TOTAL ECONOMIC VALUE OF THE DELTAIC MANGROVE FOREST RESOURCES IN THE DISTRICT OF KUCHING, SARAWAK

By Ahmad Shuib

Institute of Agricultural and Food Policy StudiesPutra Infoport UPM, Serdang 43400

e-mail: mad.shuib@gmail.comSharon Yap Jin Fui

Department of Economics, Universiti Malaysia Sarawak, Kota Samarahan 94300

jarcany_syjf@hotmail.comSalbiah Edman

Department of Economics, Universiti Malaysia Sarawak, Kota Samarahan 94300

esalbiah@feb.unimas.my

ABSTRACT

The deltaic mangrove forest areas in the District of Kuching which cover an area of

about 52,300 ha. are being used for many purposes; some uses are destructive, other

uses are supporting the livelihood of communities living in the periphery of the

forests. Determining the Total Economic Value (TEV) of the deltaic mangrove forest

resources in the District will justify the calls for conservation of this important asset

for future generations. The method used to collect the data is the face to face

interviews of villagers living in the surrounding areas of the mangrove forests in the

Mukim of Santubong, Matang, Lundu and Sematan. To estimate the TEV, the means

of use value (UV) (tangible benefits consisting of timber woods and non-timber

mangrove products) and means of willingness to pay (WTP) (intangible benefits

consisting of the conservation and option values) by communities in surrounding

areas of the forests are calculated. The results show that the total gross economic

value of the deltaic mangrove forest resources in the District of Kuching is RM1.1bil.

per year. Through conservation practices, the mangrove forest resources in the delta

could produce benefits in perpetuity, giving an estimated present value of the gross

benefits of about RM27.7 bil. The regression results show that secondary education

level, occupation of villagers as fishermen and household income of the villagers have

significant influences on the TEV of the deltaic mangrove forest resources in the

District of Kuching.

Key Words: welfare , conservation, willingness to pay, tangible benefits, option value, discounted value

1

INTRODUCTION

It has been proven that mangrove forests provide both ecological and economic

benefits and many people depend on the mangrove resources for their livelihood. Yet

mangrove forests are being destroyed and resources being over exploited. According

to the United Nation Environment Programme report on World’s Mangrove Forest,

although conservation efforts slow down the rates of clearance, however, mangroves

are still being cleared at three to four times faster than the rate of other forests

(McDermott, 2010).

Similarly, the mangrove forest areas in Sarawak, which form parts of the state

wetland areas, are decreasing because of they are being converted to alternative

agricultural or industrial uses. The mangrove forests in the state occupy about 60% of

the 740km long coastline mainly along the sheltered shores and estuaries within the

major bays of Kuching, Sri Aman and Limbang Division (Sarawak Timber Industry

Development Corporation (STIDC), 2008). However, the protected mangrove forests

in Sarawak are relatively small compared to the total land area.

In the District of Kuching, although the total mangrove areas cover 52,318 ha., only

14,019 ha of the forests are gazetted as protected areas. This amounts to only about

20% of the total land area in the state. However, Kuching’s residents have slowly

becoming more aware of the importance of conservation of mangroves after following

several awareness programs that have been initiated by the authority. Programs such

as “Trees for Life” (TFL) and seminars on National Conservation of Forests in

Coastal Areas have been organized by the Sarawak Forestry Department (Sarawak

Forestry Department, 2011).

The importance of mangrove is immense. Under a sustainable management regime

mangrove can provide tremendous economic benefits, through the support of

fisheries, agriculture, maintenance of water tables, production of timber and plant

matter, protection against storms, and pollution buffering, and provision of wildlife

resources, transport, recreation and tourism opportunities (Shuib, 2008). In addition to

these economic values, mangroves form part of the cultural heritage of humanity.

Some of these economic values are quantifiable and others are totally ignored. The

conversion of the mangrove forests into agriculture or industrial uses makes total

economic value of the benefits derived from mangrove a top priority (Batagoda,

2

2003) . Agriculture development in mangrove habitats requires the application of

appropriate technologies and correct soil and water management.

