Makgadikgadi Birdlife 2011.Pdf

ENHANCING THE VALUE OF PROTECTED AREAS OF THE MAKGADIKGADI WETLAND SYSTEM

THROUGH CO -MANAGEMENT AND SUSTAINABLE FINANCING

Jane Turpie, Jon Barnes & Gwyn Wilson

Final Report February 2011

ANCHOR environmental

Cover photo and inside photos: J Turpie

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ACKNOWLEDGEMENTS

This study was funded by GEF as part of the GEF/UNDP/DWNP/BirdLife Botswana “Strategic Partnerships” project, and was managed by Pete Hancock of BirdLife Botswana.

This report was produced by:

Anchor Environmental Consultants , 8 Steenberg House, Silverwood Road, Tokai 7945, South Africa; www.anchorenvironmental.co.za

ANCHOR environmental

Design and Development Services , 25 Saffier Street, Eros Park, PO Box 25942 Windhoek, Namibia.

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System iii EXECUTIVE SUMMARY

Introduction

This project forms part of the GEF/UNDP/DWNP/BirdLife Botswana PROJECT: “Strategic Partnerships to Improve the Financial and Operational Sustainability of Protected Areas”. The overall objective of the “Strategic Partnerships” project is to improve the financial and operational sustainability of Protected Areas (PAs) in Botswana through improved working partnerships between public, private, NGO and community stakeholders. This project aims to use the new CBNRM Policy, the draft Environmental Management Act and the Makgadikgadi Framework Management Plan in order to implement participatory planning and protected areas co-management, using the Makgadikgadi Wetland System, Makgadikgadi/Nxai National Park and the Flamingo Sanctuary as demonstration sites. Management of the small and fragmented system of protected areas in the Makgadikgadi area will only be sustainable and effective if numerous funding streams are tapped and benefits accrue to the adjacent communities. The Strategic Partnerships project will test the important assumption that by involving relevant stakeholders in PA management, control over their resources will be democratic, costs to central government will decrease, destructive behaviour will be reduced, law enforcement improved, capacity expanded, a wide base of technical and traditional knowledge tapped, a more equitable distribution of benefits will be possible, and the service provision functions of PAs will be better recognized and protected.

Objectives for the study included a description of the current economic value of the MWS protected areas, options for establishing a protected area around the Flamingo Sanctuary in southern Sua Pan, options for co-management as a means of reducing costs of the parks in the MWS, a description of the current financing situation for protected areas in the MWS and a contribution to towards the development of a financing strategy.

The Makgadikgadi Wetland System

The Makgadikgadi wetland system (MWS) is located in north-eastern Botswana, south east of the Okavango Delta and south of the Chobe River. The MWS contains one of the largest pan complexes in the world, which is divided into the Ntwetwe Pan in the west and Sua Pan in the east, each of these having their own catchment area.

In Botswana, the overall floral and faunal species richness is highest within the protected area network and in the more northern and eastern boundaries of the country, such as the Okavango Delta. The Makgadikgadi Pans does however represent an important part of the biodiversity landscape in Botswana, particularly for the representation of plains game, including migratory herds, for predator populations such

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as wild dogs, and for breeding waterfowl, in particular, flamingos. Flooding of the pans occurs after good rains when water arrives via the Boteti and Nata Rivers. This attracts herds of big game such as zebra and wildebeest as well as large flocks of birds such as pelicans, waders, terns and breeding aggregations of flamingos. The MWS also supports charismatic fauna such as the African meerkat and the highly endangered wild dog.

Botswana's protected area system is one of the country’s most important natural assets. Botswana has set aside about 45% of its land area as protected areas in National Parks (8%), Game Reserves (10%), private Wildlife and Nature Reserves (<1%), Wildlife Management Areas (WMAs, 24%), Forest Reserves (1%) and National Monuments (<1%). Further protection is also afforded through the national Community-Based Natural Resource Management (CBNRM) programme. In the MWS, the state protected areas are limited to three sites: the Makgadikgadi Pans National Park, the Nxai Pan National Park, and the recently-proclaimed Sua Pan Flamingo Sanctuary within the southern Sua Pan.

Non-state protected areas is the land which falls under the CBNRM Programme and here, in line with the National CBNRM Policy, communities have organised themselves into community-based organisations (CBOs). There are currently eight registered CBOs in the MWS, of which only three are fully functional. The primary conservation objective for community protected areas is the sustainable use of natural resources, rather than the protection of biodiversity and ecosystem integrity.

The MWS boasts a range of tourism attractions that are complementary to the other areas of Botswana. These include the unusual pan-dominated landscapes, waterbird aggregations, baobabs, archaeological artefacts and local culture. The MWS is relatively underdeveloped as a destination but tourism developments have been significantly increasing over the last decade. These include luxury camps and lodges around the edge of the pans, community campsites, and hotels and camps along the main routes around the MWS. The campsites in the National Parks are basic. There are good tarred roads around the MWS but reaching areas within the MWS requires travel on poor quality dirt roads by 4x4. In total, if campsites are included, there are an estimated 1257 beds in the study area.

The Makgadikgadi Framework Management Plan (MFMP) was developed in 2010 by the Ministry of Environment, Wildlife and Tourism (MEWT) through the Department of Environmental Affairs (DEA). The MFMP identifies priorities for development, management and conservation activities with the overall aim “ to improve people’s livelihoods through wise use of the wetland’s natural resources ”. The MFMP consisted of three phases and a common environment-development approach was used where the activities were guided by a combination of sustainable development and livelihood approaches as well as an ecosystem approach. Potential future scenarios were developed for the area. These included “current situation and trends”, “resource protection and conservation”, “rapid economic growth” and “sustainable use”.

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“Sustainable use” emerged as the preferred management option. The MFMP activity plan highlights the importance of creating livelihood benefits and economic growth within the MWS. It states that underutilised natural resources need to be used to their full potential and the efficiency of natural resource use needs to be increased. Development and management of the area should be the shared responsibility of all stakeholders and therefore, partnerships between the private sector, communities, government and other institutions need to be improved and further established. Ecosystem goods, services and functions also need to be recognised and supported through management.

The recommended MFMP activities include fully integrating the sustainable development and ecosystem approaches into management planning and development, implementing integrated river basin management for the area, conducting a more detailed valuation study of protected areas, and integrating indigenous knowledge into management. The MFMP also lists recommended activities specific to protected areas, tourism and CBNRM.

Economic value of the MWS state protected areas

The MWS as a whole generates a number of ecosystem services that have values to society. The recent MFMP study estimated the area to be worth over P1 billion in terms of the overall direct and indirect contributions to the economy. Direct uses include livestock production, crop production, harvesting of veld products, tourism and mining, and they amount to some P880 million (of which P197 million per annum is realised directly as private net income to households in the MWS). Indirect uses include ecosystem services such as carbon sequestration and the provision of wildlife refuge areas that serve the broader landscape which are estimated to be worth about P155 million.

Ecosystems offer a range of goods, services and attributes that generate value and contribute to human welfare. Goods are harvested resources such as grass, services are processes that contribute to economic production such as water purification, and attributes relate to the structure and organisation of biodiversity such as beauty. They can also be categorised as provisioning services, regulating services, cultural services and supporting services. The Total Economic Value of an ecosystem comprises Direct Use, Indirect Use, Option and Non-Use values.

In this study, the value derived from an activity was measured in terms of net private value , contribution to local communities and contribution to net national income . In measuring economic value, prices are adjusted to correct for distortions, wherever market prices do not reflect true value. The main services provided by the MWS parks were identified and described as far as possible using existing information. Particular attention was given to tourism value, which was the most important value of the

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protected area system and one which can be further developed and enhanced. The specific contribution of avitourism was also examined.

The ecosystem services generated by protected ecosystems in the MWS area were evaluated. While communities living within the MWS system derive large benefits from the use of natural resources, little or none of this is obtained from protected areas. As consumptive use of parks is not allowed, none of these potential provisioning service values is realised at present. The main regulating services provided by the protected area system are carbon sequestration and the provision of refugia for wildlife. The sequestration of carbon is an important service which offsets the damage caused by increasing atmospheric carbon and resultant global climate change. The sequestration of carbon by ecosystems therefore has a positive economic value. A preliminary estimate is that this service may be worth in the region of P74 - 253 million in the whole of the Makgadikgadi Pans area. Protected areas play an important role here, in that conserved natural systems within dryland have higher value as carbon sinks compared to degraded or heavily grazed areas outside protected areas.

Focus for analysis was on the direct use values currently generated by the protected areas though tourism. Game lodges and camps are responsible for much of the economic value of park tourism in the MWS. In terms of its direct value added to the national income , park tourism in the MWS contributes some P22 million in gross value added (gross national income), and some P18 million in net value added (net national income). About 170 jobs are involved and these tourism activities generate an estimated P15 million in terms of natural resource rent. It is noteworthy that much of this economic rent is captured by government in taxes and only 16 percent of it is captured by local communities in the form of rentals and royalties for tourism concessions. The issue of rent capture is worthy of examination and possible rationalisation to make it more economically efficient.

The direct gross value added by park tourism amounts to P22 million but this direct contribution can be combined with additional impacts on the national income resulting from lateral and backward linkages. Adding these values brings the total gross national income impact to P93 million. The total impact is some 4.2 times the direct value. It is noteworthy that the park-related economic tourism values estimated above, amount to between 40% and 45% of the economic tourism values for the whole MWS area as measured by Arntzen et al. (2010).

Options for sustainable financing of parks Budget allocations to Botswana’s national parks are considered insufficient to maintain a minimum standard of services and are expected to result in a deterioration of the natural resource base and park infrastructure. This situation is not unique, and development of sustainable financing mechanisms has become a global focus for protected area systems. This requires financial planning that matches the short- and

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System vii Executive summary

long-term requirements of a protected area system. Sustainable financing requires securing adequate funds, and also considering the quality, form, timing, targeting, uses and sources of funding. It is not possible without strong and effective institutions for PA management. It may be worthwhile for Botswana to assess its situation and progress using the UNDP's Financial Sustainability Scorecard which can serve as a useful tool.

Budget data are not available for Botswana’s parks at the individual park level, and neither is expenditure recorded at the park level. Previous estimates suggest that the budget is a fraction of that required to achieve biodiversity conservation goals under the existing and expected illegal hunting pressures, with a financing gap of some P17 million for parks as a whole. This would bring spending to a level comparable with that of South African parks in similar environments.

DWNP will need to consider various options, including external flows, various market- based revenue raising tools and cost-saving mechansisms. At present, parks are largely reliant on government buget allocations, but these allocations are disproportionately small when one considers the importance of nature-based tourism to Botswana’s economy. These kinds of arguments can also be used to leverage donor funding for park development. Like many other countries, Botswana has already made some headway in setting up trust funds for the reinvestment of park income, in the form of a National Environment Fund, gazetted in July 2010, a Conservation Trust Fund, and a Community Conservation Fund. Trust funds provide an opportunity for ensuring that as much as possible of the revenue generated by parks is returned to parks. Such funds provide opportunities for better management of money allocated to the wildlife sector, and can play a significant role in supporting community-based initiatives.

The main source of revenue from parks is currently the park entrance fees, which are charged per person per day and per vehicle entrance. Three areas need to be addressed: (a) increasing tourism demand through investment in infrastructure and marketing; (b) development of an optimal pricing system that achieves the desired balance between revenue maximization and overall welfare value, and (c) development of an efficient fee collection system. Development of the MWS area will play an important role in increasing tourism demand, in that it will broaden Botswana’s tourism product in several dimensions. Park entry fees are badly outdated and urgently need to be reviewed based on empirical research. Review and updating of park fees every three years based on proper ongoing analysis of demand and re-evaluation of needs and objectives will be an essential action to take.

There is substantial opportunity for increasing tourism revenues through public- private partnerships with concessionaires. Many of Botswana’s parks, including those in the MWS, have the capacity for an increased numbers of beds. Royalties of 4 – 10% of turnover can be obtained from these, in addition to rentals. Use of these opportunities should not compromise the conservation objectives of the parks, however. New tourism developments would have to be phased in to meet

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anticipated growth in overall demand. Current growth in tourism is around 5% per annum. Private sector investment in parks needs to be encouraged, possibly through setting up a dedicated unit within the DWNP to perform concession development and management functions. Continuous capacity development of the Concession Unit staff would be necessary. Moreover, in order to cover the additional cost of the concession management and to ensure the high level of visitor experience in parks, it is strongly recommended that the tourism concession fees will be reinvested in the park management through a trust fund.

Visitors to parks can also be given the opportunity to make voluntary contributions over and above the entry and other fees they paid to visit the park. This has been implemented successfully in other countries.

Other revenue raising options for state parks include sales of wildlife or plant products (limited potential), bio-prospecting permits (very limited potential) and prospecting and mining fees (considerable potential). Opportunities to tap into the global trend for Payments for Ecosystem Services are probably limited to carbon sequestration and storage (e.g. via REDD initiatives) and possibly the Refugia function of parks (involving payments from tourism operators outside parks), but neither of these are sufficiently tried and tested under similar circumstances at this stage. A scheme could be devised where firms could receive biodiversity offset certificates for making contributions to conservation, e.g. into a trust fund. However, it is doubtful that this would be a significant source of revenue for parks in Botswana. Some income could also be generated from cause-related marketing (e.g. ‘adopt an elephant’), through an NGO partner.

Cost-saving initiatives, that might reduce the costs of running parks, include the use of paying or non-paying volunteers and interns, outsourcing park management to a private company, and reducing conflict with neighbours through co-management of parks and/or establishment of development projects or programmes (e.g. CBNRM) in the areas surrounding parks. Park management concessions, in which management is outsourced to the private sector, is increasingly being applied both in developed and developing countries, and has been successful, leading to more efficient use of funding by a company that is free to deploy its resources in the most efficient manner. The Zambian Liuwa NP model is a good example. As another alternative, co-management arrangements (public-community partnerships) are usually set up to help parks meet their social mandates and to reduce park management costs by reducing conflict with neighbouring communities. Such arrangements have been tested in Moremi Game Reserve and in South Africa (Richtersveld National Park) but have had suboptimal results. Integrated conservation and development projects, also aimed to reduce pressure from neighbouring communities, include (a) development assistance (this has very limited benefit to parks), (b) access to resources in parks (limited benefits to communities, and carrying inherent risks to biodiversity), and (c) community-based natural resource management (CBNRM), which has achieved mixed success, but can be

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highly successful. The latter option is explored further below.

Options for developing the tourism base in MWS

Recognising the biodiversity importance of the MWS area, the MFMP has identified the need to strengthen conservation of the system, while at the same time pursuing socio- economic development. Rural development among the resident communities is a high priority. It is also clear that substantial opportunities exist to increase tourism in the MWS area. Focusing on tourism as a development tool has the advantage in that it simultaneously provides the incentive to secure the natural resource base upon which it depends, has the potential to generate revenues to help finance the parks, and provides local business and employment opportunities. It is important that whatever development takes place does benefit resident communities, since this will in turn help to improve compliance within and outside parks, which will have financial advantages.

Tourism development sites and nodes have already been identified in the MWS area. Developing these areas will require upgrading the level of biodiversity conservation in and around them, and enhancing both the wildlife and wilderness characteristics of the MWS area as a whole. Options for expanding the area suitable for nature-based tourism include expansion of the park itself, either through expropriation or through contract arrangements with the local communities, or the development of buffer zone conservation areas around the park by developing CBNRM activities.

The Government of Botswana has created a positive enabling policy and legal framework within which community-based approaches to natural resource management can be implemented. The most important policy and legislating affecting the future of the MWS area include: • The Tribal Land Act, 1968, which introduced common law leases making land obtainable to individuals or communities for certain commercial purposes, including cattle ranching, wildlife utilisation and tourism; • The Tribal Grazing Land Policy, 1975, which promoted livestock development and also reserved areas for wildlife and formed the basis for Wildlife Management Areas; • The Wildlife Conservation Policy, 1986, which further established the WMAs and encourages the development of a commercial wildlife industry; • The National Conservation Strategy, 1990, which outlines approaches for sustainable use of natural resources; • The Tourism Policy, 1990, which outlined the low impact tourism policy and encourages local benefits from tourism through employment and rural development; • The Wildlife Conservation and National Parks Act, 1992, which makes provision for protected areas in Botswana, as well as establishment of WMAs and CHAs, and the issuing of permits, licenses and quotas; and

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• The Community Based Natural Resources Management (CBNRM) Policy, 2006, formulated to guide what had hitherto been a rather ad hoc implementation of CBNRM around the country and to safeguard the interest of communities in natural resources management and to attract investment in natural resources based enterprises.

CBNRM in Botswana places a heavy emphasis on the devolution of power, the generation of jobs, and income through enterprise development, the active management of natural resources by local communities, and capacity building and other support to local communities by external agencies including government. However some aspects of the recent policy have been criticised. Experiences from CBNRM initiatives in Botswana, such as the Chobe Enclave Conservation Trust, Okavango Community Trust and Sankuyo Tshwarangano Management Trust, have provided useful lessons on financing (conservation objectives should be an explicit part of the formal financing agreement), community empowerment (communities need to have real authority over natural resources management), external support (for capacity building), benefit distribution (hampered by lack of skills and capacity to plan and implement community development projects), stakeholder collaboration (crucial for common understanding) and on the multiple versus single village approach (single is easier).

CBNRM lease areas have been registered in most parts of the MWS area where communities reside. Some eight trusts have been registered but only three are currently operational – the Gaing-O Community Trust, Nata Conservation Trust, and the Xhauxhwatubi Development Trust.

Financial and economic analysis using empirical data from the operational trusts indicates that CBNRM in MWS, fully supported and developed with a sound joint venture concessions policy, can be financially attractive to investors and economically efficient. It is noteworthy that this viability is dependent on the community retaining all the income generated from joint venture concessions. Current CBNRM policy makes provision for the state to tax these incomes for a fund at the level of 65%. Sensitivity analysis using the general CBNRM lease area model and imposing varying levels of this tax, shows that taxes at or near this level would result in negative net incomes and non- viable project rates of return for CBNRM investments. Care will be needed to ensure that CBNRM lease areas in the MWS are taxed at low levels - below 35%, and commonly close to zero, depending on the situation.

Broad options for expanding the area suitable for nature-based tourism, whether for the south Sua Pan or for the MWS area as a whole, were identified as follows: 1. Proclaim a larger state protected area – requiring purchasing land from the communities. This option is likely to be extremely costly and politically difficult. 1. Set up a co-managed contractual park, similar to the CBNRM model, except that the whole area would be named as a protected area and jointly managed

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by the communities and the state. This would require a co-ordinated effort involving all four communities, which share in the overall arrangement and benefits. 2. Promote full CBNRM programme development in the areas around the state park in a looser co-management arrangement. This would entail building on the existing Gaing-O initiative and conserving resources to develop a number of new tourism joint venture establishments.

A cost-benefit analysis model for the south Sua Pan co-management option indicated that at full production, a project net income of P1.9 million would be possible, and the project internal rate of return could be some 16%. Communities would benefit substantially relative to their inputs receiving net incomes of P2 million and internal rates of return of 21%. The project would also be economically efficient with an economic rate of return of some 24%. These results indicate that co-management as an option to develop in the south Sua Pan area is both financially attractive and economically efficient, and that it could offer attractive positive returns for communities

Co-management in the whole MWS area was analysed by comparing the costs and benefits of two scenarios, a "business as usual" scenario and a co-management scenario involving either the contractual park or and the full CBNRM programme development options. The findings indicate that overall, cost and benefits are significantly larger with the co-management scenario, and the 30 year economic rate of return is also significantly higher at 35% as opposed to 23%. The overall project net present value could be expected to be some three times larger for co-management compared with the “business as usual” scenario.

It is clear from the cost benefit analysis that from a conservation perspective, as well as from an economic development point of view, investment in further conservation and tourism activities beyond the existing parks in conjunction with the surrounding communities is likely to be a very attractive strategy. Sensitivity analysis on the models varying the costs and income predictions confirms this finding. It remains to decide which particular approach to co-management between the two described above would be institutionally and politically preferable.

Analysis of the pros and cons suggest that from a biodiversity perspective, the certainty of conservation success appears to be highest under a contract park model, largely because of the more cohesive management of the area. The contract park model may also be preferable to the CBNRM model in terms of tourism potential, because one larger park may be easier to market than separate accommodation facilities in multiple CBNRM areas. The CBNRM option is likely to be better in terms of local community empowerment, sense of ownership and building capacity. However, the relative advantage does depend on the way in which communities might be engaged to co- manage the contractual park.

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It is possible that CBNRM would be easier to implement than a Contract Park, because the process is already started, and there is a policy and a precedent. It could even be a step towards a contractual park, though there would be some legal issues to consider. From a governance perspective, both types of operation are likely to lead to reduced land use conflicts, allowing DWNP to concentrate on their mandate. There were major concerns, however, that communities lack the skills and capacity to make a success of the CBNRM model. This might be further exacerbated by lack of cooperation between communities and in both models, governance may also be weakened by lack of sufficient support from government, and maladministration, but possibly more so under CBNRM.

Conclusions

CBNRM in the MWS has potential to be financially and economically viable but this will require significant support and the development of joint venture tourism with a minimum of taxation. Investing in conservation and tourism through a contract park or CBNRM approach is economically viable, assuming a sound CBNRM policy environment particularly in the latter case. This is true for both the South Sua Pan area as well as the broader MWS area. In the broader MWS area, co-management could offer very significant leverage, in that the burden on government finance would be lessened, while very large private sector and donor investments could be harnessed in the generation of very significant increases in conservation benefits and economic growth

Given the potential economic advantages due to greater tourism marketability, the contractual park option should be considered seriously. This could begin at the scale of the South Sua Pan, and eventually be scaled up to create an amalgamated Makgadikgadi Pans National Park that is rival to Namibia’s flagship park - Etosha Pan National Park. The park will then set the scene for the realisation of the many tourism development options in the area, through private sector investment. In the longer term, the area should be able to generate substantial benefits to local communities and Botswana’s economy. Through these developments, it is likely that the pressures on parks will decrease and the financing gap will be reduced. The success of the park will ride on the successful creation of operational management forum, such as a Joint Management Board. Given the shortcomings of government in implementation of park management and development, it is possible that the whole system might benefit greatly from outsourcing the park management to a commercial entity that works closely with communities and investors.

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System xiii Executive summary LIST OF ACRONYMS AND ABBREVIATIONS

ACORD Association for Cooperative Operations Research and Development APN African Parks Network ATP Areas of Tourism Potential AWF African Wildlife Foundation BRE Barotse Royal Establishment BSAP Biodiversity Strategy and Action Plan CAR Centre for Applied Research CBA Cost Benefit Analysis CBNRM Community Based Natural Resource Management CBO Community Based Organisation CECT Chobe Enclave Conservation Trust CHA Controlled Hunting Area CTF Conservation Trust Fund DEA Department of Environmental Affairs DWNP Department of Wildlife and National Parks FMP Framework Management Plan GCT Gaing-O Community Trust GEF Global Environment Fund GNI Gross national income IBA Important Bird Area ICDP Integrated Conservation and Development Programme IRR Internal rate of return IUCN International Union for the Conservation of Nature JVP Joint Venture Partner MCA Multi-criteria Analysis MEWT Ministry of Environment Wildlife and Tourism MFMP Makgadikgadi Framework Management Plan MNP Makgadikgadi National Park MNPNP Makgadikgadi Nxai Pans National Park MoU Memorandum of Understanding MWS Makgadikgadi Wetland System NACSO Namibian Association of CBNRM Support Organisations NCT Nata Conservation Trust NGO Non-Government Organisation NNI Net national income NP National Park NPV Net present value NRMP Natural Resources Management Project OCT Okavango Community Trust PA Protected Area

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REDD Reduced Emissions through Degradation and Deforestation RNP Richtersveld National Park SAM Social Accounting Matrix SANParks South African National Parks STMT Sankuyo Tshwaragano Management Trust TGLP Tribal Grazing Land Policy UNDP United Nations Development Programme USAID United States Agency for International Development WMA Wildlife Management Area WTTC World Travel and Tourism Council XDT Xhauxhwatubi Development Trust ZAWA Zambia Wildlife Authority

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System xv Executive summary TABLE OF CONTENTS

1 INTRODUCTION ...... 19

1.1 BACKGROUND ...... 19 1.2 OBJECTIVES OF THIS STUDY ...... 21

2 OVERALL APPROACH ...... 21

3 THE MAKGADIKGADI WETLAND SYSTEM ...... 22

3.1 LOCATION ...... 22 3.2 STUDY AREA BOUNDARY ...... 23 3.3 BIODIVERSITY ...... 23 3.4 PROTECTED AREAS ...... 26 3.5 LAND UNDER THE CBNRM PROGRAMME ...... 29 3.6 TOURISM ...... 30 3.7 THE FRAMEWORK MANAGEMENT PLAN ...... 32 3.7.1 Overview ...... 32 3.7.2 The MFMP development process ...... 32 3.7.3 FMP activity plan ...... 34

4 ECONOMIC VALUE OF THE MWS STATE PROTECTED AREAS ...... 38

4.1 INTRODUCTION ...... 38 4.2 THE VALUATION FRAMEWORK ...... 39 4.2.1 Ecosystem services ...... 39 4.2.2 Total Economic Value ...... 39 4.2.3 Measuring Value ...... 40 4.2.4 Valuation approach ...... 42 4.3 INFLUENCE OF MANAGEMENT ON THE VALUE OF ECOSYSTEM SERVICES ...... 44 4.4 CONTRIBUTION OF PROTECTED AREAS TO ECOSYSTEM SERVICES PROVIDED BY THE MWS...... 45 4.4.1 Provisioning services ...... 45 4.4.2 Regulating services ...... 45 4.4.3 Cultural services ...... 46 4.5 TOURISM VALUE OF THE MWS PARKS ...... 47 4.5.1 Level and nature of tourism use ...... 47 4.6 SECURING THE FUTURE VALUE OF THE MWS PARKS ...... 51

5 OPTIONS FOR SUSTAINABLE FINANCING OF PARKS ...... 52

5.1 SUSTAINABLE FINANCING ...... 52 5.1.1 Financial planning ...... 52 5.1.2 Sustainable financing ...... 53 5.1.3 The financial sustainability scorecard ...... 53 5.2 DWNP PARK BUDGETS AND THE FINANCING GAP ...... 54 5.3 OVERVIEW OF SUSTAINABLE FINANCING MECHANISMS ...... 56 5.4 EXTERNAL FLOWS ...... 56 5.4.1 Government budgets ...... 56 5.4.2 Grants ...... 57 5.4.3 Trust funds and reinvestment of park income ...... 57 5.5 TOURISM REVENUES ...... 59

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5.5.1 Increasing nature-based tourism demand ...... 59 5.5.2 Park fees and collection system ...... 62 5.5.3 Concession fees & royalties ...... 64 5.5.4 Voluntary contributions ...... 65 5.6 REVENUES FROM RESOURCE EXTRACTION ...... 65 5.6.1 Sale of wildlife/plant products ...... 65 5.6.2 Bioprospecting ...... 65 5.6.3 Mining ...... 66 5.7 REVENUES FROM PAYMENTS FOR ECOSYSTEM SERVICES ...... 66 5.8 REVENUES FROM BIODIVERSITY OFFSETS ...... 67 5.9 REVENUES FROM CAUSE -RELATED MARKETING ...... 67 5.10 COST -SAVING MECHANISMS ...... 67 5.10.1 Volunteers and internships ...... 67 5.10.2 Park management concessions ...... 68 5.10.3 Co-management of parks ...... 70 5.10.3.1 Integrated conservation and development projects around parks ...... 72 5.11 CONCLUSION ...... 74

6 OPTIONS FOR DEVELOPING THE TOURISM BASE IN MWS ...... 76

6.1 INTRODUCTION ...... 76 6.2 POLICY AND LEGAL CONTEXT IN BOTSWANA ...... 76 6.2.1 The Tribal Land Act, 1968 ...... 77 6.2.2 The Tribal Grazing Land Policy, 1975 ...... 77 6.2.3 Wildlife Conservation Policy, 1986 ...... 77 6.2.4 National Conservation Strategy, 1990 ...... 77 6.2.5 Tourism Policy, 1990 ...... 78 6.2.6 Wildlife Conservation and National Parks Act, 1992 ...... 78 6.2.7 Community Based Natural Resources Management (CBNRM) Policy, 2006 ...... 78 6.3 CBNRM EXPERIENCE IN BOTSWANA ...... 80 6.3.1 The CBNRM Programme ...... 80 6.3.2 CBNRM initiatives ...... 81 6.3.3 Lessons learned from earlier CBNRM experiences in Botswana ...... 83 6.3.4 Lessons learned from CBNRM experiences generally ...... 84 6.4 VIABILITY OF CBNRM IN THE MWS AREA ...... 85 6.4.1 Operational CBOs in the MWS ...... 85 6.4.2 Assumptions and analytical approach ...... 87 6.4.3 Viability of existing and generic CBNRM models ...... 88 6.4.4 Effect of the state tax policy on viability ...... 88 6.5 POTENTIAL CONSERVATION-DEVELOPMENT MODELS FOR MWS ...... 90 6.5.1 Background and vision ...... 90 6.5.2 Potential conservation models considered in this study ...... 93 6.5.3 Assumptions and analytical approach ...... 93 6.5.4 Financial and economic viability ...... 95 6.6 WHAT IS THE BEST CONSERVATION -TOURISM DEVELOPMENT MODEL ? ...... 98 6.7 MODELS FOR TOURISM ESTABLISHMENTS ...... 100 6.8 CONCLUSIONS ...... 102

7 REFERENCES ...... 103

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8 APPENDIX 1. DETAILS OF TOURISM FACILITIES CONTACTED ...... 109

9 APPENDIX 2: SELECTED FINANCIAL/ECONOMIC COST-BENEFIT MODELS ...... 110

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1 INTRODUCTION

1.1 BACKGROUND

The project targets an important biodiversity area that is under pressure from growing human populations and economic activities. Management of the small and fragmented system of protected areas is this area is likely to only be sustainable and effective if a wide range of funding streams are tapped and benefits accrue to the adjacent communities. Success will require a strategic mix of approaches including business planning, law enforcement, local capacity building, and incentives for participation of communities and the private sector.

The project aims to use the opportunities provided by the new CBNRM Policy, the (draft) Environmental Management Act and the Makgadikgadi Pans Integrated Management Plan to implement participatory planning and PA co-management, using the MPWS (landscape) and Makgadikgadi/Nxai NP and the Flamingo Sanctuary 1 as demonstration sites. An important assumption to be tested by the project is that by involving relevant stakeholders in PA management, control over their resources will be democratic, costs to central government will decrease, destructive behaviour will be reduced, law enforcement improved, capacity expanded, a wide base of technical and traditional knowledge tapped, a more equitable distribution of benefits will be possible, and the service provision functions of PAs will be better recognized and protected.

The components and outputs of the overall Strategic Partnerships project are summarised in Box 1.

1 Originally it was the intention to use Nata Sanctuary, but this was changed to the Flamingo Sanctuary (Pete Hancock, BirdLife Botswana, pers. comm.)

