Freshwater systems have historically been the linchpin of urban centers; however, they are also considered to be one of the most endangered ecosystems in the world. This paper develops a choice experiment method to assess the potential for a sustainable management of a freshwater system, the Danda River, in Nepal. We use a primary survey data from 637 households, and the empirical analysis is conducted using the Generalized Multinomial Logit (GMNL) model.

The findings indicate substantial demand for the river ecosystem services. Respondents were willing to pay (WTP) $17.06/year on average for the highest quality of river water and $13.46/year to introduce vegetation in the riverbanks. Our analysis incorporates the respondents’ preference uncertainty, and we also explore the presence of spatial heterogeneity using the hot spot analysis. We find the inclusion of preference uncertainty increased the precision of the marginal willingness to pay estimates, while the hot spot analysis indicates that heterogeneity in preferences for the ecosystem services surfaces from an urban center. We also observe that the public prefers community-based management of the Danda River, which highlights the need for policymakers to decentralize their management to the local communities so as to enhance interest in conservation of common pool resources like river ecosystems.

Funding agency: Open Society Foundation

Graduate Student: Samrat Kunwar