 Cultural services 725,277 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information Recreation and tourism 725,277 100.0 *Option, Bequest and Existence value (not included in totals) 3,166,127 Regulating services 30,135,345 (benefits obtained from ecosystem processes) Flood control/water regulation 25,262,498 83.8 Water treatment 3,768,505 12.5 Nursery function 102,279 0.3 Climate regulation 68,283 0.2 Other (e.g., sediment control, biological control) 933,780 3.1 41 Supporting services 11,056 (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 11,056 100.0 Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - 0.0 Total 33,154,178 67. Nearly half of the provisioning services come from, again, Lunugamvehera Reservoir where most of the benefits accrue to agricultural irrigation. However, the Kirindi Oya river basin also supports a large fisheries sector.23 68. Overall, watersheds provide 40 million USD in environmental service flows per year in the Southern Province once the value of water for irrigation and domestic use is added to wetland, mangrove and coral reef benefits. Over a 10-20 year period this would represent between 353- 545 million USD, using a 5 percent discount rate. A significant proportion of the annual value can be easily ascertained (and cross-referenced) from other studies of agriculture, fisheries and irrigation investment benefits in the Southern Province (Bakker et al., 1999; Dissanayake and Smakhtin, 2007; Hermans et al., 2006; IIMI, 1995; Imbulana et al., 2002; Molle and Renwick, 2005; Renwick, 2001; Smakhtin and Weragala, 2005; Somaratne et al., 2005). Flood control and water regulation benefits comprise the largest share, with the value of water for irrigated paddy production second. While provisioning services is significant for the livelihoods of the population in the province, the value is modest compared to the other values. However, the benefits from agriculture, fishing and fuel wood are likely to be under-valued in this context when one begins to imagine the costs of possible substitutes and from where these goods would originate. 23Other studies have quantified significant inland fisheries benefits in the Kirindi Oya basin – which includes Lunugamwehera Reservoir and the Debera Wewa, Tissa Wewa, Yoda Wewa, Pannegamuwa, and Weerawila tanks. Annual returns of the five commercially important fisheries in the Kirindi Oya Irrigation and Settlement Project (KOISP) were estimated based on actual monthly returns to fisherman, by reservoir, for the three surveyed reservoirs. Total annual economic returns to the five reservoirs from inland fishing were Rs 38.1–39.6 million (or US$544,000–566,000) per year (Renwick, 2001). 42 69. Cultural services are one area where enormous potential still exists in the form of greater recreational and nature-based opportunities. The Southern Province with its rich wildlife and protected area system is relatively ‘un-tapped’ from an economic development standpoint. While the lower bound values calculated here amount to only $700,000 USD in annual use values, note that significant non-use values (option, bequest and existence) were estimated in the order of $3 million USD annually (Table 3.6). While these were not included in the tabulation totals above they do represent a significant potential source of development and conservation revenue. In the companion policy note on nature-based tourism these benefits were evaluated in greater detail (including the park system) and were on the order of $6 million USD annually or $55 million in 10 years, just in entrance fees to the five parks in the study (World Bank, 2010). Accounting for the full range of direct and indirect expenses (i.e., accommodation, food, gifts, etc.) from increasing international tourist visitation to its full potential, this could amount to $248 million USD annually or $2.2 billion in 10 years. Table 3.7 Summary of watershed benefits in the Southern Province Service function Annual flow (USD/year) % Provisioning 2,282,499 5.6 Cultural 725,277 1.8 Regulating 30,135,345 74.5 Supporting 11,056 0.0 Irrigated paddy 6,061,104 15.0 Domestic water 1,249,002 3.1 Total 40,464,283 100.0 43 4.1 Conclusions and discussion 70. The Government of Sri Lanka has committed to a 10-year development framework of increased growth and policymakers in the Southern Province have embarked on an ambitious program of improved roads and other large infrastructure projects. The development challenge will be to realize the benefits from these projects while still encompassing the basic tenets of sustainable development, particularly in light of the rich natural resources and biodiversity of the province. Coupled with this challenge are the development issues of increasing income and livelihoods of the area, which are highly dependent on environmental services which are vulnerable to irreparable damage from blind pro-growth activities. 71. This policy note estimates the environmental service flows that currently constitute a significant proportion of the Southern Province’s economy – namely agriculture and watershed benefits. Through the quantification of such benefits, which captures market and non-market values, policymakers are better informed to weigh benefits of future development activities and consider potential tradeoffs. More specifically, the valuation of environmental services allows policymakers to efficiently address sustainable economic development and environment protection within the country’s economic policy. 72. Agriculture is a main income earner for nearly half of the population and contributes 30 percent to the provincial economy. Underpinning the productivity of agriculture are the benefits of soil conservation that are not only controlled at the individual plot level, but also affected through development in the surrounding areas. The clearing of land for non-agricultural purposes often leads to increased rainfall erosion decreasing soil depth, permeability and eventually leading to decreased agricultural yields. 73. The benefits of soil conservation practices are substantial in the Southern Province with the cost of soil nutrient losses in the order of 1-5 million USD per year. If appropriate nutrient management measures were undertaken, this would represent a cost savings between 14-61 million USD in 20 years, using a 5% discount rate. Soil conservation techniques such as stone terracing, lateral drains and Sloping Agricultural Land Technologies (SALT) have been shown to reduce soil losses from 50-90%. Comparing the benefits (avoided costs) from soil nutrient losses with investments in these conservation measures over a 30-year time horizon, they would reach full cost recovery in 8-30 years depending on the technique, yield response and individual farm- level circumstances. Thus private landowners face a difficult decision of weighing the benefits and costs of investing in soil conservation while taking into consideration the possible externalities of public development projects that affect nearby landholdings. Clearly more sustainable development would take into consideration its affect on adjacent landholdings and its affect on agriculture through potential soil erosion. 