Investing in forestry sector can alleviate poverty in Tanzania

Dar es Salaam: Deforestation in Tanzania could cost the national economy 5,588 billion Tanzanian Shillings between 2013 and 2033 on current trends, highlighting the importance of investing in the forestry sector to alleviate poverty and boost growth, according to a new report released on Monday.

Forest ecosystems in the transition to a green economy and the role of REDD+ in the United Republic of Tanzania took into account the market value of timber resources as benefits that arise from deforestation, and costs in terms of lost timber forest products in the future, as well as other forest ecosystem services that will be lost as a result of deforestation.

“Forests provide a whole host of ecosystem services to national economies that are not captured in national development planning, and this latest assessment, from Tanzania, provides further evidence of the economic damage that can be wrought when we do not appreciate the full value of nature,” said UN Under-Secretary-General and UNEP Executive Director Achim Steiner.

“Implementation of REDD+, which goes beyond deforestation and forest degradation to include the role of conservation, sustainable management and enhancement of forest carbon stocks, can be an important vehicle for Tanzania, and other nations, to transition to an economic model based on reduced deforestation and increased investment in the sustainable use of forest resources and significant benefits for local communities.”

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Loss of forest ecosystem services such as water regulation can have adverse impacts on the value added of other sectors such as agriculture, tourism and energy. For example, more irregular water availability due to deforestation can impact agricultural output or lead to higher costs for hydroelectric utilities. These costs are not incurred by the forestry sector, but in the Gross Domestic Product (GDP) figures of other sectors. Other services, such as biodiversity, are currently not included in national accounts.

The report also looked at the costs and benefits of deforestation when taking into account only forest products compatible with the System of National Accounts (SNA). It found that the present value of net losses from deforestation for the value added of the forestry sector is estimated to be 273 billion shillings (US$171 million) over the next 20 years – calculated by comparing the one-off benefits of deforestation, which come in at 147 billion shillings, with actual economic costs, including linkages with other sectors, of 420 billion shillings.

This report – by the Tanzania Forest Services, in collaboration with the United Nations Environment Programme (UNEP) under the UN-REDD Programme to reduce deforestation and forest degradation, and the Centre for Environmental Economics and Policy in Africa – based its analyses on the annual deforestation rate of at 372,816 hectares per year between 1995 and 2010, an estimate provided by the National Forest Monitoring and Assessment 2014.

The report provides an economic rationale for Tanzania to invest in more sustainable use and conservation of its forest assets by showing that the one-off financial benefits of deforestation, mainly from the sale of timber, are outstripped by the long-term losses. Some of these losses are compatible with the SNA and can be reflected in GDP.

The report also shows that investments in the forestry sector to stimulate output lead to higher rural incomes than equal investments in the agricultural and wood paper printing sectors, with clear implications for poverty reduction. This presents a case for the government to tackle the direct and underlying drivers of deforestation, and transit to an economic model that stimulates sustainable use and conservation of forest ecosystems by implementing REDD+.  

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The Tanzanian report is part of a range of activities by the UN-REDD Programme to support Tanzania by enabling it to build the economic case for sustainable management and conservation of the country’s forest ecosystems as part of REDD+ implementation.

The analysis provides insights and recommendations for government authorities on how to tackle the rising costs of deforestation, including:

·        The Natural Bureau of Statistics (NBS) and the Ministry of Finance and Economic Affairs could assess how the value of the country’s natural capital can be linked to its national accounts, for example by developing an Inclusive Wealth Account that includes the value of the natural capital in addition to social, manufactured and other types of capital.

·        The Tanzanian Forest Services (TFS) could use the findings of this report to advocate for additional domestic resources to tackle the driving forces behind deforestation, which in itself could deprive the TFS of 2 billion shillings in revenue between 2013 and 2033

·        The Ministry of Natural Resources and Tourism could consider investing in the forestry sector as a potential way to alleviate poverty as the report found that investments in the forestry sector leads to comparatively higher income for rural populations than equal investments in the agricultural and wood paper printing sectors.

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Similar national forest valuation studies have been completed for Kenya, Panama and Zambia, and UNEP is currently working with the Governments of Nepal, Ethiopia and Indonesia. A synthesis combining the findings of this work will be released later this year.

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