Worth of watersheds: A producer surplus approach for valuing drought control in Eastern Indonesia

Citation:

Pattanayak SK, Kramer R. Worth of watersheds: A producer surplus approach for valuing drought control in Eastern Indonesia. Environment and Development Economics [Internet]. 2001;6 :123-45.

Abstract:

This study combines hydrological modeling with applied micro-econometric techniques to value a complex ecosystem service: drought mitigation provided by tropical forested watersheds to agrarian communities. Spatial variation in current base flow allows estimation of drought mitigation values as the marginal profit accruing to agricultural households. The paper shows that focusing on producer (not consumer) surplus measures is appropriate for valuation as long as markets for commodities related to the environmental services are complete. For the typical household, the estimated marginal profit is positive -validating the central hypothesis that base flow makes positive contributions to agricultural profits. The paper provides support for the hypothesis that protected watersheds can supply latent and unrecognized ecosystem services to local people. This summary is not an official abstract. Users should refer to the original published version of the material for the full abstract

Publisher's Version

Last updated on 01/13/2016