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BOX 1. COMPONENTS AND OUTPUTS OF THE OVERALL STRATEGIC PARTNERSHIPS PROJECT (PARAPHRASED , WITH EMPHASIS ON PARTS RELEVANT TO THIS STUDY )

1. Strengthened enabling environment for PA co-management, revenue generation and benefit sharing. 1.1. Identify and implement effective institutional models and legal reforms for PA co- management. 1.1.1. Valuation study to justify increased public budget allocation to PAs; cost co-management vs traditional management, and effect of management effectiveness and better financing. 1.1.2. Assess options to maximise PA management effectiveness under current and projected funding levels 1.1.3. Inform decision-makers on PA benefits and costs 1.1.4. Review legislation, assess and implement Institutional reforms for co-management 1.1.5. Draft a PA business planning framework (national and site level) 1.1.6. Draft DWNP financing strategy and support short-term plan operationalisation 1.1.7. Motivate National Environment Fund to provide financial support for Pas 1.1.8. Draft operational standards for allocating fin and human resources to Pas. 1.1.9. Draft summary of other PA revenue mechanisms (mid-long term)

1.2. Mainstream PA agenda into the IMP and District Plans, including forecasting local benefits. 1.2.1. Ensure synergies 1.2.2. Technical inputs, e.g. review wildlife conflict, support CBNRM, review feasibility of PA management models, parks and people strategy for the Mak/Nxai parks. 1.2.3. Technical support 1.2.4. Drafting

1.3. Secure PA business investment partnerships and secure commercial concessions. 1.3.1. Determine private-sector WTP towards PAs. 1.3.2. What disincentives would need to be redressed for this to work? 1.3.3. Develop a tourism concessioning policy (to ensure income generation without compromising conservation) 1.3.4. Develop a Biodiversity Offset framework 1.3.5. Draft a bird tourism handbook 1.3.6. Draft best practices publications on different PA –related policy instruments

2. Effective co management and revenue systems demonstrated and tested. 2.1. Create co management structures (site support groups) and develop and test revenue generation schemes. 2.2. Business plan development 2.2.1. Economic and financial analysis of PAs, incl CBA of increasing analysis, options for improving financing, and dev of a budget and rollout prog for a sustainable financing plan. 2.2.2. Undertake tourism market assessments and ideas for new NRM-based markets, training, id project support 2.3. Emplacement of PA functions

3. Capacity building 3.1. Capacity for managing pas 3.2. Capacity for implementing business plans and jointly managed Pas 3.3. Establish National Liaison Committee

This study informs aspects of Component 1 of the overall project, and was commissioned by BirdLife Botswana.

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1.2 OBJECTIVES OF THIS STUDY

The main objectives of this study were 2: • to describe the economic value of the MWS protected areas, including an estimate of the contribution of avitourism to this value, and discuss options for enhancing tourism value of the MWS; • to identify options for establishment of a protected area around the new Flamingo Sanctuary in southern Sua Pan, in terms of arrangements with local communities, and undertake a financial and economic analysis of these; • to examine options for co-management as a means of reducing the costs of parks in the MWS; and • to describe the current financing situation for the protected areas in the MWS and contribute to the development of a financing strategy.

2 OVERALL APPROACH

This project is largely a desktop study which builds on the recently-completed Framework Management Plan (DEA & CAR 2010), the assessment of the value of the MWS as a whole (Arntzen et al. 2010) which was completed for the FMP, and a review of the relevant literature. The valuation component of the study focuses on the established state protected areas of the MWS, namely the Makgadikgadi National Park and the Nxai Pan National Park. The study was based on existing information, plus qualitative information obtained from interviews with a small number of tourism establishments. Information on park finances was not available at a park level (B. Othusitse, Head of Parks, DWNP, pers. comm.), and was taken from estimates in earlier consultant reports. The study involved a review of co-management models, and CBNRM in particular, and explored the impact of different co-management arrangements using spreadsheet models. Methods are described in more detail under the relevant sections.

2 These have been slightly modified from the original ToRs supplied to the consultant, following discussions with the client.

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3 THE MAKGADIKGADI WETLAND SYSTEM

3.1 LOCATION

The Makgadikgadi wetland system (MWS) is located in north-eastern Botswana, south east of the Okavango Delta and south of the Chobe River (Figure 1). The MWS contains the largest pan complex in the world, the remnant of a huge lake that covered a large part of northern Botswana thousands of years ago. The wetland area is divided into the Ntwetwe Pan in the west and Sua Pan in the east, each of these having their own catchment area. The Ntwetwe Pan is fed by the Okavango system, via the Boteti River. The Boteti River has flooded in 2010, all the way past Rakops to Lake Xau after having been dry since the 1981. The Sua Pan is fed by the Nata River, whose catchment extends into Zimbabwe, and the Mosetse, Semowane, Lepashe and Mosupe Rivers in the east of the Makgadikgadi Basin.

FIGURE 1. LOCATION OF THE MAKGADIKGADI WETLAND SYSTEM WITHIN BOTSWANA (VISIBLE AS THE WHITISH AREA ), SHOWING ITS POSITION RELATIVE TO THE OKAVANGO DELTA CLEARLY VISIBLE IN THE NORTH -WEST OF THE COUNTRY . SOURCE : GOOGLE -EARTH .

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3.2 STUDY AREA BOUNDARY

The study area was taken to be the area of the recently-completed Makgadikgadi Framework Management Plan (MFMP). This is slightly smaller than the area of the proposed Integrated Management Plan, which includes the full extent of the MWS catchment area (Figure 2).

FIGURE 2. BOUNDARIES OF THE MAKGADIKGADI FRAMEWORK MANAGEMENT PLAN (IN RED ) AND OF THE PROPOSED INTEGRATED MANAGEMENT PLAN (IN PURPLE ). SOURCE : DWA & CAR 2010.

3.3 BIODIVERSITY

Overall floral and faunal species richness in Botswana tends to be highest within the protected area network and in the more mesic northern and eastern boundaries of the country (Figure 3), with the numbers of threatened and vulnerable species being highest in the Okavango Delta (Figure 4). The Makgadikgadi Pans nevertheless constitute an important part of the biodiversity landscape within Botswana, particularly for the representation of plains game, including migratory herds, for predator populations such as wild dogs, and for breeding waterfowl, in particular, flamingos.

After good rains, water arrives via the Boteti and Nata Rivers, flooding the pans to a few centimetres depth, and attracting herds of big game and flocks of birds. The MWS forms part of a large scale migratory route of large mammals, notably zebra and

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wildebeest, and although not noted for game viewing in terms of diversity, they are the scene of an annual migration event which sees aggregations of animals moving northwest towards the Okavango Delta. The MWS also supports populations of charismatic fauna such as African meerkat the highly endangered Wild Dog.

FIGURE 3: MAP SHOWING SPECIES RICHNESS INDEX IN BOTSWANA , BASED ON KNOWN DISTRIBUTIONS OF MAMMALS , BIRDS , FISH , PLANTS , REPTILES , AMPHIBIANS AND INVERTEBRATES (BSAP 2005)

FIGURE 4. DISTRIBUTION OF THREATENED AND VULNERABLE MAMMAL AND BIRD SPECIES IN BOTSWANA . SOURCE : TH CBD 4 REPORT

Where the Nata River enters Sowa Pan in the northeast, it forms a delta which attracts large numbers of waterbirds, including Great White and Pink-backed Pelicans, a variety

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of waterfowl and large numbers of waders and terns, including the rare and endangered Chestnut-banded Plover and Caspian Tern. It also attracts breeding aggregations of Lesser and Greater Flamingos. This occurs only every five to six years, depending on water levels, and can reach spectacular proportions. After the rainy season of 1999-2000, more than 200 000 flamingos were counted in the pan (source: BirdLife Botswana). As a result, the MWS has been identified as one of Botswana’s twelve Important Bird Areas (Figure 5). Of these, the Chobe and Okavango Delta IBAs have the richest avifauna with 433 and 464 species respectively (Kootsositse et al. 2008).

FIGURE 5: MAP OF IMPORTANT BIRD AREAS IN BOTSWANA . SOURCE : KOOTSOSITE ET AL . (2008)

During the baseline studies for the MFMP, a number of ecological hotspots were identified within the study area (Figure 6).

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FIGURE 6 ECOLOGICAL HOTSPOTS WITHIN THE BOUNDARY OF THE MWS FRAMEWORK MANAGEMENT PLAN : SOURCE : ARNTZEN ET AL . 2010

3.4 PROTECTED AREAS

Botswana's protected area system (Figure 7) is one of the country’s most important natural assets. The Botswana Biodiversity Strategy and Action Plan (BSAP) defined protected areas as: An area of land and/or sea especially dedicated to the protection and maintenance of biological diversity, and of natural and associated cultural resources, and managed through legal or other effective means . Under this definition, Botswana has set aside about 45% of its land area as protected areas in National Parks (8%), Game Reserves (10%), private Wildlife and Nature Reserves (<1%), Wildlife Management Areas (WMAs, 24%), Forest Reserves (1%) and National Monuments (<1%) (BSAP 2007, Figure 7). National Parks, Game Reserves and WMAs, as well as Controlled Hunting Areas (CHAs), are governed by the provisions in the Wildlife Conservation and National Parks Act, 1992. The National Parks and Game Reserves are under direct state control. Gazetted Wildlife Management Areas and Forest Reserves occupy state and tribal land around these. Private wildlife and nature reserves are found on private and leased land. A further element of conservation, not included in the definition of protected areas above, is the protection afforded through the national Community- Based Natural Resource Management (CBNRM) programme. In some cases this is superimposed on Wildlife Management Areas, but it can also occur outside of these.

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TH FIGURE 7. TOURIST MAP SHOWING BOTSWANA ’S SYSTEM OF STATE -OWNED PROTECTED AREAS (CBD 4 REPORT )

In the MWS, the state protected areas are limited to three sites: the Makgadikgadi Pans National Park, the Nxai Pan National Park, and the recently-proclaimed Sua Pan Flamingo Sanctuary within the southern Sua Pan. These state protected areas are described in Table 1. In the context of enhancing the value of protected areas, their linkages with surrounding land, where natural resources are protected by others, are examined.

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TABLE 1. REGISTERED AND OPERATIONAL CBO S IN THE MAKGADIKGADI FMP AREA IN 2010

Protected area Extent Description Use Mostly dry north west Ntwetwe Used for tourism, with two Pan surface, pan shoreline and state-run camp sites in adjacent lacustrine grasslands, park, several lodges acacia dominated woodlands outside park on tribal land. along ephemeral Boteti river. Surrounded by livestock Water points along Boteti river grazing mostly to west, Makgadikgadi attract elephant, zebra, 4 900 wildlife management areas Pans National wildebeest, kudu, giraffe, km 2 to east, south and north Park gemsbok and other plains game. east, and Nxai Pan national Open plains seasonal destination park to the north. for large zebra herds, and with Significant densities of springbok, ostrich, gemsbok and human settlement and wildebeest. Range of predators livestock to west over including lion and wild dog. Boteti river. Important mammal core ranges. Small pans surrounded by mopane Used for tourism: State and acacia woodlands on Kalahari run campsites and one sediments, mostly sand. private lodge Surrounded Springbok, zebra, elephant, kudu, by wildlife management Nxai Pan 2 578 gemsbok, ostrich. Full range of areas to north east north National Park km 2 predators including lion and wild and west, livestock to east dog. Important historical sites and national park to south. including Baines Baobabs. Fairly high value wildlife to Important biodiversity hotspot. west. Centre of southern part of Sua Not used other than for Pan. Bare salt pan surface. research. Surrounded by Embraces important wet spot in Sua Pan livestock grazing lands on pans system, key site for lesser Flamingo 408 km 2 all sides. Some and greater flamingo breeding. Sanctuary community-run campsites. Important biodiversity hotspot to Potential for more tourism south. Important archaeological on surrounding pan edges. sites outside park on pan edges. Source: Authors

There is one private protected area on the east side of Sua Pan, where Botash has established a site around the mine, and stocked it with some plains game species.

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3.5 LAND UNDER THE CBNRM PROGRAMME

In the MWS, the important element of non-state protected areas is the land which falls under the CBNRM Programme. Here in line with the national policy on CBNRM, (MEWT 2007) communities have organised themselves in community-based organisations (CBOs) which allows them limited rights to manage and use natural resources. There are eight registered CBOs or community protected areas, of which only three are fully functional (Table 2), and five that are registered but not yet operational (Table 3). The operational CBOs are responsible for the Nata Sanctuary, Lekhubu Island camp, and the Xhauxhwatubi joint venture hunting operation. These are described in more detail in Chapter 6.

The primary land use objective for state protected areas is natural resource protection, and their economic use is generally limited to non-consumptive tourism. Community protected areas are held under lease by community-based organisations (CBOs). These are superimposed on other land uses such as livestock grazing and here the primary conservation objective is the sustainable use of natural resources, rather than protection of biodiversity and ecosystem integrity.

TABLE 2. REGISTERED AND OPERATIONAL CBO S IN THE MWS AREA IN 2010

Name of CBO Villages Covered CBNRM Activities Remarks Date registered Financial/economic model developed. Current activities Revenues for 2009: P135,000, gate fees and • Photographic tourism in Nata Sanctuary. Nata Lodge. Nata Conservation • Craft production Workshop held to try and align their Trust (Nata, Sepako, • Management of a Campsite constitution with the Model Deed of Trust. Maposa, Manxotae) Planned Activities at Nata Sanctuary MoU signed with joint venture partner to 05/05/1992 • Development and Management of a lodge build and operate the lodge. • Planned Activities at CT 5 Application submitted to Ngwato Land Board • Photographic tourism for CT 5. Drafting Management Plan for CT 5. Current activities • Photographic tourism on Lekhubu Island (a Gaing-O Community National Monument). Financial/economic model developed. Trust (Mmatshumo) • Management of a Campsite Revenues for 2009: P444,000. 1997 • Selling crafts and firewood Possible future activities • Lodge development Community have waiver to utilize resources Current activities in NG 49, Head Lease signing pending Xhauxhwatubi • Hunting and some photographic tourism. development of NG 49 Management Plan. Development Trust • Sponsorships, funeral contributions, Trust constitution amended to align it with (Phuduhudu, accommodation, houses and toilets for the Model Deed of Trust. Size of the CHA: elderly, employment – 14 ( 2 non-locals). Retendering joint venture in 2010. 112,8 km 2) Planned activities Revenues in 2005: P1,271,750, 11/12/2002 • Planning shift to photography in 2010. Including: Land rental, Hunting quota, Game birds, Community development. Source: Authors, Setlhogile (pers. comm.), and Arntzen et al. (2010)

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TABLE 3: REGISTERED CBO S, CURRENTLY NOT OPERATIONAL IN THE MWS AREA IN 2010

Villages Covered CBNRM Activities Remarks GWEZOTSHA Natural Trust operated for some time between 1996 Resources Trust and 2005, but has since stopped. Former activities (Gweta, Zoroga and Tsokatsha) Supported by DWNP, Conservation • Morula processing and marketing. CT11&CT7 Grazing and international and Gweta Lodge owner. photographic areas. MEWT has initiated a revival of Trust.

11,927 km 2 Revenues between P30,000 and P140,000 08/03/1996 per annum. Recent activities • Production and sale of Morula Trust in the process of amending its sweets. constitution (Deed of Trust) to encompass Planned Activities Ngande Trust others who were not initially members of • Photographic activities at Gwaraga (Kumaga) Ngande Trust, but affected by the around Makgadikgadi Pans 11/12/2002 Makgadikgadi Pans National Park fencing National Park. project. The Trust recommended a change of • Lodge. name. • Cultural Village and Campsite • Fish Farming Planned Activities Not yet operational. • Mopipi Dam rehabilitation for fish Mokopi Conservation Trust Management plan developed in 2006/7. farming. (Mopipi. Mokoboxane) MP recommended Trust approach donors, • Game farming. 19/12/2005 including DEBSWANA, for financial and other • Campsite. assistance. • Tree planting. Lenao la Kwalabe Conservation Trust Planned Activity Not yet operational. (Kedia) • Game farm at Hima Ranches 19/12/2005 Planned Activities Gumakotsha Conservation • Game farm at Gumakotsha farm. Trust • Fish farming. Not yet operational. (Mosu) • Cultural village. 26/03/2006 • Lodge or motel. Source: Authors, Setlhogile (pers. comm.), and Arntzen et al. (2010)

3.6 TOURISM

Visitors to the northern parks can expect to see large numbers of charismatic wildlife such as the “big five” at fairly close range, and can also experience wildlife viewing from boats or dugout canoes. The parks of the Makgadikgadi Pans do not support the same densities of game, but do offer the “Big 5”, and during certain times of year, concentrations of plains game and predators.

In addition, the MWS boasts a range of tourism attractions that are complementary to other areas of Botswana. These include the area’s unusual pan-dominated landscapes, which are attractive whether dry (which is most of the time) or flooded, waterbird aggregations, baobabs, archaeological artefacts and local culture.

Nevertheless, the MWS is generally underdeveloped as a destination (Johnson et al. 2010). However, tourism developments have increased significantly in the last decade.

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These include luxury camps (Jack’s Camp and Camp Kalahari) and luxury lodges (Meno a Kwena and Leroo le Tau) around the edges of the Makgadikgadi National Park, Nxai Pan Camp in the Nxai Pan National Park, the Gaing-O community campsite at Lekhubu Island, and hotels and camps along the main routes around the MWS, including Gweta lodge, Nata lodge and Planet Baobab. The Makgadikgadi & Nxai Pan National Parks have campsites, but these are basic and most do not have potable water.

Good tarred roads encircle the MWS. Reaching areas within the MWS requires travel on poor quality dirt roads. All roads in the national parks are negotiable by 4x4 only. Many of the routes into the pans become inaccessible after heavy rains, however, and obtaining good views of the breeding aggregations can be a challenge. In total, if one includes camping berths, there are an estimated 1257 beds in the study area (Table 4, Figure 8).

TABLE 4. BREAKDOWN OF ACCOMMODATION FACILITIES IN THE MWS (UNPUBLISHED DATA )

Type Facilities Rooms Beds Lodges & Camps (Wildlife & Nature-Based) 12 145 597 Hotels and motels 11 157 225 Camp Sites and Camping Grounds 11 43 415 Mobile Safaris 1 10 20 Total 35 355 1257

FIGURE 8. CURRENT TOURISM SITES WITHIN THE BOUNDARY OF THE FRAMEWORK MANAGEMENT PLAN . SOURCE : ARNTZEN ET AL . 2010

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3.7 THE FRAMEWORK MANAGEMENT PLAN

3.7.1 Overview The Makgadikgadi Framework Management Plan (MFMP) was developed by the Ministry of Environment, Wildlife and Tourism (MEWT) through the Department of Environmental Affairs (DEA) and forms an integral part of the implementation of the Draft Botswana Wetland Policy and Strategy, and government’s drive for economic diversification and sustainable development (DEA & CAR 2010). The MFMP identifies priorities for development, management and conservation activities with the overall aim “ to improve people’s livelihoods through wise use of the wetland’s natural resources ” (DEA & CAR 2010). There are several guiding principles that the MFMP was based on: • Holistic planning must prevail over sectoral planning (which causes many conflicts); • Development must benefit rural livelihoods and the environment; • Special attention is needed for vulnerable groups; • Local stakeholders should be involved in the preparation, planning and plan implementation; • The local population must develop a sense of ‘ownership’ of the MFMP; • Implementation is the shared responsibility of the government, private sector and civil society; and • Conservation and management of resources benefit long term development opportunities and livelihoods.

3.7.2 The MFMP development process The MFMP consisted of three phases: inception, analysis and component development, and synthesis and plan development. The project adopted a multidisciplinary and integrated approach and was developed through a public-private partnership with the DEA working together with the Centre for Applied Research (CAR) (DEA & CAR 2010). Stakeholders regularly participated throughout the process and the communities were widely consulted.

A common environment-development approach was used where the activities were guided by a combination of sustainable development and livelihood approaches as well as an ecosystems approach (DEA & CAR 2010). Work was subdivided into disciplinary components, before being synthesized and integrated back into the framework and scenario evaluation (DEA & CAR 2010). Potential future scenarios for the area were developed through consultations with key informants/experts, planners and stakeholders, as follows:

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1. Current situation and trends. This scenario describes the current situation in the Makgadikgadi area and includes current policy trends. Management features are characterised by sectoral management and development with continued conflicts between human and wildlife resources, and between livestock and crops. Interventions are ad hoc. There are no changes in land use zones and tenure with general under development of tourism and sub-optimal land use.

2. Resource Protection and conservation. In this scenario, priority is given to resource protection through increasing the size of the protected areas by conservation of all WMAs. The management of protected areas is the same as the current situation, where protected areas are almost purely for conservation with little or no benefits for the communities and there is very little tourism in the MNP. Management features advocate for the expansion of fully protected areas. The management of the protected areas is government led with emphasis on conservation and protection. This implies reduced opportunities for agriculture, mining, settlements and other human activities.

3. Rapid economic growth. Priority is given to rapid economic growth of agriculture, mining and tourism. The development of agriculture includes both the traditional or subsistence farming and commercial livestock farming. Management features include rapid agricultural, tourism and mining growth, which may lead to reduced opportunities for wildlife and biodiversity through loss of WMAs. Tourism growth is mainly through tourism facilities and associated activities and there is increased opportunity for communities to engage in the tourism sector. There will be increased pressure on water resources and increased human-wildlife conflicts.

4. Sustainable use. This scenario seeks to balance resource conservation and utilisation through wise use of the area. Wise use would ensure that the area could be designated as a RAMSAR site. Sustainable use would include the protection of biodiversity hotspots, resolution of major conflicts and conflict spots, sustained development of tourism development spots, protection of archaeological and heritage sites, most suitable use and livelihood improvements. Management features include a holistic and integrated resources management approach, based on participatory and adaptive resource management. The planning process would be based on pre-cautionary principle and shall meet RAMSAR management and use requirements. It encourages location of the right activity in the right place, leading to reduced conflicts and greater economic and livelihood benefits.

Multi-criteria analysis (MCA) was then used to evaluate the scenarios. The ‘Sustainable Use’ scenario emerged from the multi-criteria analysis as the preferred management option.

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3.7.3 FMP activity plan The proposed activities are part of the scenario “Sustainable Development of the Makgadikgadi Project Area”. Sustainable development therefore constitutes the core of the proposed activities (DEA & CAR 2010). Sustainable development is achieved through concepts such as integrated water resources management and the ecosystem approach to wildlife, biodiversity and protected areas. The following table provides resource management directions for all resources and environmental concerns (DEA & CAR 2010).

TABLE 5: GENERAL RESOURCE MANAGEMENT DIRECTIONS

Sustainable development and ecosystems approach General • All resource management should be flexible and adaptive to deal with natural hazards (floods, droughts and fire) and climate change. • Commercial resource use: user-pays-principle and polluter-pays-principle. • Subsistence resource use: some payment (in kind management responsibilities). • Maintenance and use of biodiversity. • Use natural resources beneficially to improve livelihoods within the limits of their sustainability. • Resource management is a shared responsibility of the stakeholders. • Management responsibility needs to be decentralised. • Prevent or minimise pollution. Water Resources • Management to be based on Integrated Water Resource Management. • Greater emphasis on resource use efficiency. • Use of non-conventional supplies (rainwater harvesting, re-use of treated wastewater and desalination). • Water demand management in buildings and reduced water losses. Wildlife Resources • Control of elephant numbers and occurrence. • Off take (legal and illegal) not higher than regeneration. • Special protection of threatened species. • Protection of migratory routes. • Better balance between wildlife conservation and utilisation in all ‘wildlife areas’. • Protected Area (PA) management needs to be participatory (with communities and other local sectors) and decentralised. Protected Areas need to create tangible local benefits. Protected Area management should become a growth engine for wildlife and tourism and be fully integrated in the area’s development. Land • Most suitable use to be promoted. • Productive capacity of land is maintained. • Avoid land degradation and bush encroachment. Vegetation • Use should not exceed natural re-growth. • Loss of species should not occur/be minimised. • Protection and controlled use of threatened species. • Need to prevent the depletion of firewood species through development of substitutes (e.g. solar power, gas, electricity) and energy demand management. Source: DEA & CAR 2010

Future developments need to take place within ecological boundaries (DEA & CAR 2010). In the case of the MWS there is the need to create livelihood benefits and economic growth – underutilised natural resources need to be used to their full potential and the efficiency of natural resource use needs to be increased (DEA & CAR 2010). Development and management of the area is a shared responsibility of all stakeholders and therefore, partnerships between the private sector, communities,

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government and other institutions need to be established (DEA & CAR 2010). Ecosystem goods, services and functions also need to be recognised and supported through management.

Recommended MFMP activities are (based on DEA & CAR 2010):

1. Fully integrate the sustainable development and ecosystems approaches and their guidelines and principles in the management planning and development activities.

2. Develop and implement Integrated River Basin Management for the MFMP area that maintains the ephemeral wetland nature through maintenance of the surface water hydrological regime (i.e. seasonal input from rainfall, rivers, and groundwater and subsequent loss to evaporation).

3. Conduct a more detailed valuation study of protected areas, wildlife management areas and communal areas.

4. Integrate indigenous knowledge into management.

The MFMP outlines numerous activities and objectives under a number of categories: • Management of natural resources (including parks) • Waste management and pollution control • Fire and hazard management • Drought management and climate change • Biodiversity hotspot management • Land use and fencing • Water use • Economic sectors and livelihoods • Livelihoods improvement • Institutions and governance • Education, knowledge and awareness • Environmental monitoring and research • Funding

The recommended activities for protected areas, tourism and CBNRM are outlined below. For detailed tables of all the planned activities for the MFMP see DEA & CAR (2010).

Activities for Protected Areas 1. Review different Park management models , including different extents of privatisation, and adoption of participatory, adaptive and more decentralised park management with a better balance between utilisation and conservation and the generation of more local benefits from the Park (e.g. in partnership with Birdlife Botswana Project).

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2. Improve the marketing of the tourist attractions. 3. MNPNP: Invest in improved tourism infrastructure to facilitate improved game viewing within the park (e.g. extended road system, additional private and public campsites to the east of the park, maintenance of existing artificial water points); increase the local benefits and for participatory management that will enable tourism growth and improved benefits for surrounding communities through: the establishment and development of viable community zones inside MNPNP; development of CBNRM activities around MNPNP ; support provided to existing CBOs, with prioritised land to these CBOs; creating opportunities for craft and other activities for tourists ; and employment of the local population for maintenance activities inside the MNPNP.. 4. Flamingo Sanctuary : increase the local benefits and encourage community participation in management through the development of CBNRM activities around the sanctuary; creating opportunities for crafts and other activities for tourists; and employment of local population for maintenance activities inside the sanctuary; develop and implement a management plan for Flamingo Sanctuary. 5. Nata Sanctuary : increase the local benefits and support the joint venture between the communities and the joint-venture partner.

Activities for Tourism 1. Develop management plans for the identified Areas of Tourism Potential (ATPs) to ensure coordinated and efficient management for them to be sustainable. 2. Develop infrastructure within the MNPNP. The current infrastructure is dilapidated and the road network poor thus hindering accessibility in the park. More tourists need to be attracted through better management and improved and more varied accommodation. 3. Preservation and development of archaeological sites in the MFMP area. These are important for education and research, cultural heritage and for poverty reduction. The most important sites (i.e. national monuments and the sites on the ‘list of 100’) should be preserved and developed in the MFMP area. 4. Branding and marketing of the diverse tourism potential of the MFMP area. It is important to highlight the overarching character of and potential tourism products so as to best optimise visitors’ experience. 5. For each tourism zone, an assessment of limits of acceptable change should be undertaken specific to each zone. This would ultimately enhance optimal visitor experience while at the same time protecting the natural resource base of the wetland system. 6. Support for the development of the selected settlements into tourism nodes and support infrastructure.

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Activities for CBNRM 1. Develop capacity of CBOs particularly in the fields of natural resource management and monitoring, business skills development, financial and records management, project management, and proper administrative and business skills. 2. Identify, nurture and support new CBOs/area specific CBNRM programmes. 3. Encouragement of mutually beneficial partnerships between CBOs and private companies. Such partnerships have proven to be more successful than CBOs working by themselves. 4. Offer on-the-ground extension support for the implementation of Trust Management Plans of the operational CBOs. The rôle of the extension officers will be to assist communities in daily activities of running their Trusts and to identify and resolve emerging challenges at an early stage.

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4 ECONOMIC VALUE OF THE MWS STATE PROTECTED AREAS

4.1 INTRODUCTION

The MWS as a whole generates a variety of ecosystem services that have values to society. The concepts of ecosystem services and the types of value they generate are outlined briefly below.

In recent studies carried out for the Framework Management Plan, Arntzen et al. (2010) estimated the area to be worth over P1 billion in terms of overall direct and indirect contributions to the economy (Table 6). This value came from direct uses of the natural resources such as livestock production, crop production, harvesting of veld products, tourism and mining, as well as from indirect use values supplied by ecosystem services such as carbon sequestration and the provision of wildlife refuge areas that serve the broader landscape. Direct use values amount to some P880 million in terms of overall contribution to the economy, of which P197 million per annum is realised directly as private net income to households in the study area. Indirect use values are estimated to be worth about P155 million.

TABLE 6. VALUE OF ECOSYSTEM SERVICES OF THE MWS AREA

Contribution to local Economic value Ecosystem services livelihoods (direct + indirect) (million Pula) (million Pula) Provisioning services NR harvesting, crops & grazing 108.1 186.7 Minerals 74.3 467.0 Regulating services Wildlife refuge 5.9 Carbon sequestration 136.5 Groundwater recharge 10.8 Cultural services Tourism 14.7 226.7 Education 2.3 Total 197.1 1035.9

In this chapter, we examine the contribution made by parks in more detail, focusing on tourism value.

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4.2 THE VALUATION FRAMEWORK

4.2.1 Ecosystem services Ecosystems offer a range of goods, services and attributes (collectively termed ‘ecosystem services’) that generate value and contribute to human welfare (Barbier 1994). The concept of ecosystem goods and services, popularised in the ecological- economics literature, stems from the perception of ecosystems as natural capital which contributes to economic production. Goods, services and attributes may be defined as follows: • Goods are harvested resources, such as grass or salt. • Services are processes that contribute to economic production or save costs, such as water purification. • Attributes relate to the structure and organisation of biodiversity, such as beauty, rarity or diversity, and generate less tangible values such as spiritual, educational, cultural and recreational value.

More recently, the Millennium Ecosystem Assessment (2003) categorized the services obtained from ecosystems as follows: • Provisioning services such as food and water; • Regulating services such as flood and disease control; • Cultural services such as spiritual, recreational, and cultural benefits; and • Supporting services , such as nutrient cycling, that maintain the conditions for life on Earth.

4.2.2 Total Economic Value Environmental and resource economics typically uses a typology of values described in the Total Economic Value concept. The Total Economic Value of an ecosystem comprises Direct Use, Indirect, Option and Non-Use values. • Direct use values may be generated through the consumptive use of resources (e.g. hunting, gathering) or non-consumptive use (e.g. photographic tourism, bird watching). • Indirect use values are values generated by outputs from ecosystems that form inputs into production by other sectors of the economy, or that contribute to net economic outputs elsewhere in the economy by saving on costs. These outputs are derived from ecosystem functioning such as carbon sequestration, flow regulation and provision of wildlife refugia. • Non-use values include the value of having the option to use the resources (e.g. genetic) of ecosystems in the future, and the value of knowing that their biodiversity is protected. Although far less tangible than the above values, non- use values are reflected in society’s willingness to pay to conserve these resources, sometimes expressed in the form of donations.

