(University of Peradeniya, 2017-10-12) Priyatharsiny, S.
Introduction
Exchange rate is a fundamental macroeconomic variable that has various impacts on balance of payments as well as other macroeconomic variables (Odili, 2014). Exchange rate plays a major role in the international economic integration because all nations are not hold autarky equilibrium so they are holding an international economic relation with other countries (Oladipupo and Onataniyohuwo, 2011). Exchange rate refers to the price of one currency in terms of another foreign currency. Sri Lanka’s exchange rate policy has gradually evolved from a fixed exchange rate regime in 1948 to an independently floating regime by 2001. Sri Lanka, which followed a managed floating exchange rate regime with crawling bands since 1977, shifted to an independently floating exchange rate regime in January 2001 due to the strong need of maintaining a large stock of international reserves (Central Bank o Sri Lanka, 2016).
The exchange rate is a key determinant of balance of payments (BOP) of the country (Oladipupo and Onataniyohuwo, 2011). Balance of Payments is a balance of international monetary transactions engaged in during a specific period of time; government, residents and non-residents individuals and institutions in the rest of the world can be involved in such transactions. In Sri Lanka, the current crisis in the BOP of the country is fundamental weaknesses in the structure and performance of the economy over a period of time. Sri Lanka faces the BOP crisis again because current account balance remains stable but the financial account weakened with the resumption of capital out flows, inability to attract foreign investments and the country’s net international foreign reserves fell short of the target and deficit trade balance which lead BOP crisis in Sri Lanka. A sound economic and financial policy is imperative to resolve the current crisis of BOP; therefore, in this study test whether exchange rate is an adoptable variable to remove this imbalance BOP situation from the country.
There are number of empirical studies have been carried out the impact of exchange rates on BOP, although with mixed results. Ahmad et al. (2014) and Odili (2014) estimated the impact of exchange rate on the BOP by using auto regressive distributed lag (ARDL) and they found exchange rate has a statistically significant and positive impact on BOP in the long-run as well as short run. However, Ontaniyohuo and Onataniyohuwo (2011) found the result which is contradictory with Ahmad et al and Odili. Iyoboyi and Muftan (2014) confirmed a long-term relationship with associated variables and bidirectional causality between BOP and other variables employed. In Sri Lanka, Alawattage (2002) examined the effectiveness of exchange rate policy of Sri Lanka and he found that there is a long-run relationship between trade balance and the real effective exchange rate.
According to the Sri Lankan data, it is difficult to identify the clear relationship between exchange rate and budget deficit. This motivated to do the quantitative assessment between these variables since the quantitative assessments between these variables are inadequate and limited in the Sri Lankan context. Therefore, this study attempts to fill this gap by investigating the impact of exchange rate on BOP position in Sri Lanka.
Objectives
The main objective of this study is to empirically analyze the impact of exchange rate depreciation on BOP in Sri Lanka.
Methodology
There are two main theories explained the behavior of exchange rate (Olidi, 2011). First, aspect of elasticity approach to BOP and exchange rate relationship is the Marshall-Lerner condition. Elasticity states that devaluation helps to improve BOP deficits of a country by increasing its exports and reducing its imports. When the sum of price elasticity of demand for exports and imports in absolute terms is equal to unity, depreciation has no effect on the BOP situation will remain unchanged where: is the demand elasticity of exports and is the demand elasticity for imports. The sum of price elasticity is greater than unity; depreciation will improve balance of payments () . On the other hand, if the sum of price elasticity is less than unity, depreciation will worsen on the balance of payment because which increase the burden of the balance of payment deficits (). Second, monetary approach focuses on both the current and capital accounts of the BOP (Ontaniyohuo and Onataniyohuwo (2011). In this approach also indicates the depreciation leads to correct the BOP imbalance situation. Another thought is the IS-LM model, suggest depreciation is theoretically expected to have positive effect on export and it would reduce import (Iyoboyi and Muftan, 2014).
In this study has been used the time series data gathering from World Bank and Central Bank Reports spanning from 1978 to 2015. We employed the data of balance of payment (BOP), current account (CA), exchange rate (ER), inflation (INF), lending interest rate (LIR), real gross domestic product (RGDP), inflation of USA (INFUS) and lending interest rate of USA (LIRUS). Following general specification of theoretical framework was developed by Fedderke (2002) and it was expanded by Vinayagathasan and Priyatharsiny (2017) adopted to examine the above objective.
Where, is the white noise error term. Auto Regressive Distributed Lag (ARDL) co-integration technique developed by Pesaran et al. (2001) was adapted to examines the above equation. Once we confirmed the co-integrating relationship between the variables using bound testing method, then we employed error correction version of ARDL model to examine the short run relationship and long run adjustment between the variables.
Results and Discussion
The both ADF and PP unit root test approaches confirmed that none of the variables are I(2). Akaike information criterion (AIC) suggested that to use ARDL (2, 2, 2, 0, 1, 2, 0, 0) model for this analysis. Our ARDL bound testing model passes the all the diagnostic testing (see Panel B in Table 1 below).
The CUSUM test concludes that the model is stable and result of Wald test suggests that there exist co-integrating relationships between the variables under considered in this study . As expected to the theory and some of the existing studies (Ahmad et al, 2014; Odili, 2014 and Iyoboyi and Muftan, 2014), the ARDL bound testing results found that ER has positive and significant impact on BOP in the long-run. Whereas CA affect positively and significantly on BOP in the long run, which implies that positive and higher balance of CA will bring BOP surplus to domestic economy but RGDP affect negatively and significantly on BOP which implies increasing RGDP encourage to rely on imports more and reduce the export activities because of the feeling of enough income (see Panel A in Table1). The error correction version of ARDL model also passes the all the diagnostic testing (see Panel B in Table 2 below) and the stability test.
CA, ER and LIRUS in current values have a positive impact on BOP and CA in lag 2, ER in lag 1, LIR in current and RGDP in current, lag 1 and 2 affect BOP negatively in the short run (see Panel A in Table 2). As expected, the coefficient of ECT is significant and negative implies that the dependent variable can get back to long run steady state line at the speed of 99.2 % in each year one period after the exogenous shocks.
Conclusion and Policy Implications
The both co-integration bound testing approach and the error correction version of ARDL model passes the all the diagnostic test and the stability test. Our results of Wald test imply that long-run (LR) co-integrating relationship exists between the variables. ER has positive and significant impact on BOP in the short run (current value) as well as in the LR while GDP has a negative and significant impact on BOP in the short run (current, lagged 1 and 2) as well as in the LR (It followed the results of Ahmad et al, 2014; Odili, 2014 and Iyoboyi and Muftan, 2014). Further this model confirms that dependent variable can get back to long run steady state line at the speed of 99.2 % in each year one period after the exogenous shocks. In sum, this study confirms that the exchange rate depreciation improves the BOP (reduce the BOP deficit) of Sri Lanka. Sri Lanka relies on the exchange rate depreciation it can reduce the crisis of expanding BOP deficit. In sum, this study confirms that the exchange rate depreciation improves the BOP (surplus) of Sri Lanka. Sri Lanka relies on the exchange rate depreciation it can reduce the crisis of expanding BOP deficit.
References
Ahmad, N., Ahmed, R.R., Khoso, I., Palwishah, R., I. Raza, U. 2014. Impact of Exchange Rate on Balance of Payment: An Investigation from Pakistan. Research Journal of Finance and Accounting. 5:13.
Alawattage, U. P. 2002. Exchange rate, competitiveness and balance of payments performance. Central Bank of Sri Lanka Staff Duties. 34, 63–91.
Central Bank of Sri Lanka. 2016. Exchange Rate and Economic Impact of Depreciation. Economic Research Department: Central Bank of Sri Lanka. Online: www.cbsl.gov.lk
Pesaran, M. H., Y. Shin, and R. J. Smith. 2001. Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics 16(3): 289-326.
