TOTAL ECONOMIC VALUE OF THE DELTAIC MANGROVE FOREST

RESOURCES IN THE DISTRICT OF KUCHING, SARAWAK

By
Ahmad Shuib
Institute of Agricultural and Food Policy Studies
Putra Infoport UPM, Serdang 43400
e-mail: mad.shuib@gmail.com
Sharon Yap Jin Fui
Department of Economics,
Universiti Malaysia Sarawak, Kota Samarahan 94300
jarcany_syjf@hotmail.com
Salbiah 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 Worlds 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, Kuchings 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 peoples

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 costbenefit 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 wetlands 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 todays 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

598

Fishing, mangrove harvesting,

Kampung Buntal

200

marine resource collection,

Kampung Bako

1,800

ecotourism, agriculture and

Kampung Goebilt
Kampung Muara Tebas

2,500

aquaculture activity, sea food

restaurants, agro-tourism
product, resettlement area, fish
product cottage industry.

Lundu

Sematan

Pekan Lundu

20,773

Ecotourism, fish product

Kampung Semunin Jaya

cottage industry, agriculture

Kampung Dagang

and aquaculture activity, agro-

Kampung Seketi Melayu

tourism product.

Kampung Sileng Melayu

Pekan Sematan

8,000

Fishing, ecotourism, fish

Kampung Tanah Hitam

product cottage industry,

Kampung Sedemak

mangrove harvesting,

Kampung Trusan Jaya

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
5

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
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
6

As shown in Table.2 it is found that male respondents are dominant since they are
Variable
Percentage (%)
the
Gender
Male
72.4
Female
27.6
Age[1]

10-29
30-49
50-69
70 and above

14.7
48.2
32.5
4.6

Education

No Formal Education
Primary /Secondary School
Tertiary
Public /Private Servant
Self-Employed
Student/Retired/Unemployed
Fisherman

11.3
72.8
15.9
15.3
18.1
27.9
38.7

1-4
5-8
9-12
13 and above

30.7
54.6
11.0
3.7

Occupation

Family Size[2] (Numbers

of family members)

Household Income per < RM 1000

Month[3] (RM)
RM 1001-2000
RM 2001-3000
RM 3001-4000
RM 4001 and above

72.1
14.4
4.9
3.1
5.5

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.

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
Harvest the
Products

Fish

477,246

149

Crab

244,133

106

Cockle

45,760

85

Mangrove Wood

192,478

26

Prawn

108,899

55

1,068,516

421*

Total

Average Income
(RM)
3,202.99
2303.14
538.30
7403.00
1979.98
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
Total Use Value
(Annually)

Percentage

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

326

100

Total

Mean: RM 32667.88
Standard Deviation: 54008.51
Minimum: RM0.00
Maximum: 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.
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
WTP
annually
(RM)

72,000

50.6*

15.57

of Mean of UV TEV annually

annually
(RM)
(RM)

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
9

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:
Present Value of Benefits =

where
r

= Social Rate of Discount

G = Gross TEV
Table 6: Present benefits of mangrove forests resources in District of Kuching.
Social Discount Rate
Gross TEV(RM)
(%)
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
10

Model

Unstandardized Coefficients

t-value

Constant

Beta
1.655

Std. Error
0.158

10.476

Fisherman

3.276

0.181

18.105

-1.840

0.000

-4.326

-0.415

0.170

-2.441

Household
(Annually)

Income

Secondary School

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 s = 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,
11

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 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.
12

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
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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