Environmental Valuation through Zonal Travel Cost

Method for Recreational Benefits and Contingent Valuation

Method for Conservation of Wonchi Crater Lake

YOHANNES GELETA – GSR/7599/11

ASSIGNMENT SUBMITTED TO:

ASEFFA SEYOUM (Phd)
(NATURAL RESOURCE ECONOMIST)

15/08/2019
Addis Ababa
Based On

Valuing Recreational Benefits of Wonchi Crater Lake, Ethiopia

Tesfaye Etensa, Abdi Teshome, Mekonnen Bersisa (2016)

ESTIMATING THE VALUE FOR CONSERVATION OF

WONCHI CRATER LAKE (APPLICATION OF CONTINGENT
VALUATION METHOD)
NEGASSA FUFA LEBETA (2016)
Outline

1. Profile of Lkae Wonchi

2. Methods for capturing the valuation
3. Basic Concept of Valuation
4. Selected Valuation Techniques
5. Stakeholders
6. Environmental functions, benefits and Services of Wonchi Lake
7. Zonal Travel Cost Method
8. Contingent Valuation Method
9. Conclusion
 Lake Wonchi Profile

 Wenchi is a high land cold–water tropical high–mountain volcano

Crater Lake.
 Location 155 Km away from Addis Ababa,
 38Kms from South West Shoa zone town Woliso and respectively
 29 Kms, from the district town Chitu.
 Altitude ranges from 2900 - 3384 meters above sea level.
 average annual rainfall is 1200 mm/year.
 The lake covers 470 ha (4.7 km2) and 13.7 km perimeter (google 2/7/2018
image)

 The depth of the lake range between 6 and 78 meters Etensa, Teshome, & Bersisa (2016)
 Contd…
 The area is equipped with
 electricity, gravel road, pathways and parking facilities,
 existence of technological advancements like internet service and telecommunication
 deprived of sufficient clean water to meet the demands of tourists and locals.
 Clearly stated the natural beauty of the lake area and its capital as the lake with its natural blue color, hot
springs, waterfalls, and cold water, beautiful and natural landscape, Kibate natural forests on the western
side, and historical church in the area are the key natural tourist attractions around the lake (Engidawork 2016).
 Linstead (2018) complements the flora and fauna in and around lake like birds, plants, and animals, the
traditional coffee and tea services and marketing services for tourists to purchase cultural items and organic
foods like honey.
 There are 10 small villages around the lake having 400 households.
 Methods for capturing the valuation

 The basic strategy for environmental valuation is

the ‘commodification’ of the services that the
natural environment provides (Roger Perman,
2003).

 Environmental valuation attempts to estimate the

economic value, in monetary terms, that members
of society receive from uses of natural resources
that cannot be efficiently allocated through markets
due to their public good characteristics such as
being non-rival and non-excludable (Esource,
2000).
 Basic Concept of Valuation

  
The Total Economic Value Estimation (TEV) is the economic value of a given environmental
resource as use and non-use values (Seyoum, 2006).

 Where – UV- Use value, NUV, Non-use Value, DV – Direct use Value, IDV- Indirect use
value, OV- Option Value, BV- Bequest value, XV- existence value
 Selected Valuation Techniques
Travel Cost Method –Revealed
Preference Approach
 Travel Cost Method (TCM) is one of the
revealed method to capture the value of
recreational ecosystems.
 The method assumes, the value of an
environmental good is reflected in the time
and money people spend getting to it.
Contingent Valuation Method –
Stated Preference Approach
 Contingent valuation method (CVM) - a stated
preference method
 the CVM can be used for both use and nonuse
values, its actual use has mainly been in regard to
the latter (Perman, 1996).
 A hypothetical market is described in which
respondents either buy (WTP) or sell (WTA) a
specified level of an environmental good or service
 The values which are elicited are “contingent” on
the hypothetical market with which respondents are
presented
 Stakeholders Identification

Stakeholder list Stakeholder Mapping

No
Stakeholders

High
1
Tourists (Local/ International)
2
Tour operators
3
Administration & Sector offices
4
Local communities

Power
5
Women in the community
6
Ecotourism society association

Low
7
Local Tour guides
8
Hotels in Addis Ababa, Ambo &
Woliso Low Interest High
9
NGOs like GIZ
 Environmental Functions , Services and Benefits
Environmental Functions Species composition - Flora Forest
and Services and Fauna (Erica Arbora , Indigenous forest – Hyginia
Water body abyssinica, Juniperus procera, Olea Africana,
Schefflera abyssinica)

Provisioning Food – fish, irrigation, hot Honey, timber,

spring

Habitat/ Supporting services Habitat (flora & Fauna) Colobous Monkeys, common bushbuck duiker Birds
(white backed vultures, fantailed ravens, black kites,
wattle ibis, white-cheeked Turakos)

Regulating Natural Drainage Conservation, Carbon sequestration

Cultural Recreation, tourism, aesthetic  

appreciation, spiritual
experience
 Potential Environmental Use of Lake Wonchi
Values Major Sub Specific Benefits of the Lake & Specific Benefits of the Natural Possible Valuation
Classification Springs Forest Techniques
Classificatio
n
Fishing, transportation, potable Honey, grazing, Timber, utensils, Market Price

vironmental services Non Consumptive Use Consumptive Use

water for livestock and humans, Fence, fuel wood, charcoal,
irrigation, sanitation, medicinal use,
Direct Use Values

