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ECONOMIC VALUE OF ECOSYSTEM SERVICESFROM EASTERN ARC MOUNTAINS OF TANZANIASubmitted to:Eastern Arc Mountains Conservation Endowment Fund (EAMCEF)Plot No. 348, Forest Hill Area, Kingalu Road,P.O.Box 6053, Morogoro, TanzaniaTelephone: 255(0) 23 2934274; Cellphone: 255(0) 755 330558; Fax: 255(0) 23 2934273E-mail: eamcef@easternarc.or.tz, eamcef@morogoro.netWebsite: ww.easternarc.or.tzWJANUARY2019

ACKNOWLEDGEMENTSThis study was commissioned by the Eastern Arc Mountains Conservation Endowment Fund(EAMCEF) and financed by the Royal Norwegian Embassy in Tanzania through an ongoingconservation project support to EAMCEF. The study team comprised of Dr. Marco A. Njanafrom Nation Carbon Monitoring Centre (NCMC), Sokoine University of Agriculture and Dr.Gody J. Sanga a private researcher on Natural Resource and Environmental Economics.The team was assisted by seven research assistants, Government officials and individuals. Inparticular, the team enjoyed extensive assistance from EAMCEF zonal project coordinators(Magreth Victor and Fredy Mafole of Northern Zone; Rosemary Boniphace and Innocent M.Kilewo of Southern Zone), the Districts officials of Muheza, Korogwe, Lushoto, Same, Mwangaand Kilindi District council and forest department officials of Northern Zone, and Mvomero,Gairo, Kilosa, Kilombero and Ulanga District councils and forest officials of Southern Zone. Theteam is also grateful to the Pangani, Wami/Ruvu and Rufiji Basin Water Office officials. Theirlogistical and moral support helped the team to get all the information needed to accomplish thetask in time.Nevertheless, the team acknowledges the assistance from village executive committees,environmental and water user committees led by village chairmen from all the 28 villagesvisited. The team also acknowledges the assistance provided by Nyumba ya Mungu, Hale, NewPangani, Kidatu, and Kihansi Hydroelectric Power Plants and TANESCO head quarter’sofficials. From TANESCO in particular we appreciate the cooperation provided by Eng.Mansour Hamdun, Eng. Costa Mutagwaba, Eng. Clement Abadyame, Mr. Imani Z. Sakire, Eng.Mathew Bundala, Eng. Mgeni Kisinzah and Mr. Masoud for their moral, logistical andinformation provided to the team that helped in preparing this report.i

LIST OF ACRONYMS & ABBREVIATIONSDOEDivision of EnvironmentCVMContingent Valuation MethodEAMCEFEastern Arc Mountains Conservation Endowment FundEEAEuropean Environment AgencyEIAEnvironmental Impact AssessmentEAMEastern Arc MountainsEMAEnvironmental Management ActESEcosystem ServicesGEFGlobal Environment FundLKHPLower Kihansi Hydropower PlantMAFCMinistry of Agriculture, Food and CooperativesMEAMillennium Ecosystem AssessmentMoWMinistry of WaterMLHRDMinistry of Lands, Housing and Residency DevelopmentMNRTMinistry of Natural Resources and TourismNBSNational Bureau of StatisticsNCMCNational Carbon Monitoring CentreNFNatural ForestNEMCNational Environment Management CouncilNEPNational Environmental PolicyNGONon-Governmental OrganizationKCCMPKihansi Catchment Conservation and Management ProjectKSTKihansi Spray TodKWHKilowatt per HourPESPayment for Ecosystem ServicesPFPlanted ForestPVPresent ValuePBWOPangani Basin Water OfficeWRBWOWami/Ruvu Basin Water Officeii

RBWORufiji Basin Water OfficeSPSSStatistical Package for Social SciencesSTATAStatistical Analysis Software PackageTFSTanzania Forest ServicesTANESCOTanzania Electricity Supply CompanyTAZARATanzania and Zambia Railways CorporationTEVTotal Economic ValueTEEBThe Economics of Ecosystems and BiodiversityTZSTanzania ShillingsTWPFTanzania Wildlife Protection FundUKUnited KingdomUNEP-WCMCUnited Nations Environmental Program-World ConservationMonitoring CentreURTUnited Republic of TanzaniaUSAUnited States of AmericaUSDUnited States DollarWAWorld AtlasWCSTWildlife Conservation Society of TanzaniaWTPWillingness to PayWSDPWater Sector Development Programmeiii

EXECUTIVE SUMMARYIntroductionThis study was carried out to value the Eastern Arc Mountain (EAM) natural assets andecosystem services supplied by the mountains for the purpose of sensitizing the society anddevelopment partners on the ecological and economic importance of the mountains. This isderived from the fact that the EAMs encompasses a series of mountain blocks which are thesources of a number of big rivers draining from the mountain blocks to the Indian Oceansupplying water for domestic and industrial use to many cities and urban centers in easternregions of Tanzania. The mountains are important habitat to the endemic species of plants andanimals. Understanding of the ecological and hydrological importance of the mountains is notenough to justify its conservation but understanding of the economic values of these ecologicaland hydrological importance helps to justify its conservation. In 2015 the Eastern Arc MountainsConservation Endowment Fund (EAMCEF) issued a consultancy work on economic valuation ofEAM ecosystem services and existing assets to a team led by UNEP-WCMC, with inputs fromCambridge, York, Southampton, Exeter Universities in the UK, and Sokoine University ofAgriculture in Tanzania. The work involved field data collection, analysis and drafting acomprehensive report on the value of ecosystem services supplied by the mountains. The studybased its valuation on GIS and hydrological modeling of the EAM natural assets. The report wasprepared and submitted to EAMCEF and EAMCEF provided comments and the consultantsworked on the comments accordingly. However, the approach used tends to undervalue the assetbecause is using the actual market price indices of the ES supplied by the mountains. Followingthis EAMCEF issued the same assignment to another team of consultants to conduct a detailedeconomic value of the mountains this time using market price indices for the ES supplied thatwould help the organization to justify its investment in conserving the mountains againstalternative land uses. This report is a step towards achieving that and was commissioned to twoconsultants by Eastern Arc Mountains Conservation Endowment Fund (EAMCEF) for threemajor objectives: To Identify the Ecosystem Services (ES) in the all EAM blocks, To estimate the economic value of the identified ecosystem services in the EAM blocks, To update the report on EAMs valuation carried out in 2015.iv

