Appraising Aquaculture: the ZALA Park Fish Cultivation and Makoba Integrated Mariculture Pond System

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Appraising Aquaculture: The ZALA Park Fish Cultivation and Makoba Integrated Mariculture Pond System

Item Type Working Paper

Authors Ngazy, Z.M.

Citation Informal meeting for Urban Environmental accounting Trieste, Italy 22nd – 24th April 2004

Download date 29/09/2021 18:04:31

Link to Item http://hdl.handle.net/1834/837

Appraising Aquaculture: The ZALA Park Fish Cultivation

and Makoba Integrated Mariculture Pond System

Z. M. Ngazy State University of Zanzibar Planning Section P. O. Box 146 ZANZIBAR –TANZANIA E-mail: [email protected] [email protected]

Informal meeting for Urban Environmental accounting Trieste, Italy 22nd – 24th April 2004

ABSTRACT This paper gives results of the preliminary socio-economic survey conducted in two coastal villages of Zanzibar where coastal aquaculture was still on experimental stage to look for possibilities and potentials for creating a means to supplement the declining fish catch from the wild and poverty reduction in coastal villages of Mungoni (ZALA Park) and Makoba. The sites were previously used for burying coconut husks for rope making and salt pans respectively. Specifically, the paper asses market condition for fish in villages and hotels looking at the local community fish requirements and their perception towards establishment of coastal aquaculture in Zanzibar. Finally it highlights the Cost Benefit Analysis of the ZALA Park fish pond project. Questionnaire survey was conducted to a random sample of 74 households in Makoba and Mungoni (ZALA Park) villages as well as to 15 hotels along the east coast of the Zanzibar island. Also, informal individual interviews with stake holders and observation was carried out during the same period. Preliminary findings revealed higher proportion for males than female household members suggesting more dependence on fishing activities. Majority of interviewees were optimistic about fish farming activities in Zanzibar. Market for cultivated species existed both in hotels and the households in the sense that villagers’ requirement for cultivated fish was estimated on average to be 21 kgs per household per month and hoteliers demand whole year round seemed to be quite considerable during high tourist seasons. Financial analysis for ZALA Park fish culturing indicate the project is viable at 12% discount rate.

2 1. Introduction Coastal aquaculture production is increasingly becoming popular in Zanzibar as a means of making the ends meet for the daily lives of the coastal communities who mostly depend on marine ecosystem for subsistence and income. The move came about after successful endeavor for seaweed culture that was commercially initiated in 1989, following not less than a decade of experiments that proved it to be transferable to local communities in Zanzibar. The aftermath of the seaweed farming was a significant improvement to household economies in respective villages and exportation of Seaweed. Most coastal aquaculture development has already taken place in Asia, Europe and South America whereas relatively modest production has been achieved in Africa (Ronnback et al 2002). Initiatives for small scale aquaculture on finfish and mollusk are progressing in Zanzibar but little has so far been made to identify the social, economic and environmental impact. Scientific experiments on aquaculture of some species of fish and mollusk are carried out on the sustainability and viability. Nevertheless, knowledge and awareness of the trade off between economic and environmental impacts as well as economic and social impact of such undertaking is a key information for the policy making bodies in Zanzibar and a guidance to the would be investors in coastal aquaculture activity in future.

This paper presents results from a preliminary socio-economic survey in two fishing villages in Zanzibar where coastal aquaculture for fin fish is being experimented. Focus is on financial appraisal of the Zanzibar Land Animal (ZALA) Park fish pond at Mungoni and the socio-economic aspects for both Mungoni and Makoba village where Integrated Mariculture Pond System (IMPS) at Mafufuni. The paper consists of five main parts; the first and second part introduces and gives an overview on fish culturing initiatives in Zanzibar with the historical background of the two project sites and the expected socio- economic benefits with respect to establishment of aquaculture for fish. It also touches on the theoretical background of the Costs Benefit Analysis (CBA) of the ZALA Park aquaculture project paving a way to explore the opportunity costs of the sites. Third part provides sections on methodology used in the study that leaded to results on social and

3 economic analysis in the fourth part. The last part ends with conclusion and recommendations for further study.