74. Watershed management is perhaps the most significant issue since they supply such a wide variety of environmental services to the population and environment. Due to the numerous beneficial flows it is difficult to visualize any development that would not affect any of these values to some degree. Sustainable development in this context would perform an initial stocktaking of all 44 of the market and non-market values derived from the watershed and then weigh these with the potential project benefits. Policymakers would then better able to understand the potential tradeoffs when gauging the project feasibility and potential compensation to affected livelihoods. In this study the following benefit flows were included in the valuation:  Water supplies for agricultural, industrial, and urban-domestic uses  Water filtration/purification  Flow regulation  Flood control  Erosion and sedimentation control  Fisheries  Timber and other forest products  Recreation/tourism  Habitat for biodiversity preservation  Aesthetic enjoyment  Climate stabilization  Cultural, religious, inspirational values 75. Watershed benefits were calculated for ten major river basins containing values accruing from wetlands, mangroves, coral reefs in addition to the value of water for domestic water supply services and agricultural irrigation. Using several different economic valuation methods it was found that over $40 million USD in market and non-market benefits are realized per year. From a more broad planning perspective, this would represent between $353-545 million USD over a 10-20 year horizon, using a 5 percent discount rate. Nearly three-quarters of this value is derived from the flood control and water regulating functions of the watersheds and over $7 million USD from domestic water supplies and the value of water for agricultural irrigation. Another increasingly important value of watersheds is the recreational and cultural aspects of these areas. Significant use values currently exist in the form of visitation to cultural sites and national parks, as well as non-use values from option and existence values. This benefit area is viewed as one of the most promising from an economic development perspective. 45 Annex 2 Map A2: Soil Map of Sri Lanka 46 Table A2.31 Average annual soil loss rates, by AEZ, soil group and crop (tons/hectare/year) Average annual Minor Climatic rainfall Export Natural Fruit District Zone Agro-ecological region (mm) Terrain * Major soil groups Paddy Tea Rubber Coconut crops crops forest Galle Wet zone Low country WL1a >3200 RUF Red Yellow Podzolic 3.5 13.7 13.7 14.1 23.5 23.5 0.9 WL2a >2400 RUF Red Yellow Podzolic 2.7 10.4 10.4 10.7 17.8 17.8 0.7 Matara Wet zone Low country WL1a >3200 RUF Red Yellow Podzolic 3.9 15.2 15.2 15.6 26.0 26.0 1.0 WL2a >2400 RUF Red Yellow Podzolic 3.0 11.5 11.5 11.8 19.7 19.7 0.7 Intermediate zone Low country IL1a >1400 RUF Red Yellow Podzolic 1.8 6.9 6.9 7.1 11.8 11.8 0.4 IL1a >1400 RUF Reddish Brown Latazolic 1.4 5.3 5.3 5.5 9.1 9.1 0.3 IL1a >1400 RUF Low Humic Gley 2.2 8.5 8.5 8.7 14.5 14.5 0.5 IL1a >1400 RUF Regosol soils 3.9 15.0 15.0 15.5 25.8 25.8 0.9 IL1b >1100 RUF Red Yellow Podzolic 1.4 5.5 5.5 5.7 9.5 9.5 0.3 IL1b >1100 RUF Reddish Brown Latazolic 1.1 4.3 4.3 4.4 7.3 7.3 0.3 IL1b >1100 RUF Reddish Brown Earth 1.7 6.8 6.8 7.0 11.6 11.6 0.4 IL1b >1100 RUF Low Humic Gley 1.7 6.8 6.8 7.0 11.6 11.6 0.4 IL1b >1100 RUF Regosol soils 3.1 12.0 12.0 12.4 20.6 20.6 0.8 Hambantota Intermediate zone Low country IL1b >1100 RUF Red Yellow Podzolic 0.7 2.8 2.8 2.9 4.9 4.9 0.2 IL1b >1100 RUF Reddish Brown Latazolic 0.6 2.2 2.2 2.3 3.8 3.8 0.1 IL1b >1100 RUF Reddish Brown Earth 0.9 3.5 3.5 3.6 6.0 6.0 0.2 47 IL1b >1100 RUF Low Humic Gley 0.9 3.5 3.5 3.6 6.0 6.0 0.2 IL1b >1100 RUF Regosol soils 1.6 6.2 6.2 6.4 10.6 10.6 0.4 Dry zone Low country DL1b >900 U Reddish Brown Earth 0.7 2.9 2.9 3.0 5.0 5.0 0.2 DL1b >900 U Low Humic Gley 0.7 2.9 2.9 3.0 5.0 5.0 0.2 DL5 >650 UF Reddish Brown Earth 0.6 2.2 2.2 2.2 3.7 3.7 0.1 DL5 >650 UF Low Humic Gley 0.6 2.2 2.2 2.2 3.7 3.7 0.1 DL5 >650 UF Solodized - Solonetz 0.6 2.2 2.2 2.2 3.7 3.7 0.1 * RUF – Rolling, undulating & flat; U – Undulating; UF – Undulating & flat 48 Table A2.32 Average annual soil losses, by AEZ and crop (tons/year) Average annual Minor Agro-ecological rainfall Export Natural District Climatic zone region (mm) Terrain * Paddy Tea Rubber Coconut crops Fruit crops forest Galle Wet zone Low country WL1a >3200 RUF 32,462 224,667 67,599 100,095 139,719 3,138 10,016 WL2a >2400 RUF 26,225 96,152 18,174 58,242 81,297 1,826 5,828 Matara Wet zone Low country WL1a >3200 RUF 24,814 257,405 5,426 80,451 74,026 3,441 6,912 WL2a >2400 RUF 29,376 72,110 26,083 64,120 58,999 2,742 5,509 Intermediate zone Low country IL1a >1400 RUF 13,934 2,365 6,009 17,119 15,752 732 1,471 IL1b >1100 RUF 7,041 1,539 3,064 14,280 13,140 611 1,227 Hambantota Intermediate zone Low country IL1b >1100 RUF 8,417 1,599 257 18,496 6,542 6,236 4,516 Dry zone Low country DL1b >900 U 2,887 - - 8,595 3,040 2,898 2,098 DL5 >650 UF 13,086 - - 28,801 10,187 9,711 7,031 Total 158,242 655,837 126,613 390,198 402,702 31,335 44,608 * RUF – Rolling, undulating & flat; U – Undulating; UF – Undulating & flat 49 Table A2.33 Nutrient content of soils, by AEZ and nutrient type Minor Units = % or mg/kg Paddy Tea Rubber Coconut export crops Fruit crops Natural forest Low High Low High Low High Low High Low High Low High Low High Low Country Wet Zone Nitrogen (%) 0.03 0.20 0.03 0.20 0.03 0.20 0.10 0.20 0.03 0.20 0.03 0.20 0.10 0.13 Phosphorus (mg/kg) 2.50 25.00 2.50 35.00 5.00 50.00 30.00 50.00 2.50 35.00 5.00 35.00 101.00 205.00 Potassium (mg/kg) 27.00 94.00 12.00 94.00 2.00 150.00 101.00 150.00 12.00 94.00 12.00 94.00 396.00 470.00 Organic matter (%) 2.80 7.90 0.50 7.90 0.30 3.00 1.72 2.28 0.50 7.90 0.50 7.90 9.00 12.00 Low Country Intermediate Zone Nitrogen (%) 0.03 0.20 0.03 0.20 0.03 0.20 0.03 0.09 0.03 0.20 0.03 0.20 0.10 0.50 Phosphorus (mg/kg) 3.00 5.00 2.50 35.00 5.00 50.00 24.00 50.00 2.50 35.00 5.00 35.00 101.00 700.00 Potassium (mg/kg) 12.00 94.00 12.00 94.00 2.00 150.00 58.00 100.00 12.00 94.00 12.00 94.00 396.00 2715.00 Organic matter (%) 0.50 3.00 0.50 7.90 0.30 3.00 0.70 1.64 0.50 7.90 0.50 7.90 9.00 12.00 Low Country Dry Zone Nitrogen (%) 0.03 0.20 0.03 0.20 0.03 0.20 0.03 0.09 0.03 0.20 0.03 0.20 0.10 0.50 Phosphorus (mg/kg) 3.00 5.00 2.50 35.00 5.00 50.00 5.00 22.00 2.50 35.00 5.00 35.00 140.00 700.00 Potassium (mg/kg) 12.00 47.00 12.00 94.00 2.00 150.00 2.00 50.00 12.00 94.00 12.00 94.00 525.00 2715.00 Organic matter (%) 0.50 3.00 0.50 7.90 0.30 3.00 0.30 0.50 0.50 7.90 0.50 7.90 9.00 12.00 50 Annex 3 3.1 Commonly-used valuation tools and their application in the adopted case studies Definitions and descriptions adapted from: Molle and Renwick (2005): Value of water for domestic services Renwick (2001): Value of water for irrigated paddy production Emerton and Kekulandala (2003): Wetlands Batagoda (2003): Mangroves Berg et al. (1998): Coral Reefs Direct market valuation: The simplest and most straightforward way of valuing watershed goods and services is to look at their market prices - what they cost to buy or what they are worth to sell.  Wetlands: Emerton and Kekulandal (2003) In the case of the Muthurajawela Wetland, market price-based valuation techniques are used to assess the economic benefits associated with fishing, agricultural and plant-based handicraft production activities in the marsh area.  Mangroves: Batagoda (2003) Of the total benefits of mangrove forests, recreational use value and direct extractive use value i.e., non-timber forest products (NTFPs) extraction are elicited from households and converted into a flow of real resources.  The value of water for irrigated paddy production: Renwick (2001) The residual method, based on a producer-level profit maximization model, is used to calculate the value of irrigation water in irrigated paddy production. The residual approach entails identification of the incremental contribution of each input to the value of the total output. It is the most widely used methodology for valuing irrigation water (Young 1996). Under this approach, all costs of production, except water, are subtracted from the value of production. This remaining (or residual) value provides an estimate of the value of irrigation. As is often the case with environmental goods and services, many of the economic benefits have no market price, or are subject to prices that are highly distorted. In these cases a range of alternative valuation techniques could, in principle, be applied: 51 Replacement costs: Even where watershed goods and services have no market themselves, they often have alternatives or substitutes that can be bought and sold. These replacement costs can be used as a proxy for watershed resource and ecosystem values, although usually represent only partial estimates, or under-estimates.  