Study methodsThe assignment was carried out between 22nd January and 9th February 2018, by conducting fieldsurvey in 28 villages randomly selected from eleven EAMs blocks. To establish the types ofecosystem services the catchment supply and usage at household level, individual householdsurvey which involved interviews of randomly selected household members, village keyinformants, various officials from Rufiji, Pangani and Wami/Ruvu Water Basin Offices, officialsfrom water supply companies (i.e. Tanga UWASA, MOROWASA and DAWASCO), officialsfrom Sugar and rice estates (Mtibwa Sugar, Kilomero Sugar and Kilombero Paddy ProductionLimited), officials from forests and nature reserves (i.e. Udzungwa Mountains National park,Amani Nature Reserve, Magamba Nature Reserve, Chome Nature Reserve, Nilo Nature Reserve,Uluguru Nature Reserve and Mkingu Nature Reserve), officials from forest plantations (i.e.Ukaguru, Mtibwa, Longuza and SAO Hill planted forests), agricultural and forest officers fromMuheza, Mkinga, Korogwe, Lushoto, Same, Mwanga, Morogoro Rural, Mvomero, Kilombero,Kilolo, Mufindi and Mahenge Districts. We also interviewed officials from TANESCO andvisited all the hydropower plants in EAMs (i.e. Nymba ya Mungu, Hale, New Pangani fall,Kidatu, Kihansi, Mbingu Sisters, and Iyovi hydropower plants). We also visited and interviewedTANESCO head office staff in Dar-es-Salaam. The information gathered from these groupsincluded the type of ecosystem used, quantity used and the market prices for those with marketprices.To establish the economic value, we categorized ecosystem services supplied by EAMs intoeight categories: (i) Agricultural ES, (ii) Extracted forest products, (iii) standing timber (iv)water resources (v) Biodiversity, (vi) Carbon sequestration, (vii) Bequest value or value ofexistence and (viii) Tourism. To account for the time preference in our calculation, we have useda discount rate/rate of return to capital of 9 percent as recommended by central bank of Tanzania(BoT) that led to a discount factor of about 0.1214947754. The exchange rate used throughout isUSD 1 Tsh. 2,276.87/ .v

Results and discussionType of ecosystem services supplied by EAMs and their economic valuesThe EAM blocks supply a number of ecosystem services with multiple uses. The ecosystemsservices supplied give the mountains a remarkable economic value as indicated in the Tablebelow.Aggregated total economic value of EAM ecosystem servicesCategories of theEcosystem servicesAgricultural productsExtracted forest productsStanding timberWater resourcesBiodiversityValue of existenceCarbon sequestrationTourismType of the ural forestsPlanted forestsNatural forestsWoodlandPlanted forestsWater (domestic, irrigation,livestock & industrial use)HydropowerBiodiversity valueBequest valueForestsWoodlandTourismEAM total valueEAM NPVTotal value in 28,787,986,000.00% of the 1428.120.00150.000331.070.820.0000093100.00The total economic value of EAM block ecosystem services is 237,069,472,267.08 USD whichis equivalent to 28,685,406,144.32 USD net present value. Standing timber in natural forestsaccount for 37.44% of this value followed by water resource used to generate hydropower(28.12%). Standing timber in woodland take the third place by accounting for 24.84% of the totalvalue followed by standing timber in planted forests which account for 5.69% of the total value.Agricultural crops take the fifth place by accounting for 1.34% followed by fruits productionwhich accounts for 0.39% of the total value. The mountain capacity to store carbon is highaccounting for 1.07% in natural forests followed by woodland which account for 0.82% of thevi

total value. Other ecosystem services account for less than 0.1% of the total value. Higher valuein forest products implies that forest cover dominates the EAMs land area and it shows howimportant forest cover is to the mountain capacity to supply ecosystem services and supportproduction of consumable goods. The capacity to supply ecosystem services and supportproduction of consumable goods varies across the mountain blocks. The Table below clearlyshows that variation among EAMs.Aggregated total economic value of EAM by mountain blocksName of the mountain blockEast UsambaraWest UsambaraSouth PareNorth M total economic valueTotal economic value in .08EAM NPV% of the 4100.0028,787,986,000.00Among the EAM blocks Udzungwa accounts for a higher value followed by far by Uluguru,Rubeho, West Usambara, Ukaguru, Nguru, Nguu, South Pare and East Usambara. The mountainblocks account for 51.54%; 11.08%; 9.24%; 6.50%; 5.10%; 5.08%; 4.36%; 3.14% and 2.96% ofthe total value respectively. Other mountain blocks account for less than 1% of the total value.This also indicate how potential the mountain blocks are in terms of ecosystem servicesprovision, forest stocks, agricultural production supporting services, regulating services andcultural services. Udzungwa mountain block led other mountain blocks in many respects as faras ecosystem services provisioning, supporting, regulating and cultural services are concerned.Uluguru and Rubeho mountain blocks follow in this respect. In addition to the potentiality, thisalso show how well preserved the block is, much of Udzungwa land cover is under reservedvii