Malaysia is endowed as one of the twelfth richest of biodiversity in the world
(MNS, 2006). Malaysias flora and fauna faces serious
threats and has already lost its original vegetation due to deforestation activities.
In Malaysia, forest areas are mainly recognized as important sources of water
supply for industry, agriculture, households and recreation purposes. However,
the forest areas nowadays are under threats due to deforestation activities.
Given to that matter, watershed areas are affected. Based on study by Benavides
and Veenstra (2005), tropical deforestation activities in fact lead to detrimental
issues to river water quality due to increment in concentrations of sediment,
nitrogen and phosphorus.
Forest areas in Selangor have been officially designated as Permanent Forest
since 1898 (Selangor Forestry Department, 2009). This
designation aimed to protect, manage, preserve and develop forest resources
in sustainable manner. However, deforestation activities in Selangor are unavoidable.
Hulu Langat forest is one of such forests that suffer from deforestation. It
is estimated that, about 14, 567 hectares of the forest have been cut down for
timber within 12 years (Jaafar et al., 2009).
In addition, recent illegal logging activities that have been reported in mass
media cause impulse severity in forest destruction. This issue is in fact crucial
because Hulu Langat forest serves as watershed areas for communities at Hulu
Langat. The reliance of communities for fresh water sources giving rise to the
need of Hulu Langat watershed conservation.
Hulu Langat watershed covers the area of Hulu Langat Forest reserve in Selangor,
a fast developing state in West Malaysia. This forest reserve represents about
26% of nine forest reserves in Selangor. It is covered with hill dipterocarps
forest at elevation of 120 to 1,265 m above sea level (Mohd
Shahwahid et al., 2003). The serve of Hulu Langat forest as watershed
is entrenched from the forests main river, Langat River. The river constitutes
several branches such as; Langat River, Lupok River, Chongkak River, Pangson
River, Lolo River and Lui River. These ancillaries are upstream catchment areas
which they function as Langat Catchment area, placing a regulatory dam for domestic
water supply. The dam releases domestic water supply to downstream to where
the water treatment facilities are located for water purification process. These
facilities are operated by a private water supply company, Syarikat Bekalan
Air Selangor (SYABAS). Apart of important function of upstream catchment areas,
the downstream part of Langat River is at leisure used by local people for recreational
and fishing activities (Mohd Shahwahid et al., 2003).
Every year, certain areas of Hulu Langat forest has being cut down for timber
harvest, agricultural and related activities. In 1990, the forest constituted
about 45,405 hectares of areas and was reduced to 41, 102 hectares by 2001 (Jaafar
et al., 2009). In 2012, Selangor Water Management Authority (LUAS)
claimed that only 30, 838 hectares of the forest areas are left due to deforestation
activities. Occurrences of deforestation are continually damaging biodiversity
of the reserved forest. The watershed areas are also affected which the quality
and quantity of water supply from Hulu Langat Dam have decreased. Based on the
AWER, (2012), daily demand for clean water in Selangor,
Kuala Lumpur and Putrajaya reaches 4,907 million liters in 2012, whereas the
projected supply capacity is only 4,431 million liters in 2014. The demand for
water supply increases annually due to population growth in Selangor expands
at 3.2% annually (DSM, 2011). In contrast, the water
supply has remained the same or even at decreasing rate due to affected watershed
areas. Water supply to Selangor, Putrajaya and Kuala Lumpur decreased since
2010 due to increment in water demand and loss of forest areas. Therefore, this
study was conducted to evaluate economic benefit of conserving watershed services
to sustain domestic water supply at Hulu Langat, Selangor. This valuation was
envisaged to yield the value of Willingness to Pay (WTP) of the communities
for the conservation of watershed.
MATERIALS AND METHODS
The contingent valuation for watershed conservation at Hulu Langat, Selangor:
Economic valuation is a method used to approximate monetary value of the benefit
which accrues to communities from the use of an environmental resource. This
study estimated the monetary equivalent of the benefits that Hulu Langat communities
derive from conservation of its watershed. This research used Contingent Valuation
Method (CVM) that has been commonly used as one of the standard approaches to
measure the economic value of non-market goods, such as resources, wildlife
and environmental quality goods (Hanemann, 1994). With
this method, the value of an environmental good is directly elicited, as answer
to a question about WTP. Thus, the monetary value can be presented in terms
of a mean or median value per capital or per household, or as a total value
for the affected population. Besides, the CVM method is very flexible. It can
be used to estimate the economic value of virtually any natural resources (Whitehead
and Blomquist, 2006). In CVM format, each respondent was presented with
a scenario based on the current status, problems and the conservation program
that will be implemented at the watershed area. The scenario was followed by
question on WTP elicitation for watershed conservation purpose. The format used
was dichotomous choice single bounded; a take it or leave it question
approach. The question offered a randomly assigned monetary value to the respondents.
The respondents have to choose Yes or No answer to indicate
their WTP or vice versa.
