Economic Value of Ecosystem Services of Wetlands

1. L. Venkatachalam
Madras Institute of Development Studies (MIDS)
Chennai -20.
venkat@mids.ac.in

2.  “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”.
(Ramsar, 1971).
 Agriculture, rural development and livelihoods depend largely
on how the small water bodies –especially, wetlands –are
managed.

3. Sr.
No
Wetland Code Type of Wetland Number of
Wetlands
Total Wetland
Area (in Ha)
% of wetland area Open water
Post - monsoon
Area
Pre-monsoon Area
1100 Inland Wetlands – Natural
1 1101 Lakes/Ponds 4369 316091 35.02 236456 45436
2 1104 Riverine wetlands 2 127 0.01 121 41
3 1105 Waterlogged 44 3928 0.44 3382 2168
4 1106 River/Stream 194 136878 15.17 131049 131479
1200 Inland Wetlands -Man-made
5 1201 Reservoirs/Barrages 99 56419 6.25 46443 31064
6 1202 Tanks/Ponds 19343 237613 26.33 164346 23078
7 1203 Waterlogged 38 10811 1.20 9353 5816
Total - Inland 24089 761867 84.41 591150 239082
2100 Coastal Wetlands - Natural
8 2101 Lagoons 74 25057 2.78 25041 22034
9 2102 Creeks 17 3404 0.38 3339 3403
10 2103 Sand/Beach 73 9798 1.09 - -
11 2104 Intertidal mud flats 84 33164 3.67 - -
12 2105 Salt Marsh 42 6108 0.68 5369 2596
13 2106 Mangroves 78 7315 0.81 - -
14 2107 Coral Reefs 36 3899 0.43 - -
2200 Coastal Wetlands - Man-made
15 2201 Salt pans 47 22889 2.54 22505 19733
16 2202 Aquaculture ponds 144 10739 1.19 10457 9420
Total Costal 595 122373 13.56 66711 57186
Sub-Total 24684 884240 97.97 657861 296268
Wetlands (<2.25 ha) mainly Tanks 18294 18294 2.03 - -
Total 42978 902534 100.00 657861 296268

4.  Provisioning, regulating, cultural and supporting
services (TEEB, 2010)
 Wetland ecosystems are highly valuable to the society
but, their economic values are unknown due to absence
of price
 As a result, wetlands become ‘wastelands’
 Economic values are useful for creating awareness and
for public policy

5.  “Application of values and other
information from a ‘study’ site where data
are collected to a ‘policy’ site with little or
no data” (Rosenberger and Loomis 2000, p.
1097)
 Global values are already estimated from
various studies

6. 1 2 3 4 5 6 7 8 9 10 11 12
ESSe
rvice Marine Coastal Wetlands Fresh water Forests Woodlands Grasslands Desert Tundra Polar Cultivated Urban Average
1 Food 9,147 3,248 754 69 107 2,824 40 1,361 2,194
2 Water 1,413 6,265 3,434 146 286 167 1,952
3 Raw materials 334 8 597 1 160 541 21 160 61 209
4 Genetic 20,434 12 195 0 5,160
5 Medical 92 67 80
6 Ornamental 264 10 12 95
7 Air quality 231 0 230 497 103 170 205
8 Climate 352 1,560 59 826 219 440 777 911 643
9 Extreme events 25,200 25,157 5,698 39 14,023
10 Water flows 535 1,338 16 630
11 Waste 42 5,184 1,686 56 262 127 222 1,083
12 Erosion 1,89,470 268 348 55 48 38,038
13 Soil fertility 44 19,368 427 1 508 250 281 2,983
14 Pollination 17 153 22 64
15 BioControl 4 55 16 13 22
16 Life cycles 108 130 13 499 187
17 Genetic Diversity 4,518 83 553 320 299 1 47 726 818
18 Aesthetic 3,712 3,733 3,723
19 Recreation 26,417 13,780 1,262 649 627 4 53 5,780 6,072
20 Inspiration 0 595 0 198
21 Spiritual
22 Cognitive 2,154 41 1,097
Total 2,82,090 63,261 24,205 6,220 5,124 8,644 1,365 160 0 0 3,839 6,708 78,378
2016 Values in Rs. 20310452.73 4554761 1742735.3 447808.4855 368956.7 622352.1988 98295.06278 11547.1 276429.234 482943 5643240.3

