Lal Bahadur Shastri National Academy of Administration
Mid Career Training Program
Phase III (2011)
Project Appraisal
“Save the Elephant”:
Eco-Tourism in Rajaji National Park, Uttarakhand
Submitted By:
Muthukrishnan
Aswathi S
Bandana Preyashi
Rathan Kelkar
Aboobacker Siddique.P
Anup Yadava
Contents
Pages
Acknowledgement
1. Introduction
1.1 Rajaji National Park: An Introduction
1.2 Elephant mortality due to railway line
4
5
2. Project formulation
2.1 Methodology
2.2 Diverting the railway line
2.3 Updated feasibility report
2.4 Project formulation
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7
7
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3. Analysis of environmental benefits
3.1 Economic value of environmental benefits
9-11
4. Project appraisal with environmental benefits
4.1 Current status of eco-tourism
4.2 Setting up of an eco-tourism hub
4.3 Re Evaluating Project Appraisal
4.4 Sensitivity Analysis
4.5 Risk analysis
4.6 Conclusion
12
12
13
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14
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Annexure
References
2
Acknowledgements
A project with environment protection as its core concern would not have
been possible without the help of the environment experts and forest
officers. At the outset, we thank Sri S.S.Rasailey, Director, Rajaji National
Park for explaining to us the status of conservation projects and potential
threats to the wild life. Dr. Bisvash Pandav, Professor, Wildlife Institute of
India, Dehradun gave us new insights into the intricacies of elephant habitat
which was of great value. Sri Abhishek Harihar and Suresh at Wildlife
Institute of India were always there to clarify our doubts. We are grateful to
them for their faith and support in our project. Sri Arup Banerjee, Divisional
Forest Officer, Rishikesh gave us an insight into other successful models of
eco tourism.
We thank the Ministry of Railways for granting us access to their survey and
estimate report for the new Rishikesh-Doiwala line.
Last but not the least, we thank the faculty of LBSNAA, Mussoorie for
painstakingly unraveling the mysteries of project appraisal to us.
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CHAPTER-1
Introduction
1.1 Rajaji National Park- an Introduction
Rajaji National Park(RNP) in Uttarakhand is spread over an area of 820 sq. km,
encompassing the three districts of Haridwar, Dehradun and Pauri Garhwal. The park is
situated at a distance of 200 km from the National Capital. It was notified as a national
park by amalgamating 3 wildlife sanctuaries in the year 1983. RNP has been designated
as a reserved area for the "Project Elephant" by the Ministry of Environment and Forests,
Government of India with the sole aim of maintaining the viable population of Asian
elephants in their natural habitat. It is estimated that Rajaji National Park is home to
around 400 elephants.
Fig 1.1
Rajaji National Park
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1.2 Elephant Mortality due to Railway Line
The railway line between Haridwar and Dehradun passes through the Rajaji National
Park for a distance of nearly 14 km. This railway track is responsible for the death of a
large number of endangered wildlife of Rajaji National Park, including elephants.
Elephants have to cross the railway track to use the habitat on the other side of the track
and also for food and water. Accidents on this line have claimed the lives of nearly 20
elephants since 1987.
The Wildlife Trust of India and the International Fund for Animal Welfare undertook a
rapid action study in 2001 for understanding and mitigating the problem of elephant
mortality due to train hits. Based on the findings of the study, certain non-structural
measures like night patrolling of tracks, improving visibility of train drivers, desilting
waterholes and improving awareness among train drivers and forest guards were put in
place. These non-structural measures have helped in significantly controlling the elephant
mortality. In the long term, the report recommended the option of diverting the railway
line outside the national park. According to the report, this option is the most viable one
for the long term welfare of the animals. Moreover, with the development of Dehradun as
the capital city of Uttarakhand, there is bound to be an increase in rail traffic with a
possibility of doubling the train track. These factors are likely to increase the threat to the
wildlife in Rajaji National Park.
This view is reiterated by the then Project Director of the Rajaji National Park, G S
Pandey. According to him, “The joint patrolling at critical section of railway track in
Rajaji National Park has been a success. However, it is not foolproof, and so, long term
solution through diversion of rail traffic via Rishikesh to Dehradun has to be sought.”
