Areno

Papadaki - 43643374

REDD+ Schemes in Tanzania: Evaluating the lowest cost for

emission reduction
By: Areno Papadaki 43643374

Reducing Emissions from Deforestation and Forest Degradation (REDD+) is

a strategy to mitigate the adverse effect of the climate change through financial
incentives for the developing countrys effort to protect the forest. There has been an
increasing consent towards REDD+ as the appropriate mitigation strategy for two
reasons. First is the significance of deforestation activities that responsible to nearly
12% of greenhouse gasses worldwide. Second is because the cost to utilize forest to
sequestrate carbon is relatively low (Corbera, Estrada, & Brown, 2010).
Approximately 48 million ha of Tanzania is a forest (United Republic of Tanzania,
2014) particularly 90% of it is filled with woodland (Blomley et al., 2008). However,
these natural resources are in peril, and the country is materially affected by the
adverse effect of climate change. Tanzania is experiencing the deforestation and its
rate is among the highest and most pervasive in the continent. The main causes
include irresponsible clearing practice in agriculture, lack of planning in land
utilization, wildfires and over exploitation particularly for charcoal production. It has
resulted nearly 100 million tons of greenhouse gases emission annually (UNESCO,
2011). Hence, REDD+ is a pivotal mitigation strategy for Tanzania to address the
effect of the climate change.
This essay tries to evaluate the lowest cost for the emission reduction through
the case study of REDD+ project in Tanzania particularly in Mpanda and Kigoma,
Kilosa, and Lindi district. The essay is structured as follow. Started with the overview
of REDD+ project in Tanzania, followed with the discussion on the factors and criteria
to define the cost element with the case study, and then ended with recommendation
and conclusion.
REDD+ in Tanzania
The rate of deforestation and forest degradation in this country are relatively
high. Annually 1.1% of the overall forest area was cleared just between the year of
1990 and 2005 (Blomley et al., 2008). However, it must be admitted that Tanzania
has been making a significant progress to address the issues. And since the early of
1990s,

the

Tanzania

government

has

introduced

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the

participatory

forest

Areno Papadaki - 43643374

management both in the form of community-based and joint forest management.

This effort was meant to achieve the sustainability of its forest (Blomley et al., 2008).
In the year of 2009, Tanzania entered in to a collaboration with the Norway
government to prepare the framework of national REDD+ strategy. The main goal of
this strategy is to facilitate an effective implementation through coordinated policies
and set of activities to achieve the sustainable development and climate change
plan. This framework also helps Tanzania government to develop the mechanism
needed for this country to get the benefit of forest carbon trading based on the
REDD+ scheme. Other elements on the partnership between Tanzania and Norway
include the establishment and piloting of trust fund, research and capacity building,
and public and private sector engagement. (United Republic of Tanzania, 2012).
There are numerous REDD+ initiatives in Tanzania, and this country receives
a lot of helps from other government and international entities as well. Tanzania
received help and sponsored by the UN-REDD program, a collaborative scheme
between FAO, UNDP and UNEP, in the value of more than USD 4 million. This
support includes the assistance for the country to be ready and have the appropriate
measurements (Milledge, 2009). Tanzania is also included in the World Banks
Forest Carbon Partnership Fund that used to help Tanzania with the funding for the
pilot projects. In addition to that, Tanzania is also committed to take part in the forest
inventory management in all part of the country with the program called National
Forest Resource Monitoring and Assessment (NAFORMA). Through this entity,
Tanzania has gathered data that is related to the social effect and biophysical
assessment. These data serves a pivotal input for the overall strategy and the MRV
process (The REDD Desk, 2012).
Criteria and cost elements for REDD+
REDD+ comes out to be a highly potential and promising scheme to protect
the forest. And essentially, this mechanism not only needs financial incentives for
emission reduction, but also it requires incentives to keep the forest sustainable
(Mollicone et al., 2007). Generally, any country will only have the advantage of
REDD+ if the benefit, which is the payment received from the sales of carbon credits
and or for reducing the emission through REDD+, is higher than the cost of achieving
it (Borrego & Skutsch, 2014). There are several types of cost elements related with
the REDD+ implementation. According to Pagiola & Bosquet (2009), there are at
least 3 types of cost; opportunity cost, implementation cost, and transaction cost.

