the economic valuation of the proposed ... - Nature Uganda

part of the area proposed for degazettement in Mabira
may be characterised as a combination of open forest
and closed secondary forest. Taking the carbon loss
value of open forest (52tC/ha) the conversion of 7186ha
of Mabira to permanent agriculture would release
373672tC. Using this value as a benchmark, the next
question is what the economic value of such carbon
stock is. A significant literature exists on the economic
value of global warming damage and the translation of
these estimates into the economic value of a marginal
tonne of carbon (Pearce & Pearce 2001). According to
Zhang (2000) if there were no limitations placed on
worldwide carbon trading, carbon credits would by then
have exchanged at just under $10tC. If ‘hot air’ trading
were excluded, the price would be $13tC. Therefore,
taking $10tC as a conservative estimate, the one-off
value of carbon released into the atmosphere would be
$3,736,720 (or Ushs 6,352,424,000).
Secondly, once the area is converted into permanent
agriculture, then its annual carbon sequestration
capacity is severely restricted. The removal of tree cover
as a result of the permanent agriculture (plantation) will
result in a loss of some of the carbon storage capacity of
Mabira CFR. According to Bush et al (2004), at the global
level, the forestry sub-sector is an important carbon
sink, helping to reduce accumulation of greenhouse
gases and hence global warming which will lead to
adverse changes in climate. Emerton & Muramira
(1999) and Bush et al (2004) give the following carbon
sequestration values for different Ugandan vegetation
types: primary closed forest UShs 54,660/ha/year;
degraded forest UShs 32,538/ha/year; and woodland,
bushland and grassland UShs 2,603/ha/year. The forest
conversion is expected to leave the cleared impact area
under grassland (sugarcane) instead of bare ground.
Furthermore, the Production Zone should have a carbon
sink value of UShs 40,996/ha/year, using the average
value for a primary closed forest and a degraded forest
and deducting grassland values.
Multiplying the carbon sink value by the size of the
applicable impact area, is expected to result in a loss
44
of carbon sink values equivalent to UShs 294,597,256/
year. Capitalised at the social opportunity cost of
capital, the annual stream gives a present value of UShs
2,454,977,133 (or $1,444,104).
G. WATERSHED PROTECTION
Typically, the functions forests play in watershed
regulation include: soil conservation (siltation and
sedimentation), water flow regulation (including flood
and storm protection, water supply, water quality
regulation – including nutrient outflow). The effects of
forest cover removal can be dramatic. Unfortunately,
economic studies of watershed protection functions are
few, nonetheless progress is being made. From existing
studies Krieger (nd) was able to arrive at average values
of tropical forests as follows: water regulation ($6/
ha); water supply/quality ($8/ha); erosion control and
sediment retention $245/ha, resulting in a total of $259/
ha. When these average values for all tropical forests of
the world are applied to the Mabira case, it translates
into annual watershed protection values of $1,760,570
and present value of $14,671,417. According to Hamilton
& King (1983), care needs to be taken not to exaggerate
these estimates. Yaron (2001) estimated the value of
flood protection (using the value of avoidable crop and
tree losses as a basis) and came up with a figure of $0-
24/ha. Using Yaron’s upper estimate of $24/ha, the flood
protection value for the Mabira impact area would be
$172,464/year (or UShs 293,188,800 using exchange rate
of 1 US$ = UShs 1700) and present value of $1,437,200.
While this conservative estimate applies to flood
protection and not the other watershed functions, it
may be used for watershed protection values lost in the
Mabira impact area.
H. OPTION AND EXISTENCE VALUES
According to Pearce &Pearce (2001), the notion of
economic value includes willingness to pay for the
conservation of a forest or ecosystem even though the
individual expressing the willingness to pay secures
no use value from the forest. The authors went on to
The Economic Valuation of the Proposed Degazettement of Mabira CFR | 2011