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CHAPTER-2
Project Formulation
2.1 Methodology
Prior to project conceptualization, our group wanted to interact with officials from the
Forest department and subject experts to get a field perspective. Accordingly, we met the
Director of the Rajaji National Park, Mr. Rasailey in Dehradun. We obtained data
regarding tourist inflows over the previous 5 years and information regarding the amount
of compensation paid to villagers for losses caused by elephants. We got in touch with
subject experts in the Wildlife Institute of India to ascertain their views regarding the
course of action to ensure continued protection of the elephant habitat in Rajaji National
Park. Since the possible solution to this problem involved an alternative route alignment,
we procured a report from the Ministry of Railways regarding the feasibility survey of the
new Rishikesh-Doiwala railway line.
2.2 Diverting the railway line
Raiwala station lies on the Haridwar-Dehradun railway route. A branch line connects
Raiwala and Rishikesh. The Railways have carried out the feasibility study for a new
railway line between Rishikesh and Doiwala station, which lies on the existing HaridwarDehradun railway route. (Fig 2.1). If this new railway line is constructed between
Rishikesh and Doiwala stations, there can be an alternate route between Haridwar and
Dehradun that would not pass through the Rajaji National Park. The alternative route
would be Haridwar-Raiwala-Rishikesh-Doiwala-Dehradun. All trains on the HaridwarDehradun route can be diverted after Raiwala.
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Fig 2.1
Proposed new railway line between Rishikesh and Doiwala (shown in red)
2.3 Updated Feasibility Report
Based on an announcement in the Railway budget of 2010-11, the survey for the
Rishikesh-Doiwala railway line was updated. This updated survey projects a capital cost
of Rs. 260 crore for construction of the 20 km long railway line. 25% of the commuters
currently using road transport between Rishikesh and Dehradun are expected to shift to
traveling by train after the new line is constructed. In addition, 10% of the increased
commuter traffic at Haridwar, Rishikesh and Dehradun railway stations is expected to be
diverted through the new railway line. Considering the short distance between Rishikesh
and Doiwala, the new railway line does not have much of freight potential.
The Weighted Average Cost of Capital (WACC) for the Railways is taken as 7.5%.
According to the survey, the rate of return on the project is negative. A NPV and IRR
analysis derived from the survey report of the Railways is included as Annexure-1.
The NPV (at a discounting rate of 7.5%) turns out to be negative. (–216 crore rupees)
Similarly, the IRR for the project is -1.81%. So, the new railway line is not commercially
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viable for the Railways. The NPV and IRR values, after accounting for inflation, turns
out to be -196 crore rupees and -6.49% respectively.
2.4 Project Formulation
If the new railway line between Rishikesh and Doiwala is constructed, it will provide an
alternative route from Haridwar to Dehradun without passing through the Rajaji National
Park. The existing railway track passing through the sanctuary can be withdrawn from
service. This achieves the objective of diverting the railway line outside the Rajaji
National Park as recommended by the Wildlife Trust of India report.
Our group strongly felt that the diversion of the railway line outside the park has
significant and long-term environmental benefits. The new railway line will reduce the
human interference in the park and create a continuous, safe and undisturbed habitat for
the elephants in the Motichur area of the Rajaji National Park.
The economic value of possible environmental benefits has to be factored in while
calculating the economic feasibility of the project.
The scope of our project is defined as follows
a) Identifying the environmental benefits accruing from the existing habitat and
qualitative improvement in the natural habitat after the shifting of the railway
track.
b) Evaluating the economic impact of environmental benefits.
c) Carrying out a fresh project appraisal of the new railway line after factoring in
this economic impact.
d) Proposing a structure (eco-tourism model) to realize the economic value of the
environmental benefits.
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CHAPTER-3
Analysis of Environmental Benefits
The environmental benefits associated with the shifting of the railway line outside the
sanctuary can be classified in to the following two types
1) those that can be monetized
2) those that are difficult to monetize.