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The relationship of types of values to ecosystem services is shown in Table 7. The first three align well with the definitions of goods, services and attributes described above. The fourth, supporting services, has created some controversy as inclusion of these ‘services’ in a valuation study can lead to double counting. It does, nevertheless, highlight the fact that the other services cannot be generated without these underlying processes.

TABLE 7. RELATIONSHIP BETWEEN ECOSYSTEM SERVICES AND TYPES OF VALUE

Ecosystem services Total Economic value Barbier Millennium assessment Goods Provisioning services Consumptive use value Services Regulating services Indirect use value Non-consumptive use value Attributes Cultural services Option value Existence value n/a Supporting services n/a

4.2.3 Measuring Value

In this study, value derived from an activity was measured in terms of (i) net private value, (ii) contribution to local communities (or local livelihoods) and (iii) contribution to Net National Income.

Net private value Net private value is the net financial value (= profit), measured as cash plus in-kind benefits to specified economic players (e.g. households, communities, entrepreneurs or firms). The difference between total annual revenue (also termed gross private value) and their annual expenditures is their net profit or net private value. Private values are measured using simple financial or in-kind transactions.

Livelihood value The contribution to local communities, or ‘ local livelihood value’ was defined as their share of the net private value, plus income derived from wages and salaries, rentals and royalties.

Economic value Economic value is defined as the total value added to national income, which reflects all income generated as a result of an activity, and not just the net profit for the investor or

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community. It includes payments to government and other economic actors, such as remuneration to employees, taxes, interest and capital repayments, and rental payments. All these things together represent the annual contribution made by the activity to the national income. This measure allows the value to be assessed in terms of statistics that are generated for Botswana’s whole economy on a regular basis. These statistics include gross national income (GNI) and net national income (NNI), which are the returns in gross and net value added to factors of production owned by a country’s citizens (Gittinger 1982). NNI is GNI minus annual capital asset depreciation.

Another very different economic value measure, also measured in this study is economic rent . Economic rent or natural resource rent is essentially excess profit, or what is left of turnover after deduction of the costs of production and a reasonable return on capital. It is a common economic policy aim for government to capture excess profits through taxes, and to redistribute or reinvest them in the economy.

Value added to national income comprises direct value added and indirect value added (Figure 9). Direct value added is the income generated in the first round of expenditure. The expenditure on inputs from other sectors then generates another round of income, and so on. These ‘backward linkages’ create a multiplier effect, so that the overall impact of is larger than the direct value added alone. The magnitude of these multiplier effects are calculated in input-output models such as social accounting matrices (SAMs).

Financial Private net Benefits to value income Local livelihoods

Wages & salaries Direct Value added to Taxes to gov National Income Interest & capital payments Turnover or Rental payments Indirect Gross Output

Expenditure on external inputs

Round 1 Round 2 Round 3 Round 4 FIGURE 9. SCHEMATIC DIAGRAM OF THE MEASURES OF VALUE EXPLAINED IN THE TEXT .

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In measuring economic value, prices are adjusted to correct for distortions, wherever market prices do not reflect true value (e.g. if a commodity such as labour has price fixed by government rather than established in a free market). This true value is taken to be its opportunity cost (the value of its best alternative use). Where actual prices differ significantly from opportunity cost, then ‘ shadow pricing ’ is applied. Shadow pricing ensures that values applied to inputs and outputs reflect their opportunity cost or real scarcity in society (rather than simply market prices), was applied in the economic analyses. Standard criteria for shadow pricing developed in the past for Botswana and surrounding countries were used to estimate these and update them (Ministry of Finance and Development Planning 1986; Matambo 1988). Botswana's economy has been relatively open in recent years, with few price distortions, and in many cases market prices fairly reflect opportunity cost.

4.2.4 Valuation approach

Following an overview of the services provided by the MWS parks, the main services were identified and described as far as possible using existing information. Particular attention was given to tourism value, which was the most important value of the protected area system and one which can be further developed and enhanced to meet the objectives of the Makgadikgadi Framework Management Plan.

For tourism value, we followed the approach of Arntzen et al. (2010), where the contributions that tourism activities make to local livelihoods, and the contributions they make to national economic growth, both directly and in total, were measured for the whole MWS area. Arntzen et al. (2010) examined the operations of, and/or gathered data on all accommodation facilities, namely, three serviced hotels/motels; three up market lodges, two mid- to up-market lodges/camps, four mid-market lodges/camps, and seven campsites. Several serviced motels just outside the FMP study area were excluded although they are in Letlhakane, effectively a tourism node for the MWS. Using the approach and values described below, Arntzen et al. (2010) estimated and documented the value of tourism in the whole Makgadikgadi Wetland System.

For this study we estimated, subjectively, the proportions of tourists using any of these facilities, who either made full use of, or were drawn to the MWS, by the existence of the state protected areas and Nata Sanctuary. Thus values attributable to the protected areas were derived as fractions of the total MFMP values. Park tourism was estimated to be attributable to all or part of the operations of three up-market lodges, two mid- to up-market lodges/camps, two mid-market lodges/camps and five of the campsites. No serviced hotels/motels were considered to contribute to park tourism values.

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The basis for the measures of tourism value included aggregate data on tourism and parks and empirically-based financial and economic tourism enterprise activity models as initially developed by Barnes (1998), and modified and upgraded by Turpie et al. (2006), Arntzen et al. (2010) in Botswana, and by Turpie et al. (2004), Turpie et al. (2010), in Namibia. These are detailed ten-year spreadsheet budget/cost-benefit models which determine the private values to tourism investments for operators and local communities ( livelihood values ). They also determine the incremental change that the tourism investments cause directly in the national income , (the value added they contribute to the national income).

Specific models were developed in this study for non-consumptive tourism in low- to up-market camp/lodge concessions and trophy hunting concessions (see Appendix 2). These models were based on older models, in turn based on empirical data, gleaned during an extended period through interviews with wildlife use enterprises and trusts, through examination of financial data from trusts, and from management plans for conservancies. For park costs the costing models developed by Martin (2004, 2008) were used to determine appropriate costs levels. Martin (2004, 2008) has developed a rigorous multivariate model for computing appropriate park costs in various settings, based on empirical data from SANParks in South Africa. Martin's model has been applied successfully in Namibia and elsewhere to corroborate detailed park planning cost estimates.

The financial analyses were based on estimates of income generated minus the costs incurred (capital and recurrent costs) by the different enterprises. The following adjustments were made to convert the financial analyses to economic analyses: (i) Domestic transfers such as taxes, and subsidies, were eliminated as costs or benefits; (ii) Donor and government investments were treated as costs in the cost- benefit analyses as the returns to these were being measured. (iii) Inflows from, and outflows to, non-nationals were treated as benefits and costs, respectively. This ensured measurement of national income. (iv) A general shadow price for unskilled and semi-skilled labour of 0.5 of the market price was applied in the economic models to reflect general unemployment and social pressure for higher wages. (v) A foreign exchange premium of 6% was added to the prices of all tradable items in the economic models, to account for general excess demand for traded and tradable goods and services. (vi) All economic models included an opportunity cost of capital of 8%, but land opportunity costs were excluded, allowing direct comparison between model results regarding returns to land.

The economic models computed the direct contribution that tourism enterprises make to the national income. Tourists drawn to accommodation in the MWS also spend

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elsewhere in the economy on travel and other things ( direct lateral linkages ). Similarly the accommodation establishments hosting them are induced to spend in other sectors for supplies such as fuel and food ( indirect backward linkages ). The lateral linkages were based on the visitor expenditure data collected during visitor surveys by the Research and Statistics Division of the Department of Tourism (Department of Tourism 2000, 2006, 2009). The indirect value added through these multiplier effects was estimated based on the multipliers described by Turpie et al. (2006), which were measured using the social accounting matrix model for the Botswana economy. The total value added was computed as the sum of direct and indirect value added.

As a way of corroborating findings, or not, an entirely separate approach was also applied to value park tourism in the MWS. Thus, using the approach to park valuation developed by Turpie, et al. (2004) and Turpie et al. (2010) an attempt was made to use visitor numbers to estimate the direct and indirect economic contribution of the MP & NP National Parks. This approach was based on the assumption that tourists who visit protected areas as part of their leisure tourism trip in Botswana are attracted primarily to the iconic protected area system, so that all their in-country expenditures inside and outside of protected areas can be attributed to this attraction. Thus without the protected areas these visits would not take place. Estimates were based on data on the number of days spent by leisure tourists in and out of parks during their trips, as well as on data on their daily and trip expenditures in Botswana, and their expenditure patterns on tourism products other than accommodation (the lateral linkages), while in the country. Data for these was drawn mainly from Department of Tourism (2009) but also from Department of Tourism (2000a, 2000b).

The specific contribution of avitourism was also examined. Information on birding in the area was obtained from the literature, as well as from casual conversations with lodge staff conducted in the study area, and from email and telephonic interviews conducted with tourism operators in the area (for operators contacted, see Appendix 1).

4.3 INFLUENCE OF MANAGEMENT ON THE VALUE OF ECOSYSTEM SERVICES

The magnitudes of the different types of value generated by ecosystems depend on the way in which they are managed. For example, there are trade-offs between focussing on the direct consumptive use of a system or keeping it intact in order to maximise the output of indirect use value from regulating services such as carbon sequestration. There is generally a trade-off between the use values and indirect plus non-use values, and within use values, there can be trade-offs between consumptive and non- consumptive values (e.g. where hunting tourism precludes the use of an area for photographic tourism). Outside of protected areas, consumptive use (e.g. grazing, resource harvesting) is the predominant use of natural systems, where they are not

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replaced by agricultural systems or infrastructure, and the values associated with the more intact habitats of protected area systems are usually greatly reduced. The values of protected area systems are primarily non-consumptive use values (tourism), indirect values (regulating services) and non-use values (existence and option values) associated with protection of biodiversity. However, these values may diminish with inadequate protection or insufficient connectivity between protected areas to maintain populations and vital ecological processes such as gene flow.

4.4 CONTRIBUTION OF PROTECTED AREAS TO ECOSYSTEM SERVICES PROVIDED BY THE MWS

The ecosystem services generated by protected ecosystems in the MWS area are described below, based on the baseline information for the whole area provided in Arntzen et al. (2010), and concentrating on the most important values, especially tourism.

4.4.1 Provisioning services While communities within the MWS system derive large benefits from the use of natural resources, little or none of this is obtained from protected areas. Values generated by terrestrial protected area systems can include harvesting of live game for sale, and provision of resources to supply neighbouring communities (e.g. harvesting areas or game for drought relief). However, as consumptive use of parks is not allowed, none of these potential values is realised at present.

4.4.2 Regulating services The main regulating services provided by the protected area system are carbon sequestration and the provision of refugia for wildlife. We do not consider services such as flood and storm protection and pollination services to crops and orchards as applying to the MWS area and we have disregarded these. In addition, the roles of flow regulation and erosion regulation are not well understood. Groundwater recharge in the area as a whole has been estimated to be worth about Pula 10.8 million (DEA & CAR 2010), but is described in terms of a supporting service (maintaining the ecological balance of the system), the valuation of which can lead to double-counting. Water purification is unlikely to be a demanded service and probably has no value (DEA & CAR 2010).

Carbon sequestration Carbon is taken up by plants in the growth process and stored in above and below- ground plant biomass. In addition, litter production and other processes lead to the accumulation of carbon in soil. The sequestration of carbon is an important service

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which offsets the damage caused by increasing atmospheric carbon and resultant global climate change. The sequestration of carbon by ecosystems thus has a positive economic value.

While it is relatively straightforward to determine the standing stock of carbon in a landscape, the rate of carbon sequestration is a more complex issue. This is related to the rate of carbon storage, but also to how permanently the carbon is stored. While long-lived indigenous trees are typically considered as good carbon sinks, faster growing vegetation may result in high levels of soil carbon sequestration, even if biomass carbon is not stored for long.

Carbon sequestration in Botswana has not been well studied. A preliminary estimate is that this service may be worth in the region of Pula 74 - 253 million in the whole of the Makgadikgadi Pans area (DEA & CAR 2010). Protected areas play an important role, in that conserved natural systems within dryland have higher value as carbon sinks than degraded or heavily grazed areas outside protected areas (Su et al. 2003).

Wildlife refugia The MWS as a whole is part of a broader system of habitats and migratory routes that all contribute to the survival of meta-populations of fauna in the Botswana. These include important migratory animals such as zebra and elephants. The animals using the MWS also contribute to tourism activities beyond the MWS. In addition, the MWS provides critical breeding habitat for flamingos and pelicans, which only breed in very few localities on the continent. These animals are not only of value when viewed in the pans (direct use value), but also generate valuable wildlife viewing and hunting opportunities beyond the pans, and even beyond Botswana. Arntzen et al. (2010) estimated that the contribution of this refuge function to tourism value elsewhere in Botswana was in the order of P5.9 million. Protected areas probably account for a significant portion of this value, and will be critical to maintaining it.

4.4.3 Cultural services Very little is known on the cultural values of the study area at this stage. The area undoubtedly contributes significantly to spiritual and religious value, and its relatively high level of intactness lends it to provision of scientific and educational value, particularly within the protected areas. Some of these values are intangible, and take the form of non-use, or existence values. The most prominent of form of cultural value generated in the study area is the direct value generated in the form of tourism. Tourism in the MWS as a whole is worth some P227 million per annum (Arntzen et al. 2010). The contribution of the parks is examined in more detail below.

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4.5 TOURISM VALUE OF THE MWS PARKS

4.5.1 Level and nature of tourism use Botswana rates as a top-class nature tourism destination globally, and attracts a diverse array of international visitors that come to see vast tracts of unspoilt wilderness and high densities and diversity of wildlife, particularly the large charismatic species including the “Big 5”. Charismatic birds and bird aggregations feature strongly within the overall attractiveness of the area, even to non-birders. Coupled with the high level of tourism service and low level of congestion, it has become a favoured destination within the African continent. However, only an estimated 3% of the country’s tourists visit the MWS area (Johnson et al. 2010).

Most visitors to the MWS area arrive on self-drive tours or organised tours and fly-in packages that visit one of the high-end lodges either as a sole destination or part of a larger tour. Mobile Safari Operators (MSO) which are common in areas such as the Okavango delta, rarely take clients to the MWS area. Those that do, mainly visit Nxai Pans NP to visit the historical Baines Baobabs, as an outing from Maun. Occasionally they are commissioned to go to Lekhubu Island or the Nata Sanctuary for an overnight trip, the latter specifically to see the flamingos (Johnson et al. 2010). According to one tourism operator, there are probably fewer than 500 trips per year traversing the pans between Lekhubu Island and Gweta/Zoroga. More recently, quad-biking has become increasingly popular in the area, and this threatens the wilderness character of the area.

Discussions were held with lodge staff at Jack’s Camp, Planet Baobab, Leroo le Tau and Gweta Lodge, and Gweta lodge provided detailed estimates of their visitors' activities (Figure 10). According to their estimates, just over half of visitors were there to see the area’s wildlife, and these were mostly general wildlife tourists. They spent about half of their time in the two national parks. Discussions with the lodges suggested that very few visitors are birders, possibly less than 5%. Nevertheless, some noted that there has been a growth in the number of birders visiting the area, and they saw more scope for growth. About 20% of visitors were considered to have been visiting Makgadikgadi Pans as their main destination, this did not include birders, who tend to visit the area either as one of several destinations, or really as a minor destination that they pass through en route to other destinations.

Indications were that visitors to these areas were people that had already had considerable experience of teeming wildlife areas such as the Okavango and Chobe areas, and were looking for something different from this and unusual, as is offered by the MWS in the form of the desolate landscapes, archaeological experiences, baobabs, meerkats, quad-biking and the like. Because the landscapes in and around the MWS national park areas offer similar birds than in the other wildlife areas, there is no special reason for birders to seek them in this area, as opposed to the richer northern areas,

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unless, for example, it offers more affordable or less congested birding. However, the majority of birders to the area possibly have a higher tendency to seek out more affordable accommodation such as camping. In general, staff at campsites do not have the same level of host-relationship with their clients and would not be expected to interact with and gain an understanding of the activities of their clients.

Birders Other 4% specialised tourists 6%

Rest of MWS In transit, on outside parks MWS National business 40% General wildlife parks 45% tourists 50% 45%

Sua Pan area 10% FIGURE 10. ESTIMATED BREAKDOWN OF TOURISTS AT GWETA LODGE , AND THEIR USE OF THE STUDY AREA . SOURCE GWETA LODGE .

Tourism value of the parks The state parks system forms the core for tourism both inside and just outside the state-funded system. Most park tourism values are associated with game lodges and camps, and contribution of hotels/motels was taken to be negligible (Table 8). Park tourism involves capital investment of some P50 million, generates aggregate turnover of some P55 million, aggregate private net income (profits) of some P9 million, and local livelihoods amounting to some P6 million (Table 8). Aggregate turnover is also essentially an economic value in that it also represents the gross output for park tourism in the MWS.

TABLE 8. TOURISM VALUES ATTRIBUTABLE TO MWS PARKS : DIRECT PRIVATE VALUES (P, 2010)

Net income to Initial capital Aggregate turnover Aggregate private local Tourism category investment (Gross output) net income communities/ livelihoods Game lodges/camps Upper market 29 592 000 32 676 500 5 602 500 3 383 500 Upper to mid market 15 660 500 17 292 900 2 964 900 1 790 600 Mid market 470 200 519 200 89 000 53 800 Subtotal 45 722 700 50 488 600 8 656 400 5 227 900 Other tourism activities Campsites 111 100 122 700 21 000 12 700 Mobile operations 3 772 100 4 165 300 714 200 431 300 Safari hunting operations 0 0 0 0 Subtotal 3 883 200 4 288 000 735 200 444 000 Total 49 605 900 54 776 600 9 391 600 5 671 900

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The local direct contributions to gross and net national income are given in Table 9, as well as the total broader contribution including lateral and backward linkages. The values in the tables are those directly associated with tourism economic activity and do not include the government's investments in parks, which are aimed primarily at biodiversity conservation.

TABLE 9. TOURISM VALUES ATTRIBUTABLE TO MWS PARKS : DIRECT ECONOMIC CONTRIBUTIONS AND TOTAL ECONOMIC IMPACTS (P, 2010)

Tourism category Gross value added Net value added Number of jobs Natural resource rent Upper market 13 232 500 10 655 400 99 8 822 700 Upper to mid market 7 002 800 5 639 000 53 4 669 100 Mid market 210 200 169 300 2 140 200 Subtotal 20 445 500 16 463 700 154 13 632 000 Other tourism activities Campsites 49 700 40 000 0 33 100 Mobile operations 1 686 800 1 358 300 13 1 124 600 Safari hunting operations 0 0 0 0 Subtotal 1 736 500 1 398 300 13 1 157 700 Total direct contribution 22 182 000 17 862 000 167 14 789 700 Total economic impact 92 720 600 74 662 800 697 61 820 700

Game lodges and camps are also responsible for much of the economic value of park tourism in the MWS (Table 9). In terms of its direct value added to the national income , park tourism in the MWS contributes some P22 million in gross value added (gross national income), and some P18 million in net value added (net national income). About 170 jobs are involved and these tourism activities generate an estimated P15 million in terms of natural resource rent. The latter is excess profit, the amount that is left after deduction of the costs of production and a fair return on investment. It is noteworthy that much of this economic rent is captured by government in taxes and only 16 percent of it is captured by local communities in the form of rentals and royalties for tourism concessions. The issue of rent capture is worthy of examination and possible rationalisation to make it more economically efficient.

As noted, the estimated gross value added by park tourism in the MWS amounts to P22 million, but this direct contribution can be combined with additional impacts on the national income resulting from the lateral linkages and the income multiplier. The lateral and backward linkages in the economy, induced by park tourism, bring the total gross national income impact to P93 million. This factor of some 4.2 has been applied to all of the measures in Table 9.

Johnson et al. (2010) and Department of Tourism (2009) provided park entry statistics for the northern and southern parks in Botswana. While the whole park system recorded some 284,000 visitors in 2009, those recorded as visiting the MP & NP National Parks, which fall within the southern parks numbered only some 7,000 or some

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3% of the total. Using our alternative approach to park valuation described in the valuation approach section, above, and which involves use of park related visitor numbers and their expenditures, we made a separate estimate of the direct and indirect economic contribution of the MP & NP National Parks. This approach, developed by Turpie, et al. (2004) and Turpie et al. (2010), is based on the premise that certain leisure tourist in-country expenditures would not take place if the iconic protected areas of the MWS did not exist. The approach resulted in an estimate of the direct aggregate turnover or gross output of P57 million and the total economic impact in terms of gross value added to the national income of P113 million. These values corroborate, fairly well, the findings in Tables 6 and 7, above, where the direct aggregate turnover or gross output was P55 million and the total economic impact in terms of gross value added to the national income was P93 million.

It is noteworthy that the park-related economic tourism values estimated in the tables above, amount to between 40% and 45% of the economic tourism values for the whole MWS area as measured by Arntzen et al. (2010).

The contribution of avitourism The e-mail and telephone survey aimed at determining operators’ opinions of the proportion of their turnover attributable to avitourism, as opposed to all tourism, yielded limited results due to low response rates, and a lack of clear understanding among some operators about the nature of avitourism. Subjective estimation based on the largely qualitative responses received, suggests that avitourism makes up differing proportions of value among different market segments: • Serviced hotels and motels - 1% to 2% • Game lodges and camps - 15% to 25% • Campsites and camping grounds - 5% to 15% • Mobile safari operations - 1% to 5%

These proportions were applied to determine the private and economic values in Table 8Table 10 and Table 11 below.

TABLE 10. AVITOURISM VALUES ATTRIBUTABLE TO MWS PARKS : DIRECT PRIVATE VALUES (P, 2010)

Tourism category Capital investment Gross turnover Aggregate profit Local livelihoods Game lodges/camps Upper market 5 918 400 6 535 300 1 120 500 676 700 Upper to mid market 3 132 100 3 458 580 592 980 358 120 Mid market 94 040 103 840 17 800 10 760 Subtotal 9 144 540 10 097 720 1 731 280 1 045 580 Other tourism activities Campsites 11 110 12 270 2 100 1 270 Mobile operations 113 160 124 960 21 430 12 940 Safari hunting operations 0 0 0 0 Subtotal 124 270 137 230 23 530 14 210 Total 9 268 810 10 234 950 1 754 810 1 059 790

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TABLE 11. TOURISM VALUES ATTRIBUTABLE TO MWS PARKS : DIRECT ECONOMIC CONTRIBUTIONS AND TOTAL ECONOMIC IMPACTS (P, 2010)

Tourism category Gross value added Net value added Number of jobs Natural resource rent Game lodges/camps Upper market 2 646 500 2 131 080 20 1 764 540 Upper to mid market 1 400 560 1 127 800 10 933 820 Mid market 42 040 33 860 0 28 040 Subtotal 4 089 100 3 292 740 30 2 726 400 Other tourism activities Campsites 4 970 4 000 0 3 310 Mobile operations 50 600 40 750 0 33 740 Safari hunting operations 0 0 0 0 Subtotal 55 570 44 750 0 37 050 Total direct contribution 4 144 670 3 337 490 30 2 763 450 Total economic impact 17 324 700 13 950 600 125 11 551 200

The estimated current private values, direct economic contributions and total economic impacts of avitourism are some 19% of the total estimated economic tourism contributions made by all tourism attributable to MWS parks.

4.6 SECURING THE FUTURE VALUE OF THE MWS PARKS The values described above are a static estimate of the flows of different types of value emanating from the MWS parks system. These values are integral to the value of the entire MWS area, and indeed the parks help to maintain the value of the surrounding systems. However, what was not assessed in this study is the trajectory of change of any of these values. If the use of the MWS is not sustainable, and the parks are inadequately protected, then the services they supply and their values cannot be sustained. According to Martin (2008), burgeoning populations and poor relations with park neighbours constitute a significant threat that is not adequately addressed by the parks. Part of the reason for this is that the parks are seriously underfunded and are not sufficiently effective in achieving their mandate. The value of the parks system is dependent on its meeting its conservation mandate, which, in turn, depends on a secure financial footing. The financial security of the parks system can be improved in two main ways:

(1) Increased income/funding to parks, e.g. through increased allocation from government, or through increasing revenues from tourism; (2) Decrease costs by reducing threats to parks, and increasing management efficiency.

These options are explored in more detail in the following chapters on financing and co- management options. We do not cover institutional structures and arrangements pertaining to the DWNP. This specialised topic has been covered in several consulting reports, including Martin (2008).

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 51 5 OPTIONS FOR SUSTAINABLE FINANCING OF PARKS

5.1 SUSTAINABLE FINANCING

Budget allocations to Botswana’s national parks are considered insufficient to maintain a minimum standard of services and are expected to result in a deterioration of the natural resource base and park infrastructure (Martin 2008). This situation is not unique. Over the past decade a number of governments in developing countries have cut their budgets for protected areas by more than half, and international aid for biodiversity conservation has also declined (Saporiti 2006). Because of this protected areas in many developing countries receive less than 30 percent of the funding estimated to be needed for basic conservation management (Saporiti 2006). These national parks lack funds to pay for staff salaries, patrol vehicles and wildlife conservation programs leading to insufficiently protected parks that become vulnerable to deforestation, poaching and conversion to agricultural lands (Saporiti 2006).

Funding of protected area systems has been recognised as a major constraint in meeting the global biodiversity protection targets that were set under the Convention on Biological Diversity (CBD, Rio 1992). As a result, protected area finance formed a key agenda item at both the IUCN World Parks Congress in Durban, 2003, as well as the 7th Meeting of the Conference of the Parties (COP) to the CBD (2004), culminating in IUCN’s release of a publication on the subject (Emerton et al. 2006). While much of the debate initially was concerned with raising the levels of funding, and developing innovative financing mechanisms to help achieve this aim, more recent emphasis has been on ensuring that financing mechanisms are not only efficient and effective, but also sustainable.

Since poverty reduction has become a primary goal for both governments and donor agencies, donor governments have tended to shift their focus from protected areas to the sustainable use and equitable benefit-sharing objectives of the CBD. In addition, much protected area finance has been short term, focusing on land acquisition and capital investment, rather than focusing on sustaining the systems over time. It is for these reasons that conventional systems of funding have come into question, and development of sustainable financing mechanisms has become a global focus for protected area systems.

5.1.1 Financial planning Financial plans differ from budgets in that they not only help to determine the protected area funding requirements over time, but also determine the income sources to match those needs over the short, medium and long term. A financial plan takes into account the fact that different sources of funding have different characteristics with

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regard to reliability, accessibility, and flexibility of use. Funding mechanisms vary in terms of their time horizons. Some take time and effort to establish, providing little short-term gain but with good prospects for steady financing over the longer-term. A financial plan should identify these characteristics and construct a revenue stream that matches the short- and long-term requirements of the protected area system (IUCN 2000).

5.1.2 Sustainable financing Sustainable financing requires securing adequate funds, and also considering the quality, form, timing, targeting, uses and sources of funding. This entails (Emerton et al. 2006): • Building a diverse funding portfolio, going beyond conventional mechanisms and including multiple funding sources • Managing and administering funds in a way that is efficient and effective, allowing for long-term planning and security, and that provides incentives and opportunities for managers to generate and retain funds at the PA level. • Providing support to groups who incur costs as a result of the PA system, as well as securing fair contributions from PA beneficiaries. • Identifying and overcoming the broader market, price, policy and institutional distortions that act as obstacles to PA funding and financial sustainability. • Factoring finance into PA planning and management processes to achieve cost efficiency of the operation. • Ensuring that there is adequate institutional set up and sufficient human capacity to use financial tools, is a key strategy for improving PA financial sustainability.

Financial sustainability is not possible without strong and effective institutions for PA management.

5.1.3 The financial sustainability scorecard A financial sustainability scorecard has recently been developed by UNDP (Bovarnick 2007) as a tool to assess and track changes in the financial status of national systems of protected areas. The scorecard presents a systematic process for financial planning, and provides a means to assess the extent to which conservation financing needs are being met, as well as the institutional arrangements that influence financial sustainability. The scorecard is divided into two parts. Part I assesses current and future costs, revenues and financing gaps of the PA system (Table 12). Part II assesses (i) governance and institutional frameworks, (ii) business planning and other tools and (iii) revenue generation, culminating in an overall score. It would be prudent for such an analysis to be conducted for Botswana’s parks system on a regular basis.

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TABLE 12. ELEMENTS OF THE FINANCIAL SUSTAINABILITY SCORECARD

Part I: Overall Sustainability of a National Protected Area System (i) Total annual expenditure for PAs (operating and investment costs) (ii) Total annual government budget provided for PA management (excluding donor funds) (ii) Total annual government budget provided for PA management (including donor funds, loans, debt-for nature swaps) (iii) Total annual revenue generation from PAs, broken down by source (iv) Net annual surplus/deficit (iv) Percentage of PA generated revenues retained in the PA system for re-investment (v) Projected revenues (over 5 year period) (vi) Estimated financing needs for basic management costs and investments to be covered (vii) Estimated financing needs for optimal management costs and investments to be covered (viii) Annual actual financing gap (financial needs – available finances) a. Annual financing gap for basic expenditure scenarios b. Annual financing gap for optimal expenditure scenarios Part II. Assessing elements of the financing system 1. Legal, regulatory and institutional frameworks Support for revenue generation by PAs Support for revenue sharing within PA system Conditions for establishing endowment or trust funds Support for alternative institutional arrangements for PA management National PA financing strategies Economic valuation of PA systems Improved government budgeting for PA systems Clearly defined institutional responsibilities for PA management and financing Well-defined staffing requirements, profiles and incentives at site and system level 2. Business planning and tools for cost-effective management Site-level business planning Operational, transparent and useful accounting and auditing systems Systems for monitoring and reporting on financial management performance Methods for allocating funds across individual PA sites Training and support networks to enable PA managers to operate more cost-effectively 3. Tools for revenue generation Increase in number and variety of revenue sources used Setting and establishment of user fees across the PA system Effective fee collection systems Marketing and communication strategies for revenue generation mechanisms Operational PES schemes for Pas Operational concessions within Pas PA training programmes on revenue generation mechanisms

5.2 DWNP PARK BUDGETS AND THE FINANCING GAP

Budget data are not available for Botswana’s parks at the individual park level, and neither is expenditure recorded at the park level (S Johnson, 2010, pers. comm.) Thus park budgets could not be calculated under the current accounting system. Park-level budgets were estimated by DARUDEC in 2005 (Martin 2008). At that time, the budget for the joint Makgadikgadi-Nxai Pan National Parks was estimated to be in the order of US$285 455, out of a total budget of just under US$2.1 million for all parks.

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Martin (2008) using his model described above, estimated the manpower and budgets required for the parks, based on 2005 data (Table 13). Under the most favourable conditions, i.e. assuming the lowest level of illegal hunting, the budget is half of that required under moderate pressure from illegal hunters. Thus under moderate pressure, which can be argued is the case, the required budget is more than 10 times the actual budget.

