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A. Markandya and M.N. Murty 
 



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Introduction
G Attempts to estimate the social benefits of cleaning
the Ganges
u Highlights some of the emerging environmental and
developmental issues
u Ganga river: 2510kms long, 861,404sq km of river
basin, 52 cities, 48 towns and over thousands of
villages.
u 1.3 billion litres of sewage, 260 million litres of industrial
waste, 6 million tons of fertilisers, 9,000 tons of
pesticides, among others.
u Stretches of river: effectively dead

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Introduction
G he "Ganga Action Plan (GAP)Dz: launched in
February 1985
G final investment cost of the GAP during 1985-86 to
1996-97: Ú 7657.37 million (1995-96 prices)
Ȃ operating costs: : Ú 480.264 million
G the Ganges has shown varying improvements in
absolute terms since 1985
Ȃ lower stretch, at Nawabganj dissolved oxygen levels
have continued to decline
G
hanges tracked using a water quality model

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Introduction: Approach
G ater quality: measured in terms of dissolved
oxygen and biochemical oxygen demand (BOD)
G riparian states agreeing on the principles to share
the cost of cleaning : an essential first step for any
river cleaning program
Ȃ a river flowing through three provinces :Uttar Pradesh,
Bihar and est Bengal
G
apital cost of the GAP: met by the central
government ; O & M is shared by central and
provincial governments
Ȃ Polluter pays principle should be followed

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Introduction: Approach
G
osts include: interception and diversion of
sewage, sewage treatment plants, low cost
sanitation projects, and river front development
projects
Ȃ Hoseholds pay sewerage charges
Ȃ Industries need to comply to effluent standards
contributes to GAP cost
Ȃ reatment of household borne effluents: met by the
Government out of general taxes

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G User benefits, non user benefits and others

Ȃ User benefits: recreation and health benefits
Ȃ Non user benefits: peopleǯs preferences for the bio-
diversity (bequest motive, existence motive & altruistic
motive)
Ȃ Others: fishermen, farmers etc.
G investment projects for cleaning Ganges provide
employment
G cost savings to water supply undertakings along
the river

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G Supports 25,000 or more of species of bio-
diversity : number of international species
Ȃ he Ganges dolphin, irrawady dolphin, finless torpoise
etc.
G preserving these species in four ways:
Ȃ 
 conservation and captive breeding programmes
Ȃ GAP has raised awareness and encouraged conservation
efforts through information dissemination
Ȃ GAP has facilitated the collection of information on
species and their habitat,
Ȃ through general improvement of the quality of water

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G placing of substantial non-use values on the
Ganges by the international communities
G international communities can potentially
contribute money
G Attractive option to India
Ȃ resource constraints and the very high opportunity cost
in terms of foregone development benefits

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! timation of Benefit and Co t of GAP

G 




 
Ȃ estimated using the contingent valuation methods of
survey of households
G Scenario specification
G licitation,
G Socioeconomic characteristics of the respondents
Ȃ Scenario specification : he information about the
environmental good provided is given to the respondent.
Ȃ value elicitation: respondents were shown a certain map
of water quality of Ganges
G asked to evaluate the benefits they perceived themselves
G (i) payment to government, (ii) payment to a reputable
charitable organization, and (iii) payment to a local citizen
group

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! timation of Benefit and Co t of GAP

Ȃ reputable charitable organization was the most

acceptable payment vehicle
Ȃ open ended bidding game; two follow up ques.
G Socio-economic details
Ȃ information was collected on
G age, education and occupation of the respondent, the size of
the household, and the gross annual household income
from all sources.
G For measuring non-user benefits :
Ȃ target population is restricted to urban literate
population in the major cities
G Hypothetical reasoning: difficult for illiterate respondents
G willingness to pay for non-user benefits

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! timation of Benefit and Co t of GAP: feature

G
ities were selected to achieve maximum

geographical coverage
Ȃ sampling scheme controlled for geographical spread and
income categories
Ȃ divided into four geographical zones
Ȃ households in three income categories
Ȃ 2000 households surveyed in 10 cities in India
Ȃ to cover residential areas with in half a kilometre on
either side of the river
Ȃ major pilgrimage centres with control for geographical
spread and income categories

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! timation Framework

G Objective
Ȃ stimate willingness to pay ( P) under alternate
scenarios
G Bathing (Best) Quality
G 1995 (
urrent) Quality
G 1985 (Pre-GAP) Quality
G Dependent variable
Ȃ  P or the value placed on the river

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!
planatory Variable

G Socio-economic
Ȃ Log of education, family size, age, income
Ȃ
ity dummies
G Information/opinion related
Ȃ hether visited the Ganges, has heard of GAP, whether
quality should be improved
G ater Quality
Ȃ BOD (Biological Oxygen Demand) data used to construct
river quality index
Ȃ hree alternate values of the index corresponding to
different scenarios

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 e ult : Non-u er
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Dependent variable:   Number of observations:  