Value of water for domestic services: Molle and Renwick (2005) The benefits derived from drinking water wells is valued by estimating the average replacement cost of providing an amount of water equivalent to the volume abstracted. Total replacement cost is calculated as the average replacement cost of Rs 15/m3, times the average current domestic usage of 20 l/capita/day, times river basin population.  Wetlands: Emerton and Kekulandal (2003) In the case of the Muthurajawela Wetland, replacement costs are used to assess the value of flood attenuation benefits in terms of infrastructure required to provide a similar level of services. Effects on production: Other economic processes often rely on watershed resources as inputs, or on the essential life support provided by watershed services. Where they have a market, it is possible to look at the contribution of watershed goods and services to the output or income of these wider production and consumption opportunities in order to assess their value.  Wetlands: Emerton and Kekulandal (2003) In the case of the Muthurajawela Wetland, effects on production techniques are used to assess the economic value of wetland wastewater treatment services and provision of fish breeding and nursery habitat functions in terms of their contribution to downstream fisheries in Negombo lagoon.  Coral Reefs: Berg et al. (1998) The value of the fish-habitat function can be estimated using the effect-on-production approach (EOP). The quality of the environment determines the ecosystem productivity. This includes the output of the fish-habitat function of coral reefs, since there is a close relationship between habitat structure and fish-community composition. Resource uses impacting on environmental quality, e.g. habitat deformation, will affect the productivity of the ecosystem. Hence, sustainable fisheries maximize the value of the fish-habitat function in the long term. Damage costs avoided: The reduction or loss of watershed goods and services frequently incurs costs in terms of damage to, or reduction of, other economic activities. These damage costs avoided can be taken to represent the economic losses foregone by conserving watersheds.  Wetlands: Emerton and Kekulandal (2003) In the case of the Muthurajawela Wetland, damage costs avoided are used to assess the value of carbon sequestration in terms of climate change-related damage costs avoided. 52 Mitigative or avertive expenditures: It is almost always necessary to take action to mitigate or avert the negative effects of the loss of watershed goods and services, so as to avoid economic damage. These mitigative or avertive costs can be used as indicators of the value of conserving watersheds in terms of expenditures avoided.  Wetlands: Emerton and Kekulandal (2003) In the case of the Muthurajawela Wetland, mitigative/avertive expenditures are used to assess the value of wastewater treatment and water recharge services in terms of alternative expenditures avoided.  Coral Reefs: Berg et al. (1998) The economic benefits of the physical-structure function can be described in through the preventive-expenditure approach (PE) which is defined by the cost of replacing the coral reef with protective constructions, e.g. groynes, revetments, and underwater wave-breakers off the coast. Hedonic pricing: Hedonic methods look at the differentials in property prices and wages between locations, and isolate the proportion of this difference that can be ascribed to the existence or quality of watershed goods and services.  Coral Reefs: Berg et al. (1998) The economic benefits of the physical-structure function can also be described through the loss of property-values (PV), which is defined by the cost of land loss (i.e. price of lost land, buildings, roads, etc) as a result of coastal erosion plus the loss of income resulting from lost land-use opportunities (e.g. loss of agricultural land). Travel costs: Watersheds (wetlands/mangroves/coral reefs) typically hold a value in terms of a recreational resource or destination. Although in many cases no charge is made to view or enjoy natural ecosystems and species, people still spend time and money to reach sites within the watershed. This expenditure - such as on transport, food, equipment, accommodation, time, etc. - can be calculated, and a demand function constructed relating visitation rates to expenditures made. These travel costs serve as a proxy of the value that people place on leisure, recreational or tourism aspects of sites within the watershed.  Wetlands: Emerton and Kekulandal (2003) In the case of the Muthurajawela Wetland, travel costs are used to assess the value of recreation and tourism in terms of expenditures made on visiting the wetland.  Mangroves: Batagoda (2003) Both domestic and international recreation benefits of mangrove forests were estimated using the travel cost method (TCM) for two mangrove sites, namely, Maduganga estuary and mangrove islets situated in the Galle District and the Ranweli holiday resort situated in the Puttalama District. 53 Contingent valuation (CV): Even where watershed goods and services have no market price, and no close replacements or substitutes, they frequently have a high value to people. Contingent valuation techniques infer the value that people place on watershed goods and services by asking them their willingness to pay for them (or willingness to accept compensation for their loss) under the hypothetical scenario that they would be available for purchase.  Mangroves: Batagoda (2003) The non-use value of mangrove forest in Sri Lanka was estimated using the contingent valuation method. The objective was: 1) to measure the willingness to pay (WTP) by local residents of Sri Lanka for their existence, bequest and option value of mangrove forests in Sri Lanka; 2) to measure the willingness to pay (WTP) by foreign visitors to Sri Lanka for their existence, bequest and option value of mangrove forests in Sri Lanka and 3) to establish socio- economic factors affecting the WTP for the non-use value of mangrove protection.  Coral Reefs: Berg et al. (1998) The value of the tourist-attraction function can be defined through a financial-revenue approach (FR) or through a contingent valuation approach. The financial revenue approach calculates the direct financial profits provided by tourism that are dependent on the coral reef, while the contingent valuation approach investigates tourists' willingness to pay to maintain the coral reef. Thus, the contingent valuation approach also includes social values, thus, these estimates could be expected to be higher than the value arrived at by the financial revenue approach. Benefits transfer: The benefit transfer method is used to estimate economic values for ecosystem services by transferring available information from studies already completed in another location and/or context. For example, values for recreational fishing in a particular state may be estimated by applying measures of recreational fishing values from a study conducted in another state. The basic goal of benefit transfer is to estimate benefits for one context by adapting an estimate of benefits from some other context. Benefit transfer is often used when it is too expensive and/or there is too little time available to conduct an original valuation study, yet some measure of benefits is needed. It is important to note that benefit transfers can only be as accurate as the initial study.  