THE BENEFITS AND COSTS OF

ESTABLISHING A NATIONAL PARK IN

MADAGASCAR
Presented by
Asim Abrar, Sumaiya Siddiqa, Habiba Azad, Safia Sultana, Sharmin Ara Ritu,
Nahid Imran
 Madagascar's high rates of endemism make it one of the
ecologically richest countries in the world.

One action the government is undertaking to protect biodiversity

is the creation of a system of parks and reserves, one of which is
the subject of this study: the Mantadia National park.

This thing estimates both the cost to nearby villages of

establishing the park, and benefits to Foreign visitors of the park
as an international tourism destination.
COSTS TO LOCAL
VILLAGERS
 Costs To Local Villagers
Establishment of the park
will pose an economic
cost on the local
population in terms of
their losing access to the Villagers depend on the forest
in and around the park for
park and the resources it
contains. Forest Agricultura
products l land

Shifting
Fuelwood Fish Animal Grass Medicine
cultivation of rice
 Costs To Local Villagers

Opportunity cost
Methods,
approach
used to
measure the To estimate total value of forest
products collected by the villagers
costs
imposed on Contingent
the villagers valuation method
To estimate the compensation for
villagers
 Costs To Local Villagers
Socio-
economic
Opportunity Cost Approach variables
Time
spent Land use
The opportunity costs gathering
associated with traditional Survey
activities were measured questions Time
using a survey of 351 Price data allocation
on forest among
households in 17 villages products economic
Househol activities
surrounding the park. d
productio
n
 Costs To Local Villagers
Value of Forest Products Collected by Villagers
Forest Number of Total Annual Value of Mean Annual Value
Products Observations all Villages ($US) per Household (US$)
Rice 351 44,928 128.0
Fuel wood 316 13,289 42.0
Crayfish 19 220 11.6
Crab 110 402 3.7
Tenreck 21 125 6.0
Frog 11 71 6.5

The mean value of losses of villagers was estimated $91 per household per year.
 Costs To Local Villagers
Contingent Valuation Method
• The village survey also contained contingent valuation
questions.
• Contingent Valuation is a method of estimating the value
that a person places on a good. The approach asks people
to directly report their willingness to pay (WTP) to obtain
a specified good, or willingness to accept (WTA) to give up
a good, rather than inferring them from observed
behaviours in regular market places.
 Costs To Local Villagers
Contingent Valuation Method

• The survey contained questions which were phrased in terms

of compensation.
• The numeraire used to elicit willingness-to-accept bids
was units of rice.
• The results of the contingent valuation survey indicate that
the average household requires $108 worth of rice per year
as compensation to forgo use of the park.
 BENEFITS TO
INTERNATIONAL
TOURISTS
1) Travel cost
method Estimation of the
economic value
of international
2)Contingent nature tourism
valuation
method
 Travel Cost Method

The travel cost method of economic valuation or

travel cost analysis is a revealed preference method
of economic valuation used in cost–benefit analysis to
calculate the value of something that cannot be
obtained through market prices.
 The Process
Estimating demand by international tourists requires reformulation
of traditional travel cost models because individuals that travel to a
country like Madagascar engage in a variety of activities.

Formation of travel cost method:

1)Questionnaire Preparation
2)Table
The following table represents selected summary statistics from these
questionnaires for the sample of international visitors.
Summary Statistics for International
Visitors
 The Process
3)The Table Average
 The average visitor tended to be well-off and well-educated
 They had an annual income of $59,156
 15 years of education,
 Stayed in Madagascar for 27 days.

4)Supplemented data collection

Since political unrest in the country cut short the survey process at 94 interviews,
the require data was supplemented with data from an expert survey of US and
European operator.
 The Process
5)Data analysis
Using combined data from the two surveys, an econometric analysis was conducted
to apply the travel-cost approach.

6)Prediction
The travel cost model was then used to predict the project benefits to tourists
assuming that the Mantadia National Park will result in a 10% increase in the
quality of
 local guides,
 educational materials
 And facilities for interpreting natural areas in Madagascar.
 Result
An average increase in willingness to pay per trip of $24 per
tourist.
3,900 foreign tourists would visit the new park (the same
number as currently visit the Perinet Reserve), this is
equivalent to an annual 'benefit' to foreign tourists of
$93,600.
 Contingent Valuation Method
 The contingent valuation method was also used to directly estimate the
value of the park for foreign tourists.
 The contingent valuation method (CVM) is a way of determining the
economic values for all kinds of ecosystem services and environmental
goods.
 Contingent valuation method is used to directly value the use and the
non-use value of a natural resource.
 The contingent valuation method involves directly asking people.
 Use of Contingent Valuation Method
In the following is given how contingent valuation method has been used
in this case study
 Visitors to the Perinet Forest Reserve were provided with information
about the new park
 they were asked how much more they would have been willing to pay
 Mean willingness-to-pay for the park was $65.
 Assuming current visitation patterns, the total annual willingness-to-pay
for the park would be $253,500. this is equivalent to an annual
'benefit(Based on the conservative assumption that 3,900 foreign tourists
would visit the new park )
Summary of Economic Analysis of Mantadia National Park

•As it is seen, the annual mean value per household and trips widely varies in the different method used as
does the aggregate present value.
•Opportunity cost and Contingent valuation method gives similar estimated values which is however about
35% of the household income, a very significant share for a poor population.
•The travel cost method for mean value per trip is largely lower than contingent valuation as the latter uses
some non-use values. Both these method shows a very insignificant share of income spent behind the trip of
the visitors’ annual income.
The upper table provides a summary of Mantadia National Park where we
can see-
The villagers will require approximately $500,000 to $700,000 of
compensation to forgo the use of the park and international tourists are
willing to pay an additional $800,000 to $2,160,000 to visit the park.
Potentially the park will provides many benefits such as local income from
tourism, protection of biodiversity, watershed protection and climate
regulation
The villagers will be losing part of their economic base so the
compensation will be direct compensation by the creation of alternative
income.
 However the park will impose costs on nearby villagers but the park also
creates benefits that can be used to meet those costs.