TOTAL ECONOMIC VALUE

Mangrove forest has both marketed and nonmarketed values. Marketed values

include products such as timber woods, aquatic products and non-timber forest

products. The CO2 sink, flood protection, habitat for marine life and wildlife and

biodiversity components are not bought and sold in the market place and thus

represent nonmarketed values. Because of this, most project appraisals relating to

mangrove resources use market values only. This has made conservation of

mangrove forest for environmental benefits to be viewed less favorably compared to

alternative uses such as agricultural production and industrial development. In

addition, the environmental benefits arising from conservation of mangrove forests

are usually not taken into account in calculating financial internal rate of return for

project appraisal.

The implementation of a project will often affect the environment. Since

environmental impacts are related to the social objective of increasing people’s

welfare, environmental values should be weighed in the objectives. These impacts

include services that are not free and have values in the same sense as marketed

goods. Although the impacts are often characterized by an absence of observable

prices on which to base in the cost–benefit analysis (CBA), their values must not be

disguised. Various methods can be introduced to measure these impacts. Stanton

(1995) states that there is a need to consider the ecological reasons in agroforestry,

and that the remarkable feature of mangrove systems lies in their comparative

freedom from the problems besetting the winning of other renewable natural

resources; and it is these ecological items that must be debited in the environmental

accounting for the true cost of production. One of the methods of measurement of the

true cost is the total economic value (TEV).

Barbier (1994) agreed that when the total economic value of a wetland’s ecological

functions is properly measured, its services and its resources may exceed the

economic gains of converting the area to an alternative use. In calculating the Internal

Rate of Return (IRR), investors use the stumpage value of tree. The use of tree

stumpage value alone to determine investment worth is in fact a purely commercial

criterion. Efforts should be made to distinguish between commercial rates of return

and economic rates of return in today’s situation of scarcity and greenhouse effect.

3

Hence quantification of the benefits of mangrove timber and mangrove agroforestry

towards the economy is in order.

The TEV is used to sum up the total benefits derivable from a particular resource

(Pearce, 1994). TEV is the sum of use and non-use economic values. The

components parts of TEV that need to be estimated in mangrove agroforestry are the

non mangrove timber products: fishes, hydrology, carbon sequestration, and wildlife.

Total economic values from those areas will be estimated by using different types of

methodological tools that take into consideration the use value and non use value of

the mangrove forests. The estimated total economic values will play a vital role in

further understanding the processes and steering actions of this study, and also

contribute to future studies. In this study, socio-demographic factors that influence

total economic value will be identified.

MATERIALS AND METHODS

Study Areas

This research will focus in the mangrove forest in District of Kuching. This paper will

estimate the total economic values of the mangrove forests in the Mukim of

Santubong, Matang, Lundu and Sematan, in the District of Kuching. Villages within

the mukim selected for the study are shown in Table 1.

Mukim Villages Populationsize Main Activities

Santubong Kampung Salak

Kampung Buntal

Kampung Bako

Kampung Goebilt

Kampung Muara Tebas

598

200

1,800

-

2,500

Fishing, mangrove harvesting,

marine resource collection,

ecotourism, agriculture and

aquaculture activity, sea food

restaurants, agro-tourism

product, resettlement area, fish

product cottage industry.

Lundu Pekan Lundu

Kampung Semunin Jaya

Kampung Dagang

Kampung Seketi Melayu

Kampung Sileng Melayu

20,773

-

-

-

-

Ecotourism, fish product

cottage industry, agriculture

and aquaculture activity, agro-

tourism product.

Sematan Pekan Sematan 8,000 Fishing, ecotourism, fish

4

Kampung Tanah Hitam

Kampung Sedemak

Kampung Trusan Jaya

-

-

-

product cottage industry,

mangrove harvesting,

government and private sectors

workers, marine resource

collection, aquaculture activity

Matang Kampung Telaga Air 2,000 Fishing, marine resource

collection, agro-tourism

product, ecotourism, fish

product cottage industry.

Table 1: Selected villages in Deltaic Mangrove Area in District of Kuching

Data Collection

In the data collection process, a few villages in the periphery of the mangrove forests

in District of Kuching are selected as the focus place of the research. The

questionnaire used to elicit the data is divided into three parts. These parts included

public attitude and behavior toward mangrove forests, uses of mangrove resources,

and willingness to pay for conservation of mangroves. Socio-demographic

information are asked through open-ended questions such as the age, gender,

education level and income. In part B, to obtain the use value, open-ended questions

are used to obtain the necessary data from the respondents. Quantity of harvesting per

day and the number of days per month that they are harvesting the marine products

(fishes, prawns, crabs, and cockles) and forest timber products (mangrove woods) are

obtained from the respondents.

