Valuation of Use Value of Forest Resources: Application of Contingent Valuation

Abstract

Continued agricultural growth is a necessity, not an option, for most developing countries. Therefore agricultural growth must be based on a sustainable basis so as not to jeopardize the underlying base of natural resources. In the present study an attempt has been made to valuate use value of forest resources of a sample area viz., Coimbatore district in Tamil Nadu State of India. The specific objective of the study was to asses the willingness to pay for conservation and improvement of forest resources. The composite error model, the truncated normal tobit model was used to study the household variables influencing Willingness To Pay. Primary data was collected from 150 tribal households selected from 18 villages. Their main source of income was from other subsidiary occupation and 31.88 per cent of annual household income was from forestry. Out of total sample households, 90 per cent of them were willing to pay for conservation. The sample households were willing to pay Rs.734.41/household/year towards creation and protection of forest resources in the district. The results of the composite error model showed that the WTP expressed by household was influenced by household income from outside, distance traveled and perception of forest degradation. The comparison of WTP by divisions indicates that there are significant differences. An important policy implication of these results is the need to consider the household and division specific factors when designing and implementing afforestation projects.