2. Overview Fishing in Zanzibar however artisanal is an industry that makes a significant contribution to the national economy both in terms of income and employment generation in other supporting sectors. Also it is an important supplement for animal protein to majority of people in the islands of Zanzibar where meat from livestock is relatively more expensive. On the other hand, fisheries sector has been observed to give a significant support to the growing tourism industry in Zanzibar through its supply to hotels and recreational park areas. Increasing population and the use of destructive fishing gears among other factors have made the fish catch to decline overtime, hence increasing demand that is satisfied by the cost of unaffordable prices for delicious and highly demanded species. Moreover, fishermen have been observed to spend relatively more time in fishing and therefore reduced time for other economic activities and leisure that could improve their household’s welfare. Such problems called for several proposals for aquaculture to be undertaken in Zanzibar however still at a small scale. Main intention is to cover the gap of excess demand by having fish supply during off seasons, thus satisfying demand in households, hotels and elsewhere.

Aquaculture though regarded as a lucrative endeavor in terms of income and supply of animal protein to majority of population worldwide. It involves investment of natural, financial, and time resource committed to produce financial gains that might be at the cost of the societal welfare. Ronnback et al (2002) underscore that aquaculture activities often utilize common property resource such as land, water and mangrove areas this contribute greatly to social equity. Consideration therefore, has to be given to the cost or negative externality that others are going to suffer by using mangrove land for other projects. Otherwise, a Pareto improvement in social welfare should be sought where some people are made better off by the project without making others worse (Georgiou et al 1997). In line with the above, survey have been conducted in the villages to assess local communities perceptions on Mangrove land use for coastal aquaculture for fish,

4 current fish marketing system and demand for targeted cultivated species in Zanzibar as well as the financial viability of culturing fish. 2.1 Historical Background The ZALA Park fishpond is a local community initiative located in Mungoni village 25 km away south west of Zanzibar town. The Pond is owned by a group of five people who manage an educational park for the local community and tourists. A wall with a gate is constructed on a mangrove that was excavated to allow control of tidal fluctuations due to its access to the sea. Approximately the 10002 m pond that has been enclosed by a wall should be capable of producing 1000 kg of mullets (Mkizi) per year that would be harvested during scarcity periods when there is less catch from the wild or during high tourist season when demand for fish rise.

The ZALA Park is Zoological for some specimens of local animals that are native to Zanzibar islands and works to promote an ecological preservation, environmental education to students who visits the park for environmental education and researchers. Tentative plan for the group is to construct restaurant in the Park area that could carter for tourists, students and local people visiting the area. The restaurant will form a forward linkage by having its supply from the fish pond and in turn will provide catering services to visitors who prefer to spend some time in the park. On the other hand the fish pond is getting its supply of fingerlings from the sea.

The fish pond area was formerly used by a group of twenty female villagers who individually used the area to process coconut husks for rope making. The activity that involves clearing the mangrove roots to get an area for burying the husks that are let to rot under ground (in vyao1) for nine months before they are exhumed for further processing. The pond area has been used for processing coconut husk since time immemorial, the rights to undertake the activity in the area has been passed over from one generation to another. The activity is indigenous supplementing women’s meager income and form one of the few activities that women can perform in the village to generate some income. In principle, mangrove area is communally owned however the

1 A ditch used to bury coconut husks for processing

5 vyao for coconut husk are owned privately mainly because of individual efforts and time allocated in preparation and the husk are continuously being replaced after every maturity period.

Conversely, the Makoba ponds are IMPS owned by the local government and were formerly used for salt production which later became unprofitable and therefore abandoned. After a very long idle period the pans were converted to integrated fish farming ponds a technique that was simulated from Israel and adapted to local conditions in Zanzibar. Basically decision to establish fish cultivation came about as a measure to utilize the area productively and to demonstrate prototype IMPS within the environmental, socio-economic and technological conditions that prevails in Zanzibar and to enhance research capabilities for development of coastal aquaculture. The pans at the Makoba Bay north west side of Zanzibar island, are located where mangrove estuary is fed by two rivers namely Zingwezingwe and Mwanakombo flowing into the creeks. Existing infrastructure spread over 5-6 hectares and includes water channels for the inflow of water from the sea, water gates and earthened dikes.