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Opportunity cost can be defined as the cost of the benefits from the best
alternatives land use that are given up due to the effort of avoiding forest degradation
and decreasing the deforestation (Irawan, Tacconi, & Ring, 2013). Following are the
examples of opportunity cost resulted from reducing the deforestation; foregoing the
benefits of timber production from the forest that can be utilized for housing and
construction, and foregoing the benefits from clearing the land so it limits the use for
agriculture purpose such as pastures and crops. Avoiding the degradation can also
means foregoing benefits hence increasing the opportunity costs, such as limiting the
collection of firewood, grazing of animal and careful logging. Opportunity cost
typically is the most pivotal cost and accounts for the biggest portion of the cost
(Pagiola & Bosquet, 2009). In addition, calculating this particular cost is crucial to
help us understand the reason behind deforestation.
The second type of cost is the implementation cost. This is the cost that
usually directly related with the implementation of reducing the deforestation and
forest degradation. For example the cost for illegal logging prevention, timberharvesting relocation, research and development for agricultural intensification, and
cost for providing local communities with incentives to keep protecting the forest
(Irawan, Tacconi, & Ring, 2013). Implementation cost also consist of the institution
related activities that essential and responsible to run the REDD+ program such as
cost or expense of research, training, policy design, law enforcement, policy design,
as well as decision making and consultation cost (Pagiola & Bosquet, 2009).
Another important cost that can be included in the implementation cost is
anything associated with the land tenure issues. This issue is important and need to
be identified before the REDD+ project is executed, because the tenures are the one
who is going to implement REDD+ directly on the site and who will lose or gain
benefit from the project execution (Sunderlin, et al., 2014). Aditionally, tenure
insecurity can lead to undesirable forest management hence it will hinder the goal of
REDD+ implementation (Resosudarmo et al,. 2014). The overlapping claims on land
are not only occurred between central government and local people who lives in the
particular forest, but also happened between private sectors, various ministries in
government and local communities as well (Holland et al,. 2014).
To ensure the execution of REDD+ is running smoothly, the proponents must
firstly identify the right holders of the forest to determine who will be responsible for
taking care of the forest. Furthermore, this includes the determining of the future
tenure challenge, such as interventions from both internal and external future claims
of the land. Clarification over the benefit sharing system and the legitimate holder for

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the forest carbon rights are also need to be included in the analysis before the
REDD+ is executed (Corbera, Estrada, May, Navarro, & Pacheco, 2011).
Additional to the opportunity and implementation cost, REDD+ also involves a
transaction cost. This includes cost for monitoring, reporting and verifying (MRV)
activities, greenhouse gas reduction certification, negotiation on REDD+ activities,
and other costs that are needed for transaction involving a REDD+ settlement
(Irawan, Tacconi & Ring, 2013; Pagiola & Bosquet, 2009). The main contrast
between transaction cost and implementation cost is transaction cost does not
directly affect the reduction of deforestation and forest degradation. However, these
costs are also required to be identified because it adds value to the whole process
(Pagiola & Bosquet, 2009).
Calculating economic value (NPV) of the land uses
Calculating the value or the most profitable drivers of deforestation in
Tanzania is one of the crucial steps to begin with. This paper focus on three pilot
projects in Tanzania based previous study by Merger et al,. (2012). Those are Jane
Goodall Masito Ugalla Ecosystem Pilot Area (JGI), Tanzania Forest Conservation
Group (TFCG) in Kilosa and TFCG in Lindi which share the same objectives to
execute the conservation plan and find an alternative income generator. Data show
that each of these areas experienced a deforestation rate approximately 1.8%,
0.35%, 1.55%, respectively, in the last 10 years.
The first project, JGI, is located in Mpanda and Kigoma districts, which cover
the Masito and Ugalla forest nearly 85,200 ha. Agriculture, fuel wood collection,
unsustainable timber extraction and pasture for grazing cattle activities are the main
reason of the forest degradation and deforestation approximately 14,163 ha annually
over the past 10 years. The second project, TFCG in Kilosa, which covered with
148,825 ha of the Eastern Arc forests, has a deforestation of 9,208 ha. Meanwhile in
TFCG in Lindi, the deforestation can be as high as 16,808 ha. Project in Lindi area is
covered with 93,800 ha of coastal forest. The main cause of the deforestation in both
Lindi and Kilosa is the shifting cultivation activities and unsustainable charcoal
production.
The best way to calculating NPV for the REDD+ project is by developing
model that reflects input and output in the actual commodity prices in some specific
region (Pagiola & Bosquet, 2009). In Merger et al,. (2012), NPV calculations are
based on the revenue that is earned from the specific use of each land. The model
allowed an assumption of a shifting in land use under some circumstances. For
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example, since production of charcoal, timber and fuel wood can only sustain in
some certain period, the land use in to agriculture or pasture are allowed. Therefore,
the revenue from this changes are also taken into the NPV computation.
In Merger et al,. (2012), it is presented the NPV calculation for six different
types of land use. Those are natural forest, unsustainable production on timber,
charcoal and fuel wood, agriculture, and pasture. The calculation was based on the
discount rate of 10% and the forest degradation and deforestation over 30 years. The
result is similar to the previous research by Fisher et al,. (2011) that agriculture and
unsustainable charcoal production are the most financially rewarding key factors that
drive the forest degradation and deforestation in Tanzania. The highest NPV in land
use for agriculture is achieved by JGI at amount of US $2,806/ha and then followed
by TFCG in Kilosa and Lindi at amount of US $1,232/ha and US $1,023/ha
respectively. The reason why JGI has the higher NPV is because the land is more
productive and the fact that the location is nearer to Congo hence better access to
other market. Meanwhile in the land use for charcoal production, the assumptions
are after the land is cleared for the charcoal production and the charcoal is sold at a
price of US $100 per ton, the land is then used for shifting cultivation mostly for
beans in Kilosa and sesame in Lindi. This resulted an NPV of US $1,662/ha in Kilosa
and US $1,290/ha in Lindi.
Opportunity cost of the projects
Figure 1 below shows the opportunity cost resulted from keeping away the
natural forest conversion for the three pilot projects in Tanzania, JGI in Mpanda and
Kigoma district as well as TFCG in Kilosa and Lindi. When calculating the opportunity
cost, NPV is used as the input. It can be seen that the bigger the NPV cost (high land
use value in agriculture for JGI project), the higher the opportunity cost. Recall that
JGI main drivers for deforestation are agriculture, fuel wood collection, unsustainable
timber extraction and pasture for grazing cattle activities. Among these four activities
in JGI, two avoidance projects are seem to be most cost effective alternatives in
overall according to the figure. Those projects are to avoid the unsustainable
collection of fuel wood and avoiding land-clearing expansion for pasture. If those
projects are combined, both projects can contribute to the emission reduction
approximately 32,000 tCO2 per year. In regard to the opportunity cost, the conversion
of natural forest in to an unsustainable fuel wood collection is US $-7.8 tCO2. The
rationale behind the negative opportunity cost is that in the longer term, keeping the
natural forest is more profitable hence higher NPV than NPV in the unsustainable
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collection of fuel wood. It also indicates that in the future, the price of the carbon
stock on land is higher. Meanwhile, the opportunity cost for avoiding the land use
change to pasture is US $7.3 tCO2.