Mangroves: Batagoda (2003) The benefits of providing breeding grounds for fish, erosion control, biodiversity maintenance, carbon sequestration, storm protection and pollution treatment were valued as indirect use benefits of mangroves. 54 Table A3.11 Valuation of Muthurajawela wetland benefits, Emerton and Kekulandala (2003) 55 Table A3.12 Direct and indirect economic benefits of Muthurajawela Marsh, Emerton and Kekulandala (2003) (Shaded values are adjusted to current exchange rates and used in the analysis) Economic benefit Value Value (Rs million/year) ($USD/ha/year) 1 Flood attenuation 485.51 1,364.2 Industrial wastewater treatment 162.31 456.1 Agricultural production 30.29 85.1 Support to downstream fisheries 20.00 56.2 Firewood 7.96 22.4 Fishing 6.26 17.6 Leisure, recreation and recreation 5.28 14.8 Domestic sewage treatment 4.32 12.1 Freshwater supplies for local 3.78 10.6 population Carbon sequestration 0.78 89.2 2 Total 726.49 2,128.4 1 - Implied value per hectare based on catchment area, authors’ calculations. 1 USD = 116 Rs. 2 – Carbon sequestration benefit based on 75 hectares of mangrove area in Muthurajawela Marsh 56 Table A3.13 Valuation of Mangrove Forests in Sri Lanka, reproduced from Batagoda (2003) (Shaded values are used in the analysis, after adjusting for current exchange rates) Value component Value Value (US$/ha/year)1 (US$/hh/year)1 Valuation technique 1. DIRECT USE VALUE Non-Timber Forest Resources Stock of Kirala fruits Forest inventory survey and (Sonneratia species) 751.0 logbook yield survey Stock of Karan Koku (Lacrostichum species) 3,784.0 Forest inventory survey Flow of Kirala fruit 24.0 23.0 Forest gate survey Flow of Karan leaves 35.0 43.0 Household survey Flow of green leaf vegetables 11.0 14.0 Household survey Flow of fish 13.0 17.0 Household survey Flow of raw fuel wood 4.0 5.0 Household survey Flow of dried fuel wood 5.0 7.0 Household survey Total flow of NTFRs 92.0 108.0 Forest gate & Household surveys RECREATIONAL VALUE Local recreation value 933.0 10.0 2 Travel cost survey Global recreation value 1,096.0 0.00013 2 Travel cost survey 2. OPTION VALUE Local option value WTP minimum 1,491.0 CVM payment card WTP maximum 1,851.0 2.9 CVM open ended Global option value WTP minimum 1,039.0 CVM payment card WTP maximum 1,179.0 18.0 CVM open ended 3. NON-USE VALUE Local bequest value CVM payment card 57 WTP minimum 1,714.0 3.3 CVM open ended WTP maximum 2,037.0 Global bequest value WTP minimum 562.0 CVM payment card WTP maximum 638.0 1.1 CVM open ended Local existence value WTP minimum 883.0 CVM payment card WTP maximum 1,001.0 1.7 CVM open ended Global existence value WTP minimum 1,399.0 CVM payment card WTP maximum 1,630.0 24.0 CVM open ended 4. INDIRECT USE VALUE Erosion control 3.6 Benefit transfer from Ruitenbeek (1992) Biodiversity maintenance 18.0 Benefit transfer from Ruitenbeek (1992) Breeding ground for fish 218.0 Benefit transfer from Bann (1999) Carbon sequestration 75.5 Estimated from Sathirathai (1997) Pollution treatment and nutrient retention 4,494.0 Benefit transfer from Lal (1990) Windbreaker and storm protection 76.8 Benefit transfer from Bann (unpublished) Economic value of mangrove Estimated taking all minimum values – taking minimum value 12,229.0 only Total flow of NTFRs used 1 – Values originally calculated at 1 USD = 95 Rs. 2 - Average consumer surplus per person 58 Table A3.14 Accumulated net present value of coral reefs in Sri Lanka over 20 years (USD 1000 km- 2 reef), reproduced from Berg et al. (1998) (Shaded values are used in the analysis, after adjusting for current exchange rates) Total Fish-habitat Tourist-attraction 2 Physical-structure quantifiable function function function value Year Low High FR low 3 FR high 3 CV 4 PV low 5 PV high 5 PE low 6 PE high 6 Low High 1 7 9 4 148 208 0.1 158 1230 4180 12 4397 51 30 38 21 700 985 0.6 669 1230 4180 52 5203 10 1 50 63 39 1309 1841 1.0 1104 1230 4180 90 6064 15 1 63 79 55 1839 2587 1.3 1366 1230 4180 120 6845 20 1 71 89 69 2300 3234 1.5 1570 1230 4180 142 7504 1 – All values are discounted with financial discount rate of 9%; 1 USD = 50 Rs. 2 – 6% annual growth of the tourist industry 3 – FR = financial revenue approach 4 – CV = contingent valuation approach 5 – property-value and land value approach; 6 – preventative-expenditure approach 59 Annex 4 Benefits of wetlands, mangroves and coral reefs in the study Bentota Estuary (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 1,700 1,700 1,700 1,700 Mangrove area (ha) 50 50 50 50 Reef area (ha) - - - - Provisioning services 812,600 85,982 901 84,885 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - - - - Fishing 635,800 29,903 532 29,556 Hunting - - - - Water supply 76,500 18,056 - 18,056 Raw materials (thatch, timber, fodder, fertilizer, etc.) 76,500 - 164 164 Fuelwood 23,800 38,023 205 37,1101 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 2,334,100 25,221 377,420 377,420 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 1,497,700 - - - Recreation and tourism 836,400 25,221 - - Local - - 38,205 38,205 International - - 48,974 48,974 Option value - - - - Local - - 61,054 61,054 International - - 42,545 42,545 Bequest value - - - - 60 Local - - 70,185 70,185 International - - 23,013 23,013 Existence value - - - - Local - - 36,157 36,157 International - - 57,287 57,287 Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 1,626,750 3,215,129 242,776 3,383,792 (benefits obtained from ecosystem processes) Flood control/water regulation 788,800 2,319,176 3,264 2,254,2291 Water treatment 489,600 - 229,593 229,593 Industrial wastewater treatment - 775,320 - 775,320 Domestic sewage treatment - 20,636 - 20,636 Nursery function 341,700 - 6,682 6,682 Climate regulation of mangroves 6,650 4,461 3,092 4,4612 Other (e.g., sediment control, biological control) - 95,536 144 92,8701 Supporting services 363,800 - 722 722 (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 363,800 - 722 722 Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 5,137,250 3,326,332 621,819 3,846,820 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 595,921,000 385,854,527 72,131,041 446,231,083 Notes: 1- Mangrove areas netted out of catchment area; 2 – Only the maximum is taken between Muthurajawela and mangroves; Rural factor = 0.10 61 Maduganga Estuary (Ramsar Site) (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 915 915 915 915 Mangrove area (ha) 125 125 125 125 Reef area (ha) - - - - Provisioning services 437,370 124,155 9,418 117,940 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 77,877 7,166 74,4041 Fishing 342,210 16,095 1,331 15,2271 Hunting - - - - Water supply 41,175 9,719 - 9,719 Raw materials (thatch, timber, fodder, fertilizer, etc.) 41,175 - 409 409 Fuelwood 12,810 20,465 512 18,1811 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 1,256,295 13,575 943,551 943,551 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 806,115 - - - Recreation and tourism 450,180 13,575 - - Local - - 95,512 95,512 International - - 122,435 122,435 Option value - - - - Local - - 152,635 152,635 International - - 106,363 106,363 Bequest value - - - - Local - - 175,463 175,463 International - - 57,532 57,532 62 Existence value - - - - Local - - 90,393 90,393 International - - 143,217 143,217 Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 888,620 1,321,943 606,940 1,743,601 (benefits obtained from ecosystem processes) Flood control/water regulation 424,560 1,248,263 8,161 1,085,8951 Water treatment 263,520 - 573,983 573,983 Industrial wastewater treatment - - - - Domestic sewage treatment - 11,107 - 11,107 Nursery function 183,915 - 16,706 16,706 Climate regulation of mangroves 16,625 11,153 7,729 11,1532 Other (e.g., sediment control, biological control) - 51,421 361 44,7571 Supporting services 195,810 - 1,806 1,806 (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 195,810 - 1,806 1,806 Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 2,778,095 1,459,673 1,561,714 2,806,898 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 322,259,020 169,322,107 181,158,852 325,600,140 Notes: 1- Mangrove areas netted out of catchment area; 2 – Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 63 Hikkaduwa National Park (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Reefs) Total Catchment area (ha) 104 104 104 104 Mangrove area (ha) - - - - Reef area (ha) 45 45 45 45 Provisioning services 49,712 5,260 1,343 6,603 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - - - - Fishing 38,896 1,829 1,343 3,1721 Hunting - - - - Water supply 4,680 1,105 - 1,105 Raw materials (thatch, timber, fodder, fertilizer, etc.) 4,680 - - - Fuelwood 1,456 2,326 - 2,326 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 142,792 1,543 39,897 39,897 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 91,624 - - - Recreation and tourism 51,168 1,543 39,897 39,897 1 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 64 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 99,112 196,417 235,927 290,465 (benefits obtained from ecosystem processes) Flood control/water regulation 48,256 141,879 235,927 235,9272 Water treatment 29,952 - - - Industrial wastewater treatment - 47,431 - 47,431 Domestic sewage treatment - 1,262 - 1,262 Nursery function 20,904 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 5,845 - 5,845 Supporting services 22,256 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 22,256 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 313,872 203,220 277,166 336,964 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 36,409,152 23,573,559 32,151,250 39,087,860 Notes: 1- Mangrove and coral reef benefits added; 2 – Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 65 Rumassala Marine Sanctuary (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Reefs) Total Catchment area (ha) 1,707 1,707 1,707 1,707 Mangrove area (ha) - - - - Reef area (ha) 1 1 1 1 Provisioning services 715,233 30,026 30 30,056 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - - - - Fishing 638,418 30,026 30 30,0561 Hunting - - - - Water supply - - - - Raw materials (thatch, timber, fodder, fertilizer, etc.) 76,815 - - - Fuelwood - - - - Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 2,343,711 25,325 897 25,325 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 1,503,867 - - - Recreation and tourism 839,844 25,325 897 25,3252 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 66 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 1,135,155 2,328,726 5,302 2,328,726 (benefits obtained from ecosystem processes) Flood control/water regulation 792,048 2,328,726 5,302 2,328,7262 Water treatment - - - - Industrial wastewater treatment - - - - Domestic sewage treatment - - - - Nursery function 343,107 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - - - - Supporting services 365,298 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 365,298 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 4,559,397 2,384,077 6,228 2,384,107 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 528,890,052 276,552,917 722,500 276,556,417 Notes: 1- Mangrove and coral reef benefits added; 2 – Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 67 Unawatuna Reef (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Reefs) Total Catchment area (ha) 100 100 100 100 Mangrove area (ha) - - - - Reef area (ha) 100 100 100 100 Provisioning services 46,400 2,821 3,017 5,838 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - - - - Fishing 37,400 1,759 3,017 4,7761 Hunting - - - - Water supply 4,500 1,062 - 1,062 Raw materials (thatch, timber, fodder, fertilizer, etc.) 4,500 - - - Fuelwood - - - - Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 137,300 1,484 89,655 89,655 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 88,100 - - - Recreation and tourism 49,200 1,484 89,655 89,6552 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 68 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 66,500 136,422 530,172 530,172 (benefits obtained from ecosystem processes) Flood control/water regulation 46,400 136,422 530,172 530,1722 Water treatment - - - - Industrial wastewater treatment - - - - Domestic sewage treatment - - - - Nursery function 20,100 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - - - - Supporting services 21,400 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 21,400 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 271,600 140,727 622,845 625,666 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 31,505,600 16,324,316 72,250,000 72,577,249 Notes: 1- Mangrove and coral reef benefits added; 2 – Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 69 Koggala Lagoon (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 727 727 727 727 Mangrove area (ha) 20 20 20 20 Reef area (ha) - - - - Provisioning services 314,791 90,924 1,507 89,930 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 61,876 1,147 61,3201 Fishing 271,898 12,788 213 12,6491 Hunting - - - - Water supply - - - - Raw materials (thatch, timber, fodder, fertilizer, etc.) 32,715 - 66 66 Fuelwood 10,178 16,261 82 15,8951 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 998,171 10,786 150,968 150,968 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 640,487 - - - Recreation and tourism 357,684 10,786 - - Local - - 15,282 15,282 International - - 19,590 19,590 Option value - - - - Local - - 24,422 24,422 International - - 17,018 17,018 Bequest value - - - - Local - - 28,074 28,074 International - - 9,205 9,205 70 Existence value - - - - Local - - 14,463 14,463 International - - 22,915 22,915 Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 695,491 1,043,254 97,110 1,110,719 (benefits obtained from ecosystem processes) Flood control/water regulation 337,328 991,789 1,306 965,8101 Water treatment 209,376 - 91,837 91,837 Industrial wastewater treatment - - - - Domestic sewage treatment - 8,825 - 8,825 Nursery function 146,127 - 2,673 2,673 Climate regulation of mangroves 2,660 1,784 1,237 1,7842 Other (e.g., sediment control, biological control) - 40,856 58 39,7891 Supporting services 155,578 - 289 289 (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 155,578 - 289 289 Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 2,164,031 1,144,964 249,874 1,351,906 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 251,027,596 132,815,781 28,985,416 156,821,059 Notes: 1- Mangrove areas netted out of catchment area;; 2 – Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 71 Weligama Bay & Reef (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Reefs) Total Catchment area (ha) 100 100 100 100 Mangrove area (ha) - - - - Reef area (ha) 10 10 10 10 Provisioning services 43,300 12,507 302 12,808 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 8,511 - 8,511 Fishing 37,400 1,759 302 2,0611 Hunting - - - - Water supply - - - - Raw materials (thatch, timber, fodder, fertilizer, etc.) 4,500 - - - Fuelwood 1,400 2,237 - 2,237 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 137,300 1,484 8,966 8,966 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 88,100 - - - Recreation and tourism 49,200 1,484 8,966 8,9662 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 72 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 95,300 143,256 53,017 143,256 (benefits obtained from ecosystem processes) Flood control/water regulation 46,400 136,422 53,017 136,422 2 Water treatment 28,800 - - - Industrial wastewater treatment - - - - Domestic sewage treatment - 1,214 - 1,214 Nursery function 20,100 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 5,620 - 5,620 Supporting services 21,400 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 21,400 