Economics of urban amenities A contingent valuation approach for Bolgoda lake

Abstract

Bolgoda Lake is known as the largest fresh water body in Colombo Urban Area (CUA) and situatedin the Southern boundary ofCUA. It covers 1,245 hectares. There are 14 Divisional secretariat (OS)divisions and 105 Grama Niladary (GN) divisions. Bolgoda Lake lies along the highly popularizedtownships and it provides a variety of environmental services such as natural environment for fisheriesproduction and estuary function; ground water recharge, potable water supply; recreation/ tourism;and )1atural biotic habitat. In CUA, there are very few lakes like Bolgoda, which provides aestheticvalues for the urban environment. Environment of the Bolgoda Lake is threatened by the disposal ofliquid and solid waste, agricultural run-off, sedimentation and congestion due to recreational uses.However, there wi II be an increasing demand for the environmental services produced by the BolgodaLake in the future.

Objectives of the present study are to identify the environmental benefits of the Lake and estimateeconomic value of selected environmental benefits. A pilot survey was carried out and five major usergroups were identified; fishermen, hotel owners, boat owners, recreational users (for swimming andhotel visiting) and indirect users. Selected study area for the present study belongs to five GN divisionsfrom Moratuwa and Panadura OS divisions. Contingent valuation method was applied to estimate theeconomic value of the Bolgoda Lake. Users' willingness to pay (WTP) was elicited on a pre-testedhypothetical market.

Depending on the WTP values, the 5 user groups were regrouped into two categories, namely User I(heavy dependency) and User 1/ (less dependency). WTP values per household per year for the UserI and User II are Rs.18, 600 and 514.3 respectively. Estimated economic value of the Bolgoda Lakefor the study area is Rs. 84,192.7 (US$ 809.55) per hectare per year. Regression analysis was carriedout to identify the socio economic characteristics of the users that affect the WTP value of the users.The results were consistent with the theory. However, the values of the study area have not beenextrapolated to the whole lake, due to the high variability of the sample mean from place to place.

It was clear that the Bolgoda Lake is a valuable aesthetic asset in the CUA and it should be judiciouslymanaged for sustain the provision of environmental services. However, the ultimate decision over theusefulness of the lake has to be based on weighing the estimated value of the environmental servicesof the Lake against the value of the use of lake as a sink for domestic and industrial waste.