TABLE 13. ESTIMATED ACTUAL AND REQUIRED BUDGETS OF THE DWNP PARKS , HIGHLIGHTING THE MWS PARKS IN PARTICULAR . SOURCE : MARTIN (2008).

Budget US$ (2005) Required Required (moderate Area km2 Actual (low pressure) pressure) Makgadi + Nxai Pan 7 520 285 455 1 705 922 3 411 844 Rest 96 490 1 805 827 7 868 584 15 737 168 Total 104 010 2 091 282 9 574 506 19 149 012

Furthermore, the revenues generate by the parks were estimated to be P24 134 818 in 2005 (Broekhuis 2008), equivalent to US$3 792 687. If 3% of this is taken to come from the MWS parks (on the basis of tourism numbers), then these parks were generating revenues in the order of US$113 781, which is only 40% of the actual budget.

This is only a rough estimate of the funding gap, however. The revenues estimated above are similar to what might be expected from entry fees, based on current visitor numbers, but are probably an underestimate, as they do not include income from concessions. The costs do not include capital costs.

Martin’s work, which has formed the basis of substantial injections of funds to park systems elsewhere, such as in Namibia, suggests that there is an enormous funding gap that needs to be filled. For the MWS parks, the financing gap could be as much as US$3.1 million per year, which is more than the actual budget for Botswana’s entire park system.

In 2007, Botswana reportedly committed US$4.779 million to DWNP (Mansourian & Dudley 2008). This represents an expenditure of US$0.27 per ha of parks, compared with, for example, US$2.65 per ha in South Africa, which is ten times greater (Mansourian & Dudley 2008).

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5.3 OVERVIEW OF SUSTAINABLE FINANCING MECHANISMS

Several possible financial mechanisms exist for ensuring adequate investment in the protected area system (Table 14). The more viable options are discussed below. High priority mechanisms for continuation include motivation for government budget investments, motivation for donor grant investments, and collection of park user fees. High priority mechanisms for further development and/or exploration and development include collection of park concession fees (rentals and royalties), user fees (royalties) from extractive activities such as mining in parks and use of wildlife and forest resources, revenues from sale of live game in parks, capture of non-use values such as biodiversity offsets, capture of carbon market income, and trust fund development. A number other mechanisms also warrant ongoing exploration as lower priorities.

TABLE 14. POTENTIAL FUNDING MECHANISMS FOR PARKS IN BOTSWANA .

External Flows Market-Based Mechanisms Cost-saving Mechanisms 1. Government budgets 1. Tourism revenues 1. Volunteers and interns 2. Donor bi/multilateral grants Entry fees 2. Management concessions 3. Protected area trust fund Concessions fees 3. Co-management 4. Earmarked taxes Voluntary contributions 4.ICDPs around PAs 5. Environmental fines Activities fees (e.g. filming) 6. Tax deductions for donations Tourism taxes (e.g. bed, airport) 7. Individual donations 2. Resource extraction user fees/sales 8. Corporate donations Wildlife/Forest 11. Loans Bio-prospecting 12. Debt reduction schemes Mining Petroleum/Gas 3. Payments for ecosystem services 4. Biodiversity offsets 6. Cause related marketing 7. Lotteries

5.4 EXTERNAL FLOWS

5.4.1 Government budgets

Botswana’s parks system is largely funded from the government treasury. Capital and recurrent budgets are insufficient to prevent depreciation and decay of park infrastructure and to maintain adequate protection of biodiversity. In Botswana, the parks system is of major importance to the national economy, in that it underpins a large part of the national tourism industry. In Namibia, it has been shown that enhanced investment in the parks system will be economically efficient resulting in

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positive economic returns in terms of income (Turpie et al. 2009), and this was used by the Namibian Ministry of Environment and Tourism to motivate for an increased government budget allocation for parks, as well as a very large donor investment in parks. Similar arguments can be expected to apply in Botswana.

5.4.2 Grants The motivation for continued and new external flows to parks, based on economic evidence, will be an important element of any park financing plan. However, because Botswana is an emerging country, the government will have, and increasingly has had, to take responsibility for these costs. At the same time, globally, there is an increasing amount of donor funding to initiatives that address biodiversity based mitigation and adaptation activities in light of climate change and envisaged serious impacts.

5.4.3 Trust funds and reinvestment of park income One of the greatest problems facing many protected area systems is that very little of the revenues generated are internalised, which means that parks have little access to the funds they generate. This, coupled with the fact that budgets allocated to protected areas are not influenced by the revenues that they generate, creates a disincentive for enabling tourism developments and consumptive use or live capture initiatives that might raise revenues, since these all increase the management costs of parks, and stretch the already-limited budgets.

In line with international recognition of the need for reinvesting wildlife management- generated revenues into wildlife protection and sustainable use, funds for wildlife management have been created in several southern African countries. Trust funds provide an opportunity for ensuring that as much as possible of the revenue generated by parks is returned to parks. Such funds provide opportunities for better management of money allocated to the wildlife sector, and can play a significant role in supporting community-based initiatives.

The way in which environmental funds have been set up varies, however, with some not being very specific about the sources or uses of the funds, and in some cases with appropriations from government budgets being listed among the sources of the funds. Wildlife protection is the main objective of some of these funds, e.g. in Malawi and Tanzania, but is not always included as an objective (Cirelli & Morgera 2010). Some countries have several funds. For example Mauritius has a National Parks and Conservation Fund, a National Environment Fund, and a National Heritage Fund (which helps safeguard habitat of animals of outstanding value).

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BOX 1. CONSERVATION TRUST FUNDS AND THE RECIPE FOR SUCCESS (BASED ON CONSERVATION FINANCE ALLIANCE 2008)

Conservation Trust Funds can be either revolving funds or endowment funds that are used to cover the operating and capital costs of protected area systems and other conservation-related activities.

The objectives of Conservation Trust Funds (CTFs) range from a strict focus on conserving biodiversity to improving the livelihoods of communities near PAs and promoting sustainable

development. In developing countries governments and donors have tended to encouraged a shift towards the latter to align with national development goals, as well as to indirectly support biodiversity conservation by reducing human threats. However, there is a danger that too broad a focus may dilute the direct impacts on biodiversity.

Advantages of CTFs are that they I. provide a relatively stable and secure source of funding for salaries, infrastructure maintenance, equipment and supplies. ii. serve as an exit strategy for international donors in countries where they plan to close down their projects or offices (for budgetary or other reasons) but would still like to have a lasting impact.

The single most important condition for good governance of CTFs is for a majority of the members of the governing board to come from outside of government. Experience has shown that this makes them more successful in attracting contributions from international donors and the private sector and more transparent and effective in achieving biodiversity conservation goals. In particular, the Chairman of the board should not be a government official; the CTF‘s offices should not be physically located inside a government ministry; and nongovernmental members of the board should not be chosen or appointed by a government.

The main sources of funding for CTFs are the GEF and bilateral aid agencies (around 75 percent), but also include corporations, other nonprofit organizations and foundations. In most cases, money raised through the latter is used to finance individual projects and programs rather than to capitalize endowments. Fundraising for CTFs relies on fundraising, marketing and strategic skills of their boards and senior management, as well as the existence of a realistic and well thought-out marketing and fundraising strategy. Conducting a system-wide PA financial gap analysis helps to raise the initial capital for a CTF, such as in the case of Madagascar.

Key factors for ensuring the success of CTFs include: 1) A country-wide conservation strategy that presents a quantified biodiversity conservation needs assessment both within and outside PAs; 2) Political support at the highest levels in a country, with limited government involvement in a CTF‘s day-to-day management; 3) Fundraising and technical support from international organizations ; 4) Consultative processes that include all major stakeholders and reflect those inputs in a CTF‘s design, including support for sustainable livelihoods; and 5) Top-notch human resources that provide the breadth of skills needed to lead a CTF, both at the senior management staff level and board level.

In addition, CTFs need to ensure that interest and investment income (including capital gains) earned by investment of endowment funds is exempt from taxation at the source (i.e., in the country where the money is invested) or in the destination country (i.e., the country where the CTF is legally registered or operate.

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Namibia has a revolving fund, the Game Products Trust Fund Act that derives its income from 25% of the park fees as well as the sale of wildlife. This fund requires the representation of community-based organizations involved in wildlife projects on the Fund’s board. In addition, it has an endowment fund, the Environmental Investment Fund, which is for the maintenance of biodiversity and resources within and outside of protected areas, although this is not yet fully operational.

Tanzania’s National Environmental Trust Fund expressly supports community-based environmental management programmes, and Zambia’s fund is able to support people needing access to natural resources. There are many opportunities to strengthen the provisions of such funds to provide opportunities to empower local communities in wildlife management (Cirelli & Morgera 2010).

Botswana has recently created a National Environment Fund , gazetted in July 2010, which is administered by the DEA for the purpose of financing protected areas. In addition, the DWNP has a Conservation Trust Fund , which receives revenue from the sale of ivory, and a Community Conservation Fund , which receives an annual allocation of about P500 000 to be shared among Botswana’s approximately 50 Community-based Organisations (Hancock, pers. comm.).

5.5 TOURISM REVENUES

5.5.1 Increasing nature-based tourism demand Nature-based tourism is dependent to a large extent on the base assets available to domestic and international visitors. These assets include the country’s biodiversity (species diversity, richness, and endemism) as well as the advanced tourism infrastructure (physical and informational) in place to support nature tourists, both general (e.g. complementary wildlife attractions, accommodations and transportation amenities) and specific (e.g. Important Bird Areas, infrastructure such as boardwalks, hides and interpretation centres). Thus tourism represents a development option that requires relatively little investment compared to other alternatives, in that much of the asset base is already in place.

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The relative importance of Botswana’s nature based tourism assets to international and domestic tourists varies. For wildlife tourists, and particularly birders, the choice of destination will be driven primarily by a combination of the following: • Ecological conditions that affect return to effort (e.g. aggregations) • Rare or range-restricted species • Species richness • Wildlife spectacles and aggregations (i.e. large concentrations of birds in a given location) • Presence of other (e.g. cultural) attractions • Infrastructure, facilities and services that affect return to effort • Personal safety

International tourists are often attracted to areas where the biodiversity is most different from that of their own region, and where they can see as many new species as possible in a limited period of time. Wildlife spectacles add value to this pursuit and may tip the balance between two comparable areas. Within Africa, would-be travellers have many countries and regions to choose from, and it is important to understand what makes Botswana stand out as a choice.

Judging from internet searches of advertised tours, most wildlife and birding tours in Botswana concentrate on the northern areas, in the Chobe/Kasane area, in and around the Okavango Delta (including Moremi Game Reserve) and to a lesser extent, in the Makgadikgadi Pans. In guided tours, the MWS is not always included, and when it is, typically constitutes a one day/one night visit between the Chobe/Kasane area and the Okavango Delta area, and incorporates a visit to the Nata Sanctuary on Sua Pan. It is estimated that only 3% of tourist days in Botswana’s national parks are within the MWS (Johnson et al. 2010). Thus at present, it is reasonable to expect that financing of the MWS parks will have to rely to a large extent on cross-subsidisation from incomes generated in the more popular parks.

Existing nature-based tourism in the MWS is largely centred on general wildlife tourism. However, recognising that the area cannot compete with parks to the north in terms of wildlife viewing, some establishments have made an effort to offer an alternative experience, based on the features that are more restricted to the MWS. These include the pans, archaeological sites, the smaller fauna such as meerkat colonies, the zebra migration and the waterbirds. These are the features that set the MWS apart from other areas, and that could be far better marketed in order to expand tourism use of the area. These assets are described in more detail in Johnson (2010).

There is great potential for enhancing the tourism product and attracting more tourists to the MWS. The area offers a range of possible new and diverse opportunities based around unique MWS features and the existing national parks and protected areas, which need to be upgraded and better developed (Johnson et al. 2010). These new

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opportunities include optimising the wild, wide-open landscapes of the salt pans, avitourism (in particular flamingos and pelicans), and archaeological sites (Johnson et al. 2010). However, this potential is dependent on a number of factors that are important for ensuring an increase in visitors and tourism value (Johnson et al. 2010): • An effective management framework • A conducive environment for investment (i.e. appropriate bulk infrastructure such as roads, electricity, water and tele-communications, and other incentives to invest) • A vigorous marketing and branding campaign

Given that the MWS area has the potential to become a popular emerging tourist destination, it is necessary that the current MNPNP facilities and tourism activities are upgraded and maintained, without impacting on the ecological and biological aspects of the park (DEA & CAR 2010). Park management needs to become more use orientated, adaptive and participatory to ensure tourism growth (DEA & CAR 2010). The MWS area has notable tourism products such as the Nata Sanctuary, the salt pans, large flamingo colonies, and Lekhubu Island. These all need to be enhanced and marketed effectively. Options for enhancing tourism in south Sua Pan are discussed in more detail in the following chapter.

Because the attractions of the MWS area outlined above are considerably broader than general wildlife tourism, they have the potential to contribute to tourism growth locally and generally in the following ways:

• Growing tourism volumes - Botswana is a prime birding destination, and offers a range of tourism facilities and services, making it a competitive international destination. There is probably significant scope to grow volumes (internationally and domestically) within this niche segment. • Increasing tourist spending - Tourists with a specialised nature interest (e.g. birding, archaeology) tend to be relatively affluent and are often prepared to spend a lot on equipment and visiting destinations that offer new species or experiences. For example, the more avid bird watchers also spend considerable amounts on guides and bird tours in order to maximize the number of birds seen within a limited time period. Growing the specialised tourism sector can thus help to increase the average tourist spending in Botswana. • Increasing length of stay - Increasing the number of attractive tourism areas presents an opportunity for expanding itineraries and increasing length of stay, not just for specialised tourists but for general wildlife tourists as well. • Improving seasonality - General wildlife tourism in Botswana is highly seasonal, with more tourists visiting during the dry season from about April to October (based on internet advertising and seasonality of prices). Specialised tourism is sometimes a seasonal or goes counter to the general trend. In particular, bird watching is more fruitful in the rainy summer months (November to March),

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which are the best months for seeing migratory birds and breeding activities of residents. The best time to visit the MWS to see breeding flamingos is from late January to April (according to internet travel advisors). Thus promoting birding can help to even out tourism numbers around the year. • Improving geographic spread - Most wildlife tourists visiting Botswana head for the Okavango Delta and Chobe areas (Johnson et al. 2010, Dept of Tourism 2006). This is probably also true of birders. Promotion of ecotourism and birding in the MWS area will help to create better geographic spread in tourism.

Nature-based tourism is by definition compatible with the conservation mandate of parks. It can help to educate local communities about the value of biodiversity and incentivise successful protection of natural areas (Sekercioglue 2002). Nature-based tourists are typically highly educated, especially with regard to ecological systems, and have higher awareness of conservation issues (Cordell & Herbert 2002). They are thus expected to consciously minimise their environmental impact, be observant of ecosystem status, and pay conservation and protected area fees while travelling. This is particularly true of avitourists, who also reportedly have a lower environmental impact than other nature-based tourists (Weaver 1998). Indeed, bird watching is becoming the most rapidly growing and most environmentally conscious segment of ecotourism and is increasingly looked to as a means of improving the protection of many threatened natural areas around the world (Dickinson & Edmondson 1996). Non-consumptive wildlife tourists and birdwatchers are particularly likely to encourage the protection of more natural areas whether by the state or other entities, as they depend to a large extent on protected areas for their activities

Tourism generally also presents a viable opportunity for development in poor rural areas surrounding parks, especially those that are rich in natural attractions such as the MWS. Tourism has been identified as a key strategy in contributing to the alleviation of poverty in Botswana and is considered to be the second largest contributor to economic growth (Johnson et al. 2010).

5.5.2 Park fees and collection system

Pricing Pricing policies can be used to make protected areas more financially self-sufficient, they can be used to manage visitation rates to reduce congestion and ecological impacts (e.g. through differential prices for parks of different popularity and ecological sensitivity, and to smooth seasonal patterns (though low and high-season prices). They can also be designed to ensure that Botswana does not subsidise recreation for visitors from wealthier countries at the expense of its own citizens. Fees can also be aligned with those of the competition, such as those of parks in neighbouring countries (Brown 2001). Park pricing strategies also need to take social equity and ecological sustainability into account, as well as the ecological and tourist carrying capacities of

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the parks. Pricing policies have to consider encouraging use by domestic visitors, who already pay taxes which indirectly support the parks system. Welfare maximizing pricing systems take into account the consumer and producer surplus of national visitors, negative impacts of visitors within parks, and the positive impacts of national and international park visitors felt beyond the park (Alpizar 2006, Larson & Jarvis 1998, Krug et al. 2002). Park fees still generally form a small proportion of tourist travel costs, and tourists are often unaware of what they have paid as park fees are often hidden within the cost of tour packages or tour guide services.

Since 1990, Botswana’s policy has been one of high-priced, low volume nature tourism, though at the same time recognising the difference in willingness to pay of local, regional and international tourists by offering differentiated prices. Entry fees were set at far higher levels than elsewhere in southern Africa, and out of this grew Botswana’s reputation as a desirable wildlife tourism destination for wealthy international tourists. Tourism in Botswana grew exponentially, and has become second in importance only to mining.

Evidence from Namibia suggests that demand among nature-based tourists for park entry tends to be more price inelastic than their demand for whole tourist trips, which itself tends to be price inelastic (Barnes 1996). In Costa Rica, another destination where park fees are high, the average long-run price elasticity of foreign visits to parks was found to be 0.68 (Alpizar 2006). This means that increasing prices will result in increased revenues, which is compatible with a high value - low impact tourism policy. Thus it is important that park fees are in line with tourist willingness to pay.

In Botswana, park fees have not been tracking inflation . The fees, which are P120 (US$17.5) per person per day for foreigners, have remained the same since at least 2000, which means they have been decreasing in real terms at the rate of inflation. Had they tracked domestic inflation they would now be approximately double their current rate. In Namibia, overseas tourists were willing to pay N$250 (about US$35) for entry to Etosha, and domestic tourists were willing to pay half as much (Turpie et al. 2009). Future research is needed to ascertain visitor willingness to pay for parks in Botswana, and the elasticity of demand.

Studies elsewhere suggest that willingness to pay seems to keep going up over time. However, one has to balance the objectives of raising park fees to limit tourist numbers (and impacts) which is usually compatible with increasing revenues, and charging so much that it detracts from the visitors’ experience, and possibly reduces the opportunities for capturing consumers’ surplus in other areas of the economy, such as in expenditure on private sector and community-based tourism initiatives. In the case of domestic tourists, goals may be to maximise the opportunity for locals to visit parks, which would require low entry fees. The Batswana already pay for parks through taxes.

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Nevertheless prices should not be so low that they bring excessive numbers of visitors, to the point of generating problems of congestion.

Revenue generation could be further improved by collecting fees at entry points where there are no gates at present. However, given the current spread of visitor numbers, it is important to first establish whether cost of setting up the required facilities would make this worthwhile.

Payment systems The existing manual collection systems are likely to be prone to error and theft, and revenues could be increased by increasing the efficiency and safety of the system. This could be enhanced through an online booking and payment system. It is interesting to note that local and foreign visitors to parks in Namibia indicated a higher willingness to pay if a non-government organisation was responsible for managing park revenues, reflecting a general distrust of government institutions (Krug et al. 2002).

Smart-card systems such as the WILD Card system used in South Africa, are potentially attractive in terms of marketing and efficiency. The introduction of a card system in Botswana may not necessarily enhance park revenues, and may even reduce them. However, there may be viable opportunities to link in with a regional system.

5.5.3 Concession fees & royalties The most efficient way to develop further tourism potential in the parks will be to enter into private-public partnerships with concessionaires. Many of Botswana’s parks, including those in the MWS, have the capacity for increased numbers of beds, across a whole range from bottom- to-top-end establishments, including luxury bush-camps. The development of this potential can yield significant benefits. This is limited to photographic tourism under Botswana’s current policy of no hunting in parks.

Private operators would be responsible for the building and maintenance of camps, and carry the risks. The concessionaires then pay rentals and royalties to the parks according to the joint venture agreements involved. Because the prospective concessionaires will compete for concessions via a tender process, it is anticipated that rentals and royalties will adequately capture the economic rent associated with park tourism concessions. A typical lease period for this type of arrangement is 15 to 45 years, with assets being handed back to the park at the end of the period. The expected royalty amounts to about 4 – 10% of turnover. This could increase once the lease period has expired and the assets are transferred to the parks.

Development for the generation of income should not compromise the conservation objectives of the parks, however. Factors that need to be taken into consideration include roads, water supply and electricity, the potential levels of congestion on the

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road networks. A strategy more compatible with conservation objectives is to concentrate on providing quality services, rather than quantity.

The potential for tourism developments has already been identified by Johnson (2010). The costs in setting this up might be reduced if development can take place in clusters. New tourism developments would have to be phased in to meet anticipated growth in overall demand. Current growth in tourism is around 5% per annum.

5.5.4 Voluntary contributions Visitors to parks may be given the opportunity to make voluntary contributions over and above the entry and other fees they paid to visit the park. This is usually when they exit the park, but it could also be elicited at national exit points. The design of these systems is important in determining their success. For example, experimental research in Costa Rica showed that visitors donated an average of US$2.50 per person, with donations of up to US$100, but the size of their donation was related to the way in which it was elicited and was 25% higher when the amount given was observable by others (Alpizar et al. 2008). Voluntary contributions might also be more successful if directly linked to a trust fund.

5.6 REVENUES FROM RESOURCE EXTRACTION

5.6.1 Sale of wildlife/plant products Parks in Namibia and South Africa derive significant revenues from the capture and sale of live game, usually involving species of high value. These game are sold in auctions, and mostly used for stocking private land. However, the equivalent demand does not currently exist in Botswana.

Potential for the use of other plant and forestry products also needs to be explored. Some of the species that grow in parks offer potential income to the DWNP. There is a strong demand for many of these species and many are illegally harvested. However, this market has not been tested and the practicality and administration involved may not be worth the risk of opening the market.

5.6.2 Bioprospecting Bioprospecting permits generate revenues in protected areas around the world. However, since bioprospecting potential tends to be highest in biodiversity hotspots, it is unlikely that this would ever generate significant revenue in Botswana’s parks, apart from in the Kgalagadi area.

Payments for bioprospecting would probably include a once off fee for the rights over a defined period, and/or a fee per sample. A percentage of the project cost

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(e.g. 25%) might be payable upfront as a rehabilitation/ performance bond. In addition, the contract can make provision for a percentage (e.g. 2%) of the total global gross sales of the product(s) made or derived from the collected samples, to be paid annually by the resource user to the government and landowners (if not state-owned land) for as long as the product is sold in the market.

Botswana does not have any laws that specifically regulate bioprospecting access and benefit sharing, although any research requires permits (Wynberg et al. 2009).

5.6.3 Mining There is significant and increasing mineral prospecting and mining activity taking place around parks in Botswana, including in the MWS. Although mining has impacts on the environment and biodiversity, it tends to have strong political support because of the generally very significant impacts on national income and employment. Although environmental care in line with the National Environmental Management Act is expected from miners and prospectors, no compensation is currently provided to the park system by miners and prospectors. The users of park resources (prospectors and miners) should be paying user fees to the government park authorities. It is considered that an economically efficient situation will involve agreements on the use of the land and such payments. Given the high value of most mineral investments, such income (user fees for prospecting and mining) could be a very significant part of the financing plan.

5.7 REVENUES FROM PAYMENTS FOR ECOSYSTEM SERVICES

No payments are received for ecosystem services generated by the parks system. This is currently a major area of activity and research around the world, as governments and conservation agencies seek more innovative ways of financing conservation. Analysis of successful cases where such payments do occur and do make a difference to conservation efforts are, however, limited to a few basic services, primarily water supply and carbon sequestration (Turpie et al. 2008). Botswana’s protected areas do not protect any major catchment areas that generate sufficient value to be captured by the protected area system. However, there may be some potential for generating income from carbon sequestration or storage, particularly in the areas where there is highest above-ground biomass. In areas where expansion of the protected area system is feasible, such as in the MWS, it may be feasible to enter the carbon market through the REDD system (Reduced Emissions through Degradation and Deforestation). The certainty of success remains low at this stage, however, as few projects have been pioneered in sub-Saharan Africa at this stage, and even fewer in areas of relatively low woody biomass.

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5.8 REVENUES FROM BIODIVERSITY OFFSETS

Biodiversity offsets are actions that offset biodiversity losses caused by economic activity in one area by contributing to conservation of biodiversity elsewhere. This can be a requirement to allow a development to go ahead which might otherwise not have been possible due to its environmental impacts, or it might be a voluntary action on the part of a firm that wants to improve its image. There is no specific provision in Botswana law for the use of biodiversity offsets at this stage. There are major concerns that biodiversity offsets could be used by government authorities and developers to permit too much environmental damage from developments, and that this damage will not be entirely offset so that there is “no net loss”. The lack of credible standards on biodiversity offsets act as a major barrier. For these reasons, it is not particularly desirable to use this tool other than as a voluntary activity. A scheme could be devised where firms could receive biodiversity offset certificates for making contributions to conservation, e.g. into a trust fund. However, it is doubtful that this would be a significant source of revenue for parks in Botswana.

5.9 REVENUES FROM CAUSE -RELATED MARKETING

Cause-related marketing, involving for example, the sale of adoption rights for park attributes has significant potential for development. Numerous wildlife adoption schemes are operational around the world, which act as revenue generating mechanisms for conservation-oriented NGOs. In these schemes, the donor chooses from a range of species, and symbolically adopts the species rather than a known individual animal. In return for a set donation, the donor receives a package. These vary from small donations of about $20 – 30, which buy a certificate and information pack, to schemes which elicit donations of the order of US$250 which buy a furry animal toy in addition to the above. The WWF scheme is a good example, and the certificate in this scheme carries weight because of its well-known logo. Whether such a scheme specific to one country could work is still to be tested, but would be a case of clever marketing. In Namibia, there was an attempt to establish an “adopt an Etosha elephant” scheme in collaboration with the US based scientist, but it has not taken off. A spatial scheme such as the adoption of areas of Kruger National Park in South Africa might be a more viable alternative in Botswana. Such a project could be taken up by an NGO or by a joint public-private sector initiative.

5.10 COST -SAVING MECHANISMS

5.10.1 Volunteers and internships Volunteer and internships programmes can be used not only to reduce the staffing costs required, but can also generate income through pay-to-volunteer programmes.

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Such a programme would be highly viable in Botswana.

5.10.2 Park management concessions Park management concessions are a type of public-private partnership arrangement that is set up decrease park costs through increased management efficiency. Responsible commercialization through public-private partnerships may be an important solution to the situation of under-financing of parks. Many governments’ no longer have the ability to provide adequate financial resources and management expertise for protected areas, resulting in some governments and park agencies entering into public-private partnerships that allow a more business-like management approach and greater financial independence (Saporiti 2006). Such a model has already been established in neighbouring countries such as Zambia, which has engaged the services of the African Parks Network (see Box 1). Parks management concession agreements are also being used in the developed world, such as in California, where several state forest areas and parks are managed by CLM Services.

BOX 1. THE AFRICAN PARKS NETWORK

The African Parks Network (APN) is an African solution to protected area challenges in Africa. It is the first private park management institution in Africa that takes on the long-term responsibility of managing protected areas, in partnership with Governments (African Parks Network 2011). The emphasis is on achieving financial sustainability of parks, through tourism, associated private enterprise and payments for ecosystem services – all of which serve as a foundation for economic development and poverty alleviation (APN 2011). The African Parks Network believes that Africa’s wildlife and landscapes represent one of the continents strategic competitive advantages and if managed properly for tourism and associated private enterprise, parks can make a significant contribution to a country’s economy – with its benefits for job creation, foreign exchange generation, and the incentive for small businesses (APN 2011). By treating parks as individual business units with retention of all income at the park level, long term financial sustainability is ensured (APN 2011).

The Business Model Each park is established as an independent business entity responsible for its own budgeting and decision making (APN 2011). There are four critical partnerships which are necessary in the establishment of a project (APN 2011): • With Government : Government or its national wildlife agency must invite African Parks to become involved in the management and financing of one of their national parks, must share the basic philosophy and approach to management and must be comfortable with the delegation of various responsibilities to a newly formed local entity, which is the vehicle for executing the project. Importantly Government still owns the park and the wildlife and remains responsible for its statutory functions. • With Communities : A formal agreement with Government creates the legal mechanism for African Parks to operate in a country, but experience has shown that communities adjacent to a park can be critical to the success of the project. Therefore community considerations are considered at the outset and built into the project objectives. In some instances this is a formal relationship with community structures represented on the Board, and in others it is

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informal with specific relationships with different communities. • With Financial Partners : Significant finances are required for both capital investment and annual operating costs and financial partners have to be in place to shoulder part of this burden. • With Commercial Investors : commercial investors are then encouraged to develop and operate tourism lodges and other private enterprises. These investors create the income base for the park from entrance fees and concession fees, allowing the park to be weaned from donor support.

In the case of the African Parks Network, a project specific Board is established with representation from all the different partner institutions and agencies. The Board is directly accountable to Government for the proper management of the park. A comprehensive business plan is developed, which determines capital investments, operating costs and levels of income for each year of management (APN 2011). It also appoints skilled managers to execute the plan (APN 2011).

The Financial Foundation African Parks Network does not make any significant investments in tourism infrastructure themselves, but believe that this should be the role of specialised organisations that have the skills, capital and marketing channels to make a success of it (APN 2011). APN’s role is to re- establish the product, create the right investment climate, and conclude agreements with reputable tourism companies (APN 2011). The parks are managed in such a way as to generate a portfolio of sustainable income streams, with sufficient funds to pay for recurrent running costs and capital replacements (APN 2011). The composition of the portfolio varies from park to park, but is a combination of local commercial revenues (entrance fees, concession fees, game sales and filming fees), grants for projects, activities undertaken and paid for by specialist wildlife and environmental NGOs, endowment income and hopefully payment systems for ecosystem services (APN 2011).

An Example: The Liuwa Plain National Park, Zambia African Parks Zambia (APZ) has been responsible for the management of Liuwa Plain National Park since 2003 – APZ is a partnership between The African Parks Network, the Zambia Wildlife Authority (ZAWA) and the Barotse Royal Establishment (BRE), the traditional authority representing the communities (APN 2011). Liuwa Plain National Park is situated in the Upper Zambezi flood plains of Western Zambia and covers an area of 3660km 2. The park supports an abundance of wildlife including over 33000 wildebeest, a number of carnivores and great diversity of birds (APN 2011). However, when the project started in 2003 the parks natural resources were being exploited unsustainably – subsistence hunting and commercial poaching posed considerable problems (APN 2011). Species which occurred in large numbers were extinct or rarely seen (APN 2011). Achievements have included: • Succeeded in securing the Liuwa area from illegal poaching and exploitation • Continued relationship building with communities and Zambian Government • Completion and update of the Business Plan • Increased Tourism revenue • Purchasing of new equipment: motorbikes, quad bikes, amphibious vehicle, light aircraft – all improving mobility and in achieving objectives of project • Strengthened relationships with funding and donor agencies

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• Wildlife have prospered under protection: significant increases in wildebeest, zebra, red lechwe, tssessebe, wild dog, and eland • Year-round law enforcement in park strengthened – highly effective rapid deployment team • Improved scout discipline • Successful training programmes for staff and communities • Communities have established 4 campsites inside the park (100% community run) – these ventures are already self sufficient and will prosper as tourism increases further • African Parks makes monthly payments to the Community Development Fund – they have purchased canoes, materials for building repair, constructed teachers’ houses, rural health clinics and equipment. • Liuwa’s Environmental Education Programme (LEEP) has strengthened over the years. All 17 schools in the area belong to the programme and are visited by the education officer every month. • Eight water wells have been sunk in areas around the park.

