Sustainable Use of Wetlands Valuing Tropical Wetland Benefits: Economic Methodologies and Applications

Tropical wetlands are increasingly disappearing as the result of development decisions. Common examples are the conversion of mangrove swamps to fishponds, diverting water away from river floodplains, draining wetlands for agriculture and other land uses, and over-loading wetlands with pollution. Too often, such development decisions are taken without considering the loss in wetland benefits arising from damages and conversion; the underlying assumption is often that the net benefits to society of any development option must presumably be greater. However, there is much evidence to suggest that this assumption is not always correct. Many tropical wetlands are being directly exploited, often through non-market, 'informal' economic activity to support human livelihoods, e.g. through fishing, hunting, fuelwood extraction and water supply. Some of the ecological functions of wetlands, such as flood control, storm prevention and groundwater recharge, may provide even wider benefits through protection or support of economic activity and property. Finally, some wetlands comprise unique natural environments and habitats, which are of considerable value. The basic methodology for assessing and valuing the economic benefits of tropical wetlands is relatively straightforward, but difficult to apply because of data and resource constraints. Preliminary applications in Central America suggest the importance of ranking wetland characteristics and distinguishing between direct-use values, indirect-use values and non-use values. A further application in a Nigerian floodplain shows how calculation of a few direct-use values alone - for agriculture, fuelwood and fishing - demonstrates that wetland benefits are significant, particularly when contrasted with the benefits from irrigation projects that are diverting water away from the floodplain. The analysis shows that sustainable use of the floodplain can yield substantial economic returns to local inhabitants, and these benefits should not be excluded as an opportunity cost of any scheme that diverts water away from the wetland system. Finally, a case study of a mangrove system in Indonesia illustrates how the degree of 'environmental linkages' between the components of the system are critical in determining the extent to which the mangrove forest can be exploited for woodchip production.