The ponds on both sites are models that are supervised and monitored by researchers from the Institute of Marine Sciences (IMS) in Zanzibar who provide professional advice in different issues relating to marine ecosystem, fingerlings and feedings before the technique is distributed to potential fish cultivators in Zanzibar. The outcome of this project is a result of collaboration between IMS and Scientists from from the National Centre for Mariculture (NCM) in Eilat, Israel (Mochi et al 1999). The idea to establish aquaculture for fish came about as an attempt to satisfy demand for fish in Zanzibar, to reduce poverty in villages and to reduce fishing pressure in the coastal waters of Zanzibar.

2.2 Theoretical background A benefit is basically an increase in utility or satisfaction an individual attain for consumption of goods and services. Economic analysis in this respect, use the maximum amount that consumers is willing to pay as a measure of benefit, but in reality such an

6 analysis uses market prices of inputs and outputs. Conversely, cost is a disutility or rather dissatisfaction a consumer suffers, and is assessed through the compensation people require for bearing them.

The rational for valuing mangroves intangible in this regard comes from the basic model of exchange where by market price is determined by intersection of demand and supply of environmental good or service (Figure 1 below). This model is the standard value model used for the estimation of environmental benefit/cost at a time. According to Sinden and Worrel, (1979) area (a + b) give an estimate for the value of environmental benefits/costs. Area (a+b+c) give estimation of Willingness to Pay (WTP) and forms a foundation to different valuation techniques that are to be used in estimation of intangible environmental benefits for its incorporation to the cost-benefit analysis. The model is although static yet it gives a basic idea on benefit and cost concepts and has been used in estimation of different values in different studies (Grilliches, 1958; Barret and Waddel 1973; Hammack and Brown 1974; Hannemann, 1994)

Price

Supply = Marginal Cost = Willingness to sell

c Demand=Marginal Benefit = Willingness to Pay

O Quantity

Figure 1: Environmental Valuation in the Basic Exchange Model

An implicit assumption is that society will be economically efficient in its use of resource when all costs and benefits2 are included in the analysis. The objective function is maximization of social net benefits assuming that the demand for an ecosystem is a derived demand for the goods and services that particular system support.

Mangrove benefits would be acknowledged only if alternative options for mangrove land use are taken into consideration because decisions to utilize mangrove areas for other uses would always involve gainers and losers. This can only economically be done if valuation of all the tangible and intangible benefits derived from the mangroves in the respective area is done to avoid a general tendency where society seeks to allocate its resources in a manner that makes the greatest possible contribution towards satisfying personal needs and wants for goods and services without regards to others or at least to future generations. Optimality and sustainability in this case becomes a challenge to developers bearing in mind that estimation of economic value of the marketed and non- marketed goods and services of the ecosystem in question is however significant but difficult to undertake. Despite the many components of benefits and costs that are intuitively obvious but there are others for which intuition still fails to suggest methods of measurement taking into account complexities of the ecosystems and linkage effect.

3. Methodology Preliminary socio–economic survey involved formal interviews to a random sample of 74 households in two coastal villages and 15 hotels along the east coast of the Zanzibar island using two different sets of questionnaires. Similarly, informal individual discussions were held with women who previously used the ZALA Park fish pond site in processing coconut husks. Similarly key informant interviews were conducted with pond owners, Shehas and village cooperatives to generate information on various issues. Evaluation of costs and benefits applied market prices and a discount rate of 12%, this being the rate used by the World Bank for project appraisals in developing countries. This study aimed at conducting cost benefit analysis of the aquaculture project in ZALA

2 This include direct and indirect, tangible and non tangible

8 Park area, however, due to time and financial constraint economic valuation of mangroves could not be conducted in this phase and by the same token cost benefit analysis do not consider the mangroves benefits or generally speaking ecological services that mangrove generates offsite and the value that the local community attach on option of having the mangrove site intact.