Vinayagathasan, T. and Priyatharsiny, S. 2017. Impact of Interest Rate on Foreign Direct Investment in Sri Lanka: An Empirical Analysis. International Conference on the Humanities and the social sciences (ICHSS): University of Peradeniya - 267-271.
(University of Peradeniya, Sri Lanka, 2017-10-12) Jayaratne, S. R. B.; Manathunga, M. A. R. P.
Introduction
In general there are two types of diseases, communicable diseases (CD) and non communicable diseases (NCD). Communicable diseases are diseases which spread by organisms, like bacteria, viruses, fungi and spirochetes (Athukorala, 2016). Some examples for CDs are Malaria,Dengue, Cholera, Tuberculosis, Encephalitis and Urinary tract infections. NCDs are the diseases which do not spread by organisms and occur due to some imbalance or activity problems in human physiology or anatomy. Some examples for NCDs are Chronic Heart Diseases, Diabetes Mellitus (DM), Hypertension and Bronchial Asthma.Among these NCDs, DM is a common and a problematic condition for the humankind. DM can go unnoticed and undiagnosed for years. It can lead to serious complications and even to death. Examples for some complications are; Coronary Heart Diseases and strokes, Diabetic Retinopathy, Diabetic Neuropathy and Renal Failure.
Non-Communicable-Diseases (NCD) is a medical condition or disease which is non- infectious (Athukorala, 2016). The prominent characters of these diseases are long duration and slow progression. Diabetes, Hypertension, Heart disease (Ischemic heart disease and Myocardial infarction), Stroke (Cerebro-vascular accidents), Neoplasms, Dyslipidaemia, Chronic kidney disease, chronic respiratory conditions are the key conditions in NCD. All these conditions require long term management. World Health Organization declares NCDs possess the highest mortality rate among all other diseases globally which is equally applicable to Sri Lankan context. Nearly one in five people die prematurely due to NCDs (World Bank 2011).
There are a list of risk factors for NCDs in which majority of them are modifiable. Low physical activity, stress, bad food habits, use of alcohol and smoking, are among them. NCD’s are easily preventable by changing sedentary life style and food habits as well as by cessation of smoking and alcohol use. According to the new report (WHO and World Bank) the NCDs have already become the largest disease burden (85 % ill health and premature death) in Sri Lanka. As per the available statistics, it shows that considerable proportion of population is suffering from these diseases. This might affect badly for their livelihoods as well as Sri Lankan economy.
National Sleep Foundation has carried out a survey in America in 2003. They have revealed that 83 % of the respondents reported one or more of 11 medical conditions such as depression, heart disease, bodily pain and memory problems were associated with more prevalent symptoms of insomnia. Other conditions such as obesity, arthritis, diabetes, lung diseases, stroke and osteoporosis were associated with other sleep-related problems such as breathing pauses, snoring, daytime sleepiness, restless legs or insufficient sleep (<6 h nightly). The Department of Census and Statistics has conducted a similar survey in 2014 namely National Survey on self-reported health.
Objectives
This study investigates the recent trends of chronic non-communicable diseases in Sri Lanka. It is clear that choices and decisions about today’s healthcare environment is extremely complicated as increasing health care costs; limits on health care resources, changing reimbursement patterns and debate over the effectiveness of health care treatments. Therefore, a study of this nature helps to develop a program which enables to minimize increasing trend of NCD in Sri Lanka.
Methodology
In this article, we referred nationally available and reliable data from the Department of Census and Statistics of Sri Lanka. In addition annual Health Bulletins of Department of Health of Sri Lanka which are published annually were used to gather data on NCDs mainly on Diabetes, Hypertension, Heart diseases and Neoplasms (cancers). We have also conducted informal interviews with key informants in Health Planning Unit at the Ministry and Provincial Health Offices to gather information. The data gathered were analysed as per the impact on environmental, economically and socially. Finally, the root causes were identified and suggested solutions to reduce the number of cases reported in NCDs discussed here.
Results and Discussions
Each year, non-communicable diseases (NCDs) cause more than 36 million deaths worldwide, representing around 63 per cent of all mortality. Four categories of NCDs are responsible for more than 80 percent of NCD deaths globally: cardiovascular diseases, cancers, diabetes and chronic respiratory diseases(United Nation Report,2012). The burden of non-communicable diseases (NCDs) is increasing in Sri Lanka largely due to prevalence of various risk factors, which can be controlled.
According to the United Nations Report on NCD(2012) as populations age, NCDs cause a growing proportion of all deaths. Rapid reductions in fertility combined with improvements in survival lead to population ageing, wherein an increasing proportion of the population is concentrated among older age groups (United Nations Report, 2012). Because susceptibility to NCDs increases with age, populations with older age structures tend to experience a greater share of deaths due to NCDs compared to populations with very young age structures where communicable diseases such as pneumonia and diarrhoeal diseases disproportionately affect children and produce a large burden of mortality (United Nations Report, 2012). Therefore, trend of the agestructure of Sri Lanka were analyzed first in this study and it is given in Table 1.
By observing above figures, in 1911, the percentage of child population was 40.9 while percentage of elderly population was 4.4. In 2015 the percentage of child population was 25.2 and percentage of elderly population was 12.4 which shows three fold increment. It is evidenced that the elderly population is increasing gradually and the proportion of youngsters is decreasing in the country. Differences in population age structure mask the disproportionately high risks of NCD mortality experienced in the developing regions. Exposures to risk factors that accumulate over the life course such as tobacco use, unhealthy diets, physical inactivity and harmful use of alcohol of elder group which is likely to be higher can increase the risk of morbidity and mortality due to NCDs in this group.
These figures indicate gradual increase in life expectancy at birth since 1920 to 2013. This is mainly because development of quality of health care service as well as the increasing literacy of the people in the country. This shows significant high figure of female life expectancy than men. Increasing life expectancy and good health services of country in turn has an impact on increasing elderly population in Sri Lanka (Demographic transition). As NCDs are common among elderly population this has a great impact on trends in non-communicable diseases.
This shows gradual increasing pattern of NCDs in the country. Almost all the NCDs has an increasing trend over the time. Out of those, neoplasm (cancers) is increasing in a higher rate. It affects the person itself his family, society and country’s economy in several ways. Initially someone who affected by the NCDs has to spend his money for treatment investigations and other interventions (out of the pocket expenditure). And inability to attend their work it affects the individual income too. It directly affects to their families drastically, where the skilled manpower withdrawal from work force in the country affecting productivity (Value of lost productivity due to illness or premature mortality or indirect medical costs). Relatively young people who are directly contribute to development are most susceptible for NCDs. NCDs will increase the fiscal costs of pensions NCDs will increase the costs of long term care of affected individuals (Direct non-medical costs).
The Government has to increase the allocation of funds for health sector annually. This causes increasing the direct and indirect taxes on the society. As Sri Lankan society mainly depend on government health facilities government has to spend a considerable amount of money for treatment as well as rehabilitation of the affected individuals. And also unwanted medicines spread throughout the medical market and addition of continues usage of medicine and treatments affect all aspects of the society including the social stability, productivity, social capital, investments on other income generating activities, social & cultural activities, education, knowledge sharing as well as losing of foreign exchange.