5.10.3 Co-management of parks Co-management arrangements (public-community partnerships) are usually set up to help parks meet their social mandates, to reduce park management costs by reducing conflict with neighbouring communities, and to compensate resident populations for loss of land and resources. Co-managed protected areas are defined as protected areas (as per IUCN categories I – VI, Table 15) where management authority, responsibility and accountability are shared among two or more stakeholders, including government bodies and agencies, indigenous and local communities, non-governmental organisations and private operators (IUCN 2003). Co-management, if properly understood and adopted, can lead towards more effective and transparent sharing of decision-making powers (IUCN 2003). However, many co-management initiatives within the conservation sector in southern Africa have failed to incorporate many co- management principles, such as joint decision making and benefit distribution (Isaacs & Mohamed 2000). Instead, in many cases, co-management has been transformed from a community-based management approach to a more top-down approach. Key distinctions therefore relate to the amount of local participation in decision making or the extent of transference to the local level (Isaacs & Mohamed 2000). Co-management arrangements are situated along a continuum – from philanthropy and forced relationships to real and promising partnerships (Isaacs & Mohamed 2000). For co- management to be really successful, it needs to be properly defined and requires a formal set-up outlining the responsibilities and management tasks from the very start of such projects (Isaacs & Mohamed 2000).

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TABLE 15: IUCN PROTECTED AREA CATEGORIES

CATEGORY Definition Area of land and/or sea possessing some outstanding or Strict Nature Reserve: representative ecosystems, geological or physiological features Ia: protected area managed and/or species, available primarily for scientific research and/or mainly for science environmental monitoring. Large area of unmodified or slightly modified land, and/or sea, Wilderness Area: protected retaining its natural character and influence, without permanent or Ib area managed mainly for significant habitation, which is protected and managed so as to wilderness protection preserve its natural condition. Natural area of land and/or sea, designated to (a) protect the ecological integrity of one or more ecosystems for present and National Park: protected area future generations, (b) exclude exploitation or occupation inimical to managed mainly for II the purposes of designation of the area and (c) provide a foundation ecosystem protection and for spiritual, scientific, educational, recreational and visitor recreation opportunities, all of which must be environmentally and culturally compatible. Natural Monument: Area containing one, or more, specific natural or natural/cultural protected area managed feature which is of outstanding or unique value because of its III mainly for conservation of inherent rarity, representative or aesthetic qualities or cultural specific natural features significance. Habitat/Species Management Area: protected area Area of land and/or sea subject to active intervention for IV managed mainly for management purposes so as to ensure the maintenance of habitats conservation through and/or to meet the requirements of specific species. management intervention Protected Area of land, with coast and sea as appropriate, where the Landscape/Seascape: interaction of people and nature over time has produced an area of protected area managed distinct character with significant aesthetic, ecological and/or V mainly for cultural value, and often with high biological diversity. Safeguarding landscape/seascape the integrity of this traditional interaction is vital to the protection, conservation and recreation maintenance and evolution of such an area. Managed Resource Protected Area containing predominantly unmodified natural systems, Area: protected area managed to ensure long term protection and maintenance of VI managed mainly for the biological diversity, while providing at the same time a sustainable sustainable use of natural flow of natural products and services to meet community needs. ecosystems

The Moremi Game Reserve in Ngamiland, when first established, functioned as a co- managed park, with management shared between the Tawana District Council and the DWNP. This arrangement proved difficult and after several years management was taken over by the DWNP (C. Spinage, 1992, pers. comm.). The Richtersveld National Park in Northern Cape, South Africa, has been managed as a contract park between the local community and South African National Parks. A contract park initiative is in the process of being developed in north western Namibia. This has been shown to be potentially extremely efficient economically. However, despite the fact that the communities involved are already established in conservation, the transaction costs involved in the establishment process have been high (Massyn et al. 2008).

The Richtersveld National Park (RNP) was South Africa’s first contractual park an arrangement that brings SANParks and the local community together in a system of co- management. Originally the community objected to the contractual agreement reached by the then National Parks Board (NPB) and the local government for establishing a

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national park. Only after negotiations were restarted with the community representatives was the park proclaimed two years later in 1991 (Isaacs & Mohamed 2000). The process of the community negotiations should have led to community- driven co-management of the RNP, however, poor representation of community interests on the joint management committee results in the conservation agency being the lead partner (Isaacs & Mohamed 2000). This strongly contrasts the principles that underscored the establishment of the park. The main issues associated with the functioning of the park have included a lack of interest and participation by communities, the fact that SANParks has failed to deliver on the unrealistic promises made during the signing of the agreement and the long time taken to finish the management plan (Isaacs & Mohamed 2000):

5.10.3.1 Integrated conservation and development projects around parks It has long been asserted that state protected areas will not be successfully protected unless their management is acceptable to the local communities and they themselves are involved in, and benefit from, their existence (Munasinghe & McNeely 1994). Impoverished communities often live in regions that enjoy high biodiversity and many of these areas are often officially protected as national parks or reserves; others are communal lands, generally with conflicting national and local claims of ownership (USAID 2009). Protected areas can meet the needs of society only if social analysis is properly integrated with economic and ecological-biological analyses in their application to protected areas.

Several models have emerged to marry the interests of conservation agencies and the surrounding communities over the past three or four decades, all of which share elements in common, but which have come to be understood as particular models, as follows:

Development assistance The earliest forms of intervention involved ICDPs in which conservation agencies and NGOs provide development assistance to local communities in order to improve park- neighbour relations and reduce demand for park resources. The rationale behind ICDPs is that economic loss to local communities caused by restricted access to the natural resources within protected areas should be compensated through alternative income sources and activities (Dahlberg & Burlando 2009). These development projects take many forms, including building of clinics and/or schools, freshwater supply and alternative livelihood projects. In general, they have been successful in improving the socio-economic conditions of these communities, but in most cases it has been difficult to demonstrate a conservation benefit (e.g. Wells & Brandon 1992).

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Access to resources/concessions within parks In some early experiments, communities in areas surrounding protected areas were given access to those areas for controlled harvest of specific resources (grass, fish, and others). This is quite common, it benefits communities, and in some cases it appears to benefit the parks through increased community goodwill. There may be risks to biodiversity and ecosystem health, and it does little to empower communities.

Most communities in southern Africa that border on or live within parks harvest natural resources from within the protected areas. O’Brien & Kinnaird (1996) believe that if harvest is truly sustainable, there should be no need to harvest in protected areas. However, preventing harvesting within protected areas is often unrealistic and in many parts across southern Africa, use of resources is likely to take place whether allowed or not (McKean 2003). In most situations, use of a resource is most likely to be sustainable when principles of tenure, economic, ecology and management are simultaneously addressed and satisfied (McKean 2003). In Kwa-Zulu Natal, South Africa there are communities living on the borders of game reserves and national parks that harvest vast quantities of ilala palm from within the protected areas, with many of these harvest schemes not meeting the criteria for sustainable use (McKean 2003). Another example of unsustainable harvesting has been recorded with the mopane worm in Zambia, parts of South Africa and Botswana.

Community-based natural resource management (CBNRM) Community-based Natural Resources Management attempts to address the problems of poverty and natural resource degradation simultaneously – CBNRM is seen as both a conservation and rural development strategy (National CBNRM Forum 2005, USAID 2009). It is not only applied adjacent to state protected areas, but can be used thus, both as a form of ICDP (improving park-neighbour relations) and to achieve conservation buffer zones or corridors to improve a protected area network (e.g. around Moremi Game Reserve).

There are numerous adaptations to CBNRM, depending on variations in location, legal, social, political and economic contexts. The premise of CBNRM is that communities will manage local resources in a sustainable manner if they (1) are assured of their ownership of the natural resources; (2) are allowed to use the resources and directly benefit from them or others’ use of them; and (3) are given a reasonable level of control of the management of the resources (USAID 2009).

Ideally, CBNRM projects are pursued through a collaborative process that includes representatives from the local community, national resource protection agencies, local and district government, sponsoring donors and NGOs (Fabricius et al. 2004, USAID 2009). The CBNRM approach can be considered as a form of co-management of communal land conservation areas , and usually involves the establishment of

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community level institutions that can make management decisions over natural resources (Jones 2002). Such areas are known as Conservancies in Namibia, but do not have a name in Botswana, and are hereafter referred to as CBNRM Lease Areas .

CBNRM has been extremely successful in Namibia where the number of communal land conservancies has grown from none in 1995 to some 60 in 2010 (NACSO, 2010). The programme has been shown to be economically efficient, making a positive contribution to economic growth and development at both community and national level (Barnes 2009, Barnes et al. 2003). The success of the programme appears due to the fact that it has been strongly and continually supported by local NGOs, international donors, and government. In addition the system allows • flexibility in conservancy size and coverage, and • significant devolution of custodial rights to manage and use wildlife resources, within a framework of sound programme guidance.

This option is dealt with in more detail, particularly in respect of the MWS area, in Chapter 6.

5.11 CONCLUSION

Sustainable financing requires not only securing adequate funds but also considering the quality, form, timing, targeting, use and sources of funding. It is important to build a diverse funding portfolio, going beyond conventional mechanisms and including multiple funding sources. Funds must also be managed and administered efficiently to achieve cost effectiveness of park management operations. In addition, it is necessary to have a mechanism to have an ongoing and continuously improving understanding of the financial requirements of the protected area system, as well as to be able to harness new opportunities for funding.

A number of options have been explored to secure sufficient and sustainable financing for an effective protected area system in Botswana. High priority mechanisms for continuation include motivation for government budget investments, motivation for donor grant investment, and collection of park user fees. High priority mechanisms for further development and/or exploration and development include collection of park concession fees, user fees from extractives such as mining in parks and use of wildlife and forest resources, revenues from sale of live game in parks, revenues from bio-prospecting agreements, capture of non-use values such as biodiversity offsets, cause related marketing, capture of carbon market income, and trust fund development.

Urgent actions that need to be taken include motivating the treasury for additional funding to DWNP and parks, convincing the Ministry of Finance to allow the DWNP to

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retain a greater proportion (or all) of revenue to be reinvested in park management, and a similar motivation for the retention of the tourism concession fees. Review and updating of park fees every three years based on proper ongoing analysis of demand and re-evaluation of needs and objectives will be an essential action to take. Other actions needed include establishment of a system for eliciting voluntary payments, investigation into the potential market and mechanisms for a voluntary biodiversity offset scheme, and establishment of a user fee for prospecting and mining activities inside protected areas. Implementation of these actions should bring Botswana close to attaining financial sustainability for its protected area system to safeguard the essential natural resource base and to secure economic benefits for the country.

Private sector investment in parks needs to be encouraged, possibly through setting up a dedicated unit within the DWNP to perform concession development and management functions. Continuous capacity development of the Concession Unit staff will be necessary. Moreover, in order to cover the additional cost of the concession management and to ensure the high level of visitor experience in parks, it is strongly recommended that the tourism concession fees will be reinvested in the park management through a trust fund. With the retention of the concession fees and if the potential of the tourism concession development is achieved, it should be feasible for Botswana to achieve a more autonomous protected area system.

Several cost-saving options are also available, of which paying volunteer programmes and CBNRM in surrounding areas carry the greatest potential for having an impact on park costs. The latter is explored in more detail below.

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6 OPTIONS FOR DEVELOPING THE TOURISM BASE IN MWS

6.1 INTRODUCTION

Recognising the biodiversity importance of the MWS area, the MFMP has identified the need to strengthen conservation of the system, while at the same time addressing socio-economic development needs. Development of the local communities is a high priority. It is clear that substantial opportunities exist to increase tourism in the MWS area. Focusing on tourism as a development tool has the advantage in that it simultaneously provides the incentive to secure the natural resource base upon which it depends, has the potential to generate revenues to help finance the parks, and provides business and employment opportunities for local communities. It is important that whatever development takes place does benefit local communities, since this will in turn help to improve compliance within and outside parks, which will have financial advantages.

Tourism development sites and nodes have already been identified in the MWS area (Johnson et al. 2010). Developing these areas will require upgrading the level of biodiversity conservation in and around them, and enhancing both the wildlife and wilderness characteristics of the MWS area as a whole. Options for expanding the area suitable for nature-based tourism include expansion of the park itself, either through expropriation or through contract arrangements with the local communities, or the development of buffer zone conservation areas around the park by developing CBNRM activities.

This chapter reviews the policy and legal context governing the options, and reviews and analyses the CBNRM experience, with particular focus on the MWS area. We also examine how the recent CBNRM policy impacts on the potential viability of CBNRM activities in the study area. Finally, we compare the potential costs and benefits of an extended contract park arrangement or a buffer zone CBNRM arrangement for the area, both at the scale of south Sua Pan, and for the MWS area as a whole.

6.2 POLICY AND LEGAL CONTEXT IN BOTSWANA

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6.2.1 The Tribal Land Act, 1968 The Tribal Land Act makes provision for the creation of Tribal Land Boards to take control of the distribution and administration of land. The Land Boards carry out their functions in terms of the customary land tenure system, common law and the national land policy (Jones 1999). One of the most important aspects of the Act was the introduction of common law leases which made land obtainable to individuals or communities for certain commercial purposes, including cattle ranching, wildlife utilisation and tourism. The lease outlines the rights and responsibilities of both the leaser (the Land Board) and the lessee (landholders) (Jones 1999).

6.2.2 The Tribal Grazing Land Policy, 1975 The Government of Botswana introduced the Tribal Grazing Land Policy (TGLP), which aimed at controlling grazing lands and improving management and productivity, whilst safeguarding the interests of those who owned few or no cattle (Jones 1999). One of the results of the reform process under TGLP was the zoning of communal lands into three land-use categories; communal, commercial and reserve land (ACORD 2002). The reserved areas of land would be set aside for the future as a safeguard for the poorest communities and for alternative uses such as wildlife (Jones 1999). These reserved areas for wildlife formed the basis for Wildlife Management Areas (WMAs).

6.2.3 Wildlife Conservation Policy, 1986 The main aim of this policy is to “encourage the development of a commercial wildlife industry that is viable on a long-term basis. This will serve to create economic opportunities, jobs and incomes for the rural population in particular and the national economy in general” (GOB 1986: 1). The policy is based on three important principles; that wildlife should contribute to rural development, citizens should actively partake in wildlife utilisation and management, and that government should provide the necessary control of the wildlife industry (Jones 1999). The WMAs were further established in this policy. WMAs need to be approved by District Councils and District Land Boards before they can officially be declared. Once gazetted, management plans and regulations need to be developed for each WMA and a policy of sustained wildlife utilisation appropriate for each area should be implemented (Jones 1999). WMAs encourage the development of a commercial wildlife industry based on sustained utilisation, in order to create economic opportunities, jobs and incomes for the rural population (ACORD 2002).

6.2.4 National Conservation Strategy, 1990 The National Conservation Strategy is a national policy on natural resources conservation and development (Jones 1999). The strategy outlines approaches for dealing with water, rangeland, woody resources, veld products, pollution, wildlife and cultural resources (Jones 1999). It contains a number of references to promoting the

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greater involvement of rural people in conservation through education, and also incentives for managing resources sustainably (Jones 1999).

6.2.5 Tourism Policy, 1990 The Tourism Policy provides local communities with the direct and indirect benefits from tourism so that they may be able to recognise the value of wildlife and its protection through participation in wildlife based industries (including tourism). The major objectives of the policy are to generate employment (mainly in rural areas), to increase income in these areas and in general to promote rural development (Jones 1999, ACORD 2002).

6.2.6 Wildlife Conservation and National Parks Act, 1992 The Wildlife Conservation and National Parks Act is the main piece of legislation that governs the protection and sustainable utilisation of wildlife, as well as making provision for protected areas in Botswana. It provides for the establishment of WMAs and CHAs, and controls the issuing of permits, licenses and quotas.

6.2.7 Community Based Natural Resources Management (CBNRM) Policy, 2006 The CBNRM policy was formulated to guide what had hitherto been a rather ad hoc implementation of CBNRM around the country and to safeguard the interest of communities in natural resources management and to attract investment in natural resources based enterprises. The policy provides guidance on CBNRM implementation on communal and state-owned land outside officially gazetted protected areas, provides incentives to communities to engage in conservation, and establishes a framework for implementation. The policy describes the CBNRM approach as embracing good governance, but not involving the transfer the ownership of natural resources to any particular community or individual. The government will set resource harvesting quotas. The CBNRM policy recognises that “community involvement in the management of the country’s natural resources is thus important for the long-term sustainability of the tourism sector but also offers the opportunity for communities to become actively involved in tourism enterprises.”

The policy specifies that communities “may obtain a 15-year Community Natural Resource Management Lease from the relevant Land Authority for the commercial use of natural resources. This ‘Head Lease’ is subject to an approved Land Use and Management Plan for the area specified in the lease, an annual land rental payable to the Land Authority, and a resource utilisation royalty payable to the Ministry of Environment, Wildlife and Tourism”. Communities “may sublease or otherwise transfer any commercial natural resource user rights to one or more joint venture partners with prior written permission of the Land Authority”, and “where financial benefits are

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derived from the sale of natural resource concessions or hunting quotas related to particular communities, a portion of such financial benefits shall be paid into a National Environmental Fund held by the Ministry of Environment, Wildlife and Tourism”. It goes on to state that thirty-five percent (35%) of the proceeds of the sale of natural resource concessions and hunting quotas shall be retained by the CBO. Sixty-five percent (65%) shall be deposited in the Fund for the financing of community based environmental management and eco-tourism projects throughout the country. The Minister may however, vary these percentages depending on the circumstances and needs of a particular CBO.

The policy also states that “Government will furthermore pro-actively assist and support communities to develop and improve their capacity to effectively manage natural resources in their areas”, while ” Communities and their CBOs shall actively participate in the monitoring of the natural resources, habitats and related ecosystems”.

Of relevance to protected areas, it is stated that “CBNRM provides an opportunity for protected area management objectives to be reconciled with those of neighbouring communities. Government will promote involvement of communities in the management of protected areas. The socio-economic needs of neighbouring communities will be identified and reconciled with the management objectives of the adjacent protected areas. Where feasible, communities may be allowed to use specified natural resources and perform certain cultural practices in protected areas.”

How the CBNRM model operates in Botswana (Source: Rozemeijer 2003)

• Demarcated Controlled Hunting Areas (CHAs), a zoning system developed by the DWNP are ‘units of production’ for a community in or adjacent to the area. • Communities are required to establish a legally registered Community Bases Organisation (in most cases a trust). • CBO Constitution and by-laws have to show proof of fair representation and accountability • CHA management plan needs to be drafted to show intended use and conservation of natural resources • CBOs need to fulfil a set of requirements to obtain a 15 year Resource Use Head Lease • Lease allows commercial use of resources, sub-leasing and other joint venture arrangements • Lease requires annual audit of community financial management • Resources and benefits go directly to the CBO, who can direct them to communal projects or distribute them directly to households.

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6.3 CBNRM EXPERIENCE IN BOTSWANA

6.3.1 The CBNRM Programme In Botswana, the CBNRM programme was officially launched in 1989 when the government and the United States Agency for International Development (USAID) embarked on a joint Natural Resource Management Project (NRMP) that was housed in the Department of Wildlife and National Parks (DWNP) (National CBNRM Forum 2005). The programme was initiated after the realisation that conservation of wildlife resources in the country was not possible and practical without the active involvement of the communities living within or adjacent to the conservation-designated areas such as Wildlife Management Areas (WMAs) and Controlled Hunting Areas (CHAs) (National CBNRM Forum 2005).

CBNRM in Botswana focuses on providing incentives for communities to take responsibility for managing natural resources sustainably, and on actively building community capacity to do this (Jones 1999). Community-based approaches to natural resource management in Botswana have not only focused on wildlife but also on numerous other resources, including marula fruit, mopane worms, cochineal and the grapple plant (Jones 1999). CBNRM in Botswana is based on ten guiding principles: 1. Decision-making authority must be at community level 2. Decision making must be representative 3. The community must be as small as practical 4. Leadership must be accountable 5. Benefits must outweigh costs 6. Benefits must be distributed equitably 7. Benefit distribution must be linked to natural resources conservation 8. Planning and development must focus on capacity-building 9. Planning and development must be coordinated 10. The CBNRM process must be facilitated

CBNRM in Botswana therefore places a heavy emphasis on the devolution of power, the generation of jobs, and income through enterprise development, the active management of natural resources by local communities, and capacity building and other support to local communities by external agencies including government.

CBNRM in Botswana has done much to improve the situation of rural communities within existing legislation. However, it has been noted by a number of reviews and papers that it will be difficult to maintain the momentum that has been achieved within the current policy and legislative framework (Jones 2002). There is a need to move from the situation where communities are the passive recipients of the benefits from trophy hunting and tourism to one where they are true managers (i.e. decision makers over their land and resources) (Jones 2002). More recent developments in some of the

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CBOs suggest that progress is being made and communities are gaining more authority and responsibility in managing their land and resources. The following are examples of CBNRM projects running in Botswana and the key issues and lessons learnt.

6.3.2 CBNRM initiatives

Chobe Enclave Conservation Trust (CECT) The Chobe Enclave in Botswana’s Chobe District is surrounded by protected areas on three sides; The Chobe National Park on the western and eastern sides and the Chobe Forest Reserve on the southern boundary (Jones 2002). The development of CBNRM in the Chobe Enclave started off with meetings in 1989 but only during 1992 did the five main villages in the enclave (Kachikau, Kavimba, Mabele, Satau and Parakarungu) form village project committees (Jones 2002). In early 1993 the village committees elected an Enclave Project Committee (EPC) and decided they wanted to form the Chobe Enclave Conservation Trust (CECT). By 1994, the EPC had been replaced by the formally constituted CECT. CECT was the first CBO to embark on CBNRM in Botswana.

Okavango Community Trust (OCT) The Okavango Community Trust was set up to represent the interests of five villages (Seronga, Gunitsoga, Eretsha, Beetsha and Gudigwa). It was registered as a trust in 1996 after a series of meetings with technical advisory committee members for establishing a CBNRM project in Kwando and Okavango Wildlife Management Areas (WMAs) (ACORD 2002). The Trust holds, manages and utilises the leased areas on behalf, and for the benefit of the community.

OCT was started unconventionally as the process lacked participation and involvement of the local community. The CBNRM project was ‘driven’ to the local people instead of with them and this resulted in the locals not readily accepting the process and were not fully aware of the trusts functions. A safari operator was then appointed to enter into a joint venture, contrary to certain requirements. With the advisors giving the advice, the OCT was given the mandate to manage their CHAs and sublease them to safari companies in the absence of a management plan, creating a weak foundation from the start of the project.

Association for Cooperative Operations Research and Development (ACORD) started working with OCT in 1999 when a pilot programme aimed at reducing poverty in Ngamiland was initiated. In partnership with the DWNP, Tawana Land Board and Conservation International, ACORD worked at strengthening OCT and its related structures (ACORD 2002). Before designing community interventions in the OCT communities, ACORD ran a number of Participatory Rural Appraisals with the aim to better understand the communities; their needs, aspirations, problems and

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opportunities. A 5 day workshop was organised as the OCT constitution was still not understood properly in all the villages and this helped to broaden participation and understanding which allowed for changes to be made to OCT. A management plan for the whole area was planned and developed.

Botswana’s CBNRM involves a multi-stakeholder approach and communication and collaboration between them are essential for success. Time frames, operating schedules, and expectations of different stakeholders, if not properly addressed, could impact negatively on project development and implementation (ACORD 2002). Involving communities from the start generates interest and ensures maximum participation, transparency, accountability and above all breeds success (ACORD 2002).

Sankuyo Tshwaragano Management Trust (STMT), Okavango Delta STMT has become one of the most successful community trusts in Botswana. In the early 1990’s the Sankuyo community was selected by a USAID-funded CBNRM programme. A participatory process facilitated the foundations for the establishment of the Sankuyo Tshwarangano Management Trust (STMT) in 1995, as well as the development of a strategic plan and 5 year management plan (AWF 2005). In 1996 the trust was awarded a concession area and under the terms of the 15-year lease from the Land Board, the area was subleased and its hunting quota sold to commercial safari and hunting operators (AWF 2005). A new strategic planning process was initiated in 1996 and this led to the establishment of four community-based economic initiatives, for which STMT provided 50% of the start up capital. The enterprises were vegetable gardens, grass and reed harvesting, Shandreka cultural village, and Kaziinki campsite. Both these facilities are run and managed entirely by the Sankuyo community through the STMT. The income from these enterprises goes to paying salaries and to the trust, which has used the money for building a school and clinic, buying a maize grinder and sinking a borehole (AWF 2005).

In 2001 STMT was awarded the concession to an adjoining block of land, and the allocation included a run-down safari lodge. In view of their previous experience of managing tourist enterprises and with working in the tourist sector, the community made the unusual decision to manage and run the lodge themselves rather than simply lease it out to a safari operator (AWF 2005). In this case, STMT entered a partnership with Lodges of Botswana to develop and manage the lodge as a 50/50 venture with the community earning 50% of the actual operating profits. The STMT had a competitive proposal process before selecting this model that is believed to be more beneficial for the community than the traditional leasing arrangement. STMT approached AWF for support in 2003 and a Memorandum of Understanding was entered into, which covered the financing of the renovation and refurbishment of the lodge together with marketing the business and building the capacity of the community (AWF 2005). Community members were trained in various aspects of lodge and campsite management. In June

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2004 the lodge opened and the first year target of US$65,000 net profit (after tax) was set to be bettered. Community benefits are in fact higher and could amount to more than US$160,000 a year (around US$2000 per household a year) (AWF 2005). The STMT and Sankuyo community possess a number of qualities and features that can be considered essential for the success of a similar community managed project – these include established institutional capacity, prior experience of managing community owned enterprises, experience with working in lodges and hotels, availability of significant community owned savings, low density population level and relatively small number of beneficiaries, and a strong incentive to engage in wildlife-based enterprises (AWF 2005).

6.3.3 Lessons learned from earlier CBNRM experiences in Botswana Lessons learned from the CBNRM projects described above are summarised below (Jones 2002, ACORD 2002, 2005, Arntzen et al. 2003,2007):

Financing The investment of public money needs to be justified by meeting both poverty alleviation and conservation objectives. Conservation logic of the enterprise should be an explicit part of the formal financing agreement between the donor and beneficiary community.

Empowerment and community based management of resources Communities need to be involved with the process from the very beginning of the project. A people-centred approach facilitates the community process which ensures commitment and participation at all levels of project development. Trusts will be more successful if they are the true managers and decision makers and are given real authority over natural resources management. Policy and legislation need to provide CBOs with stronger rights and more secure tenure over land and resources. Internal transparency and accountability in the decision making needs to be strengthened. Residents need to perceive that they are gaining benefits in order for them to fully participate.

External support and capacity building Community mobilisation and capacity building are processes that require a regular and consistent presence in the community follow up and these training packages and methods need to be adapted to local needs. Communities should not be underestimated by agencies providing external support – a lack of education does not necessarily mean a lack of capacity. Providing space for CBOs to learn from their own mistakes should also be part of capacity building. External support to CBOs also needs to focus on institutional development i.e. governance, decision-making and

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accountability. Management decisions need to be made with communities. Unless the community can effectively market, manage and maintain the lodge and the associated land allocations, then little or no benefits will accrue.

Benefit distribution Weak participation by residents in decision-making can undermine the legitimacy of a CBO. The CBOs need participation from all groups for decisions surrounding benefit sharing. More attention is needed for non-investment enterprises, such as community infrastructure, scholarships and micro-credit. Communities need to define the benefits they get from wildlife income and facilitation support should focus on decision-making that leads to benefit distribution of the wider community. Efforts to distribute the funds equitably have often failed in the past as villages lacked the skills and capacity to plan and implement community development projects.

Collaboration with stakeholders Collaborating with stakeholders through continuous dialogue and consultation is crucial for common understanding in project development, and this generates confidence amongst the local people. Collaboration is also important for resource sharing and skills transfer.

Multiple village versus single village approach Initiating and implementing a CBNRM project where resources are allocated to more than one village is challenging. There are often groups of people with different ethnic backgrounds, diverse interests, different ways of interpreting and approaching issues, and this often results in conflicts that delay the process.

6.3.4 Lessons learned from CBNRM experiences generally CBNRM has grown significantly in southern Africa over the last twenty years, but the establishment of CBNRM projects can be a very lengthy and complicated process, with sustainable projects often requiring more than a decade to take root (USAID 2009). Although there are a number of successful projects up and running, CBNRM projects have had numerous shortcomings, providing lessons that have allowed new CBNRM programmes to be adapted and improved. Probably the most important issue in CBNRM is tenure – giving ownership back to rural communities of land, wildlife, timber and other resources to be sustainably managed (DeGeorges & Reilly 2009). Land tenure without resource tenure may be of very little value to the local people and may dissuade them from maintaining natural systems and the associated biodiversity DeGeorges & Reilly 2009). Many CBNRM projects remain co-optive rather than empowering and when authority and responsibility are separated, institutions very rarely perform effectively. Other shortcomings include mismanagement of finances, a

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lack of transparency and accountability, collapse of donor funding, and uneven benefit sharing (National CBNRM Forum 2005, DeGeorges & Reilly 2009). For CBNRM to be successful in the dual goal of conservation and development there needs to be significant transfer of power and the right to directly benefit from the sustainable management of the resources (DeGeorges & Reilly 2009).

Experience has shown that a CBNRM project is more likely to succeed and become successful where enabling conditions are in place. Among the most critical of these are (USAID 2009): • Clarified and improved land tenure; • local community commitment, strengthened capacity, strong local institutions and adequate skills; • experienced NGO partners and functional government bureaucracies; • targeted technical assistance; • regional resource management plans; • monitoring and policing programme; • access to markets; • social cohesion both within and across communities; and, most importantly • genuine economic benefits.

6.4 VIABILITY OF CBNRM IN THE MWS AREA

6.4.1 Operational CBOs in the MWS CBNRM lease areas have been registered in most parts of the MWS area where communities reside. Some eight trusts have been registered but only three are currently operational. These have been described in chapter 3, as well as in Arntzen et al. (2010), DEA & CAR (2010) and Setlhogile (2010).