3.1 Societal Benefits and Cost Sinden and Thampapillai (1995) give a broad definition on the CBA as a framework for organizing information, listing the advantages and disadvantages of each alternative, determining the relevant economic values, and ranking alternatives on the criterion of economic worth as a way to make choices. In other words when several options exist for the use of the same basic resource the net benefits of the various options are compared to determine the most profitable way to use the resource.

Looking from a bird’s eye view, the societal benefits of the project under study are broadly divided into three main categories. First and foremost is demonstration effect of fish culturing technique that is expected to spill over to local people in other villages who in future would want to invest in fisheries aquaculture activity, secondly, strengthening research capacity of the local researchers in production and innovation of fish culturing techniques that are environmentally friendly, sustainable and economical viable, considering the local situations. Thirdly, it is one of the food security and poverty reduction processes for local community who fully depend their livelihoods in fishing and extraction of natural resources.

Ecosystem wise, it is widely known that the benefits of mangroves have not ended onsite but are extended offsite. Mangrove areas are breeding sites for fish and other marine creatures that are lucrative to majority of people in the coastal areas. It is well documented that since time immemorial, mangrove ecosystems have contributed significantly to the well being of the coastal communities through their provision of various goods and services such as wood, forage for livestock, honey, medicine and higher valued fisheries. Ecosystem services include coastal protection, nutrient cycling

9 and habitat for wildlife3. Furthermore, mangrove areas are often used for some other traditional activities such as gleaning, burying coconut husks for rope production and emerging ideas on coastal aquaculture with the current ideas of adapting to be in a small scale and mangrove ecosystem friendly. Some of these benefits have existing market prices and others due to market and policy failures society disregard the monetary value for such ecosystem services. But all in all economic valuation is still crucial for placing monetary values on different mangrove goods and services therefore worth be acknowledged in this paper.

3.2 Need for Valuation Dixon and Lal (1993) put forward that a wide variety of single purposes activities may be able to occupy the same area of mangrove at the same time or at different periods without causing damage to the system in question. For the ZALA Park fish pond area a regular scientific monitoring has been carried out and was therefore assumed that the ecological impact is insignificant; nevertheless ecological services that mangroves at the fish pond generate both on site and offsite are still to be considered in valuation exercise; in this case, market price and household production function techniques are to be used disregarding the intensity of fish farming at the ZALA Park and the scale of operation whereby the area used is relatively small and very few mangroves have been destroyed due to a constant emergence of roots in water.

Despite the assumption of insignificant impact, yet economic and financial analysis is crucial so as to have a wider perspective of the project. For that matter, the next phase will consider value attached to mangroves that dried up and that are still destined for drying further while the fish farming is progressing. The idea is to value expected mangrove loss with respect to establishment of such kind of aquaculture and to estimate the opportunity costs as a justification for decisions to continue utilizing mangrove area

3 There is an array of literatures that provides details on direct and indirect benefits of mangroves ecosystem including Christensen; B. (1982); Evan, D. Mercer; Lawrence and S. Hamilton(1984); Ngoile M. A. K and P. J. Shunula (1992), Nasser S. M. (1994); Shunula and A. Whitick (1996); Maler et al, (1996); Spaninks F. and Pieter van Beukering, (1997); Ronnback P. (1997); Semesi, A. K. 1998,

10 for fish farming and not for mangrove regeneration or other undertaking such as the indigenous coconut husk burying activities.

Production Function Approach The complexity of mangrove ecological system is perceived from the considerable services it provides to local communities and interlinkages between the ecosystems. This has posed a challenge in valuing each of the services. Main challenge from economic perspective is availability of information on the magnitude of specific service each mangrove ecosystem or mangrove tree contributes to other ecosystem. Furthermore the ecosystem services might be specie specific, also the outcome of such services might be influenced by other factors that are external to a particular service. But assuming aother factors remaining the same it is quite clear that mangrove ecological services are crucial inputs to the household production. Based on that understanding, production function approach has been suggested in literatures as one of the best techniques for valuation of mangrove ecosystem (Smith V. K (1991) and Maler K-G, I-M Gren and C. Folke 19….).