Conclusion and Policy Implications
According to the Department of Census and Statistics of Sri Lanka, the current population of the country is nearly 2.1 million. During the period of 1981 and 2014, the age composition shows a drastically change. The population below 15 years of age has decreased by 10 percent and population aged 60 years of age and above has increased by 5.8 percent. Accordingly, the population of Sri Lanka seems to be gradually shifting to an aging population. The life expectancy for both male and females in Sri Lanka has been increased during past few decades. Increasing life expectancy as well as shifting to aging population has an impact on increasing number of incidents of chronic non-communicable diseases among the population in Sri Lanka. The older population often gets diseases which are more chronic and costly to cure. As a result, our country faces high health care costs to face this problem. The identified main risk factors are obesity, smoking, high sugar and salty diets and alcoholism. This problem will further rise in future due to further aging of the population resulting doubling of the population over the age of 65 years within next thirty years (World bank report 2015).
Reducing risk factors Tobacco usage and excessive alcohol usage, active life style and improved healthy diet will go for a long way towards healthy life. More effective legislation on the use of tobacco, alcohol and Trans-fat and public education to reduce salt intake would help delay the onset of this diseases. Especially healthy life style clinics all over the country launched a screening and awareness programme to those vulnerable groups. It is very successful. Well-women clinics which are conducted throughout the country do the screening of common cancers of females. These activities are done by national NCD Surveillance System of Sri Lanka. National Cancer Early Detection Centre is responsible to conduct screening programmes for cancers. This could not be achieved by government alone. General public has the responsibility to change their life styles dietary habits regular health check-ups getting away from stressful lives in order to overcome this problem.
References
Athukorala, W. 2016. Estimating the health cost of climatic change related diseases: A case of Dengue in Sri Lanka. Unpublished Report. Department of Economics and Statistics, University of Peradeniya.
Boutayeb, A. and Boutayeb, S. 2005. The burden of non communicable diseases in developing countries. International Journal of Equity Health. 4(1):2.
Ministry of health Sri Lanka-2012-2016. Annual health bulletins National survey on self-reported health in Sri Lanka 2014. NCD-Wellness Sri Lanka.
The World Bank. 2011.Tackling Non communicable diseases in SriLanka. National multisectorial action plan the prevention and control of communicable diseases.
Sugathan, T. N., Soman, C.R., Sankaranarayanan and Behavioural, K. 2008. risk factors for non-communicable diseases among adults in Kerala. India. Indian J Med Res, 127 : 555-63.
World Health Organization. 2005. WHO STEPS Surveillance Manual: The WHO STEP wise approach to chronic disease risk factor surveillance Geneva: World Health Organization.
(University of Peradeniya, 2017-10-12) Wanniarachchi, S. Minonshika
Introduction
Financial stability is an important component in the global economy and plays a key role in maximizing real economic gains. This proves the continuous efforts taken by the international regulatory bodies to minimize the adverse effects due to the economic and financial crisis in 2007/2008. The Bank for International Settlements – Central Banker’s Bank, located in Basel, Switzerland produced new set of banking regulations to avoid – at least minimize – the danger of another financial and economic crisis. The Basel Committee on Banking Supervision (BCBS) is an international financial regulatory body which was established in 1974 to structure the global banking risks by formulating guidelines and regulations relating to credit, capital, markets and operations. As an operational practice to overcome the effects of financial crisis, the Basel Committee collectively discussed and came up with a set of agreements. Its first accord issued in 1988 which named as Basel I and an updated version was published in 2004 as Basel II (Buddhipala, 2017). Basel III introduced in 2011 by reforming Basel II regulations to strengthen the global capital and liquidity rules with the goals of promoting more resilient banking sector. Capital adequacy, Liquidity Management, Risk Management and Market Discipline are the four major components that has been regulated in the Basel III. According to Bank of International Settlements, lack of quality and quantity of the capital base was one of the main influential factors for the financial crisis. This resulted, the credit losses come out from retained earnings (a part of bank’s tangible common equity base), inconsistency in the definition of capital across economies and lack of disclosure (Bank of International Settlements, 2016. Therefore, Basel Committee on Banking Supervision clearly defined the "Total Regulatory Capital" through Basel III accords as Tier one capital: Going-concern capital and Tier two capital: Gone- concern capital.
International regulatory bodies introduced a concept of "Systematically Important Banks" to regulate financial bodies effectively with more control, which represents a financial institution whose unmanageable failure, because of its size, complexity and systemic interconnectedness, would lead significant disruption to the wider financial and economic system. Domestic and Global are the two types of systematically important banks where the banks which are limited their operations within the originated country called domestic while the banks which provide a wide range of international coverage through branches defined as global. Existing researches recognized the impact of implementing Basel III in developed economies such as USA, Japan and European Union, but cannot be satisfied with the assessments carried out on local banking system. This research considered the domestic systematically important banks since the global systematically important banks carry out operations here are not originated in Sri Lanka.
Objectives
Assess the capital adequacy measurements of Basel III within the domestic systematically important banks and to identify the emerging challenges in implementing Basel III capital adequacy regulations when moving further.
Methodology
The capital adequacy ratio consists of three main ratios namely, Tier one capital ratio (Core capital ratio), Total capital ratio and Common equity ratio, defined as follows.
< equity ratio>
A comparative ratio analysis of six Domestic Systematically Important Banks (DSIBs) been conducted using the secondary data from the respective annual reports for the period of 2011-2016.All six DSIBs in Sri Lanka namely Bank of Ceylon, Peoples’ Bank, Sampath Bank, Commercial Bank, Hatton National Bank and Seylan Bank will be assessed in this empirical research. These six DSIBs represent 75 % of the commercial bank assets, 63 % of the banking sector assets and 36 % of the entire financial system’s assets(Central Bank of Sri Lanka, 2013).
Results and Discussion
The Central Bank of Sri Lanka divided the banking sector by assigning an asset threshold of LKR 500 billion to regulate the financial intermediary system in a sophisticated manner. Table 1 illustrates the set targets which should be met in given time frames in order to satisfy Basel III capital adequacy regulations.
(a) Tier one capital ratio is the proportion of tier one capital to risk weighted assets of the bank which has Basel III threshold of 4.5 % to 6 % at the end of 2016. As shown in figure 1, all six domestic systematically important banks in Sri Lanka are in satisfactory level when meeting the core capital requirements of Basel III. Two state banks managed to continue stable capital ratio while Seylan, Sampath and Hatton National banks report slight decline in their capital ratio over the considered time period. Commercial bank is maintaining fairly high and stable capital ratio comparing to its' competitors.
(b) Total Capital ratio, is the ratio between total capital base and the risk weighted assets of the bank which the minimum requirement of Basel III accords is 8 %. The total capital ratios of domestic systematically important banks in Sri Lanka are also reports a satisfactory level. Figure 2 illustrates the behavior of total capital ratios of considered DSIB’s and there we can clearly see The Hatton National Bank has sudden incline in capital ratio after three years of downturn by reporting 15.3 % in 2016.
(c) Common capital ratio provides the fraction between common capital to risk weighted assets, but most of the banks did not clearly differentiate common equity from core capital in their calculations which they publish in annual reports. Even all domestic systematically important banks pay their attention to clearly publish tier one capital ratio and total capital ratio, lack of data on common equity ratio created a challenge in this data analysis. Basel III accords require minimum 5 % common equity ratio without capital conservation buffer in 2016. This must be increased up to 8.5 % by domestic systematically important banks by 1st January 2019.
Conclusion and Policy Implications
As per the evidences drown from the research it can be conclude that all the domestic systematically important banks in Sri Lanka could manage to meet the international capital adequacy requirements drawn by Basel III accords, in terms of tier one (core) capital ratio and total capital ratio. Lack of proper disclosure created a challenge to assess the level of implementation on common equity ratio. In addition to the findings drawn from the analysis, prevailing literature emphasizes several challenges emerged with new Basel III accords. Increased capital and liquidity requirements may limit the options to raise additional tier one capital with small equity market in Sri Lanka (25 % of GDP) comparing to other Asian economies such as India (70 % of GDP) and Thailand (88 % of GDP). Another challenge may arise is uncommon usage of convertible structures to claim additional tier one capital in future stages in Basel III implementation. Further investments on IT infrastructure and on data architecture will be needed in terms of fulfilling disclosing requirements assigned by Basel III and the local financial regulatory bodies and commercial banks should pay attention on these challenges when moving further.