Questionnaire design: Precedence of questionnaire design for this study
was to gather primary information such as socio demographic profiles, awareness
and respondents WTP for watershed conservation. The questionnaire was
divided into six sections; (1) warming up questions, (2) questions upon current
water supply scheme, (3) awareness towards watershed conservation, (4) respondents'
perceptions, (5) WTP and debriefing questions, (6) socio-economic profiles.
The first section solicited knowledge about environmental problems for initiating
contact with the respondents. In the second section, the respondents were required
to give their views regarding current water service and related problems. The
third and forth sections included questions about level of environmental awareness
and the respondents perceptions towards the watershed conservation. The
fifth section of the questionnaire was mainly comprised of hypothetical scenario
and followed by WTP and debriefing questions. The scenario explained about problems
encountered in Hulu Langat watershed, which can affect the sustainability of
the watershed. Deforestation and conversion of land to different land use is
diminishing the forest area leading to the problem of water quality degradation.
Therefore, conservation program implementation is necessary. The conservation
program includes reforestation, increase in regular patrol, monitoring activities
in the forest and effective forest management to ensure reduction in illegal
logging, forest fire and wildlife poaching. Following the scenario, the respondents
were doffed a dichotomous choice question which the question included bid offer
for increment in monthly water bill. The medium used for the bid offer was in
terms of percentage value as adapted from CVM study by Yacob
et al. (2009). The selection of bid offers was validated through
pretest. Based on the pretest results, five bid offers were selected including
10, 15, 20, 25 and 30% increment in monthly water bill. Each bid offer was randomly
assigned in 100 set of questionnaires prior to survey implementation. The last
section of the questionnaire included questions on socioeconomic background
comprising of age, residential area, gender, race, number of year in education,
occupation, family size and income level.
|| Distribution of respondents by sub-district
|Source: Primary data, 2011
The questionnaire survey was conducted from July to September 2011. From 521 of survey, 21 of them were eliminated because of the respondents refusal to complete WTP questions. Thus, this study was carried out by 500 completed questionnaires as summarized in Table 1. A large percentage of respondents (40.2%) came from sub-district of Kajang followed by sub-district of Cheras with 26.2%. Sub-district of Semenyih comprised of 9.6% of the total respondents, while Hulu Semenyih and Beranang constituted only 9 and 5.8% of the respondents respectively. The number of the respondents selected from each sub-district was based on the ratio of the actual population on the communities in Hulu Langat, Selangor. The sampling plan used in this study was stratified random sampling. The respondents were stratified according to their standard of living indicated by the type of their housing areas. Three strata were used in this survey. First strata represented those who live in high income housing area. The second strata embodied the respondents in medium income housing area while the third strata represented those who reside in low income housing area.
Willingness to pay estimation: Based on Cameron
(1988), the respondents WTP for watershed conservation is Yi
and variable Xi are the underlying independent variables. Meanwhile,
μj is assumed to be logistic random variables. Maximum likelihood
binary logit model is assumed as follows:
Since Yi is an unobserved continuous dependent variable, so it is manifested through binary response variable Ii. In Camerons approach, threshold value, ti is included for generating new form of logistic model, censored logistic regression. The respondents Yes or No responses towards WTP are either greater or less than ti. Hence,
So that, the probability of Yes answer is:
where, Zij is a standard logistic random variable with mean 0 and
standard deviation b = .
Hence, the log-likelihood function can be written as:
The mean of willingness to pay could be determined using the formula:
where, β0 is the constant, β1 is the coefficient
for the bid price variable, β2 is the coefficient for independent
variable X1 and β3 is the coefficient for independent
variable X2 (Santos, 1998; Kaffashi
et al., 2011). The regression was estimated by utilizing Gretl version
1.9 through logit regression analysis. Based on Eq. 5 the
calculation of mean WTP is represented as below:
Respondents socioeconomic profile: Summary of the respondents
socioeconomic profile is presented in Table 2. On average,
age of the respondents was 39 years old. As expected the gender was composed
mostly of male (83.8%) since they were the ones who represented the leader of
the households during the survey. The respondents study background was
recorded based on their level of educational qualification. The proportional
distribution of respondents level of education showed that 50.6% of the
respondents had spent six to twelve years studying. This implies that half of
the total respondents have either studied until primary or secondary school
while the rests further their studies until college or university. The average
number of years spent studying was 13 years. The average household size was
five members per household.
|| Socioeconomic profile of the respondents
|| Respondents' responses towards bidding offers
The average household income was about RM 3933.00 in which 48.2% of the respondents
earned an income range of RM 3000 to RM 4999 per month. Of the total respondents,
only 0.6% was unemployed, while 23.2% were self-employed and another 18.8% were
civil servants. With respect to occupations, most respondents were in the private
sector and constitute about 57.4% of the total respondents. In addition, most
respondents (73.6%) lived in urban areas while the rest lived in sub-urban.
