Environmental Valuation of Biodiversity in Japan. Koichi Kuriyama (Kyoto University)

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1 Environmental Valuation of Biodiversity in Japan Koichi Kuriyama (Kyoto University) 1

2 Introduction Why Valuing Biodiversity? No price of biodiversity Economic Values of Biodiversity Use-value and non-use value Empirical Studies in Japan Contingent valuation studies Policy Implication Economic incentives for conservation 2

3 Why Valuing Biodiversity? Cost of biodiversity conservation US$22 billion per year Benefit of biodiversity conservation No price No profit to protect biodiversity Problems of conservation Cost benefit of conservation Monetary benefit of conservation 3

4 Economic Values of Biodiversity Forest Values Use Value Non Use Value Direct Use Value Indirect Use Value Option Value Bequest Value Existence Value Timber production Recreational use Landscape Conservation for future use Genetic resources Conservation for future generation World heritage Conservation for endangered species Wildlife habitat 4

5 Replacement Cost Forest Value of Japan Billion $ / year Water conservation 36 11% Preventing landslides 69 21% Recreational use 65 20% Biodiversity and wildlife habitat 6 2% Cleaning air % Total value % Source: Forestry Agency (1993) Note: Estimated by the replacement cost method, US$1 = 118 yen in

6 Valuation of Biodiversity Characteristics of biodiversity value No market price No substitution goods Non-use value Contingent Valuation (CV) How much to pay for biodiversity conservation? 6

7 Case Study Yakushima World Heritage Site World Heritage List since 1993 Yakusugi cedar More than 1,000 years old Biodiversity More than 1,900 spiecies Increasing tourists Conflicts Biodiversity conservation? Tourism development? 7

8 Vegetation Distribution Altitude (m) 2000 Alpine plants Yakusugi cedar Temperate evergreen forests Tropical and Subtropical 8

9 CV Question (Biodiversity Protection Scenario) Landscape protection Biodiversity protection Would you pay *** yen for protecting biodiversity in Yakusima World Heritage site? 9

10 Double-bounded CV Initial response Upper bid Follow-up response Yes WTP interval $30 - Initial bid $10? Yes No $30? Lower bid $5? No Yes $10 - $30 $5 - $10 No $0 - $5 10

11 CV Question (Tourism Development Scenario) Landscape protection No Biodiversity protection Would you pay *** yen for protecting biodiversity in Yakusima World Heritage site? 11

12 Data CV survey of Yakusima World Heritage Area Double-bounded CV Split-sample CV Scenario Biodiversity conservation Tourism development scenario In-person interview survey 821 sample response rate 68.4% 12

13 Estimation of Willingness-to-Pay Prob. of YES Response Median WTP Bid 13

14 Estimation Results Scenario WTP ($ / household) Aggregated Value (million dollar) Biodiversity Conservation ,109 Tourism Development ,283 Difference Note: Market Value 1,461 million dollars 14

15 Valuation Function Scenario Valuation Targets Individual Attributes Landscape protection Ecosystem protection Biodiversity scenario Ecosystem Important + Value of Yakushima Age Household size Income Assessment Use Value TV program User Distance Option to Visit 15

16 Case Study Kabukuri Marsh Kabukuri marsh Rice paddies Habitat for the wild goose 423ha area was inscribed as a registered wetlands under the Ramsar Convention 16

17 Winter-Flooded Rice Paddies Ramsar area Including rice paddies Management for waterbirds habitat 17

18 Population of Wild Goose 10 years ago About 10,000 Current More than 70,000 18

19 Choice Experiment Plan 1 Plan 2 Plan 3 Marsh 62ha 150ha 62ha Rice paddies 0ha 50ha 22ha Birdwatching Site Yes No No Payment $10 $5 $

20 Willingness-to-pay Yen per household per year Ecotourism Marsh Rice paddies Local Other 20

21 WTP Distribution (Ecotourism) Eco Tourism 21

22 WTP Distribution (Marsh Conservation) Eco Tourism Marsh 22

23 Summary Need for valuing biodiversity No market price of biodiversity Market failure Contingent valuation How much to pay for conservation? WTP of biodiversity Ecotourism: Local resident Ecosystem: National resident Heterogeneity in preference of biodiversity 23

24 Policy Implication Cost share of biodiversity conservation Beneficiary pays principle Payment scheme with heterogeneity Conservation with private capital Limits of government subsidies Economic incentives to conserve biodiversity Valuing biodiversity 24