References
Bank for International Settlements, 2015. International Regulatory Framework for Banks (Basel III). [Online] Available at: http://www.bis.org/bcbs/basel3.htm [Accessed 3 February 2016].
Buddhipala, N., 2017. What You Need to Know about Basel III and Sri Lankan Banks. [Online] Available at: http://echelon.lk/home/what-you-need-to-know-about-basel-iii-and-sri-lankan-banks/ [Accessed 06 September 2017].
Central Bank of Sri Lanka, 2016. Capital Requirements under Basel III. [Online] [Accessed August 2017].
Fitch Rating Lanka Ltd., 2012. The Sri Lankan Banking Sector Special Report. [Online] Available at: http//:www.fitchratings.lk [Accessed 16 March 2016]
(University of Peradeniya, 2017-10-12) Nagarajah, N.; Ranasinghe, K.; Kavitharan, S.
Introduction
Climate change is happening and is felt deeply globally. Sri Lanka is already facing the adverse impacts of climate change in the form of droughts, unprecedented and rising temperature, floods, unseasonal rain, and coastal erosion. As a small island nation, Sri Lanka falls into the UNFCCC and IPCC's category of 'vulnerable' Small Island nations which are under serious threat from various climate change impacts, such as sea level rise and severe floods and droughts (Climate Change Secretariat, 2014). These threats are considered to have significant negative consequences on various sectors within Sri Lanka (Athukorala, 2015).
Sri Lanka is a negligible contributor to global warming. However, as a nation, we are highly vulnerable to the impacts of climate change. Sri Lanka has ratified the United Nations Framework Convention on Climate Change (UNFCC) in November 1993 and became a party to the Kyoto Protocol in 2002. The national Climate Change Policy of Sri Lanka aims to sensitize and make aware the communities periodically on the country’s vulnerability to climate change and to enhance knowledge on the multifaceted issues related to climate change in the society and build their capacity to make prudent choices in decision- making.
A number of research were done in Sri Lanka on the different causes of climate change. However, there is little literature to understand Sri Lankans’ awareness about climate change to determine if they act as responsive citizens to their share of emissions. According to Margaret Gardner, “in the next 55 years the greatest threat to Sri Lanka will be from climate change. Sri Lanka is particularly vulnerable to rising sea levels and weather-related disasters have the potential to set back any gains made in agriculture, fisheries and even services such as tourism” (Fernando, 2017). This paper helps to determine the success of using the environment valuation methods as a pragmatic approach to monitor the ‘nationally determined contributions’.
Objective
The objective of this paper is to understand people’s awareness on climate change and its impact, to investigate the relationship between household income and the level of awareness on climate change and to investigate the demand for climate change mitigation action by their willingness to pay to compensate their emissions and damages to the environment.
Methodology
The survey was done from May to June 2017 by gathering primary data using a semi-structured questionnaire in both local languages as well as an online survey. The respondents represented different age groups, gender, education status and income levels. 120 respondents from 15 districts consisted of farmers, government and non-government employees, school children, self-employed and unemployed. They are between the ages of 15 to 67. 87 % represent rural sector and 13 % represent urban sector. Also 55 % of the respondents are females. The secondary data on climate change was gathered from on-line sources.
Average imputation and common-point imputation are being used to fill the missing vital data. These methodologies analyses the association between categorical variables. Microsoft Excel and Minitab were used to obtain an accurate assessment of relationships, and possible contradictions found in the data by generating graphs, charts, cross tabulation and descriptive statistics. The contingent valuation method was applied in this study by asking the respondents for their Willingness to Pay (WTP) to offset their contribution to climate change and damages to the environment.
Results and Discussion
People’s awareness on climate change and its impact
In our sample 99 % of the respondents have stated that they are aware of the concept of climate change irrespective of gender, age, educational background, income level or their locality. Among those who are aware of climate change 41 % had come to know through media, 35 % have felt it and 14 % have heard it from other people. The survey indicate that 14.5 % respondents thought climate change was caused only by humans, while 9.6 % thought it happens naturally. 75 % of the respondents indicated that the cause for climate change is both by human and natural reasons.
When the respondents were asked to rate top three environmental issues; first rated issue was deforestation with 93 %, second highest was extreme weather conditions i.e. rains and droughts (82.5 %). Third rated with 75 % was water pollution. Findings also reveal how respondents conceptualize climate change; while majority of them interpret it as the rise in temperature and global warming, droughts, heavy rains, irregular rain patterns and floods, others interpret it as storms and strong winds, strange weather patterns, irregular climate, rise in sea water level, spread of diseases, Tsunami, disturbance to natural cycle, presence of Elnino and Lanino, failed agriculture and change in harvest patterns. While few relate it with melting of glaciers, depletion of Ozone layer and GHG emissions. Likewise, people’s beliefs about air pollution, factory / vehicle emissions, deforestation, and unplanned development are also again a way of anchoring climate change. The survey finding also indicated that the respondents are aware that the prevailing climatic conditions are impacts of climate change. Majority of the respondents felt that drought, floods and global warming are impacts of climate change; 36 %, 26 % and 25 % respectively.
The relationship between household income and the level of awareness on climate change
Results indicate there is no relationship between household income and the level of awareness on climate change (figure 1). Of those who are aware of climate change 28.3 % are very low, 28.3 % are middle, 24 % are average and 7.5 % are upper class income earners. 93 % of people agree that climate change is a common problem for everyone. Again, their income level and answers do not show any relationship. However, 39 % involved in farming strongly agree that climate change to be a common issue.
When judgments of other issues are solicited, climate change is invariably not the highest or most important priority for many people. Only 17 % of the respondents believed that environment was a pressing issue in Sri Lanka. Environmental problems were rated seventh place of ten other current problems given. Understanding people’s perceptions as contributors for the climate change is an important indicator of awareness. It is evidence that 90 % of people believe they contribute to climate change in some way. Of the respondents, 48 % are females and 48 % are involved in farming. Comparing it with the level of income, 28 % of very low-income holders, 20.8 % of average and 23 % of middle income earners believed that they are contributing to the climate change (figure 2). Neither gender, age, education nor income level or if farmer or not suggest a correlation.
The demand for climate change mitigation action by their willingness to pay to compensate the damage caused by them to the environment.
The respondents were introduced to a hypothetical fund called ‘Green Future’ which will be exclusively used for tree planting to compensate for the anthropogenic effects. The respondents were asked for their WTP for the fund and if they were willing, the maximum amount they can contribute annually. Further, 78 % of the respondents were willing to pay for the green future fund and out of them 42.5 % were females and 40.8 % were advanced level students and 15 % of them were graduates. The youth are sensitive to the climate change and proactive to make an action. A correlation cannot be observed between income level and peoples’ WTP. Approximately 22 % of those who were not willing to pay, stated their reason as their income being low or them willing to spend the money on other things. Further, 83 respondents stated a maximum amount they are willing to contribute annually to offset their emissions and harm to the environment. The amount ranged between Rs. 50 to Rs. 12,000. Out of those who are willing to pay and who earn more than Rs. 1,000.00 monthly income; people are willing to contribute 0.69 % (on an average) of their monthly income for the ‘Green Future’ program. Their average annual contribution in rupees amounts to Rs. 2,154.
Conclusion and Policy Implications
Sri Lankan’s awareness on climate change is in satisfactorily high level. Media is the main source people had come to know about climate change. The way people have described climate change varied from bringing out real-time examples, to attempts for text-book definitions. Placed among other problems country currently faces, their ranking for the environment as a topic was towards the lower side.