Gaing-O Community Trust (GCT) Gaing-O Community Trust (GCT) was legally registered in 1997 to represent the interests of the Mmatshumo community and surrounding settlements. The community was concerned about the damages, lack of proper management and uncontrolled tourism opportunities at Lekhubu Island. Through the CBNRM initiative, GCT has taken the advantage of the devolution of user rights by the government and ventured into the tourism industry as an alternative sustainable livelihood option for the benefit of the community. Lekhubu Island, situated 32km from Mmatshumo village, has prominent rocky features with views of the Makgadikgadi saltpans, unique aesthetic beauty, archaeological setting and cultural significance. The objectives of the trust were to: • Protect and preserve the archaeological site on the island; • Preserve the natural environment; • Preserve traditional cultural practices;

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• Utilise Lekhubu Island as a stimulant for sustainable natural resource development; • Gain benefits from tourism by preserving the natural resources and to use them for the benefits of the residents; and • Encourage wildlife in the surrounding area.

GCT developed campsites and chalets as well as guided tours of the island. They are currently enhancing the tourism product at Lekhubu Island where they are completing the cultural centre, moving some of the campsites and providing water at the sites. With proper marketing the eco-tourism venture has potential to generate more income and increased benefits for the community. The GCT operates a simple website for information associated with the island and the campsites that they run. The website also showcases photographs, describes the history of Lekhubu Island and lists contact details for GCT.

Nata Sanctuary The Nata Conservation Trust (NCT) is comprised of community members living within the vicinity of the northern part of Sua Pan. In 1988, the Nata Conservation Committee recognised the need for a protected area near Nata to conserve the globally significant migratory bird breeding sites and aquatic ecosystems. The result was the formation of a community based project and the Nata Conservation Trust in 1992, with representatives from four surrounding communities (Nata, Maposa, Mmanxotae and Sepako). The Sanctuary is the responsibility of the Board of Trustees of the Nata Conservation Trust. Facilities include a bar area (Figure 11), campsites with hot-water ablutions, and two permanent en-suite tents, though the latter are unfinished. The income from the Sanctuary has been used for development within the four villages.

FIGURE 11. NATA SANCTUARY BAR AND CAMPSITE

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After almost 20 years the Nata Sanctuary and the NCT is now partnering with the Hedgerow Fund from London, which committed to a P30 million investment. Hedgerow Fund signed a Memorandum of Understanding (MoU) with the Trust in 2009. The plan involves constructing two accommodation facilities in the Sanctuary which will be subleased to a joint venture partner. The revenue from one of the lodges will go directly to the community in addition to proceeds from the area lease. Part of the money will be used to develop a new gate house at the entrance to the sanctuary and a training centre for community development. The proposed developments will follow those detailed in the management plan for the area, which was approved by a technical advisory committee in 2008.

Xhauxhwatubi Development Trust The Xhauxhwatubi Development Trust is centred on the village of Phuduhudu, west of Nxai Pan NP. This trust has a waiver to utilise resources in the relatively high quality wildlife area of NG 49 pending signing of a head lease based on a management plan. Their hunting quota, or part of it, forms the basis for a joint venture agreement with a safari hunting operation which pays them a rental/royalty. The value of this rental is significant, some P1 million, which the community is able to derive with relatively small costs.

6.4.2 Assumptions and analytical approach Empirical data from the three operational CBNRM lease areas have been collected by Setlhogile (2010), and used to develop enterprise budget and cost-benefit models along the lines described in the tourism valuation section, above.

The basis for the measures of viability of CBNRM in the MWS is a set of financial and economic CBNRM enterprise activity models as initially developed by Barnes (1998) in Botswana, and modified and upgraded by Barnes et al. (2002) in Namibia, and Arntzen et al. (2010) in the MWS. These are detailed ten-year spreadsheet budget/cost-benefit models which follow the same format as the tourism enterprise models described above. The models treat the investment by the community, government and donors in the CBO and head lease as an enterprise or project. So they determine the private values to the project, as realised first by all the investors and then by the communities alone livelihood values . They also determine the incremental change that the CBO/lease investments cause directly in the national income , (the value added they contribute to the national income ). They measure annual net values, as well as measures of project worth - the ten year internal rate of return (IRR) and the net present value (NPV). Internal rates of return below the opportunity cost of capital or discount rate (assumed to be a real rate of 8%) are considered non viable, the net present value measures the value of the ten year investment at the opportunity cost discount rate. Negative or low NPVs are indicative of non-viability.

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The CBNRM models contain some features missing from the tourism enterprise ones referred to above. They contain and explicit measure of the return in investment accruing to the communities as well as the return to the project as a whole (all investors). They also contain a stock projection over the 10 year life of the project recording the numbers and values of the wildlife stocks in the lease. The value of these is treated as a residual asset in the economic and project financial analysis, but not in the community analysis.

Although the data are somewhat limited, with some assumptions, it has been possible to develop models for all three currently operational CBNRM CBO/lease area ventures. These models are fairly robust as they were based on older models, in turn based on empirical data, gleaned elsewhere during an extended period through interviews with wildlife use enterprises and trusts, through examination of financial data from trusts, and from management plans for conservancies. The three models were used to synthesise a general model for a typical CBNRM lease area enterprise in the MWS. The results of these specific models and the general one are presented below. Details of the general model are presented in Appendix 2.

6.4.3 Viability of existing and generic CBNRM models Table 16 below shows the results of the financial and economic analysis of existing CBNRM lease areas. The Nata and Gaing-O trust models show negative net incomes overall and low marginal to non-viable financial rates of return over ten years (6% to12%). This is clearly the result of their not yet having any significant joint venture tourism developments, as the Xhauxhwatubi trust which has a moderately high value hunting joint venture has a positive net income, and very favourable financial and economic rates of return. The general CBNRM lease area model, based on the existing three but including a tourist lodge, designed to be typical of the conditions in the MWS area shows a positive annual net income of some P250,000, a favourable project financial rate of return of 14%, a very favourable rate of return specifically for the community of 44% and a favourable economic rate of return of 22%.

These results indicate that CBNRM in MWS, fully supported and developed with a sound joint venture concessions policy, can be financially attractive to investors and economically efficient.

6.4.4 Effect of the state tax policy on viability It is noteworthy that this viability is dependent on the community retaining all the income generated from joint venture concessions. The current CBNRM policy (MEWT 2006) makes provision for the state to tax these incomes for a fund at the level of 65%. Table 17 shows a sensitivity analysis using the general CBNRM lease area model and imposing varying levels of this tax. It can be seen that taxes at or near the levels proposed in the policy would result in negative net incomes and non-viable project

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rates of return. The Minister can vary the tax according to the needs of specific communities. In the case of most MWS CBNRM lease areas, maintaining viability of CBNRM will require much lower taxes than proposed - below 35%, and commonly close to zero, depending on the situation.

TABLE 16. BASE CASE FINANCIAL AND ECONOMIC CHARACTERISTICS OF CBNRM LEASE AREAS AND THE PROPOSED SOUTH SUA PAN CO -MANAGEMENT (CONTRACT PARK /CBNRM) INITATIVE (P, 2010, SOURCE : AUTHORS )

Nata Conservation Gaing-O Community Xhauxhwatubi General CBNRM Value Trust Trust Development Trust lease area model Project financial values

Initial capital investment 782,570 1,595,080 1,595,080 1,355,820 Annual net income -20,400 -39,620 794,760 250,390 Internal rate of return 1 (%) 12% 6% 23% 14% Net present value 2 413,260 -396,010 2,574,890 1,004,180 Community private values

Annual community income 42,990 86,400 920,770 350,880 Internal rate of return 1 (%) 18% 17% 70% 44% Net present value 2 877,220 1,103,640 4,074,540 2,503,830 Economic values

Annual gross value added 42,690 133,930 1,018,370 413,290 Annual net value added -14,330 -12,090 872,350 289,170 Economic rate of return 1 (%) 17% 11% 36% 22% Economic net present value 2 775,830 470,160 3,619,310 1,753,170 1 Internal rate of retrun over 10 years 2 Net present value (NPV) over 10 years @ 8%

TABLE 17. EFFECT OF TOURISM INCOME TAX ON FINANCIAL VIABILITY OF GENERAL CBNRM LEASE AREA MODEL FOR MWS AREA (P, 2010, SOURCE : AUTHORS )

65% 0% Tax on tourism income for Investment Fund (CBNRM 50% 35% 20% 5% (base case) Policy) Project net income - 162,932 - 67,551 27,830 123,211 218,593 250,386 Community net income - 62,438 32,943 128,325 223,706 319,087 350,881 10 year project financial rate of return (%) 5.2% 7.2% 9.3% 11% 14% 14% 10 year community financial rate of return (%) 18% 23% 28% 33% 41% 44%

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6.5 POTENTIAL CONSERVATION -DEVELOPMENT MODELS FOR MWS

6.5.1 Background and vision

South Sua Pan The middle of the southern part of Sua Pan has recently been proclaimed a Flamingo Sanctuary. The surrounding area (which includes land around the pan as well as in the pan) belongs to a total of four communities (see Figure 12). One of these communities (based in Mmatshumo village in the south west) has already established a CBO (Gaing-O Community Trust) and has started a tourism initiative on Lekhubu Island (see above). The community based in Mosu village to the south has also established a CBO (Gumakhutsaa) and would like to set up a CBNRM tourism programme. Two other communities to the south east around Mokubilo and Mmeya villages have expressed an interest in working together and working with DWNP in a co-management framework. They have been working under the facilitation of BirdLife Botswana to explore options along these lines. There thus appears to be potential for mutually beneficial collaboration between DWNP and the surrounding CBNRM areas to enhance conservation and tourism incomes. The ideal would be to have a large conservation area encompassing most of the southern pan, with a core area in the middle (the gazetted area).

FIGURE 12. VIEW OVER THE PANS FROM NEAR MMEYA VILLAGE , SE SUA PAN (ABOVE ), AND THE KHAMA RUINS AT MOSU (BELOW )

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BOX 2. CONSIDERATIONS FOR MAXIMISING TOURISM VALUE

The southern edges of the Sua Pan, with its flamingo spectacle and the exceptional views and vistas of the salt pans make it an important area for tourism potential. Developing a package of different features and experiences would improve the chances of convincing tourists to visit the MWS and would also encourage a longer stay, instead of a one night stop over. The following are options for enhancing the tourist product at the Sua Pan: • The south Sua Pan is an area of wide open spaces with far reaching views over the salt pans. The area also has unique features in the archaeological sites, Lekhubu Island and the flamingos that breed in the pan. These features, if developed and marketed correctly have the opportunity to generate a promising tourism product. • The flamingos that breed in vast numbers in the Sua Pan are a birding spectacle, something many avitourists are interested in experiencing. The fact that the flamingos breed in the middle of the pan and reaching them is almost impossible, creating a tourist product with this in mind requires creativity. • Linking all the features of the area together into one experience will be more successful than marketing them separately. By doing this the tourists are exposed to many different experiences in one area – all within close proximity. • Developing a lodge and camping area in an area with views of the pan will attract more tourists than accommodation that is placed away from the pans without views. There needs to be a diversity of accommodation so that all types of tourists (self-drive, foreign, local, tour based) have the option to stay in the area. • Linked to these accommodation facilities at the edge of the pan could be a visitor information centre that focuses on the spectacle of the flamingos. • The centre should have information about all aspects of the flamingos and the salt pans, flamingo conservation, as well as photographs and footage of the birds and the Sua Pan. The information should be presented creatively and should be interactive. Because getting up close with the flamingos is not possible logistically and for ecological reasons, a web-cam could be used in the visitor centre to show the tourists live, actual footage of the flamingo colony. • Attached to the centre, an enclosed wetland area that houses a few flamingos would provide visitors who have never seen flamingos before with the opportunity to observe and watch the birds in a natural setting. • The visitor centre and flamingo observation area would offer employment opportunities for communities in the area. The centre could be run and maintained by community members. • The lodges and camping area would also be in close proximity to the archaeological sites in the area and guided tours from these accommodation facilities could be developed. Community members who have knowledge about the area and the ruins could guide visitors, as well as manage and work in the lodges and camp areas. • The accommodation facilities at the edge of the pan would also be in close proximity to some of the villages which many tourists are interested in visiting. • Linking the accommodation, information centre, flamingo viewing area and guided tours of the archaeological sites all together creates a package that many tourists would be interested in.

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MWS as a whole In the MFMP, several different tourism zones are envisaged for the MWS area (Figure 13). These include a large wilderness area adjoining the existing parks and covering most of the pan areas. Surrounding most of this are zones for differing intensity use tourism, based on criteria such as sensitivity to disturbance, importance for conservation, and general tourism potential.

FIGURE 13. PROPOSED TOURISM ZONES IN THE MWS, AS DEFINED IN THE MFMP.

FIGURE 14. LIONS AT NXAI PAN

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6.5.2 Potential conservation models considered in this study Broad options for expanding the area suitable for nature-based tourism, whether for the south Sua Pan or for the MWS area as a whole, are as follows: 1. Proclaim a larger state protected area – requiring purchasing land from the communities. This option is likely to be extremely costly and politically difficult. 3. Set up a co-managed contractual park, similar to the CBNRM model, except that the whole area would be named as a protected area and jointly managed by the communities and the state. This would require a co-ordinated effort involving all four communities, which share in the overall arrangement and benefits. 4. Promote full CBNRM programme development in the areas around the state park in a looser co-management arrangement. This would entail building on the existing Gaing-O initiative and conserving resources to develop a number of new tourism joint venture establishments.

6.5.3 Assumptions and analytical approach The contractual park and CBNRM buffer scenarios were assumed to be similar from a financial-economic perspective, although this assumption is discussed in more detail below. The generic CBNRM model developed above was used as the base for more complex models assessing the costs and benefits of various co-management options, for both south Sua Pan and the whole MWS.

In the case of the south Sua Pan a model combining the participating trusts as well as DWNP management of Sua Flamingo Sanctuary was developed. This followed a ten-year cost-benefit model framework comparable with that for the general MWS CBNRM model.

A much scaled-up form of the model was developed for the cost-benefit analysis of co- management the MWS area as a whole. Here we compared co-management with a “business as usual” low intensity CBNRM scenario. In the MWS area analysis, it was assumed that the contractual park or CBNRM buffer arrangements had the same outcomes, which included a reduction in poaching threats to the parks from medium to low (as defined by Martin 2008). The MWS area financial and economic cost-benefit models, as is appropriate for large public and private investments, with large recurrent injections of capital and long term growth in income, were run over a 30 year time period.

The models allowed detailed static and dynamic, budget and cost-benefit analyses, where the benefits of natural resource use were measured, in a cost-benefit framework, against the costs of investing in and undertaking the activity. The project boundary was restricted to corresponding costs and benefits for the enterprise, trust or park involved. Thus, in CBNRM models where joint ventures between communities and

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the private sector were involved, only the net benefits accruing to the community from the venture were included in the model.

The "business as usual" model for MWS development involved continuing on the present path where resources are concentrated on strengthening the existing state parks, with minimal CBNRM development, i.e. with little or no co-management. This would involve raising protection levels for the parks to the levels estimated to be needed by Martin (2008), to effectively combat the medium illegal hunting threat.

The co-management model for MWS development involved either the contractual park or the full CBNRM programme development options described within a greater area of overall protection. Here the expected illegal hunting threat would be reduced to the low illegal hunting threat level of Martin (2008).

For the two cost-benefit analyses the net returns in terms of livelihoods and national income to investments made by concession holders, communities, donors, and government were measured and costs were compared with benefits. This was done in a static format, measuring annual financial returns (private net income values including in-kind values) at full production after deduction of all capital and recurrent financial costs including interest and amortization. They also measured annual economic contribution (value added to national income). The dynamic cost-benefit models measured financial and economic returns over the investment periods (ten years in CBNRM and south Sua Pan and 30 years in the case of MWS). Interest and inflation were excluded from all calculations. Cost and benefit flows were in constant prices and discounted over time to reflect the time value of money. A real discount rate of 8% was used for both financial and economic models. All capital expenditures were included and depreciation (or appreciation) was accounted for in the residual value of assets in the final year of analysis.

The models included detailed stock projections over the investment period, depicting the anticipated growth, or not, of wildlife stocks by species. These incorporated estimates of initial wildlife populations determined from aerial census (Brooks et al. 2010), the natural growth potential of each species, any acquisition of stock, any natural immigration of stock, and any legal or illegal off-takes. Natural growth potential for each species was calculated using the method described by Barnes (1989). Wildlife biomass was measured both in numbers and as large stock unit equivalents (LSU), the metabolic equivalent of a 450 kg bovine steer, using the conversion ratios of Meissner (1982). Residual value of wildlife stocks in the trust or park was included in the models with the other residual assets. In the case of community financial analysis these stocks were not included in residual value (as communities would not be able to recover this stock value at the end of the period).

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All models were tested through sensitivity analysis, by varying key assumptions to determine how robust they were, and the strength of conclusions that can be drawn from the results.

6.5.4 Financial and economic viability

South Sua Pan Table 18 shows the results of a budget cost-benefit model of the co-management options given above for the South Sua Sanctuary area and surrounds. These two options differ institutionally but they do not differ substantially in terms of cost and benefits, so a single model can indicate the characteristics of both. The basic structures of the general CBNRM lease area model were used to develop this. It can be seen that at full production, a project net income of P1.9 million would be possible, and the project internal rate of return could be some 16%. Communities would benefit substantially relative to their inputs receiving net incomes of P2 million and internal rates of return of 21%. The project would also be economically efficient with an economic rate of return of some 24%.

These results indicate that co-management as an option to develop in the south Sua Pan area is both financially attractive and economically efficient, and that it could offer attractive positive returns for communities

TABLE 18. BASE CASE FINANCIAL AND ECONOMIC CHARACTERISTICS OF CBNRM LEASE AREAS AND THE PROPOSED SOUTH SUA PAN CO -MANAGEMENT (CONTRACT PARK /CBNRM) INITATIVE (P, 2010, SOURCE : AUTHORS )

South Sua Pan Park co- Value General CBNRM lease area model management Project financial values

Initial capital investment 1 355 820 5 582 790 Annual net income 250 390 1 903 760 Internal rate of return 1 (%) 14% 16% Net present value 2 1 004 180 3 397 180 Community private values

Annual community income 350 880 2 004 260 Internal rate of return 1 (%) 44% 21% Net present value 2 2 503 830 4 896 840 Economic values

Annual gross value added 413 290 2 296 160 Annual net value added 289 170 1 785 100 Economic rate of return 1 (%) 22% 24% Economic net present value 2 1 753 170 5 585 810 1 Internal rate of retrun over 10 years 2 Net present value (NPV) over 10 years @ 8%

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MWS as a whole The “business as usual” scenario for the MSW as a whole involves a significant state investment in the parks and little concession development around them (Table 19). The state would incur 70% of the investment and the private sector would contribute only 28% of it. Annual output overall would be relatively low and the state would only receive 10% of it while the private sector would likely get some 86%. Growth in tourism incomes would be low due to a lack of conservation outside the state parks.

In the Contract Park/CBNRM Buffer scenarios, the state would have a lower investment but there would be significant potential for tourism investment through joint venture concessions outside the park (Table 20). Overall costs would be significantly higher but so would tourism incomes, with concession income growing at an estimated 5% per annum over the 30 years period, based on WTTC (2006, 2007). Here the state would only bear 19% of the investments while the private sector capital would make up 77% of them. The income would grow to some P230 million with 84% of this accruing to the joint venture concessions.

TABLE 19. FINANCIAL CHARACTERISTICS OF THE BASE CASE “B USINESS AS USUAL ” SCENARIO AFTER 30 YEARS (P, 2010, SOURCE : AUTHORS )

Scenario/stakeholder Initial capital Annual recurrent cost Annual output Current (status quo) scenario

Nxai Pan/Makgadikgadi NPs 139 203 234 23 200 539 3 254 910 Nata Conservation Trust 782 572 226 993 846 598 Gaing-O Community Trust 1 595 084 484 602 1 084 980 Xhauxhwatubi Development Trust 1 595 084 484 602 834 245 Gweozotswa Natural Resources Trust - - - Ngande Trust - - - Mokopi Conservation Trust - - - Lenao la Kwalabe Conservation Trust - - - Gumakotsa Conservation Trust - - - Tsoe-Tamiga - - - Zoroga-Ntwetwe - - - Botash Private Sanctuary 1 355 821 393 096 643 483 Joint venture lodges/camps 28 427 328 26 008 437 30 000 000 Joint venture hunting 3 396 535 5 724 726 5 992 282 TOTAL 176 355 658 56 522 995 42 656 498 Relative shares Investment Income

State 70% 10%

Donor 1.3% 0.0%

CBNRM 0.2% 4.2%

Private sector 28% 86%

Total 100% 100%

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TABLE 20. FINANCIAL CHARACTERISTICS OF BASE CASE FOR A CONTRACT PARK OR CBNRM SCENARIO AFTER 30 YEARS (P, 2010, SOURCE : AUTHORS )

Annual recurrent Annual Scenario/stakeholder Initial capital cost output Co-management scenario

Nxai Pan/Makgadikgadi NPs 69 601 620 11 600 270 9 418 346 Nata Conservation Trust 1 173 858 453 986 2 133 563 Gaing-O Community Trust 3 190 167 969 204 3 015 428 Xhauxhwatubi Development Trust 1 595 084 484 602 2 562 708 Gweozotswa Natural Resources Trust 2 304 896 786 193 5 960 321 Ngande Trust 1 355 821 393 096 2 371 946 Mokopi Conservation Trust 1 084 657 314 477 1 158 269 Lenao la Kwalabe Conservation Trust 1 355 821 393 096 3 898 424 Gumakotsa Conservation Trust 1 762 567 511 025 4 743 891 Tsoe-Tamiga 1 355 821 393 096 1 728 463 Zoroga-Ntwetwe 1 355 821 393 096 643 483 Botash Private Sanctuary 1 355 821 393 096 1 286 965 Joint venture lodges/camps 174 981 940 160 092 664 184 662 383 Joint venture hunting 5 094 802 8 587 089 8 988 423 TOTAL 267 568 697 185 764 992 232 572 613 Relative shares Investment Income

State 19% 8%

Donor 2.9% 0.0%

CBNRM 0.5% 7.9%

Private sector 77% 84%

Total 100% 100%

Overall cost and benefits are significantly larger with the co-management scenario, and the 30 year economic rate of return is also significantly higher at 35% as opposed to 23% (Table 21). The overall project net present value could be expected to be some three times larger for co-management compared with the “business as usual” scenario.

TABLE 21. ECONOMIC CHARACTERISTICS FROM THE BASE CASE MODEL FOR A POSSIBLE CO -MANAGEMENT (CONTRACT PARK /CBNRM) SCENARIO AFTER 30 YEARS (P, 2010, SOURCE : AUTHORS )

Contract Park or Economic value Type Business as Usual CBNRM buffer Capital Prorated annual 16 368 100 23 774 000 Recurrent costs Annual (P, 2010) 27 223 600 134 996 800 Direct value added Annual (P, 2010) 52 920 000 207 453 200 Economic rate of return (IRR) 30 years (%) 23% 35% Economic net present value (NPV) 30 years @ 8% (P,2010) 83 573 200 278 597 600

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Effect of tourism growth rate In the above analyses it was assumed that tourism growth rate follows the current national average growth rate of 5%. This rate of growth has a significant effect on the rates of return to investment in tourism development (Table 22). However, apart from that for the project at 3% growth, these rates are still above the 8% cut-off discount rate and are highly favourable even under a low growth scenario.

TABLE 22. FINANCIAL AND ECONOMIC RATES OF RETURN FOR THE CONTRACT PARK OR CBNRM BUFFER SCENARIO UNDER DIFFERENT RATES OF TOURISM GROWTH

Tourism growth rate 3% 5% 7% 9% Project rate of return 7% 24% 31% 37% Community rate of return 41% 46% 50% 55% Economic rate of return 26% 35% 42% 48%

It is clear from the cost benefit analysis that from a conservation perspective, as well as from an economic development point of view, that investment in further conservation and tourism activities beyond the existing parks in conjunction with the surrounding communities is likely to be a very attractive strategy. Sensitivity analysis on the models varying the costs and income predictions confirms this finding. It remains to decide which particular approach to co-management between the two described above would be institutionally and politically preferable.

6.6 WHAT IS THE BEST CONSERVATION -TOURISM DEVELOPMENT MODEL ?

In the above analyses, it was assumed that two different options – a Contract Park or a CBNRM Buffer model, were similar from a financial and economic perspective, and differed mainly from an institutional perspective. However, some additional considerations that need to be taken into account include: • the effect of the different models on tourism demand, • the level of community buy-in, • capacity of the players involved, and • the transaction costs involved.

These issues were discussed at a stakeholder workshop held in Gaborone in January 2011, the outcome of which is summarised in Table 23. The degree to which the issues are weakly or strongly an advantage or disadvantage is dependent on multiple factors, however, and these should be taken as rough estimates, based on current understanding.

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TABLE 23. EVALUATION OF THE POSITIVE AND NEGATIVE ASPECTS OF A CONTRACT PARK VS CBNRM BUFFER OPTION FOR THE STUDY AREA , BASED ON WORKSHOP INPUTS .

Contract CBNRM Area Positive aspects Park Buffer Biodiversity Increase in biodiversity protection XXX X Tourism potential Increase in tourism marketability XXX X Entrepreneurship encouraged XX X Community Local community ownership and empowerment X XXX Build community capacity, skills X XX Increased economic opportunities and income XXXX XXX Implementation Ease of implementation X XX Economies of scale XXXX XX Governance Reduced land use conflicts XX X Reduced conflict allows DWNP to concentrate on X X conservation mandate Involvement of all stakeholders ensures success XX X Policy and legislation Compatibility with policy and legislation X XX Contract CBNRM Area Negative aspects Park Buffer Biodiversity Sensitive ecosystems not adequately conserved X Tourism potential Branding of MWS as tourism area is new, hence slow X X initial growth Limited wildlife in some areas (e.g. Sua Area) X X Communities Human-wildlife conflict XX XX Land use conflict (grazing land, natural resources) X X Implementation Limited resources (capital) X X Governance Community lacks skills and capacity XXX XXXXXX Too many players – may have different understanding XXXX X and conflicting interests Communities not willing to cooperate with one another XXXX XXX Limited involvement of local government X Maladministration X XXX Policy and legislation Requires policy and legislative amendments XX X Not supported by current government policy XX X Resistance to change by the powers that be X X

From a biodiversity perspective, the certainty of conservation success appears to be highest under a contract park model, largely because of the more cohesive management of the area.

The contract park model may also have the edge over the CBNRM model in terms of tourism potential , because one larger park may be easier to market than separate accommodation facilities in multiple CBNRM areas. This aspect is also beneficial to

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communities, in that more tourism turnover will translate into more jobs and more income from tourism concessions (in this case via the park authority).

The CBNRM option was generally considered to fare better in terms of local community empowerment , sense of ownership and building capacity. However, the relative advantage does depend on the way in which communities might be engaged to co- manage the Contractual Park.

It is possible that CBNRM would be easier to implement than a Contract Park, because the process is already started, and there is a precedent. It could even be a step towards a contractual park, though there would be some legal issues to consider (e.g. the Joint Venture Agreements) if this is to be the eventual goal.

From a governance perspective, both types of operation are likely to lead to reduced land use conflicts, allowing DWNP to concentrate on their mandate. There were major concerns, however, that communities lack the skills and capacity to make a success under the CBNRM model. This is further exacerbated by the lack of cooperation between communities that is already being witnessed. In both models, governance may also be weakened by lack of input from local government, and maladministration, but more so under CBNRM.

6.7 MODELS FOR TOURISM ESTABLISHMENTS

As part of the research conducted for the MFMP, Mbaiwa (2010) provided a review of the possible tourism operation models and their sustainability for the ten selected tourism potential spots in the MFMP area. The objectives of the study were to review and assess, through SWOT analysis, the existing tourism operation models in Botswana and based on these characteristics recommend tourism management and operation models for the project area (Mbaiwa 2010). Several tourism models were evaluated (Table 24): • Private Sector Investment and Operational Tourism, • Government Tourism, • Community-Based Tourism and • Donor and Development Agency.

This analysis overlaps to some extent with our analysis above, but evaluates the actual tourism developments in more detail.

The SWOT analysis for each of the tourism models indicated that all can be applicable in different parts of the MWS. However, the Government Tourism Model was less favourable mainly because governments are generally poor at running efficient and

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successful tourism businesses (Mbaiwa 2010). Governments are also poor at tourism product marketing and development (Mbaiwa 2010).

TABLE 24. POSSIBLE TOURISM MODELS FOR THE MFMP AREA . SUMMARISED FROM MBAIWA (2010)

Model Comments Government Tourism Model The Government Campsite Model is found within DWNP parks. Government – Private Sector Government has been shown to be very poor at running campsites Partnerships and tourism activities in the National Parks. In an attempt to address Government – CBNRM Partnerships this issue, DWNP recently leased out some of its campsites to the Government Campsite Model private sector. This form of tourism partnership can also be extended to certain parts of the MNPNP. The Government-CBNRM Partnership Model is largely carried out in wildlife areas considered buffer zones between protected areas and human settlements. The model involves government providing a wildlife quota to a CBO who in turn lease it to safari hunting companies.

Private Sector Investment and The private sector investment in tourism development in Botswana is Operational Tourism Model mainly undertaken in concession areas known as CHAs, and in national High-end/Up-Market Tourism Model parks and game reserves. The majority of the activities are Community Public Private characterised by the construction of accommodation facilities. The partnerships high-end tourism model is characterised by permanent accommodation facilities where prices paid for services are generally very high. Although a small number of tourists stay in these facilities, they contribute almost 80% of the expenditure by tourists in Botswana. The community public private partnership models are partnerships between local communities and the private sector. Such partnerships are developed through shareholding agreements where communities and private companies share profits from the tourism business.

Community-Based Tourism Model These two models are separated by hunting activities – CBNRM has Ecotourism Model safari hunting as one of its tourism activities whereas ecotourism does CBNRM tourism Model not. Ecotourism concentrates more on eco-lodges and conservation because many of the ecotourism companies are opposed to hunting in wilderness areas

Donor and Development Agency This model involves donor and development agencies funding a Model community project at the initial stages of development. Once the Eco-lodge development approach project has become established the donor agency withdraws and the Alternative Tourism Enterprise community is left to manage the project. The donor and development agency model is applicable in areas where a community wants to establish a tourism activity like eco-lodge, sanctuary or any other related tourism project.

The most viable tourism models for the MFMP area were considered to be the private sector investment and community-based tourism models. Community-based tourism

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models achieve a reduction in human-wildlife conflict and increase natural resources management, as well as increasing rural development and local livelihoods. The private sector investment model is critical in increasing tourism revenues and related economic and environmental benefits. Both these models encourage sustainability in the use of natural resources and local participation in tourism development (Mbaiwa 2010).

6.8 CONCLUSIONS

Implementation of CBNRM would be the simplest option, but it is less co-ordinated, and given limitations in the current CBNRM policy may not have the same level of conservation or attraction for tourism. If CBNRM is chosen as the route to go, the policy will need improvement, along the lines identified in the CBNRM review (Martin 2008), to make it possible for CBNRM to work effectively. Given the potential economic advantages due to greater tourism marketability, the Contractual Park option should be considered seriously. This could begin at the scale of the South Sua Pan, and eventually be scaled up to create an amalgamated Makgadikgadi Pans National Park that is rival to Namibia’s flagship park - Etosha Pan National Park.

