Catchment-to-intake-point economic valuation of water resources using a hybrid method

Catchment-to-intake-point (CTIP) economic valuation of water resources is an important aspect
of sustainable forest management. With a total of about 94,851 ha of forest catchment area, the
state of Johor has among the largest inland water bodies and, thus, water resources in Malaysia.
However, the economic valuation of CTIP water resources is rather undeveloped in this country.
This paper introduces a hybrid method of CTIP economic valuation of water resources from
forest catchment areas based on state-wide Cobb-Douglas translog production function and
residual methods, by taking the state of Johor, Malaysia, as a case study. Data on Gross Domestic
Product (GDP), labour (L), capital (K), water (W), energy (E), and raw materials (M) were
collected for the state of Johor from various secondary sources. Using a pro-rata price in 2014, the
total value of CTIP water resources for an assumed lease period of 60 years at 4% per annum is
RM 70,272,825.14. This is equivalent to the use-value of water of RM 1,171,213.75 per annum
which is an additional source of income to the state government.