Non Market Valuation In Another Project

Yudi WahyudinYudi Wahyudin, M.Si.
Resources Economist
INTERNATIONAL SEMINAR OF
LAND AND RESOURCES ECONOMIC VALUATION
Held by IPSLA
(Institutional Partnership for Strengthening Land Administration)
Cooperation between
BPN Republic of Indonesia and Government of Sweden
Non Market Valuation
in another project
Case:
Economic Valuation of an Area in some different Places
Jakarta, November 12-13, 2008

2Yudi Wahyudin, S.Pi., M.Si.
Institute for Applied Sustainable Development (IASD)Jakarta, 13.11.2008
Basic View of the Importance of
Resource Economic Valuation (REV)
ECONOMIC OF DISASTERS
Source :
Adger, et.al (2005) in Adrianto (2007)

oligotrophic (clear) eutrophic (turbid, dense algae)
Adopted from Adrianto (2007)
ECONOMICS OF EUTROPHICATION

Coral dominance Algae dominance
ECONOMICS OF CORAL REEFS
Adopted from Adrianto (2007)

Introduction
• Increasing the need of good and services
– Increasing the extraction of environmental and natural resources
(Env.Nat.Res.)
– Need awareness from Gov. to allocate the Env.Nat.Res.
utilization
• Need of policy, which consider a few of objectives function
– Quantity and quality of the resources
– Land use
– And others derrivated effect for human being
• Gov. need to take part in all policies that could combine the
economic development and Env.Nat.Res. preservation
– Benefit of Ec.Dev. is higher than the benefit of Env.Nat.Res. preservation
– Env.Nat.Res. utilization must have higher benefit than socio-ecological
benefit for the peoplel

– Need special approach for calculating the
benefit of socio-ecological-economic
Env.Nat.Res. services
• No market value due to market failure
– Non market valuation approach
– An area have several land use
• Env.Nat.Res.
– Market value and non market value
• This paper present:
– The need and importance of ecological-
economic valuation
– The case of study

Economic Concept of Value
NEO-CLASIC CONCEPT:
Based on Consumer Preferences
A soccer player would be valued higher and
higher if he/she could make a lot of goals
In this context : value is
calculated based on objective
(Maximum Utility)
Tool analysis thet be used

Quantity
Price
Market Price
Consumer
Surplus
D
em
and
C
urve
Quantity
Price
Market Price
Producer
Surplus
Siupply
Curve
Consumer Surplus (CS) Producer Surplus (PS)

ECOLOGICAL ECONOMIC CONCEPT:
Adopted from
Constanza and Folke (1997)
in Constanza (2001)
in Adrianto (2007)

Basic Schema for
Sustainable Land Development
Resources System Identification
Stakeholders Identification
Institutional Identification
Goods and Services
Typology Identification
Choosing Economic
Valuation Method
Economic Valuation
Total Economic
Value
Policy
Analysis
Sustainable Land
Development
Feedback
analysis
DUV
IUV
NUV

The Typology of
Total Economic Value (TEV)
Total Economic Value
Use Value Non-Use Value
Direct
Use Value
Indirect
Use Value
Option
Value
Bequest
Value
Existence
Value
Use Value Non-Use Value
Direct
Use Value
Indirect
Use Value
Option
Value
Bequest
Value
Existence
Value
Adopted from Barton (1994)

Total Economic Value of
Coastal Zone Resources
Biological Support to:
• fisheries
• marice mammals
• sea birds
• turtles
• marine reptiles
• other ecosystem
Physical Protection to:
• coastline
• navigation
• other coastal
ecosystems
Global life-support:
• carbon storage
• species
• habitats and
ecosystems
• biodiversity
• threatened reef
habitats
• endangered species
• charismatic species
• aesthetic reefscapes
and beaches
• species
• habitats
• “way life” connected
to traditional users
Extractive:
• capture fisheries
• bivalves snails
• prawns, crabs
• mariculture
• aquarium
• trade
• curio trade
• pharmaceutical
• genetic material
• construction
• raw material
• fluelwood, charcoal
Non Extractive:
• tourism
• recreation
• research
• education
• aesthetic
Output/services that
can be consume
directly
Functional benefits
enjoyed indirectly
Value of leaving use and
non use value to next
generation
Value from knowledge
of continued existence
based on moral
conviction
Future direct and
indirect use of:
Expected new
information from avoiding
irreversible loss of:
USE VALUE NON USE VALUE
Direct Use Value Indirect Use Value Option Value Quasi-option Value Bequest Value Existence Value