Figure 1 Opportunity cost curve

Source: Merger et al,. (2012)

Generally, the TFCG project in Lindi and Kilosa have the largest amount of
emission reduction from preventing the land use change for agriculture activity to
expand the cultivation and an unsustainable charcoal production. For all TFCG
project in Lindi, nearly 176,000 tCO2 per year of emission can be reduced with the
opportunity cost of US $8.9 tCO2 for preventing the land use change to expand the
cultivation and US $ 11.4 tCO2 for preventing the land use change to unsustainable
charcoal making. In a similar fashion, for all TFCG project in Kilosa, about 119,000
tCO2 per year of emission can be reduced with the opportunity cost of US $8.8 tCO2
and US $ 12.1 tCO2 for preventing the land use change to expand the cultivation and
the land use change to unsustainable charcoal making, respectively.
In average, ranked from the highest to the lowest, JGPs opportunity cost is
the highest at amount of US $12.5 tCO2, and then followed with TFCG in Kilosa and
Lindi at US $10.3 tCO2 and US $10.1 tCO2 of opportunity cost, respectively.

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Implementation and transaction cost of the projects

To compute the implementation cost, Merger et al,. (2012) collected the data
from each of the project budget. This particular cost contributes nearly 95% of the
total cost of avoiding the emission. However, it is not included the opportunity cost.
For the Jane Goodall Masitu Ugalla Ecosystem Pilot Area (JGI), the associated cost
to reduce the deforestation and forest degradation are:
1. Management cost, which includes the staff remuneration, administration and
office

operations,

purchase

of

equipment

and

office

supplies,

and

maintenance.
2. Cost for capacity building for local communities and the related stakeholder
for the REDD+ execution.
3. Consulting fees, and cost of project monitoring and evaluation.
4. Cost for establishing forest conservation civil society organizations.
5. Cost for various training, which includes training on sustainable forest
management practice, developing formal plan of forest management, and
general business management and marketing.
6. Cost of forming and managing the participatory benefit sharing schemes.
In regard to the Tanzania Forest Conservation Group (TFCG) both in Kilosa
and Lindi district, the direct cost that is related to the implementation of reducing the
deforestation and forest degradation includes:
1. Management cost, which includes the staff remuneration, administration and
office