For this study, consideration is therefore given to kind of production that take place in relation to mangrove services that are considered as one of the inputs. Production that are carried out in the area are cutting mangrove wood for charcoal and firewood, poles for house construction, harvesting fish from the sea including crustaceans, Cephalopods and mollusks, lime making, firewood collection, burying coconut husks, Agricultural harvesting from the land. The model will thus involve production by households under assumption of a closed economy and household consumption. production functions qi where i= 1,2…5 are shown below:

Fish harvesting from the sea and the pond q1 = f1 (y1, y11 , S2, S1, E)

Lime making q2 = f2(y2, S1, L)

Collection of firewood q3 = f3(y3, S1, L)

Coconut husk burying q4 = f4(y4S1, S3, S4,L)

Agricultural harvesting from the land q5 = f5 ( y5, L, S1,S4, )

Where the mangrove services are denoted by S1, S2, S3 and S4 indicating stock of mangrove at the ZALA park measured in wood biomass, supply of fish, protection of the shore from erosion, and nutrient cycling between the land and the sea respectively. Also y1 is time allocated in fishing, y11 supply of fingerling from the wild, y2 is time allocated in stone quarrying, y3 is time allocated in cutting firewood, y4 is time allocated in collecting coconut husk and y5 is time allocated for farming. It is assumed that beside the services provided by mangrove swamp and primary input, the only extra input is households labor L that is used in conducting the production activities.

4. Results and Discussion 4.1 Household Characteristics The Communities of Mungoni and Makoba village consist of 1320 and 6940 people with 286 and 1320 households size of 4.6 and 5.3 respectively making the average of approximately 5, generally population in both villages give a higher proportion of males than females (Census 2002) suggesting further exploitation of coastal waters for fishing. This is supported by the Age group structure which range between 11 years and 80 years, majority of them being the age of 31 to 40 years as shown in figure 2 below and therefore very energetic to withstand the hardship of fishing activity in the sea.

Respondents' Age Distribution 30

10 No. of Respondents 5

0 11 - 20 21 - 30 31 - 40 41 - 50 51 - 60 61 - 70 71 - 80 Age Group

Figure 2: Respondents Age Distribution

12 Levels of education for both villages showed that 35.6 % completed form I to form III a compulsory basic education in Zanzibar. Only 2.7% completed form IV, a secondary level of education that allows one in Tanzania/Zanzibar to sit for Ordinary Level Certificates that could at least give someone a chance to go for higher studies. A significant number 16.4% of respondents did not go to school and are regarded as not having formal education (see figure 2); however, most of those have completed Madras, religious institution that is attended by Muslims and is popular in Zanzibar.

Respondents' Levels of Education 30

10 No. of Respondents 5

0 N.F.E Std 1 - 4 Std 5 - 8 For m I - III Form IV Level of Education

Figure 3: Respondents’ Level of education

4.2 Local Community Livelihood Structure Local community livelihoods are the day today activities that villagers are engaged in order to earn their daily bread. Generally villagers in both villages have low income to enable them invest in more profitable and sustainable economic activities. Hence they mostly depend on unsustainable exploitation of natural resources being marine, terrestrial or both. Analysis suggested that respondents in Makoba and Mungoni were simultaneously engaged in more than one economic activity. Nevertheless, fishing was found to be the most dominant activity in both villages followed by farming, other activities though insignificant are government employment, tailoring and public transport. Formal interviews suggested that activities relating to mangrove are insignificant in both villages. This might be because mangrove cutting is illegal; however villagers are allowed to utilize for subsistence purposes only example for house

13 construction in the respective village, otherwise one has to get a permit from department of forestry to cut if it is dry/dead. Observation in villages revealed that mangroves in the area was mainly used for charcoal making, this is due to its high calorific value that made it fetches higher price than charcoal made out of terrestrial trees. This observation was common in Mungoni village where a bag of mangrove charcoal sold at a price of 3,5004 Tshs each, whereas a bag of similar size made of terrestrial trees was sold at 2,500 Tshs.