R-squared 0.334 Adjusted R-squared 0.330
F-statistic (zero slopes) 69.6797


    

    

CONSTANT -3.931600 *** -5.08746
QLOG 1.473850 *** 26.77850
ILOG 0.285526 *** 6.17231
ALOG -0.373782 *** -4.24718
SLOG 0.236715 *** 2.99498
ELOG 0.352119 * 1.61129
VISIT 0.226198 *** 3.35536
INF_CL 0.292159 *** 3.83297
B_STAND 0.176796 1.61140
D_STAND 0.125844 ** 2.35420
MADRAS 0.784868 *** 6.78864
DELHI -0.173690 ** -1.91892
TVM 0.098726 0.84003
BLE 0.207553 ** 2.01479
BARODA 0.218628 ** 2.03979
KLA -0.540680 *** -6.77557
HYV 0.253662 ** 2.02352
Standard Errors are heteroskedastic-consistent (HCTYPE=2).
x
: *** denotes significance at the 1 percent error level
** denotes significance at the 5 percent error level
* denotes significance at the 10 percent error level
Source: Markandya and Murty, 2000

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 e ult : U er
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 Average WTP: Different Scenario
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 Aggregate Benefit (Con umer Surplu 
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 Œealth Benefit

G
ost of illness approach

Ȃ Does not account for mitigating/averting activities
Ȃ May underreport actual benefits
Ȃ Only work days lost considered as cost of illness
G Data and Methods
Ȃ AIIH&PH, 1997
Ȃ Population living along the river in the Dzpre-dz and Dzpost-dz
GAP scenarios
Ȃ Number of days saved multiplied by average daily
income to obtain estimate of total increase in income for
household

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 e ult

G s. 34.84 million saved each year, based on sample

size of 473,550
G Average benefit of s. 73.57 per user per year
G otal actual population=1262500
G otal benefits estimated at s. 92.88 million per
year

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 e ult

G s. 34.84 million saved each year, based on sample

size of 473,550
G Average benefit of s. 73.57 per user per year
G otal actual population=1262500
G otal benefits estimated at s. 92.88 million per
year

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 Benefit to Water Supply Undertaking
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 Agricultural benefit
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S P of 74.3 MLD capacity is needed

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 Agricultural benefit Cont.
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G the incremental benefits per hectare of irrigated land -----

s 16837(GAP) - s 9518(non GAP) = s 7319

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 Agricultural benefit Cont.
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G the total value of fertilizers in the sludge annually generated

by the GAP projects is estimated as s.12.02 million

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 Agricultural benefit Cont.
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G the cost to the Indian economy by shifting unskilled

labourers from the farm employment to the industrial
employment could be zero

G social benefit - due to increased income due to employment

and second due to the redistribution of income to the
unskilled labourers belonging to the low income group in the
Indian economy.
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G he total funds released by the Government of India for the
investment expenditure of GAP (under both GAP Phases I &
II) at 1995-96 prices were s.7657.37 million during the
period 1985-86 to 1996-97

G Out of total capital cost of s. 7657.37 million, the unskilled

and skilled labour employed for the construction of GAP
projects amount to s.1837.77 million and s.1684.62
million respectively i.e. 24 and 22 percent respectively

G Data on the O & M expenditure of GAP-II is not available -the

estimates a obtained by assuming that the ratio of O & M
cost and capital cost of GAP-II is same as that of GAP-I.

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 Table 9: Dome tic Material, Skilled Labour and Un killed Labour Component of
O&M Co t of GAP ( .Million at 1995-96 Price 

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G An estimate of O & M cost of GAP projects created ( Phase I and II)

is s. 480.264

G share of skilled and unskilled labour in the total operating cost of

GAP projects is 4 and 17 percent respectively i.e. s 19.21 million
and s 81.65 million resp.


 
 

G he environmental regulation requires the polluters to comply with

safe environmental standards

G he compliance - private and public investments

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G public investment through the project GAP private investment by

industries in the Gangetic basin

G 68 heavily polluting industries in Gangetic basin generating 2.6

million kilolitres of effluent every day

G he daily cost of treating 2.6 million kilolitre of effluent is s. 1.014

million

G he annual cost of effluent treatment for the water polluting

industries in the river basin is estimated as s.370.11 million.

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 Social benefit of GAP

G Social rate of discount Ȃ 10%

G Shadow Price of investment and unskilled labor

È stimation

G Net present social value Ȃ s. 4147.51 million

G Internal rate of return Ȃ 15.4%

G Benefit-cost ratio Ȃ 1.68

È quity concern

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Social benefit of GAP

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 Social benefit of GAP


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Social benefit of GAP

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Su tainability of Proce e of Cleaning
Gange

G Polluter pays principle

G User-pays principle (with government

involvement)

G User-pays principle (without government

involvement)

G General tax system

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Conclu ion

G Mix of instruments and institutions

G Benefits - market and non-market valuation

G Financial support from international communities

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