Environmental benefits that can be monetized
a) Free & safe movement of elephants and other animals in the Motichur area of
RNP will lead to increase in habitat area for the elephants and other wildlife. We
expect better sightings and greater potential for eco-tourism. The economic value
of this environmental benefit is proposed to be monetized by estimating the
generated eco-tourism potential.
b) Bringing the area presently occupied by the railway line under afforestation. The
economic value is proposed to be monetized by a carbon-credit model.
c) Due to improved habitat for the elephants, there is likely to be a reduction in the
elephant-human conflict in the areas adjoining the RNP. The economic value is
proposed to be monetized by estimating the compensation given by the
Government for loss of life, property and agricultural crops in the immediate past.
Environmental benefits that are difficult to monetize
a) Reduction in animal mortality due to rail accidents
b) Improvement of genetic contact of the wildlife due to greater ease and freedom of
movement.
c) Reduction in pollution- air, noise, soil etc.
3.1 Economic value of environmental benefits
The following section attempts to estimate the economic value of the environmental
benefits that can be monetized.
a) Habitat improvement
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There does not seem to be any universally accepted model for exactly calculating the
economic
value
of
the
environmental
benefits.
Literature
suggests
(www.ecosystemevaluation.org) that the Travel-cost method can be used to estimate the
economic value of the environmental benefit in situations where the ecosystem site can
be used for recreation/tourism.
The basic premise of the Travel-cost method is that the time and travel cost expenses that
people incur to visit a site represents the value that they attach to the site. Thus, people’s
willingness to pay to visit the site can be estimated based on the number of trips that they
make at different travel costs. This information is used to estimate the demand function
for the site.
At present, almost all of the visitors to the RNP are day visitors. The tourists spend 3-4
hours within the park and then return. If a eco-tourism hub is developed with all
accompanying facilities like accommodation, catering, guided nature tours, jungle safari,
nature interpretation etc., a significant percentage of visitors would be willing to spend
more time (probably 1-2 days including night stay) in the RNP to avail of these value
added services.
Data on tourist inflow into RNP (for the period 2006-07 to 2010-11) from the Project
Director of the Rajaji National Park (Table-I) indicates that the average annual tourist
inflow is around 18000. 10% of this is comprised of foreign tourists. If we assume that
the park is open for 200 days in a year (after accounting for monsoon shutdown, holidays
etc.),the average daily tourist inflow is around 90.
After a eco-tourism hub is developed, it is estimated that around 50 tourists (per day) will
avail of the facilities of the eco-tourism hub. The profile is assumed to be 85% Indian and
15% foreign tourists. Out of the Indian tourist inflow, 40% is assumed to originate within
a radius of less than 500 km from the park, another 35% is assumed to originate from an
area that is at a distance of more than 500 km but less than 1500 km from the park. The
balance 25% is assumed to originate from a distance greater than 1500 km from the park.
After accounting for travel costs and economic cost (income/day) of travel/stay, the
economic value of the environmental benefit is worked out according to the Travel-cost
(zonal) method. With the above mentioned set of assumptions, the annual economic value
comes to Rs. 14.02 crores. (Annexure-II). This effectively means that we have an
untapped eco-tourism potential worth Rs. 14.02 crore per year.
b) Economic benefit due to afforestation
Since the length of the railway line within the RNP is approximately 16 km & if we
assume the total width of the railway line (including ballast, drainage channels etc and
railway signaling & telecom systems) to be 10 metre, shifting of the railway line outside
the park will release 16000*10 = 160,000 sq.m or 16 hectares of land.
This freed land can be brought under afforestation. Data from a proposed World Bank
assisted project in Himachal Pradesh indicates that the benefit accruing from sale of
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carbon credits associated with afforestation of 1 hectare of land will come to Rs. 2500Rs. 3000. Assuming a benefit of Rs. 3000 per hectare, the monetary value of afforestation
of 16 hectares comes to Rs. 48,000 per year
c) Reduction in damage due to human-animal conflict.
Data from the Field Director of the RNP (Table-II) indicates that the maximum amount
paid by the Government as compensation towards loss of human life & property and loss
to agricultural crops in the previous 5 year period is Rs. 9.82 lakhs.