Boating, Aesthetic Value, ecotourism, Aesthetic Value, ecotourism, Tourism, (Non – Market Price
Tourism, religious service, birds birds watching, guiding, trekking, CVM – WTP,
watching, guiding,
TCM)
Use Value

local climate regulation, flood Conservation, local climate regulation, CVM – WTP,
Indirect Use Value

control, Habitat for flora & fauna flood control, Habitat for wildlife,
TCM)
flora & fauna
 
 Valuation - Zonal Travel Cost Method (ZTC)


  The method demands data such as origin, mode of transport, travel expense, time spent for the
trip, socio economic data and other data.
 It assumes that the value of a site is reflected in how much people are willing to pay to travel
to visit the site.
 Recreation demand curve was established using observations on visitation (i.e., demand) and
expenses incurred during visits (i.e., the price of the experience).
 Theoretically, visitation is a function of total travel costs, such that:

Where: Vij is the number of visits per zone from i to site j, TCij is the average total travel cost from
zone i to the recreational site j.
 Contd….

  
The zonal TCM divides the visitation observations into zones
based data obtained from visitors and uses the population
within each zone as the measure of visitation to the site. Zonal
visit rates, the participation rate of zone i, visits per capita to the
site j are calculated as follows:

Where : Vij is the total number of visitors from zone i to site j as obtained from the
survey study, Nij = is the population of zone i, the CSA.
 Given that the zonal TCM uses visitation rates as a proxy for
quantity purchased and travel cost as a proxy for price. The
approach implies demand and consumer surplus.
 Contd…

 The economic benefits of Lake Wonchi can then be estimated by

Zones Origin Distanc Visitors – (No VR *1000 Travel cost
quantifying the area under the demand curve and above the e from sampled visits)
price paid for purchase of the recreation, also known as the the (%) (VA/P)
consumer surplus (CS). Lake
(km)
 Based on the data collected by researchers, seven zones in terms A Addis Ababa 155 89 (37.40 %) 0,028 53263
of their origin was established and analysed the collected data to B Ambo 32 22 (9.24), 0.35 14971
get consumer surplus per trip per1000 populations and aggregate C Gindo 50 12(5.04%) 2.29 9147
annual benefit. D Cittu 29 9(3.78%) 5.7 3509
 Accordingly, the recreational benefit computed that the average E Sebeta 130 25(10.50%) 0.39 18616
consumer surplus per trip per1000 populations from the seven F Woliso 37 65 (27.31%), 1.33 28309
zones to Lake was estimated to be 9,090.909 birr. This amount G Wolkite 79 16(6.72%) 0.38 8706
was translated into an expected aggregate annual benefit of
birr 35,654,545 which shows that the value of the benefit that
visitors gained by visiting recreational site.
 Contingent Valuation Method


  CVM is based on the WTP.
 WTP is a function of different determinants such as age of respondent, sex, income level of
respondent, level of education, and settlement, home of respondent, category of respondent,
Individuals purpose to use resource, and some other factors including initial bids. A dichotomous
choice, which is a closed-ended way of asking the willingness to pay was employed in this
refereed work. A model for WTP was built.
)
Where: INC = income of respondent, EDUC = education of respondent, AGE = age of respondent,
GENDER = sex of respondent, U = individual use of the environmental asset, SETTL= settlement of respondent-whether they live in the lake or
not, CATEG=is the category of respondent-visitor, cooperative worker, or nonuser, e = random disturbance or error term which is assumed to
be normal.
Contd…

 In this approach, first reason for willingness to pay was identified

 42% of respondents were willing for recreation,
 22%, 22% and 14% for future generation (bequest), source of income and
existence respectively.
 Among these willing respondents 54% for recreation, 28% for bequest, 7% for
income generation and 11% for existence value are willing to pay or these are Yes
respondents.
 Contd…

 The dominant reasons the respondents were WTP was the ‘bequest’ value.
 This may be due to the fact that Wenchi Crater Lake is used for recreational purposes and as historical
place with its cultural importance so that respondents want to transfer the heritages from generation to
generation.
 From the total of usable sample, 109 (56%) were agreed to pay the initial bid amount for conservation of the
lake.
 This indicates that there are motivations to pay for individuals.
 At mean level, 46, 100 (52%) of respondents agreed to accept payments for conserving the lake.
 The mean WTP was estimated at birr 62 per year which is 220,413.00 for bequest value of the lake.
 Conclusions

Contingent Valuation Method

Zonal Travel Method  People may be indicating their value of
 Difficult to model Multipurpose trips: something other than the particular
 ‘Meanderers’ may visit several sites during a trip environmental issue
 ‘Purposeful visitors’ visit only one site  People do not have practice valuing
environmental issues so they are not certain
 Residents have lower travel costs, but may in fact value
what they are WTP.
the site highly
 The expressed WTP may be biased because
 What costs to include?
the respondent wants to feel good, be thought
 Total cost of travel, marginal cost of visit, value to of as a good person, or signal importance of
time the issue but not actual WTP.
 Type visitors makes significance difference  There is a fundamental difference between
hypothetical decisions and actual decisions.
 Thanks

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