Economic Valuation of Village Tank Systems of Hambantota District: Towards Development of an Incentive Mechanism for Their Continuity

Abstract

Village tanks of Sri Lanka play an important role in socio-eqonomic development of the country. There are thousands of farm families who receive multiple benefits from these tank systems. However, being a public property, some of the goods and services provided by a tank system hardly receive any value as they are not traded in markets, and are not closely related to any marketed goods. Therefore, this study tries to value the direct benefits of these man made assets and to develop an incentive mechanism for the sustainable use of these resources. The Total Economic Value (TEV) concept was the basis for the valuation of tank benefits. To measure the direct use values, residual imputation approach, market price approach. Opportunity cost method and contingent valuation method were used. 175 households who live adjacent to the selected 10 village tanks of Hambantota district were interviewed using a pre-tested questionnaire. Further, officers of relevant government institutes of the district and officials of the farmer organizations were also interviewed. Field survey was dc.e in the maha season of 2005/2006. The total economic value of direct uses of tank was estimated as Rs. 65.840 in the isolated tanks and Rs. 80,155 in cascade tanks per household per year. The results of contingent valuation method indicated that respondents are willing to pay I % of their average annual income for the recreational benefits of the tank. Furthermore. it is interesting to find out that, the non-irrigation value of a village tank is greater than the irrigation value. In the case of cascade tanks that is 81% and in the case of isolated tanks that is 86%. The estimated tank benefits were then compared with tank rehabilitation cost in order to derive relevant policy implications. Results of the cost-benefit analysis indicated that rehabilitation of village tanks is economically feasible if multiple benefits are generated. Among the ecosystem functions supported by village tanks. Ground water recharge was investigated in the study. There is a correlation between distance from the tank to well and the depth to the water level of the tank. Furthermore, tank ecosystems are habitats for four threatened fauna species. Furthermore, the forest area of a tank catchment is a carbon store worth Rs. 3.3 million. Market failure, policy failure and institutional failure are the main reasons behind tank degradation while poverty, climatic factors and growth of population are also contributing to the deterioration of the tank systems. The study concludes that the best interventions for continuity of tanks be the; better use of social capital. the empowerment of farmer organizations through a catalyst, use of an integrated apprcach in tank management and granting subsidies to paddy farming.