In part C, to obtain the willingness to pay (WTP) for conservation of the mangrove

resources, a modified dichotomous choice technique is used. Firstly, several levels of

bid price (RM5, RM10, RM15….etc) are selected and presented to respondents to see

whether they are willing to pay for conservation of the mangrove forests. If the

respondent gives an answer of “Yes”, an open ended approach is used to obtain the

maximum amount of willingness to pay which is higher than the bid price. On the

other hand, if respondent gives a “no”, the maximum amount of willingness to pay

which is lower than the bid price will be asked. This is a modified dichotomous

choice method where the lower bound (RM0) and upper bound of WTP will be

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obtained (Rusli et al. 2009) . The TEV will be measured by summing up all the use

value (UV) and non use value (NUV) of each respondent.

Sampling

In this research, a multistage sampling is used to select the sample. Firstly, cluster

sampling technique has been used to cluster the regions that surround the mangrove

forests such as Mukim of Santubong, Lundu, Sematan and Matang. This is followed

by stratifying the villages into those where the residents are dependent on mangrove

for their livelihood, and those formerly mangrove areas which have been converted

into housing resettlement villages. In this study, the villages that have been selected

are shown Table 1. which also shows the main activities that generate income of the

population of each village in the Mukim

After the villages have been selected, convenient sampling is used to select the

respondents in each village. Selection of respondents by convenient sampling is

justified because the residents are either dependent on mangrove forests or are not. A

sample size of 300 fulfills most of the rules when the technique of sampling is

nonprobability sampling (Neuman, 2000). Therefore in this study, the sample size

used is 326. Face to face interviews have been conducted in the selected mangrove

villages to obtain the necessary data.

RESULTS AND DISCUSSION

Socio-demographic characteristics

As shown in Table.2 it is found that male respondents are dominant since they are

the heads of the families. Most of the respondents are aged between 30 years old to 59

years old. The majority of the respondents have finished only the primary school and

secondary school education. For the list of main occupation, fishing forms the main

type for 38.7% of the respondents. This means that many of the respondents are

dependent on the mangrove resources. However, about 32% of the respondents who

are public servants, private servants or self-employed may be working in the

settlement areas. Family size of the respondents usually is between 5-8 members with

a mean family size of 6 members. The household income in general is less than

RM1000 per month, which may imply that poverty still exists in this rural area of the

District.

Variable Percentage (%)

6

Gender Male 72.4Female 27.6

Age[1] 10-29 14.730-49 48.250-69 32.570 and above 4.6

Education No Formal Education 11.3Primary /Secondary School 72.8Tertiary 15.9

Occupation Public /Private Servant 15.3Self-Employed 18.1Student/Retired/Unemployed 27.9Fisherman 38.7

Family Size[2] (Numbers of family members)

1-4 30.75-8 54.69-12 11.013 and above 3.7

Household Income per Month[3] (RM)

< RM 1000 72.1RM 1001-2000 14.4RM 2001-3000 4.9RM 3001-4000 3.1RM 4001 and above 5.5

Table 2: Socio-demographic characteristics of villagers

[1]For Age, mean is 45 years old. SD is 14. Min age is 15 years old, Max age is 90 years old.[2] For Family Size, mean is 6 family members. SD is 2.6. Min family size is only 1 member, max family size is 16 members.[3] For Household Income per month: Mean is RM1264.46. SD is RM1708.82. Min household income is RM200; Max household income is RM 15000.

Total use value and willingness to pay of mangrove forests resources

The total use value of the mangrove products harvested for the majority of the

villagers are found to be less than RM10,000 annually. Those villagers who are living

on the ex-mangrove land converted to housing settlement do not obtain any use value

because they are not economically dependent on the forests.

Table 3: Average income from different types of mangrove products.

Products Total Income (RM)

Numbers of Respondents who

Average Income (RM)

7

Harvest the Products

Fish 477,246 149 3,202.99

Crab 244,133 106 2303.14

Cockle 45,760 85 538.30

Mangrove Wood 192,478 26 7403.00

Prawn 108,899 55 1979.98

Total 1,068,516 421* 15,427.41

* 222 respondents who depend directly on the mangrove products, and some have more than one products harvested

Table 4. Total use value of mangrove forest resources of respondents.

