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What It Takes, Part II: Selling Environmental Services

In our second of four benefit sharing examples, we look at:
Farmers who benefit by providing water to Dar Es Salaam, Tanzania.

Project: Equitable Payments for Watershed Services (EPWS)
Location:  Morogoro, Tanzania
Type: Payment for Ecosystem Services
External Funder: Dawasco (a utility company)
Facilitator/Implementing-Monitoring Agency: CARE Tanzania and WWF
Other Parties: Local government; university that provides training
Community Stakeholders: 144 local farmers in four villages

In the Morogoro region of Tanzania, the rugged Uluguru Mountains form part of the watershed used by Tanzania’s largest city, Dar es Salaam. Slash-and-burn farming practices left swaths of unusable land, and the region experienced a doubling in the percentage of cultivated land between 1995 and 2000, at the expense of forests and woodland. The deforestation and poor land use practices caused soil erosion and siltation of waterways. To combat this ecological damage and improve water quality in the capital, CARE Tanzania and the World Wildlife Fund (WWF) initiated the Uluguru Equitable Payments for Watershed Services (EPWS) project in 2006. The project sought to establish a scheme for payment-for-ecosystem-services in which water users would pay farmers who agreed to adopt better land use practices.

The Scheme

The international NGOs first identified “buyers” and “sellers” who could benefit from such an arrangement. They met with the head of the environmental section of Tanzania’s Vice President’s Office, District Council members and the District Executive Director, the local water office, which provided hydrology services, and members of a nearby nature reserve and a conservation fund. They consulted village leaders, conducted interviews, held discussion groups, and carried out household surveys to find sellers. They completed a hydrological assessment, a cost-benefit analysis, and an examination of existing legal and institutional frameworks to determine which parties could benefit and how the project might work. The initial set-up took 17 months.

They identified one “buyer,” utility company called Dawasco based in Dar es Salaam, and 144 “sellers,” or farmers, from four villages. Dawasco agreed to pay the farmers $65,000 to voluntarily adopt eco-friendly farming practices so that the company could spend less on water purification. The participating farmers agreed to build terraces using ditches and uphill mounds, to stop slash-and-burn agriculture, to plant trees and elephant grasses, and to sow two or more crops in close proximity to produce a greater yield, a process known as alley cropping. In return for changing their farming practices, farmers earned cash, but also obtained other benefits, including farm supplies, animal manure, and agricultural training from a local university. CARE Tanzania facilitated the contracts, and oversaw the implementation and monitoring of the project.

Implementation began in 2008, when Dawasco made an initial payment through CARE, which deposited the money into a village bank. Local councils then distributed the funds to the farmers according to specific criteria, including how much land the farmer had subjected to improved farming practices, the number of trees they planted, and the type of land management adopted (bench terraces or other). Other factors included whether the farmers had used mixed cropping or had refraining from cultivating sloped land and river banks. An additional 690 farmers from 350 households received training on tree planting, farming techniques, and the use of farm animals for manure production.

The Benefits

The benefits to the villages included not just financial rewards, supplies, and training to farmers, but also restored ecosystems, greater community empowerment, and the formulation of a water user association. Dawasco profited from improved water quality, availability and reliability, a reduction in water-treatment costs, and enhanced public-private relations. The government benefited by being able to implement its water resource plans, and to increase its capacity and knowledge development. Additionally, there was a noticeable positive impact on the environment, including reduced soil erosion, fewer trees cut illegally, and more trees planted. The number of bush fires was reduced and the forest was no longer receding.

Farmers surveyed in two of the four villages reported that they were happy or very happy with the way the project was going, and most also reported financial gains and a greater sense of financial security, though income improvements were difficult to ascertain because payments varied greatly. Most felt that the scheme was fair and that they were justly compensated for their efforts. Most also noted that the farming network had been strengthened and that there was greater exchange of knowledge about farming practices. In general, productivity increased up to four times the pre-project levels, convincing more farmers to join the project or adopt the practices.

Factors Leading to Success

The leadership provided by the international NGOs was central to the success of EPWS, and proved to be a key ingredient that helped farmers to voluntarily let go of traditional farming methods. Both CARE and WWF earned the trust of the farmers, another essential element that allowed the NGOs to preserve the integrity of the project by overseeing the payments being distributed by local governments that farmers did not trust.  The farmers were patient and persistent, laboring at difficult tasks and then waiting for rewards. Expectations were clear and understood by the parties involved, and the link between action and payment was easy to verify. Importantly, villagers discovered the non-monetary value of the project, including access to better fertilizers, markets for farm products, and training.

Future Viability

A permanent mechanism for paying the farmers needs to be created. The farmers received an initial payment through CARE, but the NGO is only a temporary facilitator. Land laws remain unclear, and trust between the farmers and local governments needs to be strengthened. There needs to be a better mechanism for disseminating information to farmers regarding both the project’s benefits and the process for payments. More emphasis should be placed on the practicality of the activities. For instance, the new farming methods require intensive manual labor to build terraces and plant trees, as well as animal manure, which is not easy to procure for most villagers. Ensuring timely incentives would entice more farmers to adopt the practices and increase the viability of this payment for ecosystem services scheme.

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