Clean Development Mechanism (CDM) and its Potential in Sri Lanka

M.A. Lankathilake

Between 1970 and 2004 the annual emission of CO₂ grew by about 80% and during the last century, the concentration of CO₂ in the atmosphere has risen by twelve fold. Due to the greenhouse gas effect, with the increase of greenhouse gases (GHG) present in the atmosphere earth’s atmosphere get warmer and warmer. This cause climate change and other related problems. In 1990 IPCC mentioned that climate change is a threat to a whole world and whole world should be joining together to solve this issue. Then the UNFCCC was established and enter into force in March 1994 .Which works with the objective of stabilizing atmospheric concentration of GHG at safe levels that would prevent dangerous anthropogenic interference with the climate system, but this did not mentioned the quantity of the level of reduction of GHG.

Therefore in 1997 Kyoto protocol was adapted with the major objective of reduction of GHG by industrialized countries at least 5% compared to the emission levels in 1990 during the period 2008-2012.Accroding to the Kyoto protocol there are 3 mechanisms which can be use to meet the GHG emission reduction targets; Clean Development Mechanism (CDM), Joint implementation (JI), International Emission Trading.

CDM is the mechanism which implementing projects in developing countries that reduce emissions of GHG or absorb GHG from the atmosphere and sell the amount avoided or absorbed to developing countries. There are 15 potential sectors for CDM listed by UNFCCC and among them the potential sectors identified for Sri Lanka are Energy, Industry, Transport, Waste management, Agriculture, Forest management, Plantations. Among these sectors almost all Sri Lankan CDM projects registered so far in the hydropower sector. But Sri Lanka also has the potential to conduct CDM projects in the other sectors also. The major issue related to CDM is lack of awareness, high cost of preparing PIN/PDD therefore high initial cost, difficulties in finding international buyers. Create an awareness programs at national levels and give an international exposure to our CDM potential and CDM projects are some of the solutions that can be given for the issues.

According to the UNFCCC statistics it shows that the India and China get more benefits than Sri Lanka.CDM is the one of the best mechanism that can be implementing in our country as a developing country to contribute to the reduction of Global warming.

Valuation of Parks using Travel Cost Method

R. A Jayasinghe

The travel cost method is used to estimate the value of recreational benefits generated by ecosystems. It assumes that the value of the site or its recreational services is reflected in how much people are willing to pay to get there. It is referred to as a “revealed preference” method, because it uses actual behavior and choices to infer values.

The basic premise of the travel cost method is that the time and travel cost expenses that people incur to visit a site represent the “price” of access to the site. Thus, peoples’ willingness to pay to visit the site can be estimated based on the number of trips that people make at different travel costs. This is analogous to estimating peoples’ willingness to pay for a marketed good based on the quantity demanded at different prices.

The travel cost method is relatively uncontroversial, because it is modeled on standard economic techniques for measuring value, and it uses information on actual behavior rather than verbal responses to hypothetical scenarios. It is based on the simple and well-founded assumption that travel costs reflect recreational value. It is often relatively inexpensive to apply.

This method has some limitations as well. The travel cost method assumes that people perceive and respond to changes in travel costs the same way that they would respond to changes in admission price. The simplest models assume that individuals take a trip for a single purpose – to visit a specific recreational site. Thus, if a trip has more than one purpose, the value of the site may be overestimated.

Defining and measuring the opportunity cost of time, or the value of time spent traveling, can be problematic. Because the time spent traveling could have been used in other ways, it has an "opportunity cost." This should be added to the travel cost, or the value of the site will be underestimated. In addition, if people enjoy the travel itself, then travel time becomes a benefit, not a cost, and the value of the site will be overestimated.

The availability of substitute sites will affect values. For example, if two people travel the same distance, they are assumed to have the same value. However, if one person has several substitutes available but travels to this site because it is preferred, this person’s value is actually higher. Some of the more complicated models account for the availability of substitutes.

The travel cost method is limited in its scope of application because it requires user participation. It cannot be used to assign values to on-site environmental features and functions that users of the site do not find valuable. It cannot be used to value off-site values supported by the site. Most importantly, it cannot be used to measure non-use values. Thus, sites that have unique qualities that are valued by non-users will be undervalued.

However, due to its own merits or a lack or alternatives–it is one of the most significant tools we have for the estimation of user value for non-market assets.