Livelihood activities

40 35 30 25 20 15

% of responses 10 5 0

g y t g n ng er nt ld ing ve kin hi hi n ro a Oth Trade g g c Farmi Fis sbandr ndcraf Stude u a Glea e m Sea weedH Man im L Youn An. H Activity

Figure 4: Livelihood activities Anderson and Ngazy (1998) highlighted that the Coastal zone offers a large number of production alternatives, derived from large number of ecosystems. Therefore as a risk aversion strategy, villagers often diversify their daily activities wisely depending on seasons. They combine their activities such that they have their flow of cash and subsistence fairly constant through out the year to carter for daily expenditures. Similarly, economic activities in study villages often supplements each other, however one of those always becomes most dominant depending on season5. The dominant activity is regarded as primary and hence most reliable for income generation. In principle activities from this study were grouped as primary, secondary, tertiary and quartenary, but few villagers found to be engaged in more than three activities. Looking the activities for both villages in figure 4 above, farming take a lead followed by fishing and the least mentioned is mangrove related activities including lime making. Basically, depending on season fishing and farming were alternatively the backbone of the

4 1,038 Tshs equivalent to 1 USD

14 households’ economy in both villages thus usually regarded by villagers as their primary activities. Farming is usually conducted on a plot of land within the village suburbs and fishing is extended very far from the village and often fishermen uses more than one fishing ground depending on weather, vessel and type of gears. Fishing in Makoba and Mungoni is artisanal, Fishing gears were found to be hooks and line 75%, dema traps 5%, line and hooks plus nets 5.2%, net (segeju), nets (other kinds) 10%. (Fig. 5 below)

Fishing Gears in Mungoni and Makoba

10% hooks and line 4.80% 5.20% dema trap 5% hooks and net net segeju net other kind 75%

Figure 5: Fishing Gears in Makoba Common vessels and means used for fishing were dug out canoe 50%, canoe 24.3% and by feet 2.7% (Fig 6 below). Despite the overall results for vessels and gears, proportion for type of vessels and gears differ in two villages, but considering sample representation between the villages at the time of this analysis, it was decided to combine the two.

5 See also Rosenznzweig, M. R. (1988); Andersson and Ngazy (1998)

15 Vessels in Mungoni and Makoba

2.70%

24.30%

dug out canoe canoe feet 50%

Figure 6: Types of Vessels in Mungoni and Makoba

Analysis of the vessels suggested that the type of vessel and proximity or accessibility to fishing grounds is among the factors determining the use of fishing ground. This is supplemented by Tobisson et al (1998) findings that the fishermen’s activities are to a large extent influenced by the direction and intensity of winds. In this regard, Fishermen from Makoba to the north west of Zanzibar utilized fishing grounds on the Tanzania mainland mostly, whereas fishermen from Mungoni to the South west of Zanzibar Island utilized fishing grounds that are within Zanzibar waters mostly (Ngazy and Jiddawi, 2003). Individual informal discussion with women who had their coconut husk buried at the pond site revealed that majority of them were satisfied with the compensation they received from fish aquaculture project owners. However due to different factors which leads one to his/her original utility, very few women were dissatisfied and claimed that they deserved more compensation in accordance to specific value they attach to the place and the intensity of their work on that place. Nevertheless, all the women who have decided to carry on with the activity managed to find an alternative site.

4.3 Demand for Fish in Makoba and Mungoni

16 Interviews with hoteliers along the Zanzibar East Coast suggested that 71.4% of the hotels received foreigners where as 28.5% received both foreigners and locals both residents and non-residents but had their meals in those hotels. Responses for the question on preference for seafood/fish specie show that most preferred fish were Red snapper and Kingfish followed by Jodari, Tuna, Marlin and Lobster and least Preferred specie were Dorado, Shark, Chewa and Prawns (see figure 7 below).

