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LOK NATH LAMSAL
M. Sc First Year
Roll no 03

Lamsal

2/7/2014
Outline of the presentation
 Introduction
 Conceptual framework
 Soil valuation
 Total value of soil conservation
 Appropriate valuation method for soil
conservation
 Analysis of different methods
 Conclusion

Lamsal

2/7/2014




The deteriorating condition of soil in Nepalese hills and
mountains first came in to the picture after Eckholm
(1975) wrote the ‘Theory of Himalayan Environmental
Degradation’ referring that anthropogenic factor is the
main causes of accelerated erosion and subsequent
degradation across the Himalayan region.
Active geology, steepness, fragility, high rainfall etc are
also equally responsible for the soil degradation in the
Nepalese hills (Ives, 2004; Blaikie, 2001).

Lamsal

2/7/2014


Valuation of the stream of benefit and cost with and
without conservation cases would give more accurate
picture of the private and social worth of these
improved conservation technologies.

Lamsal

2/7/2014




The concept of the conservation of soil takes into
account, the strategies for preventing the soil from
getting eroded and preventing it from losing its fertility
due to an adverse alteration in its chemical
composition.
Valuation means the act of valuing, esp a formal
assessment of the worth of property, jewellery, etc. an
appraisal of the value of something. Economic
valuation: The process of expressing a value for a
particular good or service in a certain context (e.g., of
decision-making) in monetary terms.

Lamsal

2/7/2014




The value of soil is determined by the stream of
benefits it provides to society. Benefits are reflected in
people’s willingness to pay (WTP) as indicated by real
market transactions or through evidence on preferences
from which values can be derived.
However, some soil services, and especially the support
of landscapes and biodiversity and the protection of
archaeological interest, are not valued in markets.

Lamsal

2/7/2014


Total Economic Value (TEV) =Direct-use value +
Indirect-use value + Option value + Existence value
Use value

Non use
value

Direct use

Indirect use

Option value

Food , Timber,
NTFP.
Habitat for animal
and micro
organism

Carbon sequestration and
future direct and
storage, water storage and
indirect uses
flow mediation, Nutrient
cycling, support construction,
support for ecology and
biodiversity, climate
regulation
Lamsal

2/7/2014

1)Existenc
e value.
2) Bequest
value.
Function

Value

Method

Food, Timber,

Direct use value

Carbon sequestration and
storage
Water storage and flow
mediation
Support for construction

Direct and indirect use value

Market based approaches,
production function
approaches
Market based and cost based
approaches
Cost based approaches and
stated preference method
Cost base approaches ( WTP
of buyers )
Production function
approaches, contingent
valuation method
Stated preference method

Use and non use value
Use value

Support for ecological habitat Use and non use value
and biodiversity
Archaeological site/artifact
protection
On site and offsite
conservation

Use and non use value
Use and non use value

Cost based and stated
Lamsal 2/7/2014
preference method
Valuation
method

Description

Strength and
Weakness

Example

Market based
approaches

Interaction between consumers
and producers with regards to
the demand and supply of goods
and services.

Standard, accepted
economic techniques.
Does not measure TEV.

Gross value
of crop
production.

Production
function/change
in productivity
method

Estimate the economic value of
ecosystem products or services
that contribute to the production
of commercially marketed goods

Single use systems
Soil fertility
easier.
improves
Multiple use production crop yield
function approach are
more problematic.
Risk of double counting

Cost Based
approach
1) preventive
expenditure
approach

Environmental services can be
valued by looking at how much
it would cost to set in place
measures to prevent the damage
arising from their loss.

Easy, simple. Do not
directly measure WTP
for environmental
goods and services
Lamsal

2/7/2014

Flood
control,
siltation
barriers
Valuation
method

Description

Strength and
Weakness

Example

ii)Damage
avoided
approaches

Environmental services
help to avoid economic
costs

Easy, simple.
The costs of destruction to
Do not directly
houses, roads, bridges and
measure WTP for
farms caused by flooding.
environmental goods
and services.

iii)
Replacement
or repair
expenditure

Examining the potential
costs of restoring or
replacing productive
assets lost or degraded
due to project impacts or
improper management.

Easy, simple.
Do not directly
measure WTP for
environmental goods
and services.

The benefits of
implementing improved
agricultural practices in
upland soil areas can be
reflected in the cost of
replacing soil and
nutrients that would be
lost through erosion.
Lamsal

2/7/2014
Valuation
method
Stated
preference
method

Description

Contingent
valuation

a random sample of
respondents for their WTP
(or WTA) for a clearly
defined good. Respondents
must be reminded of
substitute goods, budget
constraints.

strength and weakness

Example

'constructed market' - i.e. a
we can obtain use and non-use
hypothetical market which is values.
presented to a respondent in
a questionnaire.
Only generally-accepted
method for estimating non-use
values, which are not traded in
markets.
CV is based on what people
say they would do, as opposed
to what people are observed to
do, is the source of its greatest
strengths and its greatest
weaknesses.
Doubts about their reliability
for estimating willingness to
pay.
Lamsal

2/7/2014

Especially for
ecological
services and
biodiversity.






No single method is enough for appropriate valuation
of soil conservation due to its multidimensional role.
Cost based approaches and market based approaches
are easy and simple but not capture the ecological,
biological role of soil and people's willingness to pay.
Production function approaches which is complex and
tedious for multiple output but gives accurate if data
were put appropriately.