There is no relationship between Sri Lankan’s awareness level on climate change and their income. The conclusion holds still with the farmers and non-farmers responses. 78 % of the respondents were willing to pay for a hypothetical fund that will be used for replanting trees. Of the people who are able to pay, and have suggested an amount, it is about 0.69 % of their monthly income and annually it will amount to Rs. 2,154.41. Despite high awareness level, when it comes to action, the youth are keen to express climate change and even ready to take action. As a recommendation, the respondents suggest that Sri Lankans have to change the lifestyles to reduce energy consumption in order to address climate change.
References
Athukorala, W. (2015). Education, Attitudes and Agricultural Biodiversity: An Application of Randomised Control Method. Sri Lanka Journal of Economic Research, 3(1): 115-132.
Climate Change Secretariat - Ministry of Environment and Renewable Energy, Sri Lanka. 2014. Technology Needs Assessment and Technology Action Plans for Climate Change Adaptation.
Ministry of Environment Sri Lanka. 2010. National Climate Change Adaptation Strategy for Sri Lanka 2011 – 2016.
United Nations. 1992. United Nations Framework Convention on Climate Change.
Fernando L. 2017. Sri Lankan Guardian. Why so much of flooding and natural disasters? [online] Available at: https://www.slguardian.org/2017/06/why-so-much-of-flooding-and-natural-disasters/ [Accessed 02 July 2017]
(University of Peradeniya, 2017-10-12) Bandara, Praveena B.; Gunewardena, Dileni
Introduction
Sri Lanka’s Arts graduates have the lowest employment rate among graduates of the Sri Lankan (public) higher education system (Graduand employability census, 2012) and the problem of unemployment among Arts graduates has been persisting for the past few decades and has been the subject of much debate. The issue has been examined through the perspectives of students, the university system, and the private sector and government (as potential employers). Many studies point to structural unemployment, as the cause of the issue. A tendency on the part of the government to resolve the issue by hiring arts graduates is said to have led to more problems such as under-employment and relatively low salaries. Therefore, current solutions look to the private sector and require graduates to make themselves more ‘employable’ by acquiring skills required by the private sector, such as I.C.T and English language skills (Ariyawansa, 2011).
In the neo-classical model of human capital, engaging in education is seen as a form of investment in human capital where benefits accrue in the long term, in the form of higher earnings. Furthermore, the neo-classical human capital model elaborates that, irrespective of investments in human capital, different levels of innate ability of individuals will be translated into different levels of productivity at the work place. Here ability is defined in relation to the demands of employment and therefore could mean physical strength or intellectual capabilities. Alternatively, there is also the idea that education performs a signaling function (Arrow, 1973), where educational attainment of prospective candidates may not necessarily have a direct relationship to productivity, but nevertheless acts as a signal of ability to interested employers. Accordingly, employers will therefore use education as a screening device as they believe it reflects innate ability.
Hanushek (1995) builds on the idea of education production functions which is similar to a (physical) production function relating inputs to outputs. Hence an education production function shows that student outcomes – schooling attainment (usually measured as years of schooling) or schooling achievement (reflected in a score in a standardized test or examination), depends on a multitude of input factors that affect student learning. A study by Harmon et al. (2011) with regard to the Irish tertiary education system, analyzes the relationship between socio-economic status and student outcomes at university level. The study analyses student outcomes (performance in their degree program) as a function of parental socio-economic status, prior educational attainment, characteristics of the institution and course attended and characteristics of the student (gender, age, personality measures, etc).
Recent studies in education, particularly by James Heckman, indicate that a variety of outcomes are determined not just by years of schooling, but also by cognitive and non-cognitive skills (Heckman et al. 2006). The latter include not just technical skills or “employability” skills like English and Information Technology, but also socioemotional skills sometimes known as personality traits. Kautz et al. (2014) argue that these are malleable, and therefore should be considered skills that can be acquired rather than traits that cannot be changed.
We argue, that the (low) initial (entry level) ability of arts/humanities undergraduates is a significant constraint in ensuring high performance outcomes at university level, leading to a problem where the majority of students are not competent enough to secure themselves jobs (especially in the private sector) upon leaving the university. We follow Harmon et al.’s (2011) approach, to explore the link between initial ability of students’ (at the point of entering the faculty of arts), their socio-economic status, and their outcomes of academic achievement. We include in the analysis the effect of personality traits, also known as non-cognitive skills, on student outcomes. The results of this study provide an indication of whether the faculties of Arts of Sri Lankan universities (as proxied by the University of Peradeniya) are absorbing the right input to ensure an output of a higher quality – an employable graduate.
Objectives
The primary objective of this study is to identify the nature of the relationship between the GPA (outcome) and the Z – Score received at A/L as a measure of initial ability. Secondary objectives included, identifying the effect of the socioeconomic background of a student on performance at university level and ascertaining the impact of socioemotional skills or personality traits on academic performance of a student.
Methodology
The model is a form of an education production function. The left-hand side variable is student outcome and the right-hand side variables are student inputs. Variable definitions are provided in Table 1.
Student outcome = f (Entry requirement, S.E.S, Personality traits)
CGPAi = α + β (Zi) + θ(MNYEi) + χ(FNYEi) + Ϟ(GGY) + φ(SOC) + λ(Oi) + γ(Ci) + ρ(Ei) + κ(Ai) + ω(Ni) + εi
Here the student outcome is the current grade point average of a student, which is dependent on, the entry requirement - the Z-score, the number of years of education of the father and mother (included as two separate variables) is used as a proxy for a students’ socio-economic status and the personality test scores of the big five personality traits. The scores were computed and standardized to facilitate comparison. Additionally dummy variables for the area of specialization were included as well.
Primary data was obtained from 60 students specializing in the areas of Economics, Geography and Sociology from the Faculty of Arts University of Peradeniya, through a questionnaire designed for the purpose of the study, which collected information on the variables listed in Table 1. Measures of socioemotional skills were obtained from questions based on the survey instrument of the STEP Skills Measurement Surveys – World Bank (2014). Students were selected using a random stratified sampling method, where subject specializations formed the strata. Sub-samples of students were randomly selected where class lists provided the complete listing of all students within the strata.
Results and Discussion
The results show that Z-score is significant at 10 % level of confidence, father’s number of years of education is significant at 1%, dummy variable for Geography is significant at 0.1%, personality traits of conscientiousness and agreeableness both are significant at 5% level of confidence. A change in the Z-score of a student by one point has a positive effect of 0.242 points on the CGPA, which is equivalent to 80 % of the interval between letter grades including + or – (for example, a B is 3.0 while B+ is 3.3) while an increase in the father’s number of years of education by one year increases the CGPA by 0.0312 points.
The performance of a student specializing in Geography is 0.354 points. less than of a student specializing in Economics. The performance of students specializing in Sociology and Geography are a class (second upper vs. second lower) below the performance of students specializing in Economics. For example the average Z-score of a student specializing in Geography is 1.72 and their average CGPA is 3.11 vs. the average Z-score of a student specializing in Economics is 1.76 and their average GPA is 3.48). Therefore it can be said that there is a tendency for students to be segregated into departments according to initial ability, where some departments absorb more able students than others. This may be a point of concern as a lack of distribution of students according to ability among the fields of specialization may mean that there is a chance of graduates specializing in a particular field being prone to unemployment than others. This may also be reflected in the claim that some programs within arts faculties lack quality.
Additionally, Conscientiousness has a negative effect on performance where a student who is more conscientious will lose 0.0888 points for having such a disposition while agreeableness is rewarded by the addition of 0.0737 points into their CGPA. Conscientiousness is defined as “the tendency to be organized, responsible, and hardworking” the fact that not only are hard-working students not rewarded but that they are penalized, as pointed out by the regression analysis should be a point of concern.