Therefore, the economic value of the environmental benefit is monetized as follows.
Sr.no
1
2
3
Environmental benefit
Eco-tourism potential due to
wildlife habitat
Afforestation
Reduction in elephant-human
conflict
Economic value
Rs. 16.83 crore/
annual
Rs. 48,000
Rs. 9.82 lakhs
Nature
Recurring
Recurring
Recurring
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CHAPTER-4
Project Appraisal with Environmental Benefits
4.1 Current status of eco-tourism
At present, there are 10 forest rest houses within the Rajaji National Park. 9 of these are
open to tourists. The accommodation provided is fairly basic and there are no catering
facilities. Tourists are expected to bring their own food along. Chilla has in addition, a
tourist complex operated by the Garhwal Mandal Vikas Nigam (GMVN), which is an
undertaking of the Government of Uttaranchal involved in promotion of tourism.
Due to the basic nature of the accommodation facilities, most tourist visitors prefer to
stay outside the park, at hotels and tourist complexes in Haridwar, Rishikesh or
Dehradun. Since these towns are situated close to the Rajaji National Park, such an
arrangement is convenient for visiting the park during the day. In fact, most tour
operators advertise the Rajaji National Park as a day visit destination. It appears that most
tourists planning to view the “Ganga Aarti” in the evening at Har-ki-Pauri in Haridwar,
visit the Rajaji National Park as some kind of a filler in their schedules.
4.2 Setting up of an eco-tourism hub
To promote eco-tourism, there has to be a provision for quality accommodation within or
in close vicinity of the Rajaji National Park, so that tourists can spend greater time in a
natural setting. Value added services like trekking, animal safari, bird watching, guided
nature tours, nature interpretation, film shows, home-stays with local forest dwelling
communities etc. have to be provided. Considering the proximity to Delhi and the good
elephant density in the Rajaji National Park, it is estimated that there will be a strong
demand for such value-added services.
Since GMVN already operates a tourist complex in the eastern portion at Chilla, it is
proposed to set up a high-end eco-tourism hub in the western portion of the Rajaji
National Park that will provide value added services. It is estimated that the Rajaji
National Park will, on an average, be able to attract 50 tourists per day for this package.
The experience of GMVN in the sector can be leveraged.
The eco-tourism hub will comprise of 40 cottages each having a capacity of 2 persons.
The cost of construction of each cottage is estimated to be Rs. 5 lakhs. The cottages are
modeled on the eco-friendly tents of Jungle Lodges Corporation in Karnataka. These
tents are mounted on a fixed cement plinth. The location of these cottages within the
Rajaji National Park is to be decided by GMVN in consultation with the forest
authorities. A tariff of Rs. 3000 per day per person is proposed for domestic tourists &
Rs. 9000 per day per person for foreign tourists. This tariff will be revised at a rate of
15% every year in nominal terms. (effectively- 7.5% in real terms.)
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In addition, GMVN will provide other value added services like nature tours, jungle
safari, trekking, home-stays etc as outlined above. A tariff of Rs. 2000 per person per day
for a basket of activities is proposed.
The annual growth in tourist inflows is projected as 3%. At this rate, there will be a need
to augment the accommodation capacity after 19 years. So, a second eco-tourism hub
with an additional 40 cottages is proposed to come up in the 19th year of the project
period.
Annexure-III shows the projected cash flows accruing to GMVN due to the proposed
eco-tourism hub. GMVN will hand over the surplus cash flows to the Government of
Uttarankhand after retaining 5% of the net cash flows. With this arrangement, the NPV
(real) for the cash flows of GMVN turns out to be positive at a discounting rate of 12%
(Rs. 3.38 crores). The State Government can enter in to an agreement with the Railways.
As per this agreement, it is proposed to transfer this surplus generated from eco-tourism
to the Railways for a period of 35 years to augment their cash flows.