Lamsal

2/7/2014




Contigent valuation provides both use and non use
value of soil conservation and gives a appropriate
valuation which consider all the function that relate on
a soil conservation.
But due to its hypothetical market. respondent biasness,
validity of output may not be reliable.

Lamsal

2/7/2014
Lamsal

2/7/2014

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Appropriate valuation method for Soil Conservation.

  • 1. LOK NATH LAMSAL M. Sc First Year Roll no 03 Lamsal 2/7/2014
  • 2. Outline of the presentation  Introduction  Conceptual framework  Soil valuation  Total value of soil conservation  Appropriate valuation method for soil conservation  Analysis of different methods  Conclusion Lamsal 2/7/2014
  • 3.   The deteriorating condition of soil in Nepalese hills and mountains first came in to the picture after Eckholm (1975) wrote the ‘Theory of Himalayan Environmental Degradation’ referring that anthropogenic factor is the main causes of accelerated erosion and subsequent degradation across the Himalayan region. Active geology, steepness, fragility, high rainfall etc are also equally responsible for the soil degradation in the Nepalese hills (Ives, 2004; Blaikie, 2001). Lamsal 2/7/2014
  • 4.  Valuation of the stream of benefit and cost with and without conservation cases would give more accurate picture of the private and social worth of these improved conservation technologies. Lamsal 2/7/2014
  • 5.   The concept of the conservation of soil takes into account, the strategies for preventing the soil from getting eroded and preventing it from losing its fertility due to an adverse alteration in its chemical composition. Valuation means the act of valuing, esp a formal assessment of the worth of property, jewellery, etc. an appraisal of the value of something. Economic valuation: The process of expressing a value for a particular good or service in a certain context (e.g., of decision-making) in monetary terms. Lamsal 2/7/2014
  • 6.   The value of soil is determined by the stream of benefits it provides to society. Benefits are reflected in people’s willingness to pay (WTP) as indicated by real market transactions or through evidence on preferences from which values can be derived. However, some soil services, and especially the support of landscapes and biodiversity and the protection of archaeological interest, are not valued in markets. Lamsal 2/7/2014
  • 7.  Total Economic Value (TEV) =Direct-use value + Indirect-use value + Option value + Existence value Use value Non use value Direct use Indirect use Option value Food , Timber, NTFP. Habitat for animal and micro organism Carbon sequestration and future direct and storage, water storage and indirect uses flow mediation, Nutrient cycling, support construction, support for ecology and biodiversity, climate regulation Lamsal 2/7/2014 1)Existenc e value. 2) Bequest value.
  • 8. Function Value Method Food, Timber, Direct use value Carbon sequestration and storage Water storage and flow mediation Support for construction Direct and indirect use value Market based approaches, production function approaches Market based and cost based approaches Cost based approaches and stated preference method Cost base approaches ( WTP of buyers ) Production function approaches, contingent valuation method Stated preference method Use and non use value Use value Support for ecological habitat Use and non use value and biodiversity Archaeological site/artifact protection On site and offsite conservation Use and non use value Use and non use value Cost based and stated Lamsal 2/7/2014 preference method
  • 9. Valuation method Description Strength and Weakness Example Market based approaches Interaction between consumers and producers with regards to the demand and supply of goods and services. Standard, accepted economic techniques. Does not measure TEV. Gross value of crop production. Production function/change in productivity method Estimate the economic value of ecosystem products or services that contribute to the production of commercially marketed goods Single use systems Soil fertility easier. improves Multiple use production crop yield function approach are more problematic. Risk of double counting Cost Based approach 1) preventive expenditure approach Environmental services can be valued by looking at how much it would cost to set in place measures to prevent the damage arising from their loss. Easy, simple. Do not directly measure WTP for environmental goods and services Lamsal 2/7/2014 Flood control, siltation barriers
  • 10. Valuation method Description Strength and Weakness Example ii)Damage avoided approaches Environmental services help to avoid economic costs Easy, simple. The costs of destruction to Do not directly houses, roads, bridges and measure WTP for farms caused by flooding. environmental goods and services. iii) Replacement or repair expenditure Examining the potential costs of restoring or replacing productive assets lost or degraded due to project impacts or improper management. Easy, simple. Do not directly measure WTP for environmental goods and services. The benefits of implementing improved agricultural practices in upland soil areas can be reflected in the cost of replacing soil and nutrients that would be lost through erosion. Lamsal 2/7/2014
  • 11. Valuation method Stated preference method Description Contingent valuation a random sample of respondents for their WTP (or WTA) for a clearly defined good. Respondents must be reminded of substitute goods, budget constraints. strength and weakness Example 'constructed market' - i.e. a we can obtain use and non-use hypothetical market which is values. presented to a respondent in a questionnaire. Only generally-accepted method for estimating non-use values, which are not traded in markets. CV is based on what people say they would do, as opposed to what people are observed to do, is the source of its greatest strengths and its greatest weaknesses. Doubts about their reliability for estimating willingness to pay. Lamsal 2/7/2014 Especially for ecological services and biodiversity.
  • 12.    No single method is enough for appropriate valuation of soil conservation due to its multidimensional role. Cost based approaches and market based approaches are easy and simple but not capture the ecological, biological role of soil and people's willingness to pay. Production function approaches which is complex and tedious for multiple output but gives accurate if data were put appropriately. Lamsal 2/7/2014
  • 13.   Contigent valuation provides both use and non use value of soil conservation and gives a appropriate valuation which consider all the function that relate on a soil conservation. But due to its hypothetical market. respondent biasness, validity of output may not be reliable. Lamsal 2/7/2014