ECOLOGICAL AND ECONOMIC-ANALYSIS OF WATERSHED PROTECTION IN EASTERN MADAGASCAR

Watershed protection is one of the many goods and services provided by the world's fast disappearing tropical forests. Among the variety of watershed protection benefits, flood damage alleviation is crucial, pa rticularly in upland watersheds. This study is a rare attempt to estim ate flooding alleviation benefits, resulting from the protection of up land forests in Eastern Madagascar. A three stage model is used to exa mine the relationship between the economic concept of value and the bi o-physical dimensions of the protected area. This approach combines te chniques from remote sensing, soil and hydrologic sciences and economi cs. In stage one, the relationship between changes in land use practic es and the extent of flooding in immediate downstream is established b y using remotely sensed and hydrologic-runoff data. Stage two relates the impact of increased flooding to crop production by comparing the h ydrologic data with the agronomic flood damage reports for the same ti me period. In stage three, a productivity analysis approach is adopted to evaluate flood damage in terms of lost producer surplus. The prese nce of the Mantadia National Park, in eastern Madagascar, is designed to prevent land conversions and changes in hydrologic patterns, thereb y alleviating flood damage. This averted flood damage is a measure of the watershed protection benefits to society. Given that natural syste ms are subject to considerable stochastic shocks, sensitivity analysis is used to examine the uncertainty associated with the key random var iables. The results of this analysis should help policy makers assess trade-offs between the costs and benefits of protecting tropical rainf orest. (C) 1997 Academic Press Limited.