Economic valuation of water supply service from two community forests in Palpa district

Abstract

Apart from physical products, community forests (CF) in Nepal generate various ecosystem
services that could be important not only to the stakeholders at local level, but also to the
stakeholders at the regional and the global levels. Water supply from CF would be one of
the many ecosystem services whose benefits are provided to the stakeholders. Considering
the economic importance of water supply service from CF, this study aims to assess the
economic value of the water supply as a service from two CFs and also identify the
factors affecting an individual's willingness to pay (WTP). Contingent valuation method
was applied to evaluate the water supply service based on the information of users' WTP.
Data from 74 households (HH) in Lipindevi Thulopakho and Jarneldhara CFs in Palpa
district (surveyed during May-June, 2008) were used. Results indicated that the mean
WTP of Lipindevi Thulopakho and Jarneldhara CF users were US$ 36.62 and 25.62 HH^-1 yr^-1,
respectively. The economic value of water supply service from Lipindevi Thulopakho
and Jarneldhara CF were US$ 93.54 ha^-1 yr^-1 and 134.06 ha^-1 yr^-1, respectively. Factors
like distance of the house from water source, daily water consumption, wealth status and
caste were associated with substantial influences on an individual's WTP. This study
concludes that there would be a high possibility for generating extra income with the
development of a payment mechanism for water supply service from CF.

Key words: Community forest; contingent valuation; economic valuation; water supply;
willingness to pay

DOI: 10.3126/banko.v20i1.3505

Banko Janakari, Vol. 20, No. 1 pp.24-29