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 297,300 157,246 62,284 165,030 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 34,486,800 18,240,548 7,225,000 19,143,449 Notes: 1- Mangrove and coral reef benefits added; 2 – Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 73 Rekawa Lagoon & Reef (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mang./Reef) Total Catchment area (ha) 250 250 250 250 Mangrove area (ha) 200 200 200 200 Reef area (ha) 4.5 4.5 4.5 4.5 Provisioning services 119,500 33,922 15,205 24,113 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 21,278 11,466 15,7211 Fishing 93,500 4,397 2,265 3,1451,2 Hunting - - - - Water supply 11,250 2,655 - 2,655 Raw materials (thatch, timber, fodder, fertilizer, etc.) 11,250 - 655 655 Fuelwood 3,500 5,592 819 1,9371 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 343,250 3,709 150,968 150,968 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 220,250 - - - Recreation and tourism 123,000 3,709 - - Local - - 15,282 15,282 International - - 19,590 19,590 Option value - - - - Local - - 24,422 24,422 International - - 17,018 17,018 Bequest value - - - - Local - - 28,074 28,074 International - - 9,205 9,205 74 Existence value - - - - Local - - 14,463 14,463 International - - 22,915 22,915 Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 264,850 375,984 994,961 1,050,638 (benefits obtained from ecosystem processes) Flood control/water regulation 116,000 341,055 36,915 81,2681 Water treatment 72,000 - 918,373 918,373 Industrial wastewater treatment - - - - Domestic sewage treatment - 3,035 - 3,035 Nursery function 50,250 - 26,729 26,729 Climate regulation of mangroves 26,600 17,845 12,366 17,8453 Other (e.g., sediment control, biological control) - 14,049 578 3,3881 Supporting services 53,500 - 2,889 2,889 (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 53,500 - 2,889 2,889 Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 781,100 413,615 1,164,023 1,228,608 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 90,607,600 47,979,387 135,026,713 142,518,572 Notes: 1- Mangrove areas netted out of catchment area; 2 - Mangrove and coral reef benefits added; 3 - Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 75 Kahanda Estuary & Kahandamodera Mangrove (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 51 51 51 51 Mangrove area (ha) 22.3 22.3 22.3 22.3 Reef area (ha) - - - - Provisioning services 24,378 6,920 1,680 5,811 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 4,341 1,278 3,7211 Fishing 19,074 897 237 7421 Hunting - - - - Water supply 2,295 542 - 542 Raw materials (thatch, timber, fodder, fertilizer, etc.) 2,295 - 73 73 Fuelwood 714 1,141 91 7331 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 70,023 757 16,833 16,833 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 44,931 - - - Recreation and tourism 25,092 757 - - Local - - 1,704 1,704 International - - 2,184 2,184 Option value - - - - Local - - 2,723 2,723 International - - 1,898 1,898 Bequest value - - - - Local - - 3,130 3,130 International - - 1,026 1,026 76 Existence value - - - - Local - - 1,613 1,613 International - - 2,555 2,555 Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 51,569 75,050 108,278 150,274 (benefits obtained from ecosystem processes) Flood control/water regulation 23,664 69,575 1,456 40,6091 Water treatment 14,688 - 102,399 102,399 Industrial wastewater treatment - - - - Domestic sewage treatment - 619 - 619 Nursery function 10,251 - 2,980 2,980 Climate regulation of mangroves 2,966 1,990 1,379 1,9902 Other (e.g., sediment control, biological control) - 2,866 64 1,6771 Supporting services 10,914 - 322 322 (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 10,914 - 322 322 Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 156,884 82,727 127,113 173,240 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 18,198,532 9,596,320 14,745,146 20,095,885 Notes: 1- Mangrove areas netted out of catchment area;; 2 – Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 77 Kalametiya Lagoon (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 604 604 604 604 Mangrove area (ha) 17 17 17 17 Reef area (ha) - - - - Provisioning services 363,004 81,956 1,281 81,111 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 51,407 975 50,9351 Fishing 225,896 10,624 181 10,5061 Hunting 74,292 - - - Water supply 27,180 6,415 - 6,415 Raw materials (thatch, timber, fodder, fertilizer, etc.) 27,180 - 56 56 Fuelwood 8,456 13,509 70 13,1991 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 829,292 8,961 12,832 12,832 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 532,124 - - - Recreation and tourism 297,168 8,961 - - Local - - 1,299 1,299 International - - 1,665 1,665 Option value - - - - Local - - 2,076 2,076 International - - 1,447 1,447 Bequest value - - - - Local - - 2,386 2,386 International - - 782 782 78 Existence value - - - - Local - - 1,229 1,229 International - - 1,948 1,948 Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 577,873 866,782 82,544 924,127 (benefits obtained from ecosystem processes) Flood control/water regulation 280,256 823,990 1,110 801,9081 Water treatment 173,952 - 78,062 78,062 Industrial wastewater treatment - - - - Domestic sewage treatment - 7,332 - 7,332 Nursery function 121,404 - 2,272 2,272 Climate regulation of mangroves 2,261 1,517 1,051 1,5172 Other (e.g., sediment control, biological control) - 33,943 49 33,0371 Supporting services 129,256 - 246 246 (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 129,256 - 246 246 Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 1,899,425 957,699 96,903 1,018,316 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 220,333,300 111,093,030 11,240,694 118,124,614 Notes: 1- Mangrove areas netted out of catchment area;; 2 – Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 79 Lunama Lagoon (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 192 192 192 192 Mangrove area (ha) 5 5 5 5 Reef area (ha) - - - - Provisioning services 115,392 26,052 377 25,804 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 16,341 287 16,2021 Fishing 71,808 3,377 53 3,3431 Hunting 23,616 - - - Water supply 8,640 2,039 - 2,039 Raw materials (thatch, timber, fodder, fertilizer, etc.) 8,640 - 16 16 Fuelwood 2,688 4,294 20 4,2031 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 263,616 2,849 3,774 3,774 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 169,152 - - - Recreation and tourism 94,464 2,849 - - Local - - 382 382 International - - 490 490 Option value - - - - Local - - 611 611 International - - 425 425 Bequest value - - - - Local - - 702 702 International - - 230 230 80 Existence value - - - - Local - - 362 362 International - - 573 573 Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 183,641 275,497 24,278 292,363 (benefits obtained from ecosystem processes) Flood control/water regulation 89,088 261,930 326 255,4361 Water treatment 55,296 - 22,959 22,959 Industrial wastewater treatment - - - - Domestic sewage treatment - 2,331 - 2,331 Nursery function 38,592 - 668 668 Climate regulation of mangroves 665 446 309 4462 Other (e.g., sediment control, biological control) - 10,790 14 10,5231 Supporting services 41,088 - 72 72 (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 41,088 - 72 72 Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 603,737 304,398 28,501 322,014 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 70,033,492 35,310,159 3,306,087 37,353,571 Notes: 1- Mangrove areas netted out of catchment area;; 2 – Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 81 Karagan Lewaya (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 835 835 835 835 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services 399,130 113,300 - 113,300 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 71,068 - 71,068 Fishing 312,290 14,687 - 