It is observed that the Z-score cut off point for the Arts stream fluctuated around 1.3 points for decades. This was the case till 2014, when the cut-off point for the Faculty of Arts of the University of Colombo, started to pick up and stood at 1.7 in 2015. A similar development can be observed for the University of Peradeniya (1.6) in 2015 as well. There are signs of other universities following this trend (Sri Jayawardanapura 1.5) but as of now the cut-off point to enter the arts faculty of most other universities lies between 1.1-1.3. Given the results of this study a continuation of this trend of advancing of the standard is a welcome development. Furthermore, raising the quality of education received by school level students may contribute in producing more competent students. Drawing from the neo-classical model of human capital, it can be deduced that better learned parents are also higher earners (investment in human capital is made with the aim of maximizing life time earnings potential). Therefore, the results also imply that children of richer parents perform better.
Conclusion and Policy Implications
The Z-score cut-off point depicts the average performance of the cohorts of students entering into different universities. Currently, there is a large variation in the Z-scores (cut-off points) of students entering into the Arts Faculties of the public universities. Thus, when considering the policy implications of this study, given the positive relationship between the two variables, it is advisable to take steps to reduce the large variation in the standard of admittance into the Faculty of Arts, by raising the standard up to a common higher standard acceptable by all universities.
The current variation in the cut-off points of Z score maybe attributed to the variation in quality between degree programs offered by universities. Thus steps need to be taken to reduce the drastic difference in the acceptable standards between universities by standardizing degree programs. Also, raising the standard of admittance cannot be done exogenously; artificially setting a higher standard will not be beneficial to either the universities or the students. What is needed is an endogenous increase in the standard of performance of students engaging in education through the arts stream at the school level (Advanced Level class).The results of the study also indicate a positive relationship between parental educational achievement and the child’s performance.
References
Ariyawansa, R. G. 2011. Employability of Graduates of Sri Lankan Universities. Sri Lankan Journal of Human Resource Management, 1(2), 91–104.
Delaney, L., Harmon, C., and Redmond, C. 2011. Parental education, grade attainment and earnings expectations among university students. Economics of Education Review, 30(6), 1136–1152. http://doi.org/10.1016/j.econedurev.2011.04.004
Hanushek, E. 2007. Education Production Functions. Palgrave Encyclopedia
Ramanayaka A, Jayarathne I, Ramayadevipriya Y, Perera K .2012). Graduand employability census 2012. Ministry of Higher Education.
(University of Peradeniya, 2017-10-12) Ashfaque, Ismail
Introduction-
It is woeful that in Pakistan the most crucial aspect of well-being is also the most neglected. Discussions around health policy in Pakistan’s 70-year history have received little or no space in the agenda of any government – civil or military - that has taken over. While specific health related crises such as the spread of polio and child deaths in the tend to take the media by storm, a meaningful debate around the causes actually spurring such abysmal health services is appallingly absent. The indifference of Pakistan’s government to health is reflected in the fact that a measly 0.9 % of the GDP is spent on health with only a third of that being allocated to public sector health services, leaving the public availing these services from the private sector primarily through out-of-pocket payments.
This apathy is evident in health indicators such as to name a few, the infant mortality is sky-rocketing to 66 per 1,000 births as opposed to 38 in India or a mere 8 in Sri Lanka and life expectancy in the nation for women is 67 years as compared to 73 in Bangladesh and 78 in Thailand. However, while these numbers speak volumes about the dismal quality of healthcare provided in Pakistan, they also remind us that behind these facts and figures lie heart-wrenching stories of countless lives that were ruined and cut short due to health facilities lacking the necessary care. Information failure, lack of accountability, miserly and mismanaged government funding and readiness on part of healthcare providers coupled with poor training amongst other deep-rooted problems are responsible for the dreadful condition of the country’s healthcare sector. After extensive research though we have deduced information failure as being the primal cause behind a great proportion of the problems that the healthcare sector faces and therefore our research aims to focus on solutions addressed specifically to overcome it (Malkani, 2016).
A systematic literature review being drawn from various sources has helped us analyze the major themes plaguing the health sector as a result of information failure. Assuming their prominence from the frequency of times they were mentioned in our sources along with the significance of their impact, we have narrowed down these themes and selected two to focus on for the purpose of this paper:
• Mismanaged Data Collection and Record-Keeping
• Staff Absenteeism
Keeping in special consideration the deep-rooted problems common to both the general concerns plaguing the healthcare sector and our specific areas of focus, our paper aims to expand beyond the traditional methods of physical contact with patients to the virtual platforms of e-Health as proposed solutions to correct information failure. E-health systems entail many sub-facilities including telemedicine, tele-education, telematics for improved management of healthcare and research, giving access to improved access and quality of healthcare. Both biblical and new models of healthcare are globally serving the masses side by side, with the latter pulling forward in most developed and developing societies alike, but in Pakistan the concept of e-Health is still relatively alien. Computer based health information systems are becoming the order of the day but their spread in Pakistan is still limited.
Objectives-
The main objective of this study is to identify the relationship between information failure and poor health services in Pakistan. It also will investigate whether information communication technology (ICT) can fill the gap in the future.
Methodology-
After a stringent evaluation of the sources used based on the credibility of their database (journal/website/newspaper), we compiled and analyzed data from several studies. We evaluated the methods of how ICT could be used to improve the health systems in Pakistan, and how the health system lacks behind in the country and developed policy recommendations based on the literature used in the report.
Results and Discussion-
The World Health Organization (WHO) has listed Pakistan as one of the fifty-seven countries with a critical deficiency in its Human resources for health (HRH) (MLHW 102). The problem of health workforce deficiency is two-pronged. Firstly, there is no specific department dedicated to HRH within the ministry of health, and along with the inadequate training programs and unrevised health curriculums, health force that is being produced is simply not competent enough.With an absence of a department whose specific function is to monitor the workforce, ‘slackers’ take advantage of the information failure resulting from the fact that they have to meet low standards of accountability and do not take their public-sector duties seriously. Secondly, in Sindh alone, 35.7 percent of public-sector doctors are absent from their workplace during normal working hours (Agboatwalla and Niazi, 2010). This proportion is higher amongst rural regions as compared to urban regions.
A cause of inefficiency in itself, absenteeism further abates the efficient delivery of public health services within the country by presenting a dual obstacle- not only does absenteeism translate into leakage in budgetary allocations as absence of health workers entails that budgetary allocations do not reach the beneficiaries; but absenteeism also leads to poor health service delivery due to unavailability of health personnel (Agboatwalla and Niazi, 2010).
Therefore, without the correction of information failure and a way forward being devised to improve standards of accountability and monitoring, increasing spending on the health sector is futile. Chaudhury et al. (2011) study staff attendance in health facilities in Bangladesh, Ecuador, India, Indonesia, Peru and Uganda to find that some common themes persist across countries such as generally higher absence rates in poorer regions, higher absence rates amongst higher-ranking and more powerful providers (such as the doctors), and higher absenteeism amongst men as compared to women. They also observe low evidence of financial incentives decreasing absenteeism, and instead find greater evidence that infrastructure plays a crucial role in increasing staff attendance.
We have identified the efficient keeping of medical records as a high-threat problem to Pakistan’s healthcare institution due to the fact that record-keeping is a government’s administration’s basic tool. With records that are accurate and up-to-date, viable information is provided and this lays the foundation for future decision making and planning. A structured and effective medium to maintain records is needed such that it coordinates the care the patient receives in every department that they have received treatment in; with this not only serving the purpose of the patient receiving higher quality healthcare due to the staff having access to a complete medical history but also with the records providing evidence for the hospital’s accountability for its actions and perhaps also direction for future medical research.