operations,

purchase

of

equipment

and

office

supplies,

and

maintenance.
2. Cost for training and capacity building for staff and village trainers on REDD+,
prevention on leakage potential and the participatory forest management.
3. Cost for reviewing the forest management plan and supporting the
participatory forest management mechanism.
4. Fees on monitoring and evaluation.
5. Result-based payments.
6. Cost for local campaign on REDD+ awareness and other community
communication activities.
7. Establishing the avoidance measure of leakage and cost of implementing the
action plan (agroforestry and tree planting).

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For the entire three projects, they share the same calculation for the other
implementation costs that are related to the institutional matters. Those are the costs
to build the capacity of the institution in each district level and every cost incurred for
circulating the valuable past experience that are important to strengthen the REDD+
implementation in Tanzania. The transaction cost includes for monitoring, reporting
and verification (MRV) purpose and compliance costs that are related to carbon
market. In aggregate, the total cost of reducing the release of one ton of carbon
dioxide and equivalent is US $13.8 for JGP, US $5.7 for TFCG in Kilosa, and US
$4.8 for TFCG in Lindi.
Tenure issues of the projects
According to RRI and ITTO (2011), 5.8% of Tanzanian forests are owned by
communities and indigenous people, nearly 89% of the forests are administered by
government, and the remains are owned by individual and firms. Previous study
conducted by Sunderlin, et al., (2014) found that overall, tenure insecurity are
relatively low in Tanzania compared to other country such as Cameroon, Brazil and
Indonesia. The reason for this insecurity includes land competition, land dispute,
invasion, the ease to repeal the land right, and the limitation and control from
government or privates sector to use the land.
Particularly in JGI, the tenure challenge mainly related to the ambiguous time
frame for land ownership and tenure. According to the forest law stated the tenure
can be as long as 99 years, but according to the land law, it is not more than 3 years.
There has been an unclear land ownership of the community based organization as
well in the JGI project. In TFCG Lindi, the main tenure problem is related to the
ambiguous national policy that is not able to define who owns the forest, and who will
receive the income from carbon legally. Another problem in Lindi is most of the
people in the villages do not actually have the land certificate required for REDD+
hence they need to create a plan for land use in order to solve the tenure problems.
Different situation happens in TFCG project in Kilosa. Tanzania government were
supposed to define the village boundaries years ago, but they performed quite a bad
job. This has resulted conflicts between villages in Kilosa district (Sunderlin, et al.,
2014). Therefore, generally, the proponents of the projects need to solve this tenure
problem and the solution is laying around the reinforcement of the lawful basis for
community based forest management through the village boundaries settlement as
well as land certification.

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Recommendation and conclusion

The following table summarizes the cost related to REDD+ and the tenure
issues. In conclusion, TFCG project in coastal forest in Lindi has the lowest
opportunity cost and total cost per avoided tCO2 emission. Opportunity cost is one of
the pivotal parts of the economic analysis on REDD+ activity that can give us an
understanding on the primary driver of the deforestation and forest degradation. It
determines the financial incentives to stop the unsustainable land utilization.
However, making the decision solely on the opportunity cost will not guarantee the
sustainability of the forest in the long term as it is expected that the payment from
carbon credits will decrease due to the expected decreasing rates of deforestation
(Merger et al,. 2012). Hence, the calculation and analysis on the implementation cost
and any investment related to establish the REDD+ is required and must be taken in
to account. The investment in the REDD+ that is reflected in the total cost per
avoided tCO2 in the table below, will increase the financial reward and profitability of
the land use. And eventually, in the financial side, the benefit will outweigh the overall
cost. And for the environmental side, reducing forest degradation and deforestation
will be achieved and be more sustainable.
Table 1 - Summary
Criteria

JGI

TFCG in Kilosa

TFCG in Lindi

Opportunity cost (average)

US $12.5 tCO2

US $10.3 tCO2

US $10.1 tCO2

Total cost per avoided tCO2

US $13.8 tCO2

US $5.7 tCO2

US $4.8 tCO2

low

low

low

emission

(implementation

and transaction cost)

Tenure issues

Source: Merger et.al (2012) and Sunderlin, et al., (2014)

Additionally, to obtain a better result and decision for the REDD+
implementation, analysis should go beyond the economic factor. Other factor such as
legal and law related, good governance, institutional, biodiversity of the forest, social
and environmental effect assessment need to be included as well.

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