14,687 Hunting - - - - Water supply 37,575 8,869 - 8,869 Raw materials (thatch, timber, fodder, fertilizer, etc.) 37,575 - - - Fuelwood 11,690 18,676 - 18,676 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 1,146,455 12,388 - 12,388 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 735,635 - - - Recreation and tourism 410,820 12,388 - 12,388 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 82 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 795,755 1,196,185 - 1,196,185 (benefits obtained from ecosystem processes) Flood control/water regulation 387,440 1,139,125 - 1,139,125 Water treatment 240,480 - - - Industrial wastewater treatment - - - - Domestic sewage treatment - 10,136 - 10,136 Nursery function 167,835 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 46,925 - 46,925 Supporting services 178,690 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 178,690 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 2,520,030 1,321,874 - 1,321,874 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 292,323,480 153,337,353 - 153,337,353 Notes: Rural factor = 0.10 83 Maha Lewaya (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 260 260 260 260 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services 124,280 35,279 - 35,279 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 22,129 - 22,129 Fishing 97,240 4,573 - 4,573 Hunting - - - - Water supply 11,700 2,762 - 2,762 Raw materials (thatch, timber, fodder, fertilizer, etc.) 11,700 - - - Fuelwood 3,640 5,815 - 5,815 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 356,980 3,857 - 3,857 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 229,060 - - - Recreation and tourism 127,920 3,857 - 3,857 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 84 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 247,780 372,465 - 372,465 (benefits obtained from ecosystem processes) Flood control/water regulation 120,640 354,698 - 354,698 Water treatment 74,880 - - - Industrial wastewater treatment - - - - Domestic sewage treatment - 3,156 - 3,156 Nursery function 52,260 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 14,611 - 14,611 Supporting services 55,640 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 55,640 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 784,680 411,601 - 411,601 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 91,022,880 47,745,763 - 47,745,763 Notes: Rural factor = 0.10 85 Lunugamvehera Reservoir (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 7,438 7,438 7,438 7,438 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services 4,470,238 1,009,253 - 1,009,253 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 633,056 - 633,056 Fishing 2,781,812 130,833 - 130,833 Hunting 914,874 - - - Water supply 334,710 79,001 - 79,001 Raw materials (thatch, timber, fodder, fertilizer, etc.) 334,710 - - - Fuelwood 104,132 166,363 - 166,363 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 10,212,374 110,351 - 11,035 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 6,552,878 - - - Recreation and tourism 3,659,496 110,351 - 11,035 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 86 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 7,088,414 10,655,362 - 10,655,362 (benefits obtained from ecosystem processes) Flood control/water regulation 3,451,232 10,147,078 - 10,147,078 Water treatment 2,142,144 - - - Industrial wastewater treatment - - - - Domestic sewage treatment - 90,287 - 90,287 Nursery function 1,495,038 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 417,997 - 417,997 Supporting services 1,591,732 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 1,591,732 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 23,362,758 11,774,966 - 11,675,650 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 2,710,079,928 1,365,896,089 - 1,354,375,432 Notes: Rural factor = 0.10 87 Koholankala Wetland in Bundala National Park (Ramsar Site) (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 390 390 390 390 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services 234,390 52,919 - 52,919 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 33,193 - 33,193 Fishing 145,860 6,860 - 6,860 Hunting 47,970 - - - Water supply 17,550 4,142 - 4,142 Raw materials (thatch, timber, fodder, fertilizer, etc.) 17,550 - - - Fuelwood 5,460 8,723 - 8,723 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 535,470 5,786 - 5,786 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 343,590 - - - Recreation and tourism 191,880 5,786 - 5,786 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 88 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 371,670 558,697 - 558,697 (benefits obtained from ecosystem processes) Flood control/water regulation 180,960 532,046 - 532,046 Water treatment 112,320 - - - Industrial wastewater treatment - - - - Domestic sewage treatment - 4,734 - 4,734 Nursery function 78,390 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 21,917 - 21,917 Supporting services 83,460 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 83,460 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 1,224,990 617,402 - 617,402 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 142,098,840 71,618,644 - 71,618,644 Notes: Rural factor = 0.10 89 Malala Wetland in Bundala National Park (Ramsar Site) (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 650 650 650 650 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services 390,650 88,198 - 88,198 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 55,322 - 55,322 Fishing 243,100 11,433 - 11,433 Hunting 79,950 - - - Water supply 29,250 6,904 - 6,904 Raw materials (thatch, timber, fodder, fertilizer, etc.) 29,250 - - - Fuelwood 9,100 14,538 - 14,538 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 892,450 9,643 - 9,643 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 572,650 - - - Recreation and tourism 319,800 9,643 - 9,643 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 90 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 619,450 931,162 - 931,162 (benefits obtained from ecosystem processes) Flood control/water regulation 301,600 886,744 - 886,744 Water treatment 187,200 - - - Industrial wastewater treatment - - - - Domestic sewage treatment - 7,890 - 7,890 Nursery function 130,650 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 36,528 - 36,528 Supporting services 139,100 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 139,100 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 2,041,650 1,029,004 - 1,029,004 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 236,831,400 119,364,407 - 119,364,407 Notes: Rural factor = 0.10 91 Embilikala Wetland in Bundala National Park (Ramsar Site) (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 430 430 430 430 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services 258,430 58,346 - 58,346 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 36,598 - 36,598 Fishing 160,820 7,564 - 7,564 Hunting 52,890 - - - Water supply 19,350 4,567 - 4,567 Raw materials (thatch, timber, fodder, fertilizer, etc.) 19,350 - - - Fuelwood 6,020 9,618 - 9,618 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 590,390 6,380 - 6,380 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 378,830 - - - Recreation and tourism 211,560 6,380 - 6,380 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 92 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 409,790 616,000 - 616,000 (benefits obtained from ecosystem processes) Flood control/water regulation 199,520 586,615 - 586,615 Water treatment 123,840 - - - Industrial wastewater treatment - - - - Domestic sewage treatment - 5,220 - 5,220 Nursery function 86,430 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 24,165 - 24,165 Supporting services 92,020 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 