Estimating payments for smallholder Agroforestry contracts in Tanzania World Congress of Agroforestry Nairobi (Aug 23-28, 2009) By: Rohit Jindal PhD Candidate - Michigan State University
Nov 01, 2014
Estimating payments for smallholder Agroforestry contracts in Tanzania
World Congress of Agroforestry Nairobi (Aug 23-28, 2009)
By:
Rohit JindalPhD Candidate - Michigan State University
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Significance of payment in PES PES: payments to service providers from service
users / intermediaries for securing valuable environmental services (ES)
An inadequate payment will: underachieve program objectives exclude poor or be rejected outright
But, how much to pay if ES markets don’t exist?important methodological & practical question
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Research site: Ulugurus, Tanzania
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PES in Ulugurus Provides valuable ES:
biodiversity, watershed (source of water for Dar)
ES threatened due to rapid deforestation
Focus on conservation through smallholder agroforestry – woodlots on 0.5 acre plots, carbon and other co-benefits
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Stated preference method
Survey with 400 randomly selected households
Covered hh demographics, labor availability and agricultural profile
Choice Experiments: farmers asked to choose from a set of hypothetical tree planting contracts
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Choice experimentsAttributes Levels
Trees Khaya + Teak
Mango + Avocado
Khaya + Acacia
Seedlings Farmers pay
Free Free + upfront payment
Contract duration
3 years 10 years 25 years
Annual PES payment
None Tsh 15,000
Tsh 45,000
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Indicative Results
High level of willingness to plant trees: Most hh already protect trees on their farmsWant to put additional 0.5 - 1 acre under treesOnly < 25% respondents said ‘no’ to planting
treesMajor constraints – old age, non-availability of
land
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Conditional Logit
Dependent variable: choice to plant trees under a specific contract
Preferences for contract attributes:Annual payment: ++Timber trees: ++Longer duration contracts: -Upfront payment: +
Still working on more detailed data analysis
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Revealed preference: Auction
Stated preference methods may not resolve info asymmetry
In an auction, farmers bid for tree planting contracts
Competition ensures they reveal their true WTA
Bids selected as per uniform pricing with the last rejected bid setting the equilibrium price
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An example If PES budget = $140
We can either get just 1 ha, or Thro auction we select the two lowest bids
and pay $60 to each of them
If budget = $580 We select five lowest bids and pay $110 to
each of them
Vickrey auction: Incentive compatible as bidders reveal their true behavior
Bids received/ha
$150$140$110$95$87$60$45$30
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Field auction in the Ulugurus 300 farmers participated Two contracts from CE options
offered: Low intensity woodlots in 0.5
acre plots Trees to be maintained for 3
years 3 training rounds 2 auction rounds: 268 valid
bids received
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Indicative results (n=268)
Round 1 (Khaya + Teak): Round 2 (Khaya + Acacia):Mean bid: Tsh 157,402 Mean bid: Tsh 151,631 Median bid: Tsh 135,000 Median bid: Tsh 135,000
Estimating ES supply curve (Teak)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
0.5 8
15.5 23
30.5 38
45.5 53
60.5 68
75.5 83
90.5 98 106
113
121
128
acres
Thou
sand
s of
TSH
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Implications Maximum enrollment under a given
budget – yields additionality Auction bids can be compared with
results from stated preference survey Comparison with other opportunity cost
studies A general method to determine payment
in PES projects
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Implications for policy makers Targeting poor farmers:
CE results can help in designing pro-poor PES contracts
Targeting priority areas: High risk areas (riparian,
steeply sloped etc.) given higher weights in the auction
Increases the probability of such lands being contracted
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Acknowledgements
John Kerr, Michigan State Univ. Brent Swallow, ICRAF Aichi Kitalyi, ICRAF Paul Ferraro, Univ. of Georgia Satish Joshi, MSU Mr. Sabas, TAFORI