VALUATION
METHOD
difficult
easy
No Approach Technique
1 Market Value Change -in-productivity Approach/Effect
of Production (EOP)
Loss -of-Earnings/Human Capital
Approach (HC)
Opportunity Cost Approach (OC)
2 Direct Expenditure Value Cost Effectiveness Analysis (CEA)
Preventive -Expenditure (PE)
Compensation Payments (CP)
3 Implicit Market Value
(Surrogate Market)
Hedonic Value/Property -value approach
(PV)
Wage-differential Approach (WD)
Travel -cost Approach (TC)
Marketed Goods as Environmental
Surrogates (ES)
4 Implicit Expenditure Value Replacement Cost (Rep. C)
Relocation Cost (Rel. C)
Shadow -Project Cost (SPC)
5 Artificial Contingent Valuation Method
6 Non -WTP Energy Theory of Value -Energy Analysis
(EA)
Market

Typology Identification of the
Resources and Total Valuation
Small
Island
Resource
Typology /
Endowment
Ecosystem
Species
Community
Total
valuation
Mangrove
Ecosystem
(S1)
Seagrass bed
Ecosystem
(S2)
Coral reefs
Ecosystem
(S3)
…..
Others
Resources-n
(Sn)

Case Study:
The Value of Mangrove Forest Resources
in Moti Island
NO
Typology
Value
Function and
Benefit
Method Source of Data
(Rp.)
Total Economic
Value (US$)
1. Direct Use
Value
A. Wood Stock/
Housing material
Market price Primary Data (2005) 6.895.020.546,61
58.604.000,00
403.357.500,00
8.809.167,00
1.080.000,00
1.849.504.723,42
1.844.319.945,60
15.543.000,00
11.076.238.882,63
689.502,05
B. Firelwood Market price Primary Data (2005) 5.860,40
C. Fisheries Market price Primary Data (2005) 40.335,75
D. Medical
material
Surrogate
market price
Primary Data (2005) 880,92
E. Research and
Education
Surrogate
market price
Primary Data (2005) 108,00
2. Indirect Use
Value
A. Abration
Protection
Replacement
cost
Aprilwati (1997) in
Santoso (2005)
184.950,47
B. Carbon Stock Damage
avoided cost
Brown and Pear
(1994) in Pearce
dan Moran (1994)
184.431,99
3. Option Value Biodiversity Benefit transfer Ruitenbeek (1991) 1.554,30
TEV (Total Economic Value) 1.107.623,89
(Total Area of Mangrove Forest = 103,62 hectares)

Using Change of Productivity (EOP) to value
Agricultural Area in Jogjogan Village
• Wide of agricultural area
– 143.38 hectares
• Number of farmer
– 109 persons
• .
• Respondent characteristics
– Average productions
• 6666.53 kg/ha/person/yr.
– Average experiences
• 17 year
– Average prices of Paddies
• IDR 1977.78/kg
– Average income
• IDR 3888888,89/yr.
– Average age
• 48 year
– Average education
• 6 persons/household

• Demand function :
• Plotting demand function :
f Q( ) :=
8.292277896 10
5
Q
0.6715939207

• The results
– Consumer surplus per person
• IDR 30560570.95
– Economic value of agriculture land (109
persons and 143.38 ha)
• IDR 23232684.01/ha/yr.

Using Travel Cost Method to Value
Recreation Area : Cilember Waterfall
• Recreation area
– 5.9 ha
• Total number of visitors
– 119768 person/yr.
• Recreation atraction
– Camping area
– Waterfall
• Characterics of respodent
– Number of visits
• 2.64 times/person
– Number of visitors per group
• 6 person
– Time spent for visiting
• 17.50 hours/visit
– Average total cost
• IDR 105883,34 per times
per visit
– Average income
• IDR 2186111.11 per month
– Average age
• 34 year
– Average education
• SLTA
– Average number of family
• 4 persons/household

• Demand function :
• Plotting demand function :

• The results
– Consumer surplus per visitor
• IDR 841137.85
– Economic value of recreation area
(119768 visitors and 5.9 ha)
• IDR 1707813324.10/ha/yr.

Using Contingent Valuation Method to Value the
Existance of MPA (Coral Reef) in Panggang Island

Non Market Valuation In Another Project

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