92,020 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 1,350,630 680,725 - 680,725 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 156,673,080 78,964,146 - 78,964,146 Notes: Rural factor = 0.10 93 Bundala Wetland in Bundala National Park (Ramsar Site) (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 520 520 520 520 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services 312,520 70,558 - 70,558 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 44,258 - 44,258 Fishing 194,480 9,147 - 9,147 Hunting 63,960 - - - Water supply 23,400 5,523 - 5,523 Raw materials (thatch, timber, fodder, fertilizer, etc.) 23,400 - - - Fuelwood 7,280 11,631 - 11,631 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 713,960 7,715 - 7,715 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 458,120 - - - Recreation and tourism 255,840 7,715 - 7,715 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 94 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 495,560 744,930 - 744,930 (benefits obtained from ecosystem processes) Flood control/water regulation 241,280 709,395 - 709,395 Water treatment 149,760 - - - Industrial wastewater treatment - - - - Domestic sewage treatment - 6,312 - 6,312 Nursery function 104,520 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 29,223 - 29,223 Supporting services 111,280 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 111,280 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 1,633,320 823,203 - 823,203 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 189,465,120 95,491,525 - 95,491,525 Notes: Rural factor = 0.10 95 Mangroves in Ruhuna (Yala) National Park (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) - - - - Mangrove area (ha) 326 326 326 326 Reef area (ha) - - - - Provisioning services - - 24,562 24,562 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - - 18,689 18,689 Fishing - - 3,471 3,471 Hunting - - - - Water supply - - - - Raw materials (thatch, timber, fodder, fertilizer, etc.) - - 1,068 1,068 Fuelwood - - 1,335 1,335 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services - - 1,892,374 1,892,374 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information - - - - Recreation and tourism - - - - Local - - - - International - - - - Option value - - - - Local - - 398,071 398,071 International - - 277,395 277,395 Bequest value - - - - Local - - 457,608 457,608 International - - 150,044 150,044 96 Existence value - - - - Local - - 235,746 235,746 International - - 373,509 373,509 Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 43,358 29,087 85,950 94,880 (benefits obtained from ecosystem processes) Flood control/water regulation - - 21,283 21,283 Water treatment - - - - Industrial wastewater treatment - - - - Domestic sewage treatment - - - - Nursery function - - 43,568 43,568 Climate regulation of mangroves 43,358 29,087 20,157 29,0871 Other (e.g., sediment control, biological control) - - 942 942 Supporting services - - 4,709 4,709 (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity - - 4,709 4,709 Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 43,358 29,087 2,007,596 2,016,526 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 5,029,528 3,374,100 232,881,129 233,916,994 Notes: 1- Only the maximum is taken between Muthurajawela and mangroves Rural factor = 0.10 97 Weerawila-Tissa-Pannangamuwa-Debara-Yoda Tanks (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 1,590 1590 1590 1590 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services 760,020 215,745 - 215,745 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 135,327 - 135,327 Fishing 594,660 27,968 - 27,968 Hunting - - - - Water supply 71,550 16,888 - 16,888 Raw materials (thatch, timber, fodder, fertilizer, etc.) 71,550 - - - Fuelwood 22,260 35,563 - 35,563 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 2,183,070 23,589 - 23,589 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 1,400,790 - - - Recreation and tourism 782,280 23,589 - 23,589 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 98 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 1,515,270 3,002,918 - 3,002,918 (benefits obtained from ecosystem processes) Flood control/water regulation 737,760 2,169,112 - 2,169,112 Water treatment 457,920 - - - Industrial wastewater treatment - 725,1521 - 725,152 Domestic sewage treatment - 19,300 - 19,300 Nursery function 319,590 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 89,354 - 89,354 Supporting services 340,260 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 340,260 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 4,798,620 3,242,253 - 3,242,253 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 556,639,920 376,101,336 - 376,101,336 Notes: 1 - Value for pollution treatment and nutrient retention from agricultural activities in the area Rural factor = 0.10 99 Pilinnawa Wetland (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 100 100 100 100 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services 10,400 3,299 - 3,299 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - - - - Fishing - - - - Hunting - - - - Water supply 4,500 1,062 - 1,062 Raw materials (thatch, timber, fodder, fertilizer, etc.) 4,500 - - - Fuelwood 1,400 2,237 - 2,237 Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 137,300 1,484 - 1,484 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 88,100 - - - Recreation and tourism 49,200 1,484 - 1,484 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 100 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services 48,900 5,620 - 5,620 (benefits obtained from ecosystem processes) Flood control/water regulation - - - - Water treatment 28,800 - - - Industrial wastewater treatment - - - - Domestic sewage treatment - - - - Nursery function 20,100 - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 5,620 - 5,620 Supporting services 21,400 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 21,400 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 218,000 10,402 - 10,402 Exchange rate ($1USD = Rs. Apr. 2009) 116 116 116 116 Total value (Rs.) 25,288,000 1,206,649 - 1,206,649 Notes: Rural factor = 0.10 101 Palatupana Lagoon (Shaded rows have no, or minimal, values) BT BT BT (MEA) (Muthurajawela) (Mangroves) Total Catchment area (ha) 160 160 160 160 Mangrove area (ha) - - - - Reef area (ha) - - - - Provisioning services - 13,618 - 13,618 (products obtained from wetlands/ mangroves/ reefs) Agricultural production - 13,618 - 13,618 Fishing - - - - Hunting - - - - Water supply - - - - Raw materials (thatch, timber, fodder, fertilizer, etc.) - - - - Fuelwood - - - - Other (genetic, medicinal, and ornamental resources) - - - - Cultural services 219,680 2,374 - 2,374 (nonmaterial benefits obtained from wetlands/ mangroves/ reefs) Aesthetic information 140,960 - - - Recreation and tourism 78,720 2,374 - 2,374 Local - - - - International - - - - Option value - - - - Local - - - - International - - - - Bequest value - - - - Local - - - - International - - - - 102 Existence value - - - - Local - - - - International - - - - Other (e.g., artistic, spiritual, historic, or scientific information) - - - - Regulating services - 8,992 - 8,992 (benefits obtained from ecosystem processes) Flood control/water regulation - - - - Water treatment - - - - Industrial wastewater treatment - - - - Domestic sewage treatment - - - - Nursery function - - - - Climate regulation of mangroves - - - - Other (e.g., sediment control, biological control) - 8,992 - 8,992 Supporting services 34,240 - - - (ecosystem functions necessary to maintain all other services) Habitat/refugia for biodiversity 34,240 - - - Other (e.g., primary products, soil formation, nutrient/biogeochemical cycling) - - - - Total value (USD) 253,920 24,983 - 24,983 Exchange rate ($1USD = Rs. 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