7.  Salim Ali Centre for Ornithology and Natural History identified
141 wetlands on the basis of the importance of their biodiversity
(SACON, 2019)

8.  BT value of coastal wetland is US $ 193,845 (2007 prices) per ha per
year.
 Conversion of US$ value into INR value. The exchange rate between
US$ and the INR in 2007 was: 1 US$ = Rs. 41. 35. So, US $193, 845X
Rs. 41.35 = Rs. 80,15,490. 70 (or Rs. 80.15 lakh) (2007 prices) per ha.
 ‘GDP deflator’ (1.8) to estimate 2019 value .Rs. 80,15,490.70 X 1.8 =Rs.
14427883. 00 (or Rs. 144 .27 lakh)(2019 prices) per ha.
 The above ‘global’ value has to be converted into domestic value by
using the following formula:
 ValueIND = ValueGlobal*(GDP-per-capitaIND (2019)/GDP-per-capitaGlobal (2019))e (=1)
 Rs. 1,44,27,883 X 0.109 =Rs. 15,65,792.97 (Rs. 15.65 lakh) per ha. per
year

9. Name Area (in Ha.) Economic Value
(crores in Rs.)*
Pallikaranai 834 130.59
Odiyur 2172 340.09
Point Calimere 2968 464.72
Pulicat 56781 8890.73
Kazhuveli 3262 510.76
Total 66017 10,336. 89
* Total Number of Hectares X Rs. 16,15,922.94 per ha.

10.  Inland Wetlands (135) = 45,294. 14 ha. X Rs.
2,14,089.26 = Rs.944.00
 Sathanur Reservoir = 633 ha. X Rs. 34,617.62
=Rs. 2.20 cores

11. Type of Wetland Value (crores in Re.)
Coastal 10,336.89
Inland 944.00
Reservoir 2.20
Total (141 wetlands) 11,283.09

12.  List of actual ecosystems from SACON Report
 Potential Value : Rs. 116397889438.62 (or, Rs.
11,639.80)/yr.
 Actual Value: Rs. 13433244914.11 (or, Rs. 1343.32
crore)/yr.
 Loss = Rs. 102964644524.51 (or, Rs. 10,296.50)/yr.

13.  Commission:
 The estimated value is treated as the maximum
value that can be achieved when the water body is
maintained in its best quality level
 In reality, water bodies are not maintained to their
best quality level and the BT values are ‘over-
estimated’.

14.  Omission:
 Many services whose values have not yet been
estimated are neglected.
 Many local services are not getting reflected in
the valuation exercise at global level
 Values are determined by the site-specific
social and economic factors

15.  Survey method –asks randomly selected
individuals/households to state their ‘maximum WTP
value’ for improvements in water bodies.
 The maximum WTP value reflects the value of those
ecosystems which the individuals/households consider
as the most important ones for themselves/their
households.
 The improvements and the benefits are clearly
communicated to all the individuals and households
through ‘realistic scenarios’.

16.  733 sample households
 Average WTP per household: Rs. 2027.00 per
annum
 Total number of households in Chennai district:
11,54,982 (2011 census)
 Total value: Rs. 234,11,48,514.00 (or) Rs. 234.11
crore per annum (as per 2019 value)

17.  Potential Value =Rs.234.14 crore per annum (Rs. 138 crore in
BT Value)
 Actual Value: =Rs. 17.12 crore per annum (WTP for status-quo)
 Loss of Value =Rs. 217.02 crore per annum
 If the Pallikaranai wetland is maintained properly, it can
generate a net benefit of Rs. 217. 02 crore to the Chennai
people.

18. Thank You