Willingness to Pay for Water Quality: A Contingent Valuation Approach for Bolgoda Lake

Abstract

Bolgoda lake is known as the largest fresh water body in Colombo Urban Area (CUA) and situated in the Southern boundary of CUA. The lake provides a variety of environmental services including recreation, fisheries production and ground water recharge. Environment of the Bolgoda lake is currently threatened by the disposal of waste by industries. However, there will be an increasing demand for the environmental services produced by the Bolgoda lake in the future.
Objectives of the present study are to identify the environmental benefits of the lake and estimate economic values of different user groups for the improvement of water quality. A pilot survey was carried out and five major user groups were identified; fishermen, hotel owners, boat owners, recreational users and indirect users. Selected study area for the present study belongs to five GN divisions from Moratuwa and Panadura DS divisions. Contingent valuation method was applied and users’ willingness to pay (WTP) was elicited on a pre-tested hypothetical market focusing on a pollution control programme.
Depending on the WTP values, the 5 user groups were regrouped into two categories, WTP values per household per month for the heavy dependency group was LKR 1,550 while for the less dependency group it was LKR 514.30. Regression analysis was carried out to identify the socio economic characteristics of the users that affect the WTP value of the users. The results were consistent with the theory. Aggregated value for all user types for the study area is LKR 1.365 billion per year and per hectare value is LKR 4.389 million per year (2020 prices).
Natural assets such as Bolgoda lake are becoming very scarce in the Colombo Urban Area. The above estimated value could be taken as a guide to manage it as an environmental amenity and to highlight the need to prevent pollution and to improve the uses obtained from the lake.
Keywords: Bolgoda lake, contingent valuation, water quality