Even though the wetlands provide a wide spectrum of use and non-use values, burgeoning demand for land and inadequacy of resources to manage urban wetlands effectively as a public good has led to the conversion of the wetlands to different uses over the past years. The ad hoc conversion of wetlands into other uses has been subjected to much debate during the recent past. However, no attempt has been made on evaluating the economic aspects of any of the services provided by Sri Lankan wetlands until date. In this initial attempt, this study attempts to evaluate the social welfare that visitors derive by enjoying the recreational benefits, and thereby to provide an economic justification to the long standing conservation conversion debate, taking Diyawanna Oya wetlands as a case study.
This study employs Negative Binomial Model for count data in estimating the welfare gains and change in consumer surplus due to the implementation of development projects under the Individual Travel Cost method. Moreover, the study examines the impact of imposing an entry fee to the site and assesses the present value of non-market benefits of preserving the site. Findings revealed that the Diyawanna Oya wetlands generate an annual consumer surplus of Rs. 3,890 million while the welfare loss per hectare from the conversion of the natural wetland area to development projects is Rs.19.45 million. Further, imposing an entry fee of Rs. 50 is likely to reduce the annual recreational value by Rs. 337 million while increasing the government revenue by Rs. 5.4 million.
The comparatively high present value of benefits of preserving the recreational site justifies the importance of conserving the recreational grounds over the conversion. Results suggest that there is a need for conservation of the wetland through strict enforcement of existing legislation, imposition of new legislation, and appropriate penalties for violation of those laws. It is timely to include the most sensitive areas of the Diyawanna Oya wetlands in the national protected area network. In conclusion, the results of this study demand the attention of all concerning parties in efficient allocation of the wetland among competing uses as well as conservation of the natural recreational area.