Rapid degradation of forest due to direct exploitation and conversion into other land uses is the major problem faced by the forestry sector of Sri Lanka. The negligence of the economics of environmental aspects is one of the major reasons for this problem. The timber value has widely been recognised as the only value held by forests, while many goods and services provided by forests are not being identified, quantified or valued. Conservation values of forests have not been evaluated either at local or global levels resulting in under-investment in conservation. Therefore, the valuing of yet unrecognised values and incorporating them in decision making have been identified as priority needs. In order to reach this goal, an economic evaluation was carried out for the conservation project of Sinharaja Rain Forest Reserve in Sri Lanka. The main objectives were to calculate the total economic value of the forest, recognise the variability patterns of use and nonuse values with the location, and compare nonuse values held by Sri Lankans and UK citizens for this particular rain forest. A contingent valuation survey was carried out to estimate willingness to pay for the use and non-use benefits of the forest using three samples of people (urban and rural areas distant to the forest and peripheral villages to the forest) in Sri Lanka and a group of respondents from UK. The quantification of use values of villagers was done by a survey of village respondents. The resultant willingness to pay estimates were consistent with the theory. When expressed as a percentage of income, clear differences were evident among the four samples for use and non-use values. On average, local villagers were willing to bid proportionately high percentage of their income to preserve the forest for future generations. This figure was much less for urban and rural Sri Lankans, and even lower for UK residents. There is a considerable dependency of villagers on the forest for non timber forest products. The benefits of conservation well exceed the costs as shown by positive net present value.