Valuation Study

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Value of Effective Forest Preservation

Attributes

Medium: Land

Country: Thailand

Analytical Framework(s): Least Cost Concept, Marginal Opportunity Cost Concept

Unit(s): Average Net Present Benefit Value

Study Date: 1996

Publication Date: 1998

Major Result(s)

Resource/Environmental Good THB, per year, per rai
(1996)
THB, per year, per rai
(2014)1
USD, per year, per rai
(2014)2
Average net benefit of forest protection 66.62 100.30 3.05

About the Inflation Adjustment: Prices in Thailand (THB) changed by 50.56% from 1996 to 2014 (aggregated from annual CPI data), so the study values were multiplied by 1.51 to express them in 2014 prices. The study values could be expressed in any desired year (for example, to 2025) by following the same inflation calculation and being sensitive to directional (forward/backward) aggregations using your own CPI/inflation data.

Study Note: The estimation of the average net benefit of forest protection is just a part of the study's aim to price water via surrogate means in examining the case of Micro Hydro-Electricity Cooperatives (MHEC) in Northern Thailand (6.25 rai = 1 ha).

Study Details

Reference: Sitanon Jesdapipat & Siriporn Kiratikarnkul. 1998. Surrogate pricing for water: The case of Micro Hydro-Electricity cooperatives in Northern Thailand. EEPSEA Research Report Series, No. 1, 1-36.

Summary: Ninety-five percent of Thailand's electricity needs have been provided for by supply management through building dams and importing fossil fuels. The remaining unserviced rural areas have to tap local sources of electricity, one of which is the use of mini- and micro-hydros that rely heavily on water supply from the forest, thus requiring effective forest conservation. The study aimed to determine the full-cost prices for energy project sites in Thailand to effectively address the shortage in water supply due to widespread deforestation. It was found out through the financial analysis employed that no new investment options were needed by the large-scale project Mae-ton-luang, since it was estimated to be very financially attractive in all possible options. The

Site Characteristics: Built by the government and the villagers in 1983 at a cost of THB 4.1 M, the Mae-ton-luang Project system has a capacity of 35 kW servicing 197 households, 113 of which are studied. The system has a 16km2 catchment area that draws water from the natural ravines Mae-iuang and Mae-ton. The project site is 40 km from the District Office, reached by travel over mountain roads. As mentioned earlier, 113 households were randomly chosen for interview. Being mainly tea planters, most of the households are in the low-income bracket, earning less than the national average (as low as THB 5,063.00, cash), due to more limited opportunities for earning extra income. However, with more acreage for tea plantation, an average family can earn up to THB 40,000.00 per household.

Comments: Estimation of the net benefits of forest protection was based on the concept that the forest is worth protecting if it is worth something, which is actually how much the forest is worth. However, only direct benefits (timber and non-timber benefits) were considered, leaving out indirect benefits (watershed conservation benefits, value of biodiversity, and water regulation), option values (biodiversity and tourism), existence values, and bequest values from the computations for the reason of being conservative. It was also acknowledged that biological diversity resources and accumulated avoided emission may be prominent in forest bequest value, but they were not covered, as well.

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