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

6.0. DISCUSSIONS AND CONCLUSION
6.1. DISCUSSIONS
The decision to degazette or not to degazette part of
Mabira CFR for sugar cane growing involves a range
of considerations. The most important consideration is
the comparative net returns to land from the different
land uses, the others being national policy, equity
and environmental considerations and international
obligations. The following section clearly demonstrates
that whereas sugar cane growing is an important
investment area for the economy, conservation of
Mabira Central Forest Reserve is an equally important
land use option.
• Why favour SCOUL only?
A very disturbing question arising from a review of the
Mabira issue is why of all things the GoU feels SCOUL is the
producer best equipped to fill the production shortfall
of 40,000 mt that currently exists when there is ample
evidence to show that despite being the oldest factory
in the country and perhaps because of this, SCOUL is the
least efficient in terms of yield and conversion. It is true
that SCOUL can point to some precedents in allocation
of CFR land to agriculture, including sugarcane
production. However, the argument is not sufficient to
encourage the repeat of what obviously would appear
to be a less than socially optimum decision.
• Is sugarcane production superior?
The first level of analysis is to ascertain whether it is
better to convert 7,186 ha of Mabira CFR into sugarcane
production instead of leaving it intact for conservation.
The proposed land conversion to permanent agriculture
would mean losing about US$ 35,236,471 of timber
growing stock. It would also mean foregoing US$
9,819,363 in form of annual benefits. Hence a total loss
of about US$ 45,055 834 of conservation benefits would
be incurred.
On the other hand, converting a part of Mabira CFR
for sugarcane production will require extensive land
clearing which itself will be a significant cost to SCOUL.
Secondly, benefit streams from sugarcane growing
would start flowing about 18 to 24 months after land
clearing (assuming planting is immediate). This time lag
also represents opportunities foregone.
Notwithstanding the foregoing, if the land clearing
costs and those costs associated with the length of time
it would take to harvest the first crop of sugarcane are
set aside, it is possible to estimate the future net benefits
realisable from sugarcane growing. In Chapter 3.0 of this
report, it was reported that the average gross profit from
sugarcane production by out-growers was US$ 490/
ha. Therefore, the annual benefit stream of sugarcane
growing would be US$ 3,593,000/year, over three times
the estimated annual value from conservation. This
probably is the justification by those who advocate
for the conversion of forest land to agricultural use.
However, this is a partial story, a rather narrow view
of the benefits attributable to conservation.The net
present value of the total benefits of conservation was
estimated at US$ 45.1 million (standing timber stock plus
present value of annual benefits). It is this value, rather
than annual benefits alone which need to be compared
with the alternative of agriculture. The net present value
of the annual benefits from agriculture was estimated at
US$ 29.9 million without making any deductions for the
initial costs associated with establishing the sugarcane
plantation plus the time it would take for the first crop
The Economic Valuation of the Proposed Degazettement of Mabira CFR | 2011 47