The park will then set the scene for the realisation of the many tourism development options in the area, through private sector investment. In the longer term, the area should be able to generate substantial benefits to local communities and Botswana’s economy. Through these developments, it is likely that the pressures on parks will decrease and the financing gap will be reduced. The success of the park will ride on the successful creation of operational management forum, such as a Joint Management Board.

Given the shortcomings of government, and the DWNP, in management (see Martin 2008), it is possible that the whole system might benefit greatly from outsourcing the park management to a commercial entity that works closely with communities and investors.

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Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 108 8 APPENDIX 1. DETAILS OF TOURISM FACILITIES CONTACTED

Name of Locatio Contact facility n Type Owner E-mail Fax No. Makgadi Game Lodges 2413 Jack's Camp kgadi & Camps Joint 458 2412277 Makgadi Game Lodges 2413 San Camp kgadi & Camps Joint 458 2412277 Makgadikgadi Makgadi Game Lodges 6214 Camp kgadi & Camps Joint 231 2412277 Game Lodges [email protected] 6861 Leroo La Tau Kumaga & Camps Citizen [email protected] 791 6861243 Sekgwa Sa Selected sekgwasametsi@yaho 2975

Metsi Rakops Serviced Hotel Citizen o.com 176 2975176 Game Lodges [email protected] 6212 Gweta Lodge Gweta & Camps Joint [email protected] 458 6212220 reservations@unchart eredafrica.com Cultural besign@uncharteredaf 2413 +267 723 Planet Baobab Gweta Village Joint rica.com 458 38344 Northgate Selected northgatelodge@yaho 6211

Lodge Nata Serviced Hotel Citizen o.com 154 6211155/56 reservations@natalodg Game Lodges e.com 6200 Nata Lodge Nata & Camps Citizen [email protected] 071 6200070 Letlhaka Fully Serviced 2978 Boteti Hotel ne Hotel Citizen 251 2978289 Letlhaka Selected 2978

Granny's Lodge ne Serviced Hotel Citizen [email protected] 479 2978246 Letlhaka Selected 2976

Mikelele Motel ne Serviced Hotel Citizen [email protected] 268 2978594 Makgadikgadi Sua Game Lodges Non- fordfoodsua@botsnet. 6214

Lodge Town & Camps Citizen bw 343 6214231 Selected 71723907/7 Xere Motel Rakops Serviced Hotel Citizen 2675568 Nxai Game Lodges 6861

Nxai Pan Camp Pan & Camps [email protected] 457 6861449 Nxai [email protected] 6862

Baines Baobab Pan Campsite w 221 73862221 Makgadikgadi Makgadi 3971

Campsites kgadi Campsites [email protected] 405 Meno A Kwena Boteti

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9 APPENDIX 2: SELECTED FINANCIAL/ECONOMIC COST-BENEFIT MODELS

1. Tourism

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MAKGADIKGADI FINANCIAL/ECONOMIC MODEL - HIGH QUALITY AREA TOURISM LODGE - BASE CASE (P, 2010)

ASSUMPTIONS*

Production System: 18 bed, up-market lodge offering all inclusive, guided, wildlife viewing.

Site: High quality, unfenced area with river/pan frontage and mixed population of Makgadikgadi wildlife species.

Game Density: 100% 2.87 LSU Equivalents/Sq. Km. or, 35 Hectares per LSU Equivalent

Carrying Capacity: 100% 0.125 Tourist Beds/Sq. Km. or, 800 Ha. per Tourist Bed

Concession Size: 48200 Hectares or, 482 Square Kilometres

Tourist Category: Overseas 80% Regional 10% Resident 5% Citizen 5% Adults 90% Children 10%

Occupancy Rate: 100% 47.5% Average Length of Stay: 4 Days

Daily Tariffs (P): 100% Overseas 2933 Regional 2933 Resident 2933 Citizen 2933 Children 100% of Adult Price

Capital Item Prices: 100% (Variation from Normal for Sensitivity Analysis)

Capital Sources: 100% Loan = 25% Equity = 75% and: 100% Foreign 25% Domestic 75%

Interest Rates: 100% Rate for Capital Loans: 10% Rate for Working Capital Loans: 13%

Working Capital as Proportion of Annual Operating Costs: 20%

Park Entry Fees: 100% Fee per Tourist Night/Day: P 91.00

Land Rental and Resource Royalty (P): 100% Rental: 0.82 per Ha. 100% Royalty: 4% of Turnover

Manpower Needs: 100% Managers 6 Skilled Labour 7 Unskilled Labour 15 100% Management: Foreign 25% Citizen 75%

Shadow Wage Adjustment: 100% Managers 1.00 Skilled Labour 1.00 100% Unskilled Labour 0.50

Foreign Exchange Premium: 100% 6% Adjustment Factor = 1.06

Tax Adjustments: 100% General Sales Tax: 10% Import Taxes: from SACU: 0% to SACU: n/a

Discount Rates: 100% Financial Discount Rate: 8% Economic Discount Rate: 8%

Opportunity Cost of Capital: 100% 8%

Static models depict enterprise at full production. Static financial model includes interest, amortisation government fees, royalties and land rentals. Static economic model takes foreign inflows and outflows into account, excludes other interest and transfers and values enterprise in economic prices before land and government costs

Dynamic models presented over 5 and 10 years, to measure IRR and NPV. Financial dynamic model, at constant prices, excludes interest and depreciation, and includes asset residual values. Economic model includes foreign inflows and outflows, and measures value of enterpise in economic prices before inclusion of land costs and public expenditures.

* Shaded cells indicate degree of conformity with base case values. Underlined shaded cells can be changed

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TABLE 1: CAPITAL REQUIREMENTS

ITEM QUANT. PRICE FINAN. LIFE AMORT. DEPREC- ECON. FOREX TAX ECON. BWP COST Years + INT. IATION DEPR. ADJ. ADJ. COST

FIXED CAPITAL

DOMESTIC ITEMS Houses Manager 6 57412 344471 40 40461 8612 7751 1.00 0.90 310024 Houses Labour 22 8633 189934 40 22310 4748 4274 1.00 0.90 189934 Storerooms 1 863335 863335 40 101407 21583 19425 1.00 0.90 777002 Tourist Lodges 1 2065529 2065529 40 242616 51638 46474 1.00 0.90 1858977 Borehole 0 179862 0 40 0 0 0 1.00 0.90 0 Reservoir (Whole Water System) 1 467640 467640 40 54929 11691 10522 1.00 0.90 420876 Reticulation/Pans 0 6443 0 40 0 0 0 1.00 0.90 0 Firebreaks 0.00 8805 0 40 0 0 0 1.00 0.90 0 Hiking Trails 0.00 1289 0 40 0 0 0 1.00 0.90 0 Power/Road to Site 1 71945 71945 40 8451 1799 1619 1.00 0.90 64750 CONTINGENCIES @ 5% 200143 40 23509 5004 4503 1.00 0.90 180128 SUBTOTAL DOMESTIC ITEMS 4202996 3801690

TRADABLE ITEMS Boma 0 75381 0 20 0 0 0 1.06 0.90 0 Hiker Camps 0 0 0 15 0 0 0 1.06 0.90 0 Pump/Windmill 1 139594 139594 15 18353 9306 8878 1.06 0.90 133173 Fencing Perimeter 0.00 125914 0 15 0 0 0 1.06 0.90 0 Fencing Internal 0.00 114467 0 15 0 0 0 1.06 0.90 0 CONTINGENCIES @ 5% 6980 15 918 465 444 1.06 0.90 6659 SUBTOTAL TRADABLES 146574 139831

SUBTOTAL- FIXED CAPITAL 4349570 3941521

MOVABLE CAPITAL

TRADABLE ITEMS Land Cruisers/Trucks/Vans 4 578306 2313223 4 729754 578306 551704 1.06 0.90 2206815 Tools/Office Equipment 1 63784 63784 6 14645 10631 10142 1.06 0.90 60850 Lodge Equipment 1 83982 83982 6 19283 13997 13353 1.06 0.90 80119 Boats/Quad bikes 3 14174 42522 6 9763 7087 6761 1.06 0.90 40566 CONTINGENCIES @ 10% 250351 6 57482 41725 39806 1.06 0.90 238835 SUBTOTAL TRADABLES 2753862 2627184

DOMESTIC ITEMS Capture: Small Antelope 0 0 0 40 0 1.00 0.90 0 : Large Antelope 0 0 0 40 0 1.00 0.90 0 : Ostrich 0 0 0 40 0 1.00 0.90 0 : Other Animals 0 0 0 40 0 1.00 0.90 0 Horses and Donkeys 0 0 0 40 0 1.00 0.90 0 CONTINGENCIES @ 10% 0 40 0 1.00 0.90 0 SUBTOTAL- DOMESTIC ITEMS 0 0

SUBTOTAL- MOVABLE CAPITAL 2753862 2627184

WORKING CAPITAL LOAN INTEREST

VARIABLE 771938 100352 1.06 1.00 818254 OVERHEAD 457103 59423 1.06 1.00 484530 SUBTOTAL- WORKING CAPITAL 1229041 159775 1302784

TOTALS 8332473 159775 1343881 766592 725655 7871490

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TABLE 2: STOCK COMPOSITION BY SPECIES AT FULL PRODUCTION

ITEM HEAD LSU FACTOR LSU

Baboon 217 0.00 0 Black Rhinoceros 0 1.50 0 Buffalo 25 1.00 25 Burchells Zebra 924 0.63 582 Bushbuck 4 0.14 1 Bushpig 0 0.20 0 Cheetah 8 0.00 0 Crocodile 0 0.00 0 Duiker 588 0.07 41 Eland 29 1.00 29 Elephant 69 3.33 231 Gemsbok 105 0.40 42 Giraffe 58 1.50 88 Hartebeest 14 0.26 4 Impala 105 0.14 15 Klipspringer 0 0.07 0 Kudu 277 0.40 111 Lechwe 0 0.16 0 Leopard 21 0.00 0 Lion 14 0.00 0 Monkey vervet 42 0.00 0 Ostrich 210 0.26 55 Reedbuck 0 0.14 0 Roan 0 0.65 0 Small predators 140 0.00 0 Spotted Hyaena 21 0.00 0 Springbok 504 0.08 40 Steenbok 578 0.06 35 Tsessebe 0 0.26 0 Warthog 126 0.20 25 Waterbuck 0 0.37 0 Wildebeest 147 0.40 59

TOTAL 4227 1381

GAME DENSITY: 2.87 LSU PER SQ.KM.; CONCESSION SIZE: 48200 HECTARES

TABLE 3: SALES AT FULL PRODUCTION

ITEM VISITOR DAYS @ RATE FINANCIAL FOREX TAX ECON. P/Day VALUE ADJ. ADJ. VALUE

Overseas Adults 2247 @ 2933 6591024 1.06 1.00 6986485 Regional Adults 281 @ 2933 823878 1.06 1.00 873311 Resident Adults 140 @ 2933 411939 1.06 1.00 436655 Citizen Adults 140 @ 2933 411939 1.00 1.00 411939 Overseas Children 250 @ 2933 732336 1.06 1.00 776276 Regional Children 31 @ 2933 91542 1.06 1.00 97035 Resident Children 16 @ 2933 45771 1.06 1.00 48517 Citizen Children 16 @ 2933 45771 1.00 1.00 45771 Optional Excursions 0 1.06 1.00 0 Bar 0 1.06 1.00 0 Crafts/Curios 46811 1.06 1.00 49620

TOTALS 3121 GROSS INCOME 9201011 9725609

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TABLE 4: VARIABLE EXPENDITURE AT FULL PRODUCTION

ITEM FINANCIAL VALUES FOREX TAX ECONOMIC VALUES P/LSU P/HA. VALUE ADJ. ADJ. P/LSU P/HA. VALUE

TRADABLE ITEMS 0.25 2300253 Marketing Costs: Advertising 666.19 19.09 920101 1.06 0.90 635.55 18.21 877776 : Agents Fees 999.29 28.63 1380152 1.06 0.90 1059.25 30.35 1462961 Lodge Running Costs : Accomodation 97.05 2.78 134042 1.06 0.90 92.59 2.65 127877 : Transport 26.79 0.77 36996 1.06 0.90 25.55 0.73 35294 : Optional Activ. 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Bar 67.94 1.95 93830 1.06 0.90 64.81 1.86 89514 : Crafts/Curios 40.28 1.15 55628 1.06 0.90 38.42 1.10 53069 Fodder and Supplements 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Offtake Costs: Ammunition 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Supplies and Packaging 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Transport 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Live Game Distribution 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Biltong Distribution 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Fuels, Oils and Miscellaneous Costs 25.23 0.72 34851 1.06 0.90 24.07 0.69 33248

SUBTOTAL TRADABLES 1922.77 55.10 2655599 1940.25 55.60 2679738

DOMESTIC ITEMS

Veterinary and Medicine Costs 0.00 0.00 0 1.00 0.90 0.00 0.00 0 Licence Fees: Park Entrance Fees 205.62 5.89 283988 1.00 1.00 0.00 0.00 0 : Hunting Licences 0.00 0.00 0 1.00 1.00 0.00 0.00 0 Sales Tax 666.19 19.09 920101 1.00 1.00 0.00 0.00 0

SUBTOTAL DOMESTIC ITEMS 871.81 24.98 1204089 0.00 0.00 0

TOTAL VARIABLE EXPENDITURE 2794.59 80.08 3859689 1940.25 55.60 2679738

TABLE 5: OPERATING OVERHEAD EXPENDITURE AT FULL PRODUCTION

ITEM FINANCIAL VALUES FOREX TAX ECONOMIC VALUES P/LSU P/HA. VALUE ADJ. ADJ. P/LSU P/HA. VALUE

DOMESTIC ITEMS 0.17 1536360 Salaries and Wages: Unskilled Labour 143.53 4.11 198240 0.20 1.00 1.00 143.53 4.11 99120 : Skilled Labour 251.19 7.20 346920 1.00 1.00 251.19 7.20 312228 : Managers 717.67 20.56 991200 1.00 1.00 717.67 20.56 991200 Administration 60.64 1.74 83756 1.00 0.90 60.64 1.74 75381 Maintenance and Repairs 178.33 5.11 246298 1.00 0.90 178.33 5.11 221669 Insurance 303.45 8.70 419102 1.00 0.90 303.45 8.70 377192 Travelling 0.00 0.00 0 1.00 0.90 0.00 0.00 0

TOTAL OPERATING OVERHEAD EXPEND. 1654.82 47.42 2285517 1654.82 47.42 2076790

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TABLE 6: STATIC FINANCIAL MODEL (AT FULL PRODUCTION)

ITEM UNITS TOTAL

Concession Extent Hectares 48200 Concession Stock Large Stock Units (LSU) 1381 Total Capital Requirement BWP 8332473

P/LSU P/HECTARE BWP

GROSS INCOME 6661.95 190.89 9201011

VARIABLE COSTS 2794.59 80.08 3859689

GROSS MARGIN 3867.36 110.82 5341323

OVERHEAD COSTS

Overhead Operating Costs 1654.82 47.42 2285517 Loan Amortisation and Interest 243.26 6.97 335970 Provisions for Capital Replacement 416.29 11.93 574944 Interest on Variable Working Capital 72.66 2.08 100352 Interest on Overhead Working Capital 43.03 1.23 59423 Land Rental 28.62 0.82 39524 Resource Royalty 266.48 7.64 368040

TOTAL OVERHEAD COSTS 2725.14 78.09 3763771

NET CASH INCOME 1142.22 32.73 1577551

NET CASH INCOME/P100 TOTAL CAPITAL INVESTMENT 18.93 "TOTAL BENEFITS"*/P100 TOTAL CAPITAL INVESTMENT 56.71 "TOTAL BENEFITS"*/HECTARE 98.04

* "Total Benefits" = all of Net Cash Income, Salaries and Wages, Licences and Duties, Rental and Royalties.

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TABLE 7: STATIC ECONOMIC MODEL (AT FULL PRODUCTION)

ITEM UNITS TOTAL

Concession Extent Hectares 48200 Concession Stock Large Stock Units (LSU) 1381 Total Capital Requirement BWP 7871490 Economic Depreciation Cost BWP 725655 Foreign Financing (Prorated) BWP 203147 Foreign Amortisation BWP 50787 Foreign Capital Replacement Provision BWP 152360 Foreign Interest Cost BWP 195322 Domestic Interest Cost BWP 585966

ECONOMIC BENEFITS P/LSU P/HECTARE BWP

Gross Income 7041.78 201.78 9725609

ECONOMIC COSTS

DOMESTIC COMPONENT

Shadow Unskilled Citizen Wages 71.77 2.06 99120 Other Citizen Wages 764.32 21.90 1055628 Opportunity Cost of Capital 455.95 13.06 629719 Other Domestic Economic Costs 488.18 13.99 674242

SUBTOTAL DOMESTIC COMPONENT 1780.22 51.01 2458709

TRADABLE COMPONENT

Foreign Remuneration 179.42 5.14 247800 Foreign Services 1355.84 38.85 1872590 Foreign Interest 141.42 4.05 195322 Foreign Lease Payments 0.00 0.00 0 Foreign Rentals 0.00 0.00 0 Foreign Net Income 302.69 8.67 418051 Other Tradable Economic Costs 584.41 16.75 807148

SUBTOTAL TRADABLE COMPONENT 2563.78 73.46 3540911

TOTAL ECONOMIC COSTS 4343.99 124.47 5999620

GROSS VALUE ADDED TO NATIONAL INCOME 2697.78 77.30 3725990 NET VALUE ADDED (Excluding Depreciation) 2172.38 62.25 3000335 STATISTICAL GROSS VALUE ADDED 3533.87 101.26 4880738

DOMESTIC RESOURCE COST RATIO = 0.49 NET VALUE ADDED/P100 TOTAL CAPITAL COST = 38.12 CAPITAL COST/EMPLOYMENT OPPORTUNITY CREATED = 281125 NUMBER OF EMPLOYMENT OPPORTUNITIES/1000 HA. 0.58

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TABLE 8: CAPITAL PHASING, DEPRECIATION SCHEDULE AND CALCULATION OF RESIDUAL VALUE

ITEM LIFE Year Year Year Year Year Year Year Year Year Year Year (Yrs) 0 1 2 3 4 5 6 7 8 9 10

DEPRECIABLE ASSETS

"Forty Year" Items 40

Total Expenditure 4202996 Phased Expenditure 2521798 1681199 0 0 0 0 0 0 0 0 0 Depreciation 63045 105075 105075 105075 105075 105075 105075 105075 105075 105075 105075 Residual value 2521798 4139951 4034876 3929802 3824727 3719652 3614577 3509502 3404427 3299352 3194277

"Twenty Year" Items 20

Total Expenditure 0 Phased Expenditure 0 0 0 0 0 0 0 0 0 0 0 Depreciation 0 0 0 0 0 0 0 0 0 0 0 Residual value 0 0 0 0 0 0 0 0 0 0 0

"Fifteen Year" Items 15

Total Expenditure 146574 Phased Expenditure 87944 58629 0 0 0 0 0 0 0 0 0 Depreciation 5863 9772 9772 9772 9772 9772 9772 9772 9772 9772 9772 Residual value 87944 140711 130939 121168 111396 101624 91853 82081 72310 62538 52767

"Six Year" Items 6 6

Total Expenditure 440639 440639 Phased Expenditure 308447 132192 0 0 0 0 308447 132192 0 0 0 Depreciation 51408 73440 73440 73440 73440 73440 73440 73440 73440 73440 73440 Residual value 308447 389231 315791 242352 168912 95472 330479 389231 315791 242352 168912

"Four Year" Items 4

Total Expenditure 2313223 2313223 2313223 Phased Expenditure 2313223 0 0 0 2313223 0 0 0 2313223 0 0 Depreciation 578306 578306 578306 578306 578306 578306 578306 578306 578306 578306 578306 Residual value 2313223 1734917 1156611 578306 2313223 1734917 1156611 578306 2313223 1734917 1156611

NON DEPRECIABLE ASSETS

Stock - Phased Expenditure 0 0 0 0 0 0 0 0 0 0 0 Residual value 0 0 0 0 0 0 0 0 0 0 0

Working Capital - Phased Expenditure 1229041 0 0 0 0 0 0 0 0 0 0

TOTAL PHASED CAPITAL EXPENDITURE

Domestic Component 2521798 1681199 0 0 0 0 0 0 0 0 0 Tradable Component 2709615 190821 0 0 2313223 0 308447 132192 2313223 0 0 Total Financial Value 5231412 1872020 0 0 2313223 0 308447 132192 2313223 0 0 Total Economic Value 4854590 1695122 0 0 2206815 0 294259 126111 2206815 0 0

TOTAL ASSET RESIDUAL VALUE

Domestic Component 2521798 4139951 4034876 3929802 3824727 3719652 3614577 3509502 3404427 3299352 3194277 Tradable Component 2709615 2264859 1603342 941825 2593531 1932013 1578944 1049618 2701324 2039807 1378290 Financial Value 5231412 6404811 5638219 4871626 6418257 5651665 5193521 4559120 6105751 5339159 4572567 Economic Value 4854590 5886632 5160977 4435322 5916482 5190827 4759431 4159888 5641047 4915393 4189738

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TABLE 9: LOAN FINANCING SCHEDULE (PULA)

ITEM PERIOD Year Year Year Year Year Year Year Year Year Year Year (Yrs) 0 1 2 3 4 5 6 7 8 9 10

LONG TERM LOANS

TWENTY YEAR LOAN 20 Total Expenditure 1050749 Loan Disbursements 630449 420300 0 0 0 0 0 0 0 0 0 Loan Payments 74052 123421 123421 123421 123421 123421 123421 123421 123421 123421 123421 Amortisation 31522 52537 52537 52537 52537 52537 52537 52537 52537 52537 52537 Interest Payments 42530 70883 70883 70883 70883 70883 70883 70883 70883 70883 70883 Loans Outstanding 630449 1019227 966689 914152 861614 809077 756539 704002 651464 598927 546390

FIFTEEN YEAR LOAN 15 Total Expenditure 36643 Loan Disbursements 27483 9161 0 0 0 0 0 0 0 0 0 Loan Payments 3613 4818 4818 4818 4818 4818 4818 4818 4818 4818 4818 Amortisation 1832 2443 2443 2443 2443 2443 2443 2443 2443 2443 2443 Interest Payments 1781 2375 2375 2375 2375 2375 2375 2375 2375 2375 2375 Loans Outstanding 27483 34811 32368 29925 27483 25040 22597 20154 17711 15268 12825

SIX YEAR LOAN 6 6 Total Expenditure 110160 110160 Loan Disbursements 77112 33048 0 0 0 0 77112 33048 0 0 0 Loan Payments 17705 25294 25294 25294 25294 25294 25294 25294 25294 25294 25294 Amortisation 12852 18360 18360 18360 18360 18360 18360 18360 18360 18360 18360 Interest Payments 4853 6934 6934 6934 6934 6934 6934 6934 6934 6934 6934 Loans Outstanding 77112 97308 78948 60588 42228 23868 82620 97308 78948 60588 42228

FOUR YEAR LOAN 4 Total Expenditure 578306 578306 578306 Loan Disbursements 578306 0 0 0 578306 0 0 0 578306 0 0 Loan Payments 182439 182439 182439 182439 182439 182439 182439 182439 182439 182439 182439 Amortisation 144576 144576 144576 144576 144576 144576 144576 144576 144576 144576 144576 Interest Payments 37862 37862 37862 37862 37862 37862 37862 37862 37862 37862 37862 Loans Outstanding 578306 433729 289153 144576 578306 433729 289153 144576 578306 433729 289153

SHORT TERM LOANS

Working Capital 1 Overdraft 1229041 1229041 1229041 1229041 1229041 1229041 1229041 1229041 1229041 1229041 1229041 Interest Payments 159775 159775 159775 159775 159775 159775 159775 159775 159775 159775 159775

TOTAL LONG TERM LOAN DISBURSMENTS

Domestic Component 985012 346881 0 0 433729 0 57834 24786 433729 0 0 Foreign Component * 348038 122565 0 0 153251 0 20435 8758 153251 0 0

TOTAL LONG TERM LOAN AMORTISATION

Domestic Component 143087 163438 163438 163438 163438 163438 163438 163438 163438 163438 163438 Foreign Component * 50558 57748 57748 57748 57748 57748 57748 57748 57748 57748 57748

TOTAL INTEREST PAYMENTS

Domestic Component 185101 208372 208372 208372 208372 208372 208372 208372 208372 208372 208372 Foreign Component * 65403 73625 73625 73625 73625 73625 73625 73625 73625 73625 73625

TOTAL LOANS OUTSTANDING

Domestic Component 985012 1188806 1025369 861931 1132223 968785 863182 724530 994822 831384 667947 Foreign Component * 348038 420045 362297 304549 400052 342304 304991 256001 351504 293756 236008

* Economic Values

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TABLE 10: FINANCIAL ANALYSIS - 5 YEARS (PULA)

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

EXPENDITURE Capital Expenditure 5231412 1872020 0 0 2313223 0 Variable Expenditure 385969 2315813 3859689 3859689 3859689 3859689 Overhead Expenditure 2693082 2693082 2693082 2693082 2693082 2693082 TOTAL EXPENDITURE 8310463 6880915 6552770 6552770 8865993 6552770

INCOME Gross Income 0 4600506 8280910 9201011 9201011 9201011 Asset Residual Value 0 0 0 0 0 5651665 TOTAL INCOME 0 4600506 8280910 9201011 9201011 14852676

NET BENEFIT/COST -8310463 -2280409 1728140 2648241 335018 8299906

FINANCIAL RATE OF RETURN (FRR) OVER 5 YEARS = 5.39% NET PRESENT VALUE (NPV) @ 8.00% = -873211

TABLE 11: FINANCIAL ANALYSIS - 7 YEARS (PULA)

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

EXPENDITURE Capital Expenditure 5231412 1872020 0 0 2313223 0 308447 132192 Variable Expenditure 385969 2315813 3859689 3859689 3859689 3859689 3859689 3859689 Overhead Expenditure 2693082 2693082 2693082 2693082 2693082 2693082 2693082 2693082 TOTAL EXPENDITURE 8310463 6880915 6552770 6552770 8865993 6552770 6861218 6684962

INCOME Gross Income 0 4600506 8280910 9201011 9201011 9201011 9201011 9201011 Asset Residual Value 0 0 0 0 0 0 0 4559120 TOTAL INCOME 0 4600506 8280910 9201011 9201011 9201011 9201011 13760131

NET BENEFIT/COST -8310463 -2280409 1728140 2648241 335018 2648241 2339793 7075169

FINANCIAL RATE OF RETURN (FRR) OVER 7 YEARS = 9.69% NET PRESENT VALUE (NPV) @ 8.00% = 753022

TABLE 12: FINANCIAL ANALYSIS - 10 YEARS (PULA)

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

EXPENDITURE Capital Expenditure 5231412 1872020 0 0 2313223 0 308447 132192 2313223 0 0 Variable Expenditure 385969 2315813 3859689 3859689 3859689 3859689 3859689 3859689 3859689 3859689 3859689 Overhead Expenditure 2693082 2693082 2693082 2693082 2693082 2693082 2693082 2693082 2693082 2693082 2693082 TOTAL EXPENDITURE 8310463 6880915 6552770 6552770 8865993 6552770 6861218 6684962 8865993 6552770 6552770

INCOME Gross Income 0 4600506 8280910 9201011 9201011 9201011 9201011 9201011 9201011 9201011 9201011 Asset Residual Value 0 0 0 0 0 0 0 0 0 0 4572567 TOTAL INCOME 0 4600506 8280910 9201011 9201011 9201011 9201011 9201011 9201011 9201011 13773578

NET BENEFIT/COST -8310463 -2280409 1728140 2648241 335018 2648241 2339793 2516049 335018 2648241 7220808

FINANCIAL RATE OF RETURN (FRR) OVER 10 YEARS = 12.68% NET PRESENT VALUE (NPV) @ 8.00% = 2780992

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TABLE 13: ECONOMIC ANALYSIS - 5 YEARS (PULA)

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

ECONOMIC COSTS

Capital Expenditure 4854590 1695122 0 0 2206815 0 Unskilled Wages 99120 99120 99120 99120 99120 99120 Other Domestic Costs 1383896 1729870 1729870 1729870 1729870 1729870 Tradable Costs 287675 1726051 2876751 2876751 2876751 2876751 Foreign Amortisation 50558 57748 57748 57748 57748 57748 Foreign Profits 0 29264 334441 418051 418051 418051 Foreign Loans Outst. 0 0 0 0 0 342304

TOTAL COSTS 6675839 5337174 5097929 5181540 7388354 5523844

ECONOMIC BENEFITS

Gross Income 0 4862805 8753048 9725609 9725609 9725609 Asset Residual Value 0 0 0 0 0 5190827 Foreign Financing 348038 122565 0 0 153251 0

TOTAL BENEFITS 348038 4985369 8753048 9725609 9878860 14916437

NET BENEFIT/COST -6327801 -351804 3655119 4544070 2490506 9392593

ECONOMIC RATE OF RETURN (ERR) OVER 5 YEARS = 35.65% NET PRESENT VALUE (NPV) @ 8.00% = 7694811

TABLE 14: ECONOMIC ANALYSIS - 10 YEARS (PULA)

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

ECONOMIC COSTS

Capital Expenditure 4854590 1695122 0 0 2206815 0 294259 126111 2206815 0 0 Unskilled Wages 99120 99120 99120 99120 99120 99120 99120 99120 99120 99120 99120 Other Domestic Costs 1383896 1729870 1729870 1729870 1729870 1729870 1729870 1729870 1729870 1729870 1729870 Tradable Costs 287675 1726051 2876751 2876751 2876751 2876751 2876751 2876751 2876751 2876751 2876751 Foreign Amortisation 50558 57748 57748 57748 57748 57748 57748 57748 57748 57748 57748 Foreign Profits 0 29264 334441 418051 418051 418051 418051 418051 418051 418051 418051 Foreign Loans Outst. 0 0 0 0 0 0 0 0 0 0 236008

TOTAL COSTS 6675839 5337174 5097929 5181540 7388354 5181540 5475799 5307651 7388354 5181540 5417547

ECONOMIC BENEFITS

Gross Income 0 4862805 8753048 9725609 9725609 9725609 9725609 9725609 9725609 9725609 9725609 Asset Residual Value 0 0 0 0 0 0 0 0 0 0 4189738 Foreign Financing 348038 122565 0 0 153251 0 20435 8758 153251 0 0

TOTAL BENEFITS 348038 4985369 8753048 9725609 9878860 9725609 9746044 9734367 9878860 9725609 13915347

NET BENEFIT/COST -6327801 -351804 3655119 4544070 2490506 4544070 4270245 4426716 2490506 4544070 8497800

ECONOMIC RATE OF RETURN (ERR) OVER 10 YEARS = 40.53% NET PRESENT VALUE (NPV) @ 8.00% = 16517900

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 120

MAKGADIKGADI FINANCIAL/ECONOMIC MODEL - HIGH QUALITY AREA TOURISM LODGE - BASE CASE (P, 2010)

TABLE 15: SUMMARY OF RESULTS

ITEM UNITS TOTAL

Concession Extent Hectares 48200 Concession Stock Large Stock Units (LSU) 1381 Annual Visitor Days (VD) Number 3121

ITEM % of TCI BWP/VISITOR DAY BWP/LSU BWP/HECTARE BWP

Total Financial Capital (TCI) - 2670.02 6033.09 172.87 8332473 Jobs 28 Financial Gross Income 110.42% 2948.33 6661.95 190.89 9201011

Variable Financial Costs - 1236.78 2794.59 80.08 3859689 Fixed Financial Costs - 1206.05 2725.14 78.09 3763771

Net Cash Income 18.93% 505.50 1142.22 32.73 1577551 Local Community Cash Income 11.43% 305.29 689.82 19.77 952724

Land Rental - 12.66 28.62 0.82 39524 Resource Royalty - 117.93 266.48 7.64 368040

FRR (@ 10 Years) - - - - 13%

FNPV (@ 8%, @ 10 Years) - - - 57.70 2780992

Total Economic Capital - 2522.31 5699.31 163.31 7871490

Economic Gross Income 123.55% 3116.43 7041.78 201.78 9725609

Economic Costs 76.22% 1922.49 4343.99 124.47 5999620

Incremental Gross Value Added 47.34% 1193.94 2697.78 77.30 3725990 Incremental Net Value Added 38.12% 961.41 2172.38 62.25 3000335 Statistical Gross Value Added 62.01% 1563.96 3533.87 101.26 4880738

ERR (@ 10 Years) - - - - 41%

ENPV (@ 8%, @ 10 Years) - - - 342.70 16517900

Economic Capital Cost/Job - - - - 281125 Domestic Resource Cost Ratio - - - - 0.49

Policy Analysis Matrix : Effects of Policy / Market Imperfections : on Output -524598 : on Tradable Inputs 885312 : on Domestic Factors -1783497 : Net Effects of Policy / Market Imperfections : on Annual Net Income -1422784 : on Net Present Value (10 Years) -13736908

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 121

2. CBNRM Lease Area General Model

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 122

MAKGADIKGADI FINANCIAL/ECONOMIC MODEL - GENERAL CBNRM LEASE AREA - BASE CASE Typical CBNRM lease area for Makgadikgadi Wetland System (P, 2010)

ASSUMPTIONS*

Production System: 32 beds. A community-based trust involve in the management of Lekhubu island and Tourism.

