CONTENTS Foreword viii Preface ix 1. Introduction: Why Value the Environment? 1 1.1 Definitions and concepts 1 1.2 Sustainable development and environmental capital 2 1.3 Implications of sustainability for development projects 4 1.4 National resource accounting 5 1.5 The importance of valuing the environment 6 1.6 A brief User Guide 8 2. Environmental Problems of Major Habitats 9 2.1 The aquatic environment 9 2.2 Watersheds 14 2.3 Tropical rain forests 17 2.4 Drylands 21 2.5 Irrigated lowland farming areas 25 2.6 Wetlands 31 2.7 Wildlands 34 2.8 Industrial and urban concentrations 36 3. The Techniques of Economic Valuation 42 3.1 Cost-benefit analysis 42 3.2 Cost-effectiveness analysis 43 3.3 Environmental benefit estimators 44 3.3.1 Effect on Production 45 3.3.2 Preventive Expenditure and Replacement Cost 48 3.3.3 Human Capital 50 3.3.4 Hedonic Methods 53 3.3.5 Travel Cost 56 3.3.6 Contingent Valuation 59 3.3.7 Conclusion: the relative usefulness of different valuation methods 61 3.4 Methodological Problems and Issues 63 3.4.1 Distribution of costs and benefits 63 3.4.2 Discounting 64 3.4.3 Future generations 67 3.4.4 Irreversible effects 68 3.4.5 Uncertainty and risk 69 3.4.6 U nmeasurable items 72 3.5. Conclusions on methodology 72 4. Economic Valuation in Practice 73 4.1 Soil erosion, siltation and deposition 73 4.2 Loss of tropical rain forest 85 4.3 Desertification 89 4.4 Destruction of wetlands 96 4.5 Depletion of fishing grounds 102 4.6 Air and water pollution 104 4.7 Noise 110 4.8 Marine pollution and reef destruction 113 4.9 Soil salinisation, contamination and groundwater problems 115 4.10 Health problems in irrigated areas 116 4.11 Loss of biodiversity 119 4.12 Global climatic effects 123 5. Appraising Projects 133 5.1 Appraisal in a decision-making framework 133 5.2 Natural resources 134 5.2.1 Agriculture 134 5.2.2 Forestry and agro-forestry 139 5.2.3 Fisheries 146 5.2.4 Livestock 151 5.2.5 Nature conservation 155 5.3 Economic infrastructure 161 5.3.1 Power and energy 161 5.3.2 Roads and railways 170 5.3.3 Ports, harbours, coastal structures 177 5.3.4 Airports 179 5.4 The built environment and social infrastructure 182 5.4.1 Urban projects: general 182 5.4.2 Housing 186 5.4.3 Water supply, sewerage and sanitation 189 5.5 Manufacturing and processing industry 197 5.6 Mining and extractive industry 203 5.7 Tourism 207 6. Policy Appraisal and Adjustment 212 6.1The limits of policy 213 6.2 Policy options 215 6.3 Targeted economic instruments 216 6.4 Indirect economic measures 219 6.5 Structural adjustment and the environment 224 6.6 Policies in a sectoral context 227 6.6.1 Marine environments 227 6.6.2 Watersheds 228 6.6.3 Forests 232 6.6.4 Drylands 238 6.6.5 Irrigated areas 244 6.6.6 Wetlands 246 6.6.7 Industrial and urban conurbations 247 6.7 Conclusion: the choice of policy mix in developing countries. 250 Appendix 1. Bibliography of references in text and Further Reading 253 Appendix 2. Specimen format for project appraisal 267 Index 269