4.3 Re-evaluating project appraisal
The proposed cash flows due to the environmental benefits have to be integrated in to the
original project appraisal framework. Annexure-IV shows this integration. The
Weighted Average Cost of Capital (WACC) for the Railways is taken as 7.5%. It can be
seen that the NPV after accounting for transfer of eco-tourism surpluses to the Railways
at a discounting rate equal to the WACC turns out to be positive (Rs. 19.50 crores). The
Internal rate of return (IRR) turns out to be 8.08% which is greater than the WACC.
Hence, the project turns out to be viable.
4.4 Sensitivity analysis
A single parameter sensitivity analysis has been carried out for the following 3
parameters
1) Growth in rail passenger traffic (base value taken as 2.5%)
2) Tourist inflow per day in the eco-tourism hub (base value taken as 50 per
day)
3) Escalation in cost of construction (base value taken as 0%)
The sensitivity analysis shows the following.
a) The NPV is not very sensitive to changes in growth of rail passenger traffic. Even
for a negative growth rate of 2%, the NPV stays positive. An increase of 1% in
passenger traffic increases the NPV by Rs. 2 crore.
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b) The NPV is very sensitive to the daily tourist inflow. If tourist inflow drops to
around 45 per day from the base projection of 50 per day, the NPV becomes
marginally negative. ( - 1.27 crores). However, if the tourist inflow drops to
around 40 per day, the NPV becomes sharply negative (- 22.05 crores). On the
other hand, if the tourist inflow increases beyond 50 per day, the NPV increases.
Therefore, to ensure the financial viability of the project, the focus must be on
ensuring that tourist inflow stays above 50 per day. An effective publicity and
awareness campaign can ensure this. If the tourist inflow drops to around 40 per
day, the tariffs might face a sharp upward revision to ensure break even. This will
have the adverse effect of discouraging further visitors.
c) The sensitivity analysis shows that a cost escalation of 5% reduces the NPV by
around Rs. 9 crore. To ensure that the project stays viable, a cost escalation of
more than 10% cannot be tolerated.
4.5 Risk analysis
Since the project agencies- Railways, GMVN and State Government are all
Government institutions, we do not anticipate any risks with regulatory approvals.
If the tourist inflow drops below 45 per day, the risk will have to be borne by GMVN
and the State Government so that the Railways is assured of regular cash flows.
There might be delays in land acquisition for the new railway line. This risk will be
borne jointly by the State Government and the Ministry of Railways.
4.6 Conclusion
The project has attempted to discover the economic value of concurrent
environmental benefits. This economic value has been integrated in to the original
project appraisal. This has the effect of ensuring that the railway construction project
becomes financially viable.
The construction of a new railway line between Rishikesh and Doiwala and the
diversion of the rail traffic plying between Haridwar and Dehradun on to the new line
significantly addresses the problem of disturbance to the wildlife in the Rajaji
National Park. It will relieve the human resources (forest guards) from the peripheral
task of railway track monitoring. This should help in efficient deployment of human
resources to concentrate on important conservation duties.
Even after the new railway line is constructed, a portion of the railway line from
Haridwar to Raiwala will continue to pass through the park. Of this portion, the 6 km
stretch from Motichur to Raiwala passes through the Motichur-Chilla elephant
corridor which elephants use to cross over from the eastern Chilla region to the
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western Motichur region of the Rajaji National Park. Semi-structural measures like
elevating the railway track for around 800 metres and deepening the water channels
that flow across the railway line will ensure the integrity of the critical MotichurChilla corridor.
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References:1. Mookerjee Anirudha and Others (2001), Jumbo Express: A Scientific Approach to
Understanding and Mitigating Elephant Mortality due to train Accidents in Rajaji
National Park, Published by Wild Life Trust of India New Delhi.
2. Northern Railway (2010), Updating Survey for Rishikesh_Doiwala New Line: Updated
Report and Estimate, New Delhi.
3. Report of Field Director Rajaji National Park (un published)
3. Website: www.ecosystemevaluation.org
4. Website: www.rajajipark.com
5. Website: http://irfc.nic.in
6. Website: www.gmvnl.com
7. Website: http://newsleaks.in
8. Website: http://wildlifetrustofindia.org
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