Customers Preferences in East Coast Hotels

Kingfish Red snaper Changu Rabbitfish Sail fish Chewa calamari Prawns Octopus

Figure 7: Customers Preference in East Coast Hotels Demand for fish during tourist low seasons and high seasons in the East coast hotels’ was 213,720 kg and 521,400 kg respectively assuming three months period per season. Compared the figures to National fish catch the quantity is substantial bearing in mind that the sample didn’t include all the big hotels in Zanzibar. Turning out attention to a general increasing tourist trend in Zanzibar (see Ngazy et al, 2000), fish consumption in hotel portray interesting suggestion between fishing and tourism that need a follow up (pers.com 2003). Regarding fish prices, the increasing number of hotels along the east coast seemed to have a negative effect on hoteliers. Relatively it increased fish prices in their locality contrary to hypothesis that hoteliers would enjoy the advantage of low prices due to their location in villages rather than in town. Responses from the question on fish prices show that 42.8% of the interviewed hotelier mentioned that prices are the same in the village and town. In addition some of them claimed that most of the time they couldn’t get their fish supply from the villages therefore had to buy fish from town market thus involving

17 transport costs and more time consuming. 28.5% responded that prices are lower in their locality than in town, 14.2% responded that prices are higher in their locality than in town market and 7% could not compare prices in town and their localities.

4.4 Local Community perceptions on Coastal Aquaculture Survey revealed that so far fish cultivation initiatives are not very popular to most people in the villages despite the increasing proposals. This is revealed by 78.6% who have not heard about fish farming in Zanzibar and a smaller proportion 21.4% who have heard about it, but have never been supplied with fish from those farms. The idea of establishing the activity in Zanzibar was seen by 79% of interviewees as good, whereas 14.3% decide not to respond to the question and 7.2% were unsure if it is good or bad. For those who are optimistic with the idea responded that they would like to buy the cultivated specie but this was subject to price, specie and season. Those who would not want to buy cultivated fish were 21% reason was their preference for Red snapper, Tuna and white flash fish (figure 6 above) that might be differently from the cultivated specie.

Suggested price by respondents for cultivated specie was 970 Tshs per kg. This price is however low considering unpredictable changes for feeds, substitutes and maintenance cost. Fish population does not expand indefinitely, since natural conditions (food) set a limit to expansion, harvesting more than growth, would ultimately cause the depletion of the resource Johansson 1996). This implies that profit-maximizing firm would deplete the resource immediately if its price is expected to increase at a rate that falls short of the market interest rate.

Majority of respondents revealed that household demand and price for fish was increasing in both villages while fish supply was decreasing this is however obvious in to demand and supply theory; to cope with the situation their preferences have changed substituting vegetables for fish. Main types of vegetables used were beans, spinach and cassava leaves. Also, in the past households used to consume fish at least in each one of the three meals of the day for all the days in a month, but currently on average households consumed 21 kg per household per month, for majority of the household this

18 quantity claimed to be sufficient for not more than three weeks6. Ronnback et all (2000) show that the average fish consumption per person in the world was 16.1 kg yr-1 in 2000. Different region however show very dissimilar trends. Hence considering average villages’ household size of 5 people consumption per person is approximately be 4kg per month, this might be unrealistic and unaffordable to local village considering fish price and villagers’ income.

4.5 Economic Returns from ZALA Park Pond Area Before pond construction started, women coconut husk processors were requested to transfer their coconut husks to another area along the coast where they could continue with the activity. They were assisted in exhuming the husks and reburying them in a new area with a displacement compensation totaling 635,000/- Tshs that was paid to women individually (in ZALA Park group’s records) though at differing rate.

Apart from the compensation figure, economic analysis for the project was constrained by unavailability of data for values on mangroves ecological services and timber and non timber resource values for clear felled mangroves that stood at the site before pond construction, also mangroves that might be at risk of destruction while fish culturing is in progress, especially when we consider that the project is an experimental undertaking, however under professional supervision and monitoring. Concern is still given to what society gives up and what society receives in return. From development point of view, this could be given by the use of shadow prices7 or by quantification of opportunity costs. Alcala (1988) in Ronnback et al, 2002 estimated that each ha mangrove can generate 1,100 –11,800 kg fisheries catch mean (3600 kg) (reviewed in Ronnback, 1999), which illustrates the potential life support value of mangroves. This productivity is for example, much higher than the10 –370 kg ha-1 yr-1 proposed for coral reefs by Alcala, 1988. In developing countries, the annual market value of fisheries supported by mangrove range from USD 900 to USD 12,400 ha-1 mangrove (USD 3400 ha-1 as mean) (Ronnback, 1999). This value is based on one mangrove good only i.e fisheries production.

