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Understanding the Benefits and Costs of Conservation: Disaggregated BCA of the Creation of a Wildlife Sanctuary

Research Team: Sharachchandra Lélé, V. Srinivasan and K. S. Bawa

Tropical forest ecosystems provide a wide range of benefits to humankind. Changes in the condition of these ecosystems leads to changes in the magnitude and distribution of these benefits. “Should society invest in strict conservation of these forests?” has been a question of much policy interest and debate. Economists have focused on developing techniques for the valuation of these (mostly non-market) benefits. Such valuation studies, however, are not of use to policy discussions unless they compare the outcomes of different (but realistic) scenarios. Benefit-cost analysis (BCA) is the traditional economics approach to doing this comparison. But it is criticised for the manner in which benefits and costs accruing to very different individuals or groups get aggregated. This is particularly relevant to questions of forest ecosystem conservation, where these benefits and costs may be distributed across a wide range, from local fuelwood collectors to global beneficiaries of carbon sequestration in forests.

The case of the Biligiri Rangaswamy Temple (BRT) Wildlife Sanctuary (WLS) in Southern India was used to illustrate ways in which realistic scenarios can be built and the aggregation issue made more transparent. First, the stream of benefits and costs resulting from the management of the BRT forests as a WLS was compared with the corresponding stream in the most likely alternative scenario wherein these forests are managed as Reserve Forests. Secondly, the affected population were categorised into relatively homogenous income and cultural groups, and the benefits and costs were estimated in a disaggregated manner for each group. These were then aggregated using the conventional method and an alternate income-weighting scheme. Finally, as the BRT forests were accorded WLS status in 1977, this ex-post analysis gave us more realistic estimates of the rates of deforestation/regeneration and changes in local use of the forests. The beneficiaries of the BRT forests were categories into five groups: the forest-dwelling and forest-dependent Soligas, the non-Soligas within the forest who also extract certain forest products, the farmers in the plains who depend more indirectly on soil conservation services of the forests, the tourists who enjoy the wildlife, and the global community that benefits from carbon sequenstration. The costs of conservation are borne by the national community of taxpayers.

To construct the trajectory that BRT forests would have followed had they remained an RF, information from neighbouring forests that remained RFs after 1977 as well as scenario building by experts was used. It appears that the RF scenario would have led to more rapid degradation of the forest, resulting in lower carbon sequestration, long-term losses to downstream farming communities due to siltation of irrigation tanks, and zero benefits to wildlife tourists, but (at least initially) higher benefits to local communities from heavier NTFP extraction, fuel wood collection, grazing, and agricultural expansion, as also greater incomes to government agencies from timber felling. A detailed sensitivity analysis along with the use of different discount rates over time and weights across income groups was carried out.  The estimates of benefits and costs suggest that the conversion to WLS seems highly beneficial if aggregate benefit-cost is calculated without adjusting for income disparities. But income-dependent weights can drastically alter the balance, indicating how unfair the distribution of benefits and costs is across different income groups. The study suggests that only a conservation strategy that combines strict protection from external pressures with substantial forest use by forest-dwelling communities can be somewhat socially equitable.


Published in: K. N. Ganeshaiah, R. U. Shaanker and K. S. Bawa (eds.), Proceedings of International Conference on Tropical Ecosystems: Structure, Diversity and Human Welfare. New Delhi: Oxford-IBH Publishing Co., pp. 31-33. (Extended Abstract)

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