In line with new policies emphasizing better health care services including Millennium Development Goals, the Pakistan Government has introduced a series of federally funded vertical and horizontal programs such as Lady Health Worker Programme, Expanded Programme on Immunization, National Maternal and Child Health Programme and Tuberculosis and HIV/AIDS Control Programme. Mismanaged record keeping is not only a consequence of information failure but also a cause of it. The purpose of this section is to highlight how important it is to carry out efficient and structured record keeping by ensuring that the information failure it both entails and creates is overcome, so as to not only record medical information of patients during consultation accurately leading to proper diagnosis and treatment but also for the successful execution of any health-related initiative.
Conclusion and Policy Implications-
This report has discussed two major problems in the health sector that are caused by poor information which have often been given secondary importance in the literature on health policies. Firstly, ICT could significantly improve the condition of record keeping in Pakistan, which is a high-threat problem to the healthcare institution of Pakistan. An efficient record keeping system could improve the treatment the patient receives and also provide more informed directions for future research. The use of Electronic Health Records (EHRs) would significantly improve the record keeping system and provide quick and accurate medical information. Secondly, poor management and information flow results in stock unavailability in the pharmacies. An investment into an IT based management system could improve the budgeting and forecasts for the future, which would balance the levels of supply of different medicines. A more informed higher-level management would improve the accountability of the corruption and inefficiencies of the lower level workers.
References-
Afzal, U. and A. Yousuf. 2013. The State Of Health In Pakistan: An Overview. The Lahore Journal of Economics, 18. 233-247.
Agboatwalla, M. and T. A. Niazi. 2010. To Assess the Extent Of Absenteeism I N The Health Sector In Pakistan. Transparency and Accountability Project the Brooking Institution-WA
Ahmed, J. and B. Shaikh. 2008.. An All Time Low Budget for Healthcare in Pakistan. Journal of the College of Physicians and Surgeons Pakistan, 18(6):388-91.
Banerjee, Abhijit V., Duflo, E. and R.l Glennerster.2008. Putting A Band-Aid on a Corpse: Incentives For Nurses in the Indian Public Health Care System. Journal of the European Economic Association 6(2-3): 487-500.
(University of Peradeniya, 2017-10-12) Rathnasooriya, S. I.; Wijewardana, I.
Introduction
The controversial Uma Oya multipurpose Development project (UOMDP) in Uva Province, Sri Lanka which commence the constructions in 2012, is proposed to divert water from Uma Oya to Kirindi Oya in order to develop hydropower, drinking water and to irrigate the dry and less developed Uva and southern regions of the country. The expected capacity of the electrical power generation of this project is 120 MW and it was estimated to have irrigation of approximately 25,000 acres of paddy lands.
The project is facing an unforeseen setback as major water seepages has developed in the main underground tunnel runs from Dyaraba Dam to Karadagolla. The first massive water leak into the tunnel began in 2014. That was only a few months since the underground drilling of the tunnels began. Water, at the beginning, was flowing at a speed around 500 liters per second. The second water leak began in June 2017. It is estimated that 976 liters of water is seeping into the tunnel every second. As a result of drastic decrease of ground water table in the area due to continues water seepage in to the tunnel, estimated number of 7,030 buildings, including houses, business places and religious places, have been damaged (approximately 2,000 building completely damaged). At the same time 3,112 wells, streams and water ways have dried up. These belongs to five divisional secretariat regions – Uva Paranagama, Welimada, Hali Ella, Bandarawela and Ella. Thus, people in more than 30 villages have been affected adversely with no safe drinking water, housing and means of livelihoods, mostly agriculture, including tea, vegetable, fruits, minor export crops and cut flower farming.
Objectives
This paper describes the finding of a study conducted, in selected villages from affected areas due to water seepage of the UOMDP, to examine the impacts of increased water scarcity on land market price.
Methodology
The methodology for analysis the data is quantitative. Ten affected villages as shown in the Table 1 selected for this study and 10 villagers from each selected village also selected arbitrarily for informal interviews. During the interviews prices of the agricultural, commercial (suitable for business purposes) and residential (suitable for housing purposes) land plots before the commencement of UOMDP and after the arise of water scarcity issue due to UOMDP were gathered. These collected price figures utilized to build the discussion of this study and standard formulas derived from the literature used to calculate the total land value loss or gain of the 10 villages. Total land area used in this study in each village is given in Table 1.
The prices of land plots (per perch) for each land category for each village has taken by calculating the average value using the figures given by each individual interviewed.
Results and Discussion
It is obvious that the construction work of the Uma Oya project, already completed one-third including the tunnel, has created social, economical, ecological and geological issues in 10 villages in Bandarawela. Due to the ad hoc development project, people in these villages have faced serious issues. A growing number of complaints on the damages to houses and drying up wells and springs have made the Government cease construction of the Rs.76.3 billion Uma Oya project temporarily time to time. Villagers and environmentalists claim that the present disastrous situation is created due to the ad hoc decisions by the short sighted politicians. Given this background, we investigate the impact of this project on land prices in the affected area.
As shown in the below Table 2, prices of agricultural, commercial and residential land plots in the selected villages before the commencement of UOMDP and after the arise of water scarcity issue due to UOMDP collected.
However, it was difficult to find the land area belongs to each land category in each and every village though total land area for each and every village was available. Therefore, calculation was done assuming 80 % land area of every village belongs to all three land categories and 20 % land area has no value in order to find the total economic lose. Accordingly, the average land price for each village was calculated as follows.
Conclusion and Policy Implications
The purpose of this research is to throw light on one problem that is emerging due to unplanned development activities implemented in haphazard manner, damaging environment, especially land resources.
According to the calculation, agricultural, commercial and residential land prices has reduced by 58 %, 18 % and 28 % consecutively. Accordingly, the biggest loss has incurred to the agricultural lands. Yet, falling of the market for residential and commercial lands in the villages would be stop for some extent by providing pipe born water to the villages. However, increase the price for agricultural lands cannot be guaranteed if the solutions to stop water seepages to the tunnel couldn't regenerate and improve the water table in the area as hoping. Providing irrigation water to all the affected areas are also impossible due to the diverse geography and topography of the region. According to approximate calculations, the total land value loss due to the water loss is Rs. 6,248,888,266.67 (RS 6.24 billion) approximately. Even only from these 10 villages, this loss is a colossal economic loss to the country.
According to the project of UOMDP, the total project cost is Rs. 76,316,307,770 (Rs. 76.31 billion). Thus, this loss is about 8.1% from the total project cost. Therefore, the total loss could go beyond the total project cost if the total land value loss calculated for all the affected areas. Considering that, if all physical, biological and sociological loss of the UOMDP calculated, that total loss can go beyond many times than total project cost. Therefore, further studies need to be conduct using accurate property valuation methods and covering all the affected villages.
References
Athukorala, W., Wilson. C. and S. Managi. (2017). Social Welfare losses from extracting groundwater for small-scale agriculture in Sri Lanka: a major environmental concern, Journal of Forest Economics, 29(S): 1-20
Chamikara, S. 2015. Uma Oya Project and its Impact for People in Uva, Movement for Land and Agricultural Reform.
Environment Impact Assessment Report. 2008. Uma Oya Multipurpose Development Project (UOMDP), Ministry of irrigation and water resources management.
Cooray. P. G. 1984. An introduction to the geology of Sri Lanka (Ceylon), 2nd edn. Colombo National Museums Department, 340
Weerasekara et al. 2009. Comparison of physico-chemical parameters of Uma Oya and Badulu Oya sub catchment with special reference to the water pollution, 65th Annual sessions of SLAAS.