Frequency Percentage

Total Use Value(Annually)

RM0-10000 177 54.3

RM10001-50000 71 21.8

RM50001-100000 46 14.1

RM100001-150000 15 4.6

RM150001 and above 17 5.2

Total 326 100

Mean: RM 32667.88Standard Deviation: 54008.51Minimum: RM0.00Maximum: RM 351960.00

The maximum gross total use value imputed for the mangrove dependent respondents

is RM 351,960.00. It is a huge amount because about 12% of the respondents are

engaged in commercial businesses which utilize inputs collected from the mangrove

forests; for example, the villagers may harvest mangrove timber woods to be used in

charcoal production, or may be involved in seafood restaurants or seafood cracker

business. The sample mean gross total use value is RM 30,456.51 per year with the

standard deviation of RM 54,008.51.

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It is found that the willingness to pay (WTP) of 58.9% of the villagers towards the

conservation of mangrove forest resources fall in the range of RM0-RM10. The mean

WTP is RM15.57 per person per year with the standard deviation of RM 30.92. About

12% of the villagers have chosen the minimum WTP of RM0. Among the reasons

given for the zero WTP include unawareness of the importance of the forests, also

some of them do not depend on the forests for their livelihoods, so they feel that

they do not have to pay for conservation of the forests. Some of the respondents argue

that they cannot afford to pay for conservation and this should be done by the

government. The maximum WTP is RM500.00 per person per year. This is an

extreme case of the WTP, it is indicated by respondents who are obtaining high

returns from the forest and have high awareness of the importance of mangrove forest

resources.

Estimation of total economic value of mangrove forest resources

Table 5: Estimation of gross annual total economic value

Population of Mangrove Ares in District of Kuching

Percentages of respondents that depend on mangrove forests (%)

Mean of WTP annually (RM)

Mean of UV annually (RM)

TEV annually (RM)

72,000 50.6* 15.57 30,456.51 1,110,712,612

Note: * the percentage of villagers who are dependent on the mangrove forest resources for their

income

The TEV of the mangrove forest resources in the District of Kuching are the

summation of tangible and intangible benefits obtained from the conservation of the

mangrove forests. The mean of UV is RM 30,456.51 per year whereas the mean of

WTP is RM15.57 per year. The TEV of the deltaic mangrove forest resources in the

District of Kuching is estimated to be RM1,110,712,612 per year (Table 5).

Present Benefits of Mangrove Forests Resources in District of Kuching

Given the importance of the mangrove forests to the communities, it is conceivable

that the mangrove will be conserved into the future and the benefits from the

mangrove will be obtained to infinity. Assuming that the Gross TEV will equal to

RM1,110,712,612 per year and obtained in perpetuity, the present value of benefits

can be calculated as follows:

9

wherer = Social Rate of Discount

G = Gross TEV

Table 6: Present benefits of mangrove forests resources in District of Kuching.

Gross TEV(RM)

Social Discount Rate

(%) Present Benefits(RM)

1,110,712,612 4* 27,767,815,300

Note: * The discount rate on conservation project should be low, whatever the preference s of society (Dasgupta and Pearce, 1972)

Table 6 shows that the present value of gross benefits of the deltaic mangrove forest

resources in District of Kuching is RM 27,767,815,300. It is assumed that the social

rate of discount is 4% and the benefits of the mangrove forest conservation obtained

are infinite. The present benefits have a very large value, therefore, conservation of

the forests are important to implement.

Factors Influencing TEV

The results of the regression estimation is shown in Table 5. The R-square for the

constructed regression model (0.604) indicates that there is around 60% of the

explanatory power of the independent variables used , that is, the independent

variables included in the function explain 60% of the variation in the TEV.

Table 7 : Factors influencing Total Economic Value of Mangrove Forest Resources in District of Kuching

Model Unstandardized Coefficients t-valueBeta Std. Error

Constant 1.655 0.158 10.476

Fisherman 3.276 0.181 18.105

Household Income (Annually)

-1.840 0.000 -4.326

Secondary School -0.415 0.170 -2.441

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Present Value of Benefits =

Dependent Variable: Log Annual Total Economic Value (LTEV), R square = 0.60 F = 163.62

The critical value for F-test implies that therefore there is enough evidence to reject

the null hypothesis of all βs = 0. This means that the model is significant at 95%

confident level. In Table 7 above, only three variables fishery occupation, household

income and secondary school education are significant in influencing the dependent

variable.. The computed t-value of the variables exceed the critical t-value at 95%

confident level which is 1.96, therefore the influence are considered as significant.