Estimation of mean willingness to pay: The survey revealed that out of 500 respondents, 58% showed willingness to pay for the watershed conservation while 42.4% declined. Table 3 depicts frequency of responses to the five set of bidding offers. The survey revealed that the respondents have more tendencies to pay lower price for watershed conservation. While 97% of the respondents who were presented with the first set of bid offer (10% increment in monthly water bill) were willing to pay for watershed conservation. In contrast, only 16% of 100 respondents were willing to pay when they were presented with bid offer of 30% increment in monthly water bill.
|| Binary logit estimation results
|***Significant at 1%
Based on the logit regression analysis in Table 4, probability of YES responses for WTP was regards as dependant variable and explanatory variables comprised of offered bid amounts, income, education and residential area. The results revealed that explanatory variables are significant which have the best fit to the model. Positive sign of coefficients from regression denotes direct relationship between explanatory and dependent variables. In contrast, negative sign of coefficient otherwise implies indirect relationship. The bid amount offered to respondents for the watershed conservation showed negative sign and it was statically significant at 1% significant level. Meanwhile, income showed positive sign signifying its positive correlation with WTP at 1% significant level. The third explanatory variable, education was categorized into number of year study. The positive sign of this coefficient indicates that it has parallel relationship with Yes responses to WTP and it is highly significant at 1% level. The final explanatory variable, the residential area also gave significant result with positive regression coefficient. The mean of WTP for the watershed conservation was derived from regressed results in logit model as in Eq. 6. Thus, the result of mean WTP for watershed conservation was 23.01% increment for monthly water bill.
There are various determinants that can influence ones WTP towards assessing
values for environmental services. Economic valuation in this study attests
to the communities acceptances towards watershed conservation by scrutinizing
the influences of offering bids and the communities socioeconomic backgrounds.
First indicator of the communities acceptances for watershed conservation
is their responses to the bid offers. This study discovered that higher bid
offer resulted in less preference for WTP among the communities. Since the payment
for watershed conservation was monthly payable, it gives loads to the communities
commitment. Hence, the utility declines as more of their financial resources
need to be spent continuously for watershed conservation purpose. This result
is consistent to the previous study by Lyssenko and Martinez-Espineira
(2009), which the finding showed that fewer respondents were willing to
pay as the bid value increases.
The second indicator of WTP for watershed conservation is income. It is expected
to play a major role in determining the WTP coherent with results from previous
studies by Day and Mourato (1998), Fujita
et al. (2005), Pak and Turker (2006), Ghorbani
and Hamraz (2009) and Sathya and Sekar (2012). The
previous results showed that income is habitually a significant variable with
positive sign. The positive sign of income denotes that the tendency to pay
for watershed conservation increased with higher income level. Thus households
with relatively higher income level are willing to pay more for watershed conservation
as compared with those with relatively lower income.
Education is an important indicator in influencing WTP towards watershed conservation.
The result signifies that communities with higher education background are more
inclined to pay. In normality, decision making made by educated communities
are more fundamental due to knowledge advantages they owned. Therefore, their
decisions towards WTP are influenced by their developed knowledge rather than
emotional driven decisions (Samdin et al., 2010).
The WTP for watershed conservation is also driven by residential status either
to be living in urban or sub-urban. Previous CVM study revealed that people
who live in urban or rural area have significant different perspectives towards
environmental protection (Solomon and Johnson, 2009).
This study revealed that urban residents are more concerned towards conserving
the watershed, hence their WTP was higher.
The result showed that the communities agree to pay about 23.01% increment
for monthly water bill for watershed conservation purpose. The interpretation
of this result can be initiated by estimating the average monthly water bill.
On average, household payable for water was RM 44.02 per month. Hence, the value
of 23.01% for monthly payable increment is equivalent to RM 10.13. When this
amount is calculated across 228376 households in Hulu Langat districts, it gives
aggregated value for watershed conservation of RM 2,313,449 monthly. In an annual
basis, the total benefit paid by the communities estimated in Hulu Langat was
RM 27,761,387. The increment in monthly water bill offers adequate fund for
the watershed conservation. This amount of money will be covering the watershed
management, reforestation and patrolling activities to ensure reduction of destruction
activities in the watershed area.
The key objective of this study was to execute economic valuation for watershed conservation with the purpose of sustaining domestic water supply. Two important components in this study were deforestation and water shortage issues. These components hinder efficient water supply scheme provided by SYABAS. The overall results indicated that the communities in Hulu Langat were willing to pay for watershed conservation. Out of 500 respondents, 58% are willing to pay while the rest declined. On average, the communities were willing to pay 23.01% or RM 10.13 increment for monthly water bill. Meanwhile, anticipated results in this study showed that WTP is influenced by the bid amount, income, number of year attainment in education and residential area (urban or suburban) of the respondents.
The WTP value for this study is sufficient enough for protection of the watershed. This value can be used in the future for cost-benefit analysis for policy maker, authorities and local manager especially in environmental protection and forest management field. The result of the watershed valuation can also help to encourage the government and other decision maker to allocate more resources for conservation. From the viewpoint of government, a regular budget appropriation for Hulu Langat watershed conservation is a step forward in addressing the social benefit of conservation.