(University of Peradeniya, 2017-10-12) Neruja, N.; Vinayagathasan, T.
Introduction
Paddy production has become a main source of standard of living for farmers in Sri Lanka not only by providing them with basic food requirement but also generating income and increasing the number of jobs to rural communities. Demand for paddy production is steadily increasing day by day in all over the world due to rise in population. In this regard, demand for paddy in Sri Lanka increase at rate of 1.1 % per year. To meet this, the rice production should grow at the rate of 2.9 % per year (Department of Agriculture, 2014). However, the increases of cost of production, climate changes, inadequate market opportunities and etc. tend to leads for stagnated yield which has made paddy farming a non-viable enterprise during the last few decades. For example, cost of labor, farm power cost and tradable inputs constitutes 5 5 %, 23 % and 2 3 % respectively in total cost of paddy (Department of Agriculture, 2015). Even though Sri Lanka achieved self-sufficiency in paddy production, due to above reasons the farmers are unable to earn profit from their paddy business. Thus, several farmers leave from farming due to inadequate and/ or uncertainty of income.
The majority of the rural people, i.e. more than 61 %, in Mullaitivu District depend on agriculture as their main source of income (Department of Agriculture in Mullaitivu, 2015). At the same time poverty level of this district was 28.8 % (Central Bank of Sri Lanka, 2015), Since Mullaitivu District was harshly affected by war for a long period, large amount of lands are not in use due to security reasons yet, high cost of production and lower prices of their product tend to leads to the extreme poverty and low living standard among the farmers. At the same time, society also has faced socio-economic problems. Such situation arises due to lack of research and less attention by government policy makers on this area. Although there are several researches which focus on the economic impact of cost of paddy production on the living standard of farmers (Rahman et al., 2005; Rabu et al., 2013) in the world, Mullaitivu district is not yet adequately explored.
Objectives
The primary objective of this study is to examine the impact of cost of paddy production on the living standard of farmers’ of Mullaitivu district. The specific objectives are: (i) To diagnose the main socio-economic factors affecting the cost of paddy cultivation, (ii) To identify and analyze the factors which influence on paddy production (iii) To examine the factors that affecting the income of farmers.
Methodology
This study mainly use primary and secondary data also employed where it necessary. The primary data was collected using percentage random sampling method by issuing the questionnaire for 60 families of study area in two round survey (2012 and 2015). The study area of Martimapattu DS division was selected based on purposive random sampling method. The secondary data were collected from the reports of relevant department. Following the Neo Classical growth theory, we used Fixed Effect Multiple Linear Regression Model (FEMLRM) to identify the determinants of cost of paddy production and farmers’ income, which are given by equation (1) and (2) respectively.
Thirdly, we adopted Cobb-Douglas production function to examine the factors that affect the paddy production, which is given by:
where, TC : average production cost, Q : average paddy production, TNC : total income of farmers,X = [KC, LC, SC, FC,WC, PDC, TRC] KC : capital cost, LC : labour cost, SC: seed cost, PDC : pesticides cost, WC: weed cost, FC: fertilizers cost, EDU: education level of the farmers, HHS: household size, Y: monthly average income from farm, FS: farm size, experience of the farmer, NY: monthly average income from non-farm, AG: age of farmers, TRC: transport cost, INPC: inputs cost, SAV: saving, D₁: land ownership, D₂: agriculture training D₃: irrigation system, D₄: quality of land and μ₁ : individual specific fixed effect, and : error terms (0, σ²).
Finally, we utilized Logit model to investigate the living standard of farmers, which is takes the form as:
where, LS is the standard of living of farmers which takes value 1, if the household i is the standard of living, is above average level, 0 otherwise; NY: non-farm income, SAV: saving. μᵢ is the individual specific fixed effect and is the white noise error term. We also used Weighted Least Squared (WLS) Method to compare the results of FEMLRM
Results and Discussion
Hausman test suggests that fixed effect model is appropriate to this study. The Table 1 below presents the estimated results of cost of paddy production.
The above table reveals that as expected to the theory and some of the existing literature (Egbodian and Ahmadu, 2015; Ahmad and Razmy, 2005; Aheer et al., 2005), cost of capital, labour and total input cost (SC, FC, WC, PDC and TRC) have significant and positive impact on cost of paddy production. Further, method of irrigation negatively affects cost of paddy production at 10 % significant level. The estimated result of production function is given by Table 2.
The results in Table 2 indicate that the cost of capital and cost of transportation, farm size and irrigation method have significant and positive impact on quantity of paddy production. This findings is similar to some of the existing empirical findings (e.g., Aung, 2012; Egbodin and Ahmadu, 2015; Gamawelagedara et al., 2011).
The Fixed effect income estimates in Table 3 reveal that as expected farm income, non-farm income, saving and irrigation system affect the farmers total income positively at 5 % significant level, while cost of paddy production affect and negatively at 10 % level of significant. Moreover, irrigation system has positive and significant impact on total income of farmers.
The WLS method also reveals the same results as FEMLRM (results are not presented here but available up on request).
The Logit regression results in Table 4 imply that several variables are significantly correlated to the living standard of farmers. First, negative coefficient estimate of LNTC indicates that an increase in total cost of farmers decreases the probability of the farmers being above the average living standard level. Second, an increase in monthly average income of farm increases the probability of the farmers being above the average living standard level as coefficient of LNY variable is statistically significant and positive. This finding is similar to some of the existing empirical findings (Abur, 2014; Labbe, 2014; Makki et al., 2013). Third, a rise in non-farm income appears to increase the probability of the farmers being above the average living standard level. Finally, an increase in saving raises the probability of the farmers being above the average living standard level as coefficient of LNSAV variable is statistically significant and positive. The odd ratio also suggests the same conclusion as the value of odd ratio of LNTC is less than 1 and LNY, LNNY and LNSAV are greater than 1.
Conclusion and Policy Implications
The results of FEMLRM reveal that capital, labour and total input costs have significant and positive impact on cost of paddy production. Further, cost of capital, transportation cost and farm size are positively linked with quantity of paddy production. Moreover, total cost is negatively correlated with farmer’s total income while farm income, non-farm income and saving have positive impact on monthly average total income of farmers. Logit model suggest that raises in cost of paddy production decreases the probability of farmers being above the average level of living standard, whereas farm income, non-farm income and saving have a positive impact on it. Therefore, the government should take necessary actions to reduce the cost of paddy production in order to increase the living standard of farmers.
References
Aung, N. M. 2012. Production and Economic Efficiency of Farmers and Millers in Myanmar Rice Industry. IDE Discussion Paper No. 471. Myanmar: Institute of Developing Economics.
Central Bank of Sri Lanka. 2015. Annual Report, Colombo: Central Bank of Sri Lanka.
Department of Agriculture. 2015. Statistical Hand Book, Mullaitivu: Department of Agriculture.
Egbodion, J. and Ahmadu, J. 2015. Production Cost Efficiency and Profitability of Abakaliki Rice in Ihialia Local Government Area of Anambra State, Nigeria’. Journal of Applied Sciences and Environmental Management.19(2), pp.327-33.
Gamawelagedara, W. C. Wickramasinghe, Y.M. and Dissanagake, C.A.K., 2011. 'Impact of Rice Processing Villages on Household Income of Rural Farmers in Anuradhapura District'. The Journal of Agricultural Sciences. 6(2), pp.92-99.
Rabu, M. R. and Shah, M.D.M. 2013. 'Food and Livelihood Security of the Malaysian Paddy Farmers. Economics and Technology Management Review. 8(3), pp.49-52.
Rahman, S. M. Takeda, j. and Shiratake, Y. 2005. The Role of Marketing in Standard of Living : A Case Study of Rice Farmers in Bangladesh. Journal of Applied Sciences. 5(1)