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Economic Valuation for Water Services from Merapi Volcano National Park, Indonesia Case Study: Kali Kuning

12 February 2018 126 views No Comment

by Ayu Diyah Setiyani; (Thesis M.Sc Unesco-IHE, Delft, Netherland, 2016)  supervised by Prof. Dr. Charlotte de Fraiture, M. Sc.: Prof. Dr. Robiyanto H. Susanto, M. Agr. Sc., and Annelieke Duker, M. Sc.

The process of National Park establishment in Indonesia is coordinated by the Ministry of Forestry. The National Park is developed based on particular considerations such as protecting ecosystem or preserving certain species. Management of national park will not succeed unless the communities surrounding park support the park itself. However, it will be difficult because the park was established through a ‘top-down’ process. Therefore, it is important to ensure that the surrounding communities are able to derive beneiit from the park, especially environmental services such as water supply.

The goal of this study is to formulate the economic value of water services from the MVNP. To achieve this aim, this study has some specific objectives, which are identifying the direct and indirect use values of the Kali Kuning subwatershed, determining the national park contribution in water services, and simulating the effect of land use change and quantifying total economic value of the environmental service in the national park based on different scenarios.

To realise these objectives, the study combines some methods. First, identifying the use value is accomplished by literature study from previous research, institution reports and field observation. Second, to determine the park contribution and to simulate land use change effect on the water supply SWAT model is applied. The model analysis is based on three different land use maps: 2004 (baseline), 2015 (deforestation), 2025 (afforestation) and extreme condition which is grassland (without national park). Third, the economic value is approached by market price for all use value. The consumers’ surplus is also applied to figure the park contribution to the locals. Lastly, cost and benefit analysis based on several scenarios (deforestation, afforestation and wiithout national park) is implemented.

The results show that the park contributes to direct value such as water for drinking water and irrigation and indirect value like ecotourism and cultural and spiritual activities. The drinking water benefit is shared by the companies and the locals. In addition, the irrigation is estimated based on its purposes in supporting

dairy cattle, irrigating dry land agriculture and trading. Other benefits from the park are grass production, fuelwood and tourism.

According to SWAT simulation, land use change from ‘with national park’ scenarioswhich are based on deforestation and afforestation land use to ‘without national park’ scenario indicates a downward changing in discharge. The afforestation land use generates the flow about l0-l2% higher compared to deforestation land use. in contrast, by converting the park to grassland, the discharge reduces significantly, especially in dry season from May to October in dry year. The flow reduces to 54% from the discharge in deforestation scenario. This result becomes basic assumption in cost and benefit analysis.

The total economic value from Kali Kuning watershed is USD 4.5 million annually based on deforestation scenario. The total economic value is calculated based on drinking water use from the companies and the locals, milk production, dry land agriculture yield and trading, grass production, fuelwood and tourism. To acquire those benefit, the beneficiaries compensate approximately USD 57,493.

Furthermore, the afforestation scenario indicates the highest economic value about USD 5.7 million. It is estimated that the water supply for the companies and communities increase due to flow increment (based on SWAT simulation). Another use value that escalates the economic value is tourism. The park’s authority targets 225,000 visitors per year when the forested area is enlarged.

However, the economic value expressively decline in ‘without national park’ scenario or grassland. It is predicted that the benefit from water supply decreases, so the beneficiaries should invest more water to obtain the same benefit. The beneficiaries are able to gain USD 3.2 million, but they lose USD 1.5 million to replace the water source from Kali Kuning sub watershed. Therefore, the net benefit in ‘without national park’ scenario is approximately USD 1.7 million. It is estimated that economic value from grass production increases, but benefits from dry land agriculture, water trading, fuelwood and tourism decrease.

Based on this study, it can be recommended that some points should be done. For instance, it is important to keep the area as national park because of the economic value for the beneficiaries. Then, in case of flow changing, the water should be reallocated, especially improving the communities’ share for drinking and irrigation purposes. Moreover, all stakeholders should work together to empower the local communities by improving their capacities and awareness to the park, promoting local wisdom and improving their welfare. Eventually, the locals are able to actively participate in supporting the park.

Keywords: national park, economic value, water services, environmental services

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