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This paper examines the available case study evidence on economic valuation of the watershed services of forests. The objectives are to study the spread of non-carbon values of forests, in particular watershed values; to analyze the methodologies and valuation results; to study issues like comparability of results across studies; and to identify key information gaps as guide to future research. For better analysis and comparison across countries, estimates are constructed such that the data is converted into a common currency (international dollars) and changes in the price levels are accounted for, using GDP deflator, and all the values are expressed in 2005 constant prices. This paper has illustrated the complexities of combining several approaches for valuing watershed services of forests. All the studies differ in sitespecific human uses, geophysical conditions such as forest type, soil type, topography, amount of rainfall, the climatic conditions of a particular watershed; the valuation methods used, including payment mechanism and sample characteristics such as the size of the affected population. More importantly, variation in study design and econometric methods makes valuation by different studies less comparable. The paper also highlights that the equity aspect needs to be considered since most studies ignore equity issues. Valuation studies should take distributional issues into account to make the results more meaningful since the benefits and costs of watershed protection may not be borne by the same set of people. Moreover, while the majority of the studies provided results, hardly any provided proposals on how these results could be applied in practice. This information is crucial to ensure applicability and to enhance credibility of results.
Keywords: economic valuation, watershed services, valuation methods