The household income is found to be negatively related to TEV, (-1.840), it means

that when household income of the family increases by 1% annually, the annual

LTEV will decrease by 1.84% per person. The negative relationship between TEV

and household income is in contrast to the result obtained by Sulaiman, et al., (2006)

in their study on TEV for sago peat forest in Mukah.

The negative influence of household income on TEV in the study is obtained

because for the majority of the households in the study location the sources of

household income do not directly come from the mangrove forest resources. Family

members whose work are not related to mangrove forests do contribute to the total

household income. Families with younger members, who work in the private or

public sectors or self employed contribute to the household income, thus the increase

in the household income. As the family does not depend directly on the mangrove

forest resources for the household income and younger members contribute to the

household income, the family is wealthier. The older members of the family will tend

to reduce their dependency on mangrove forests. On the contrary, in at study on

willingness to pay for the conservation of the mangrove forests in Kuching district,

the result shows a positive relationship between individual income and WTP (Bon,

2011). The implication is that if only the individual income is considered (excluding

contribution by other members), the TEV will have positive relation to income.

In the TEV function, the variable for occupation type is measured by the dummy

variable for work as fisherman. The results show respondents who are fishermen have

higher TEV than the other respondents who have other occupation types such as

public and private servants, self-employed, labourer, students, and retirees. The

nominal TEV for those who are fishermen is RM 85,310.01 whereas the nominal

TEV for those who are not a fisherman is RM45.19. The main reason for this to

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happen is that the fishermen are highly dependent on the mangrove forests to collect

and sell the products from the mangrove forests to earn their incomes. Whereas for

those who are non fishermen but have other occupations, they may not have the use

values, only the WTP since they do not depend on the mangrove forests for their

livelihood.

It is also found that respondents who have attended higher than the secondary school

have higher TEV (RM45.19) compared to other respondents who have secondary

school or below as their highest education level (RM17.38). Knowledge on the

importance and usefulness of the mangrove forest resources and the significance of

conservation of the resources to human life may be acquired through education,

although those with lower educational attainment may have some ideas on the

subjects. Their lack of understanding on conservation may influence their WTP and

thus the TEV on the mangrove forest resources. Among those who are more

knowledgeable on the impacts of conservation of the mangrove forest resources,

presumably among those with higher level of education, they would have higher WTP

as an indication of their satisfaction and as a means to ensure the protection of the

resources.

CONCLUSIONS

The estimation of the gross total economic value and present value of benefits of the

mangrove forest resources in the District of Kuching presume the importance of

conservation of the mangrove forests. The local communities living in the

surrounding areas of the mangrove forests realize the contribution of the mangrove

forests to their livelihood. Some of them are dependent directly on the presence of the

mangrove area. Some obtain direct use values from the harvesting of the mangrove

forest products; others may obtain indirect benefits via the non-use values. Mangrove

forests are habitat for many marine life and wildlife. Mangrove provides protection

against sea water instrusion and performs flood mitigation and carbon sequestration.

The commercial value of the mangrove woods for the production of charcoal in the

area implies that the forest must be managed properly and conserved.

The regression analysis indicates that education is one of the factors which can

influence the TEV. Educating the communities could be done through the formal

channels like the schools or informally through awareness programs and involvement

in workshops and seminars. Students both at the schools and tertiary levels should be

encouraged to participate in conservation education and programs. The influence of

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occupation on the TEV depends on direct dependency of the individuals on the

mangrove forests for their livelihood. Similarly, the income factor will be influential

on the TEV if the individuals are highly dependent on the mangrove resources to

make their living.

The valuation of the gross TEV does not take into consideration the costs to conserve

the forests. The Department of Forestry Sarawak has undertaken many conservation

programs to increase the awareness of the local communities on the importance of

conservation of the mangrove forests. Replanting programs to replace trees that have

been harvested or destroyed have been carried for a number of years. These are costly

endeavours. To determine the true value of the mangrove forests these cost must be

imputed into the TEV. Also, the estimation of the direct use values should take into

the calculation the costs of obtaining the products of the mangrove forest areas.

Nonetheless, the gross estimation of the TEV has proven the worth of the mangrove

forest resources to the communities in the district.

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