This paper analyses the economics of biodiversity conservation in the
context of a tropical forest ecosystem in the Western Ghat region of India,
where coffee is the main competitor for land use. Using primary data
covering a cross-section of coffee growers, the study notes that the
opportunity costs of biodiversity conservation in terms of coffee benefits
foregone are quite high. Even after including external costs due to
wildlife damages and defensive expenditure to protect against wildlife, the
NPVs and IRRs from coffee for all land holding groups were high. Including
external costs these NPVs across different land holding groups ranged
between Rs 17 thousand to over Rs 106 thousand per acre at 12% discount
rate, and the IRRs between 16.6 to 23 per cents. Even if the expected
benefits were to decrease by 20% and costs rise by a similar proportion,
still the IRRs from coffee were quite high (19.5 to 20.1 per cent). The
study notes that the external costs accounted for between 7 to 15 per cent
of the total discounted costs of coffee cultivation, and smaller holdings
proportionately incurred higher external costs as compared to large
holdings. The study also notes high transaction costs incurred by the
growers to claim compensation for wildlife damages. Notwithstanding these
disincentives, the study notes that the local community had a positive
attitude towards biodiversity conservation and were willing to pay in terms
of spending time for participatory biodiversity conservation. Taking
elephants, a keystone and threatened species in Asia and the study region,
for the contingent valuation survey, the study notes that the respondents
are willing to spend 25.8 humandays per household annually which works to
over Rs 6003 per household per annum in terms of the income foregone. They
also preferred a decentralized government institution for participatory
biodiversity conservation.
21st Century COE Program
-Aiming for COE of Integrated Area Studies-