Abstract: The Powai Lake in Mumbai, India, spreading over 2.10 square
kilometres, is in the heart of the most crowded India's premier
metropolis. It consists of rich ecosystem of considerable value and interest,
supporting wide variety of flora and fauna and a habitat for wild variety of
aquatic animals. Now, it is increasingly being impacted by human activities,
resulting in choking off the shoreline, and deteriorating water quality. In
this context it is important to understand how to effectively protect the
present status and to improve the water quality of the lake. Benefits of
improvement as perceived by the users serves as a critical input for devising
policy instrument based on economic principles. This paper attempts valuing
improvement in water quality through 'Contingent Valuation
Method' (CVM). Then the paper analyses the factors determining the
WTP by the users for improvement in water quality using regression tool. A
survey was conducted of about 300 samples, living in approximately five
kilometres radius of the lake. The survey was done in two rounds, one in 2005
and another in 2007 to determine the changes that occur over time in terms of
quality as well as perception of the users regarding the benefits of the lake.
The results indicate that the average WTP have increased from 2005 to 2007
after adjusting for general price increase. Income, occupation and uses of the
lake are the important attributes explaining WTP. On an average, salaried class
is willing to pay 30% more according to 2007 survey. The respondents attach
more values to the aesthetic benefits. The results are useful in designing
policies based on market-based instruments such as charges or taxes for the
purpose of improving the lake quality.
Keywords: Non-market valuation, Powai Lake, CVM, water quality
