SCOPING STUDY OF FOREST CARBON PROJECT POTENTIAL IN TANZANIA

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Sunday 1 March (after lunch):

1:00 †5:00: Introduction; background to the study; personal introductions and progress on key issues to be discussed; map out the current policy, legal and institutional framework for REDD and carbon finance in Tanzania; introduce Katoomba Incubator; develop criteria for defining high potential ‒domains’; preliminary identification of high potential domains.

Evening Michael, Tom, Hannah to brief late arrivals from Uganda

Monday 2 March:

8:00 †12:30: Personal introductions (Uganda); Development and characterisation of the domains; preliminary selection of higher potential domains (before undertaking the gaps analysis)

12:30 †1:30: Lunch

1:30 †5:30: Analysis of policy, legal and institutional gaps for each higher potential domain via analysis of steps in development of carbon credits; extended analysis of land tenure and carbon property rights issues.

Tuesday 3 March:

8:00 †10:30: Discussion of potential legal, institutional and policy options for making progress for each domain, and re-consideration of higher potential REDD or carbon finance options in light of the gaps analysis

11:00 †12:30: Discussion of potential REDD and other carbon finance projects within each high potential domain

12:30 †1:30: Lunch

1:30 †5:30: Develop data collection and analysis plan for in-country team to deepen the analysis of higher potential domains, to firm up legal, policy and institutional analysis, and to investigate potential Incubator projects; agree milestones and reporting timetable; re-cap on main findings and conclusions, and ensure these are agreed and documented; consider need to contact other donors.

Tanzania is strongly placed to develop a national Reduced Emissions from Deforestation and forest Degradation (REDD) programme due to its stable socio-political situation; its confirmed REDD Readiness funding, especially via the Government of Norway, the UN-REDD process and the World Bank Forest Carbon Partnership Facility; its well-established community forestry programme; and high rates of deforestation, especially for miombo woodland and coastal forests, and degradation (about 500,000 ha are degraded annually ). Apart from global warming, deforestation and degradation have various negative socio-economic and environmental impacts, many of them impacting disproportionately on the poor, e.g., reduced quality of hydrological services; soil erosion; local rainfall impacts; loss of subsistence, construction, fuel and other non-timber forest products; foregone timber income; and loss of biodiversity, which can impact on eco-tourism.

Carbon finance, and especially REDD, provides a unique opportunity for countries like Tanzania in that it provides a market-based economic incentive for forest conservation and management; in the case of Tanzania there is particular potential to generate financial incentives for Participatory Forest Management (PFM), and to realise the associated poverty reduction benefits. This scoping study will provide essential information for identifying carbon finance potential which can then be explored via the ‒Katoomba Ecosystem Services Incubator’ (Incubator for short). The aim of the Incubator is to act as an ‒honest broker’ between forest-dependent communities and the PES marketplace; following a careful selection process, the Incubator can provide technical, financial and legal support to help communities access carbon and other PES markets.

• Dr Michael Richards: Forest Economist, Forest Trends Consultant, UK

• Tom Blomley: Institutional/Community Forestry Consultant, Consultant, UK

• Dr Robert Otsyina: DASS, Consultant , Tanzania (in-country team leader)

• Juma Mgoo: Policy and Planning Division, Ministry of Natural Resources and Tourism, Tanzania

• Hannah Murray: Coordinator of Forest Trends work on legal and institutional analysis of PES, USA

• Alice Ruhweza: Coordinator of East & Southern Africa Katoomba Group, Uganda

• Dr Sara Namirembe: Regional Manager of Katoomba Incubator, Uganda

• Francis Stolla: land lawyer, Tanzania (Monday only)

EXECUTIVE SUMMARY

This Incubator Scoping Study was undertaken prior to more site-specific studies of potential Reduced Emissions from Deforestation and forest Degradation (REDD) projects to be considered for support by the Katoomba Ecosystem Services Incubator. Analysis of a range of criteria, including key legal and institutional constraints to REDD projects, resulted in the identification of REDD project types with the best market potential as well as responding to the criteria of the Incubator, e.g., community benefits. A key objective of the study was to develop an approach to identifying a balanced and strategic portfolio of REDD projects, which will be refined in further Incubator scoping studies in Uganda and Ghana.

In addition to identifying project types with good prospects for success, the analysis sought to identify critical legal, institutional, and policy barriers or gaps, which if they can be effectively tackled, would result in a major boost for REDD in Tanzania. It is therefore hoped that the study will inform the work of Tanzania‟s REDD Task Force, while recognising that there are some key differences in objectives and project selection criteria.

Much of this report is based on the scoping study workshop held in Dar es Salaam between 1-3 March 2009. A small interdisciplinary team with a broad range of forestry, legal, policy, institutional and carbon market experience, went through the following steps:

• discussion and choice of REDD project selection criteria;
• characterization of forest ecosystems and deforestation/degradation (DD) drivers;
• identification and classification of project types according to the ecosystem type, main deforestation/degradation drivers and the institutional/tenure system;
• scoring of project types;
• selection of project types demonstrating high potential for success/market viability;
• analysis of legal and institutional constraints for the more viable project types.

After the workshop, a small in-country team fleshed out the gaps and opportunities analysis through discussions and fieldwork with a range of stakeholders, especially around the main legal-institutional arrangements for participatory forest management (PFM): Community Based Forest Management (CBFM), Joint Forest Management (JFM) on National Forest Reserves and Wildlife Management Areas (WMAs). The workshop identified seven higher potential project types.

This selection was based partly on the scoring exercise, but particularly following further analysis of the most crucial market and project development issues †especially carbon property rights, opportunity costs and carbon additionality. For example, while mangroves and wetlands are very important for carbon and other values, without key policy or legal reforms these project types are very risky for carbon investors due to their high opportunity and transaction costs (e.g., leakage risks and unclear carbon property rights under JFM). It is recognised that with a fund-based national REDD strategy, the project selection criteria would be slightly different; however any necessarily performance-based REDD strategy will still require most carbon market criteria, e.g., additionality and opportunity costs.

A gaps and opportunities analysis of the higher potential REDD project types, and especially analysis of the legal and institutional constraints to effective and equitable REDD projects, resulted in the identification of some key measures or recommendations, which if adopted, would greatly facilitate the effectiveness of REDD in Tanzania:

• Clarification of benefit sharing under JFM.
• Development of effective aggregator mechanisms.
• Rationalisation of institutional arrangements for natural resource management in the WMAs.
• Formalization of customary CBFM arrangements through legal registration of community forest reserves.
• Clarification f the hierarchy between general and sector specific legislation on land tenure issues.
• Careful economic analysis to locate viable REDD projects.
• Where opportunity and transaction costs of REDD are prohibitively high, a regulatory or policy response is preferable.
• Development of highly transparent and accountable institutional arrangements for channeling incentives to local forest managers.
• R&D of best practice intra-community benefit-sharing arrangements.
• Governance and administrative capacity building of local institutions, and educating community members to exert good governance pressures.

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