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Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009
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Rohit Jindal - Estimating payments for smallholder Agroforestry contracts in Tanzania - August 2009

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Estimating payments for smallholder Agroforestry contracts in Tanzania

Estimating payments for smallholder Agroforestry contracts in Tanzania

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  • 1. 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
  • 2. 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
  • 3. Research site: Ulugurus, Tanzania
  • 4. 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
  • 5. 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
  • 6. Choice experiments Attributes 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
  • 7. Indicative Results
    • High level of willingness to plant trees:
      • Most hh already protect trees on their farms
      • Want to put additional 0.5 - 1 acre under trees
      • Only < 25% respondents said ‘no’ to planting trees
      • Major constraints – old age, non-availability of land
  • 8. 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
  • 9. 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
  • 10. 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
  • 11. 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
  • 12. 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
  • 13. 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
  • 14. 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
  • 15. Acknowledgements
    • John Kerr, Michigan State Univ.
    • Brent Swallow, ICRAF
    • Aichi Kitalyi, ICRAF
    • Paul Ferraro, Univ. of Georgia
    • Satish Joshi, MSU
    • Mr. Sabas, TAFORI

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