To Develop or to Conserve? The Case of the Diyawanna Oya Wetlands in Sri Lanka

The Diyawanna Oya wetland ecosystem has proven to be an important recreational site in the greater Colombo area in the face of the growing demand for urban recreational amenities. It provides a wide spectrum of use- and non-use benefits, including production, hydrological, and ecological values. However, the wetland suffers from both inadequate recognition of these benefits and poor representation in the national protected area network. This study evaluates the recreation related social welfare benefits that visitors derive from the Diyawanna Oya wetlands. The study employs the Individual Travel Cost Method in order to estimate the welfare gains from recreation as well as changes in consumer surplus if authorities were to convert parts of the wetland to other development uses. The study also assesses the present value of non-market benefits from preserving the site. The findings indicate that the Diyawanna Oya wetlands generate an annual consumer surplus of LKR 3,890 million (or USD 35 million) to people who use the area for recreation. [SANDEE Working Paper No. 52-10]