6 We have to understand that usually majority of villagers consume the low priced fish and sell the high priced fish to earn more income.

Cost benefit analysis for this paper therefore, focused more on financial perspective of the ZALA Park project. Additional effort is still to be made in economic analysis by estimating the economic value of ecological services and other resources generated by mangrove. This will follow later when the negatives and positive changes become known. Currently financial analysis gives a greater hope for project feasibility as presented by the Net Present Values (NPV), Benefit Cost Ratio (BCR) and Internal Rate of return (IRR) in the outline of Cost-benefit analysis below.

Costs and Expected Revenues for the ZALA Park Aquaculture 1) Initial Project Costs in 1st year: Pond construction 1,245,6008 Compensation to rope markers 635,000 Labor cost 9 210,000 Sub total 2,090600 2) Annual costs Maintenance cost10 55,000 Fishing net 43,100 Reproduction and Fingerling 17,200 Sub total 115,300 3. Annual revenue from fish sales 800,000

Discount rate 12%

7 Adjustment of market prices to correct for distortion caused by government intervention or regulations 8 this is equivalent to 1200 USD 9 Opportunity cost of labor is calculated as the social cost for labor considering 21 days used by project owners in exhuming coconut husks from the pond area and supervision.

20 Table 1: ZALA Park NPV Cash Flow Benefit Capital Costs Annual costs Net Cash flow Year 1 0 -2,090,600 -115,300 -2,205,900 2 800,000 0 - 115,300 684,700 3 800,000 0 -115,300 684,700 4 800,000 0 -115,300 684,700 5 800,000 0 -115,300 684,700 6 800,000 0 -115,300 684,700 7 800,000 0 -115,300 684,700 8 800,000 0 -115,300 684,700 9 800,000 0 -115,300 684,700 10 800,000 0 -115,300 684,700

PV 3805892.7 -1,866,607.1 -651,470.7 1,287,814.9

NPV = Tshs. 1,287,814.9 Benefit Cost Ratio = PV Benefit/PV costs = 1.5 IRR =28% NPV gives the net present value of an investment by using a discount rate and a series of future payments (negative values) and income (positive values). This is a first decision criterion, it require that project NPV>0 in order to be feasible. Thus it reflects that the present value of incremental benefit exceeds the present value of all capital and recurrent costs. Objective is to maximize NPV, since appraisal in this case involve only one site/project the project is seen as feasible for Local communities to undertake.

BCR explains how much the owner gets from every 1sh expended in the project. Therefore the project seems to be feasible if for every 1 shilling the owner get more than one shilling. Referring to this case the project is feasible since the BCR is 1.5, however

10 This include feed, fertilizer and pond maintenance

21 we can’t say that it is the best since we don’t have alternative project to compare with in order to select the optimal one.

IRR is the discount rate that will bring NPV of the project equal to zero. On the other hand it is a return on investment such that the Present value of measured benefit equals the present value of measured costs. The objective in this criterion is for the project to earn an IRR greater than opportunity cost of capital which in this case the IRR is 28% and therefore greater than 12%. According to this criterion this project is accepted, otherwise if less than 12% it would be rejected.

5. Conclusion and Recommendations Preliminary fish culturing initiatives are perceived by local communities as a positive undertaking and a good idea to satisfy increasing demand for fish in Zanzibar especially following tourism promotion in the islands. The ZALA park fish aquaculture project appears to be feasible, however further survey and assessments have still to be done on the use values and ecological values of mangroves in the area for the sake of economic analysis and financial analysis of the Makoba fish farm project and estimation of economic value for integrated fish pond system at Makoba site for incorporation to cost benefit analysis.

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