The Economic Impact of Forest Hydrological Services on Local Communities: A Case Study from the Western Ghats of India

"The conventional wisdom that more forest is always better has dominated policy making in the management of forested watersheds. In the context of the supposed hydrological regulation service provided by forest ecosystems, however, hydrologists have debated this assumption for more than two decades. Unfortunately, detailed studies of the relationship between forest cover, hydrology and the economic use of water have been relatively scarce, especially in the tropical forests of South Asia. Building upon a larger research project at four sites in the Western Ghats of peninsular India, this study examines the link between stream flow, agricultural water use and economic returns to agriculture. The study attempts to simulate the likely impacts of regeneration of a degraded forest catchment on stream flow and the consequent impact on irrigation tank-based agriculture in a downstream village. The authors find that regeneration of forests would reduce the ratio of runoff to rainfall in the forested catchment thereby significantly reducing the probability of filling the well-used irrigation tank. This in turn reduces the probability of the command area farmers being able to cultivate an irrigated paddy crop, particularly in the summer season, thereby reducing expected farm income as well as wage income for landless and marginal landowning households. The study results seem counter intuitive to conventional wisdom. This result is, however, not because the hydrological relationships in this region are peculiar, but because the community immediately downstream of the forest is using water in a particular manner, viz., through irrigation tanks for growing water-intensive crops. The main implication is that policymakers must move away from simplistic notions of forests being good for everything and everybody under all circumstances, and facilitate context-specific, ecologically and economically informed forest governance.
water resources, ecosystems, valuation, economic reform, forests