Economic Valuation of Sand and Gravel in Davao del Norte, Philippines

Adrian Tamayo and Romulo Tagalo

MPRA Paper from University Library of Munich, Germany

Abstract: The study aims to quantify the economic value of the sand and gravel which is deemed as a non-renewable resource. A survey was conducted to extract the consumer surplus of the households, also construct the demand equation for the resource. With the demand equation for sand and gravel at , the consumer surplus was estimated at P8271. Using the economic valuation technique, the economic value of sand and gravel was estimated at P729,568,368. Thus, a very high value imputed on the environmental resource. The survey showed that 82% of the population in Davao del Norte is amenable for a policy to regulate sand and gravel extraction. With the new valuation measure of the sand and gravel, a new price may be introduced at price range between P125-P225 per cubic meter. The new price is set to be used as payment for environmental services and compensation projects at the quarry sites. Also, the cost structures of permitees in Davao del Norte are too low compared to the operators in Compostela Valley, Davao Oriental and Davao City. The cost of operation in Davao del Norte is approximately 18% of the cost in Davao Oriental and 20% of the cost of Compostela Valley. The cost differences are largely due to the permit cost which is cheaper in Panabo and Tagum than in other areas. This is suggestive that the permitees may likely absorb the cost rather than transfer operation given their high producer surplus value.

Keywords: Non-renewable natural resource; willingness to pay (search for similar items in EconPapers)
JEL-codes: Q3 Q31 Q5 Q51 (search for similar items in EconPapers)
Date: 2016-10-20
New Economics Papers: this item is included in nep-agr, nep-env and nep-sea
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