Site: MWS area

Game Density: 100% 5.20 LSU Equivalents/Sq. Km. or, 19 Hectares per LSU Equivalent

Carrying Capacity: 100% 0.113 Tourist Beds/Sq. Km. or, 888 Ha. per Tourist Bed

Conservacy Size: 28400 Hectares or, 284 Square Kilometres Core Wildlife Area Size: 13300

Tourist Category: Overseas 35% Regional 35% Resident 5% Citizen 25% Adults 100% Children 0%

Occupancy Rate: 100% 50.0% Average Length of Stay: 10 Days

Daily Tariffs (BWP): 100% Overseas 350 Regional 350 Resident 350 Citizen 350 Children 75% of Adult Price

Capital Item Prices: 85% (Variation from Normal for Sensitivity Analysis)

Capital Sources: 100% Loan = 0% Equity = 100% and: 100% Foreign 0% Domestic 100%

Interest Rates: Rate for Capital Loans: 9% Rate for Working Capital Loans: 12%

Working Capital as Proportion of Annual Operating Costs: 0%

Park Entry Fees: 100% Fee per Tourist Night/Day: BWP 30.00

Household Dividends: 450 Households @ BWP0

Land Rental and Resource Royalty (BWP):100% Rental: 0.00 per Ha. 100% Royalty: 0%

Manpower Needs: 100% Managers 1 Skilled Labour 4 Unskilled Labour 4 100% Management: Foreign 0% Citizen 100%

Shadow Wage Adjustment: 100% Managers 1.00 Skilled Labour 1.00 100% Unskilled Labour 0.50

Foreign Exchange Premium: 100% 6% Adjustment Factor = 1.06

Tax Adjustments: 100% General Sales Tax: 10% Import Taxes: from SACU: 0% to SACU: n/a

Discount Rates: 100% Financial Discount Rate: 8% Economic Discount Rate: 8%

Opportunity Cost of Capital 100% 8%

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 123

TABLE Sa1: CAPITAL REQUIREMENTS

ITEM QUANT. PRICE FINAN. LIFE AMORT. DEPREC- ECON. FOREX TAX ECON. BWP COST Years + INT. IATION DEPR. ADJ. ADJ. COST

FIXED CAPITAL

DOMESTIC ITEMS Houses Manager 0 34000 0 40 0 0 0 1.00 0.90 0 Ablution blocks 1 50,000 42500 40 4656 1063 956 1.00 0.90 38250 Buildings 1 185,802 157932 40 17301 3948 3553 1.00 0.90 142139 Cultural village/campsite/lodge 1 575,000 488750 40 53541 12219 10997 1.00 0.90 439875 Boreholes 1 25000 21250 40 2328 531 478 1.00 0.90 19125 Reservoirs 0 0 0 40 0 0 0 1.00 0.90 0 Reticulation/Pans 0 0 0 40 0 0 0 1.00 0.90 0 Road Maintenance (km) 0 0 0 40 0 0 0 1.00 0.90 0 Hiking Trails (km) 0 0 0 40 0 0 0 1.00 0.90 0 Transaction Costs 0 0 0 40 0 0 0 1.00 0.90 0 CONTINGENCIES @ 5% 35522 40 3891 888 799 1.00 0.90 31969 SUBTOTAL DOMESTIC ITEMS 745953 671358

TRADABLE ITEMS Boma/Pens 0 15000 0 20 0 0 0 1.06 0.90 0 Campsite 0 100000 0 15 0 0 0 1.06 0.90 0 Pump/Windmill 1 140,800 119680 15 14847 7979 7612 1.06 0.90 114175 Fencing Perimeter (km) 0 4510 0 15 0 0 0 1.06 0.90 0 Other Items 0 2050 0 15 0 0 0 1.06 0.90 0 CONTINGENCIES @ 5% 5984 15 742 399 381 1.06 0.90 5709 SUBTOTAL TRADABLES 125664 119883

SUBTOTAL- FIXED CAPITAL 871617 791241

MOVABLE CAPITAL

TRADABLE ITEMS LDVs/Trucks 1 330750 281138 4 86778 70284 67051 1.06 0.90 268205 Tools/Office Equipment 1 61,115 51948 6 11580 8658 8260 1.06 0.90 49558 Other equipment 1 26,000 22100 6 4927 3683 3514 1.06 0.90 21083 Training 1 100000 85000 6 18948 14167 13515 1.06 0.90 81090 CONTINGENCIES @ 10% 44019 6 9813 7336 6999 1.06 0.90 41994 SUBTOTAL TRADABLES 484204 461930

DOMESTIC ITEMS ECON. FIN. Stock : Small Game Batch 0 0 0 40 0 1.00 0.90 0 : Large Game Batch 0 0 0 40 0 1.00 0.90 0 : Big Five 0 0 0 40 0 1.00 0.90 0 : Cattle 0 0 0 40 0 1.00 0.90 0 Horses and Donkeys 0 0 0 40 0 1.00 0.90 0 CONTINGENCIES @ 10% 0 40 0 1.00 0.90 0 SUBTOTAL- DOMESTIC ITEMS 0 0

SUBTOTAL- MOVABLE CAPITAL 484204 461930

WORKING CAPITAL LOAN INTEREST

VARIABLE 0 0 1.06 1.00 0 OVERHEAD 0 0 1.06 1.00 0 SUBTOTAL- WORKING CAPITAL 0 0 0

TOTALS 1355821 0 229352 131155 124115 1253172

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 124

TABLE Sa2: STOCK COMPOSITION BY SPECIES AT FULL PRODUCTION

ITEM HEAD POT. OFF-TAKE OFF-TAKE PROP. LSU LSU (%) (NO.) (%) (NO.) LIVE FACTOR

Buffalo 0 6.60% 0 3.30% 0 0 1.00 0 Crocodile -14 23.50% -3 11.75% -2 0 0.07 -1 Eland 15 6.70% 1 3.35% 1 0 1.00 15 Elephant -23 3.10% -1 1.55% 0 0 3.33 -77 Hartebeest 2 10.20% 0 5.10% 0 0 0.26 1 Impala 112 14.65% 16 7.33% 8 3 0.14 16 Kudu 193 9.90% 19 4.95% 10 6 0.45 87 Leopard 3 15.00% 0 7.50% 0 0 0.00 0 Lion -35 12.00% -4 6.00% -2 -1 0.00 0 Oryx 70 9.40% 7 4.70% 3 3 0.40 28 Ostrich 147 10.00% 15 5.00% 7 4 0.26 38 Springbok 602 16.00% 96 8.00% 48 18 0.08 48 Steenbok 1805 27.70% 500 13.85% 250 5 0.06 108 Warthog 131 14.40% 19 7.20% 9 4 0.18 24 Wild dog 0 15.00% 0 7.50% 0 0 0.00 0 Wildebeest 100 9.60% 10 4.80% 5 3 0.40 40 Zebra 560 8.40% 47 4.20% 24 24 0.63 353 Cattle 0 15.00% 0 7.50% 0 0 1.00 0 Goats 0 45.00% 0 22.50% 0 0 0.11 0 Donkeys/horses 19 10.00% 2 5.00% 1 0 0.63 12

TOTAL 3687 724 362 70 692

STOCK DENSITY ON LAND:5.20 LSU PER SQ.KM.; CONSERVANCY SIZE: 13300 HECTARES

TABLE Sa3: SALES AT FULL PRODUCTION

ITEM QUANTITY @ VALUE (BWP) FINANCIAL FOREX TAX ECON. VALUE ADJ. ADJ. VALUE

Trophy Hunting Rental 1 camp @ 635875 604081 1.06 1.00 640326 Trophy Hunting: Royalty 0 @ 67500 0 1.06 1.00 0 Trophy Hunting: Meat 0 animals @ 327 0 1.06 1.00 0 Tourism Rentals: Lekhubu 0 Campsite @ 437373 0 1.06 1.00 0 Campsite Net Income 0 site @ 269675 0 1.06 1.00 0 Tourism Rentals - Other 0 site @ 210420 0 1.06 1.00 0 Live Game Sales 0 animals @ 0 0 1.06 1.00 0 Venison: Biltong 0 animals @ 327 0 1.06 1.00 0 Livestock sales 0 animals @ 0 0 1.06 1.00 0 Crafts 0 units @ 33396 0 1.06 1.00 0 Poles 0 h'holds @ 525 0 1.00 1.00 0 Other 1 @ 7608 7608 1.00 1.00 7608

TOTALS GROSS INCOME 611689 647934

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 125

TABLE Sa4: VARIABLE EXPENDITURE AT FULL PRODUCTION

ITEM FINANCIAL VALUES FOREX TAX ECONOMIC VALUES BWP/LSU BWP/HA. VALUE ADJ. ADJ. BWP/LSU BWP/HA. VALUE

TRADABLE ITEMS 0.78 Marketing Costs: Advertising 6.93 0.36 4797 1.06 0.90 6.62 0.34 4576 : Agents Fees 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Campsite Running Costs : Accomodation 21.17 1.10 14643 1.06 0.90 20.19 1.05 13969 : Utilities 12.57 0.65 8,692.63 1.06 0.90 11.99 0.62 8293 Temporary employment 18.89 0.98 13,069.68 1.06 0.90 18.02 0.94 12468 : Bar 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Crafts 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Fodder and Supplements 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Other Costs : Office Supplies 27.89 1.45 19,295.06 1.06 0.90 26.61 1.38 18407 : Capture Team 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Biltong Distribution 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Live Game Distribution 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Consultancies, Travel and Training 4.79 0.25 3,314.96 1.06 0.90 4.57 0.24 3162 General Vehicle Running Costs 19.97 1.04 13,815.87 1.06 0.90 19.05 0.99 13180

SUBTOTAL TRADABLES 112.21 5.84 77628 107.05 5.57 74057

DOMESTIC ITEMS

Veterinary and Medicine Costs 0.00 0.00 0 1.00 0.90 0.00 0.00 0 Meat Board Levy 0.00 0.00 0 1.00 1.00 0.00 0.00 0 Bank Fees 7.07 0.37 4,889.00 1.00 1.00 0.00 0.00 0 Sales Tax 35.73 1.86 24,718.70 1.00 1.00 0.00 0.00 0

SUBTOTAL DOMESTIC ITEMS 42.80 2.23 29608 0.00 0.00 0

TOTAL VARIABLE EXPENDITURE 155.01 8.06 107236 107.05 5.57 74057

TABLE Sa5: OPERATING OVERHEAD EXPENDITURE AT FULL PRODUCTION

ITEM FINANCIAL VALUES FOREX TAX ECONOMIC VALUES BWP/LSU BWP/HA. VALUE ADJ. ADJ. BWP/LSU BWP/HA. VALUE

DOMESTIC ITEMS 0.78 Salaries and Wages: 130.81 6.80 90,494.59 1.00 1.00 130.81 6.80 45247 : Skilled Labour 0.00 0.00 1.00 1.00 0.00 0.00 0 : Managers 0.00 0.00 1.00 1.00 0.00 0.00 0 Administration 2.11 0.11 1,458.52 1.00 0.90 2.11 0.11 1313 Maintenance and Repairs 32.77 1.70 22,669.73 1.00 0.90 32.77 1.70 20403 Insurance 27.30 1.42 18884 1.00 0.90 27.30 1.42 16996 Miscellaneous Fixed Costs 16.19 0.84 11,198.62 1.00 0.90 16.19 0.84 10079

TOTAL OPERATING OVERHEAD EXPENDITURE209.18 10.88 144705 209.18 10.88 94037

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 126

TABLE Sa6: STATIC FINANCIAL MODEL (AT FULL PRODUCTION)

ITEM UNITS TOTAL

Conservancy Extent Hectares 28400 Conservancy Stock Large Stock Units (LSU) 692 Total Capital Requirement BWP 1355821

BWP/LSU BWP/HA. BWP

GROSS INCOME 884.22 21.54 611689

VARIABLE COSTS 155.01 3.78 107236

GROSS MARGIN 729.21 17.76 504453

OVERHEAD COSTS

Overhead Operating Costs 209.18 5.10 144705 Loan Amortisation and Interest 0.00 0.00 0 Provisions for Capital Replacement 189.59 4.62 131155 Interest on Variable Working Capital 0.00 0.00 0 Interest on Overhead Working Capital 0.00 0.00 0 Land Rental 14.46 0.35 10,000.00 Resource Royalty 0.00 0.00 0

TOTAL OVERHEAD COSTS 413.22 10.07 285861

NET CASH INCOME 315.98 7.70 218593

NET CASH INCOME/BWP100 TOTAL CAPITAL INVESTMENT 16.12 "TOTAL BENEFITS"*/BWP100 TOTAL CAPITAL INVESTMENT 25.72 "TOTAL BENEFITS"*/HECTARE 12.28

* "Total Benefits" = all of Net Cash Income, Salaries and Wages, Licences and Duties, Rental and Royalties.

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 127

TABLE Sa7: STATIC ECONOMIC MODEL (AT FULL PRODUCTION)

ITEM UNITS TOTAL

Conservancy Extent Hectares 28400 Conservancy Stock Large Stock Units (LSU) 692 Total Initial Capital Requirement BWP 1253172 Economic Depreciation Cost BWP 124115 Foreign Financing (Prorated) BWP 0 Foreign Amortisation BWP 0 Foreign Capital Replacement Provision BWP 0 Foreign Interest Cost BWP 0 Domestic Interest Cost BWP 104089

ECONOMIC BENEFITS BWP/LSU BWP/HECTARE BWP

Gross Income 936.62 22.81 647934

ECONOMIC COSTS

DOMESTIC COMPONENT

Shadow Unskilled Citizen Wages 65.41 1.59 45247 Other Citizen Wages 0.00 0.00 0 Opportunity Cost of Capital 144.92 3.53 100254 Other Domestic Economic Costs 70.53 1.72 48790

SUBTOTAL DOMESTIC COMPONENT 280.86 6.84 194291

TRADABLE COMPONENT

Foreign Remuneration 0.00 0.00 0 Foreign Services 2.32 0.06 1602 Foreign Interest 0.00 0.00 0 Foreign Lease Payments 0.00 0.00 0 Foreign Rentals 0.00 0.00 0 Foreign Net Income 0.00 0.00 0 Other Tradable Economic Costs 104.74 2.55 72455

SUBTOTAL TRADABLE COMPONENT 107.05 2.61 74057

TOTAL ECONOMIC COSTS 387.91 9.45 268348

NET ECONOMIC BENEFIT (Gross Value Added) 548.71 13.37 379586 NET VALUE ADDED (Excluding Depreciation) 369.29 9.00 255471

DOMESTIC RESOURCE COST RATIO = 0.52 NET VALUE ADDED/BWP100 TOTAL CAPITAL COST = 20.39 CAPITAL COST/EMPLOYMENT OPPORTUNITY CREATED = 139241 NUMBER OF EMPLOYMENT OPPORTUNITIES/1000 HA. 0.32

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 128

MAKGADIKGADI FINANCIAL/ECONOMIC MODEL - GENERAL CBNRM LEASE AREA - BASE CASE Typical CBNRM lease area for Makgadikgadi Wetland System (P, 2010)

TABLE Sa9: CAPITAL PHASING, DEPRECIATION SCHEDULE AND CALCULATION OF RESIDUAL VALUE

ITEM LIFE Year Year Year Year Year Year Year Year Year Year Year (Yrs) 0 1 2 3 4 5 6 7 8 9 10

DEPRECIABLE ASSETS

"Forty Year" Items 40

Total Expenditure 745953 Phased Expenditure 447572 298381 0 0 0 0 0 0 0 0 0 Depreciation 11189 18649 18649 18649 18649 18649 18649 18649 18649 18649 18649 Residual value 447572 734764 716115 697466 678817 660169 641520 622871 604222 585573 566924

"Twenty Year" Items 20

Total Expenditure 0 Phased Expenditure 0 0 0 0 0 0 0 0 0 0 0 Depreciation 0 0 0 0 0 0 0 0 0 0 0 Residual value 0 0 0 0 0 0 0 0 0 0 0

"Fifteen Year" Items 15

Total Expenditure 125664 Phased Expenditure 75398 50266 0 0 0 0 0 0 0 0 0 Depreciation 5027 8378 8378 8378 8378 8378 8378 8378 8378 8378 8378 Residual value 75398 120637 112260 103882 95505 87127 78749 70372 61994 53617 45239

"Six Year" Items 6 6

Total Expenditure 203066 203066 Phased Expenditure 142146 60920 0 0 0 0 142146 60920 0 0 0 Depreciation 23691 33844 33844 33844 33844 33844 33844 33844 33844 33844 33844 Residual value 142146 179375 145531 111686 77842 43998 152300 179375 145531 111686 77842

"Four Year" Items 4

Total Expenditure 281138 281138 281138 Phased Expenditure 281138 0 0 0 281138 0 0 0 281138 0 0 Depreciation 70284 70284 70284 70284 70284 70284 70284 70284 70284 70284 70284 Residual value 281138 210853 140569 70284 281138 210853 140569 70284 281138 210853 140569

NON DEPRECIABLE ASSETS

Stock - Phased Fin, Expenditure 0 0 0 0 0 0 0 0 0 0 0 Phased Econ. Expenditure 0 0 0 0 0 0 0 0 0 0 0 Residual value 1085864 1231556 1396471 1591328 1813259 2074279 2373040 2723339 3125923 3597055 4140389 Working Capital - Phased Expenditure 0 0 0 0 0 0 0 0 0 0 0

TOTAL PHASED CAPITAL EXPENDITURE

Domestic Component 447572 298381 0 0 0 0 0 0 0 0 0 Tradable Component 498682 111185 0 0 281138 0 142146 60920 281138 0 0 Total Financial Value 946254 409567 0 0 281138 0 142146 60920 281138 0 0 Total Economic Value 878558 374614 0 0 268205 0 135608 58118 268205 0 0

TOTAL ASSET RESIDUAL VALUE

Domestic Component 1533436 1966320 2112587 2288794 2492076 2734448 3014560 3346210 3730145 4182628 4707313 Tradable Component 498682 510866 398359 285853 454484 341978 371618 320031 488663 376156 263650 Financial Value 2032118 2477186 2510946 2574647 2946561 3076425 3386178 3666241 4218808 4558785 4970963 Economic Value 1855835 2257054 2281363 2332618 2676447 2787250 3067627 3316899 3823315 4123219 4488104

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 129

TABLE Sa9A: STOCK PROJECTION

STOCK ON HAND Growth Year Year Year Year Year Year Year Year Year Year Year (NO.) 0 1 2 3 4 5 6 7 8 9 10

Buffalo 6.60% 0 0 0 0 0 0 0 0 0 0 0 Crocodile 23.50% 0 0 -1 -1 -3 -3 -5 -6 -8 -10 -14 Eland 6.70% 8 8 9 10 10 11 12 12 13 14 15 Elephant 3.10% 0 -2 -4 -6 -8 -11 -13 -15 -18 -20 -23 Hartebeest 10.20% 4 4 4 4 3 4 3 3 3 3 2 Impala 14.65% 28 33 37 43 49 56 65 74 85 97 112 Kudu 9.90% 75 82 91 100 109 120 132 145 160 175 193 Leopard 15.00% 6 6 5 5 5 5 4 4 4 3 3 Lion 12.00% 0 -2 -4 -7 -10 -13 -16 -20 -25 -30 -35 Oryx 9.40% 28 31 34 37 41 45 49 53 58 64 70 Ostrich 10.00% 57 63 69 76 83 92 101 111 122 134 147 Springbok 16.00% 136 158 184 213 247 287 332 386 447 519 602 Steenbok 27.70% 156 200 255 326 416 531 679 867 1107 1413 1805 Warthog 14.40% 34 39 45 51 58 67 76 87 100 114 131 Wild dog 15.00% 0 0 0 0 0 0 0 0 0 0 0 Wildebeest 9.60% 40 44 48 52 57 63 69 76 83 91 100 Zebra 8.40% 250 271 294 319 345 374 406 440 477 517 560 Cattle 15.00% 0 0 0 0 0 0 0 0 0 0 0 Goats 45.00% 0 0 0 0 0 0 0 0 0 0 0 Donkeys/horses 10.00% 8 8 9 10 11 12 13 15 16 18 19

TOTALS 831 943 1074 1231 1416 1640 1907 2232 2624 3103 3687

LSU ON HAND LSU Year Year Year Year Year Year Year Year Year Year Year (NO.) FAC. 0 1 2 3 4 5 6 7 8 9 10

Buffalo 1.00 0 0 0 0 0 0 0 0 0 0 0 Crocodile 0.07 0 0 0 0 0 0 0 0 -1 -1 -1 Eland 1.00 8 8 9 10 10 11 12 12 13 14 15 Elephant 3.33 0 -7 -14 -21 -28 -35 -43 -51 -59 -68 -77 Hartebeest 0.26 1 1 1 1 1 1 1 1 1 1 1 Impala 0.14 4 5 5 6 7 8 9 10 12 14 16 Kudu 0.45 34 37 41 45 49 54 59 65 72 79 87 Leopard 0.00 0 0 0 0 0 0 0 0 0 0 0 Lion 0.00 0 0 0 0 0 0 0 0 0 0 0 Oryx 0.40 11 12 14 15 16 18 19 21 23 26 28 Ostrich 0.26 15 16 18 20 22 24 26 29 32 35 38 Springbok 0.08 11 13 15 17 20 23 27 31 36 42 48 Steenbok 0.06 9 12 15 20 25 32 41 52 66 85 108 Warthog 0.18 6 7 8 9 11 12 14 16 18 21 24 Wild dog 0.00 0 0 0 0 0 0 0 0 0 0 0 Wildebeest 0.40 16 17 19 21 23 25 28 30 33 36 40 Zebra 0.63 158 171 185 201 218 236 256 277 300 326 353 Cattle 1.00 0 0 0 0 0 0 0 0 0 0 0 Goats 0.11 0 0 0 0 0 0 0 0 0 0 0 Donkeys/horses 0.63 5 5 6 6 7 8 8 9 10 11 12

TOTALS 277 298 322 349 380 415 456 503 557 619 692 Stocking rate 38.8 35.3 32.1 29.1 26.4 23.8 21.5 19.4 17.4 15.6 14.0

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 130

TABLE Sa9A: STOCK PROJECTION (Continued)

STOCK SALES Off-Take Year Year Year Year Year Year Year Year Year Year Year (NO.) 0 1 2 3 4 5 6 7 8 9 10

Buffalo 3.30% 0 0 0 0 0 0 0 0 0 0 0 Crocodile 11.75% 1 0 1 0 1 0 1 0 1 0 1 Eland 3.35% 0 0 0 0 0 0 0 0 0 0 0 Elephant 1.55% 2 2 2 2 2 2 2 2 2 2 2 Hartebeest 5.10% 1 0 1 0 1 0 1 0 1 0 1 Impala 7.33% 0 0 0 0 0 0 0 0 0 0 0 Kudu 4.95% 0 0 0 0 0 0 0 0 0 0 0 Leopard 7.50% 1 1 1 1 1 1 1 1 1 1 1 Lion 6.00% 2 2 2 2 2 2 2 2 2 2 2 Oryx 4.70% 0 0 0 0 0 0 0 0 0 0 0 Ostrich 5.00% 0 0 0 0 0 0 0 0 0 0 0 Springbok 8.00% 0 0 0 0 0 0 0 0 0 0 0 Steenbok 13.85% 0 0 0 0 0 0 0 0 0 0 0 Warthog 7.20% 0 0 0 0 0 0 0 0 0 0 0 Wild dog 7.50% 0 0 0 0 0 0 0 0 0 0 0 Wildebeest 4.80% 0 0 0 0 0 0 0 0 0 0 0 Zebra 4.20% 0 0 0 0 0 0 0 0 0 0 0 Cattle 7.50% 0 0 0 0 0 0 0 0 0 0 0 Goats 22.50% 0 0 0 0 0 0 0 0 0 0 0 Donkeys/horses 5.00% 0 0 0 0 0 0 0 0 0 0 0

TOTALS 7 5 7 575 7 5 757

STOCK PURCHASES Year Year Year Year Year Year Year Year Year Year Year (NO.) 0 1 2 3 4 5 6 7 8 9 10

Buffalo 0 0 0 0 0 0 0 0 0 0 0 Crocodile 0 0 0 0 0 0 0 0 0 0 0 Eland 00000000000 Elephant 0 0 0 0 0 0 0 0 0 0 0 Hartebeest 0 0 0 0 0 0 0 0 0 0 0 Impala 00000000000 Kudu 00000000000 Leopard 0 0 0 0 0 0 0 0 00 0 Lion 00000000000 Oryx 00000000000 Ostrich 0 0 0 000 0 0 000 Springbok 0 0 0 0 0 0 0 0 0 0 0 Steenbok 0 0 0 0 0 0 0 0 0 0 0 Warthog 0 0 0 0 0 0 0 0 00 0 Wild dog 0 0 0 0 0 0 0 0 0 0 0 Wildebeest 0 0 0 0 0 0 0 0 0 0 0 Zebra 00000000000 Cattle 00000000000 Goats 00000000000 Donkeys/horses 0 0 0 0 0 0 0 0 0 0 0

TOTALS 0 0 0 000 0 0 000

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 131

TABLE Sa9A: STOCK PROJECTION (Continued)

NET IMMIGRATION Year Year Year Year Year Year Year Year Year Year Year (NO.) 0 1 2 3 4 5 6 7 8 9 10

TOTALS 0 0 0 000 0 0 000

VALUE OF STOCK VAL. Year Year Year Year Year Year Year Year Year Year Year (BWP) /UNIT 0 1 2 3 4 5 6 7 8 9 10

Buffalo 1154 0 0 0 0 0 0 0 0 0 0 0 Crocodile 2500 0 0 -2500 -3088 -6313 -7797 -12129 -14979 -20999 -25934 -34529 Eland 928 7283 7771 8291 8847 9440 10072 10747 11467 12235 13055 13930 Elephant 4115 0 -8231 -16716 -25465 -34485 -43784 -53372 -63257 -73449 -83956 -94789 Hartebeest 1375 5212 5744 4955 5460 4642 5115 4262 4697 3801 4189 3241 Impala 160 4543 5209 5972 6847 7850 8999 10318 11829 13563 15549 17827 Kudu 496 37196 40878 44925 49372 54260 59632 65536 72024 79154 86990 95602 Leopard 425 2418 2355 2283 2201 2106 1996 1870 1726 1559 1368 1148 Lion 582 0 -1165 -2470 -3931 -5568 -7401 -9454 -11754 -14329 -17213 -20444 Oryx 1504 42770 46790 51188 56000 61264 67023 73323 80215 87756 96005 105029 Ostrich 225 12819 14101 15511 17062 18768 20645 22709 24980 27478 30226 33249 Springbok 5750 784657 910202 1055835 1224768 1420731 1648048 1911736 2217613 2572431 2984020 3461464 Steenbok 85 13231 16896 21576 27553 35185 44931 57377 73270 93566 119484 152581 Warthog 133 4527 5179 5925 6778 7754 8870 10148 11609 13281 15193 17381 Wild dog 100 0 0 0 0 0 0 0 0 0 0 0 Wildebeest 491 19556 21433 23490 25745 28217 30926 33895 37149 40715 44624 48907 Zebra 606 151503 164230 178025 192979 209189 226761 245809 266457 288839 313102 339403 Cattle 800 0 0 0 0 0 0 0 0 0 0 0 Goats 50 0 0 0 0 0 0 0 0 00 0 Donkeys/horses 20 150 165 182 200 220 242 266 292 322 354 389

TOTAL VALUE OF STOCK 1085864 1231556 1396471 1591328 1813259 2074279 2373040 2723339 3125923 3597055 4140389 % OF FINAL RESID. VAL. 26% 30% 34% 38% 44% 50% 57% 66% 75% 87% 100%

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 132

TABLE Sa9A: STOCK PROJECTION (Continued)

VALUE OF SALES VAL. Year Year Year Year Year Year Year Year Year Year Year (BWP) /UNIT 0 1 2 3 4 5 6 7 8 9 10

Buffalo 2308 0 0 0 0 0 0 0 0 0 0 0 Crocodile 5000 5000 0 5000 0 5000 0 5000 0 5000 0 5000 Eland 1855 0 0 0 0 0 0 0 0 0 0 0 Elephant 8231 16461 16461 16461 16461 16461 16461 16461 16461 16461 16461 16461 Hartebeest 2750 2750 0 2750 0 2750 0 2750 0 2750 0 2750 Impala 320 0 0 0 0 0 0 0 0 0 0 0 Kudu 992 0 0 0 0 0 0 0 0 00 0 Leopard 851 851 851 851 851 851 851 851 851 851 851 851 Lion 1165 2330 2330 2330 2330 2330 2330 2330 2330 2330 2330 2330 Oryx 3009 0 0 0 0 0 0 0 0 0 0 0 Ostrich 451 0 0 0 0 0 0 0 0 0 0 0 Springbok 11500 0 0 0 0 0 0 0 0 0 0 0 Steenbok 169 0 0 0 0 0 0 0 0 0 0 0 Warthog 265 0 0 0 0 0 0 0 0 0 0 0 Wild dog 200 0 0 0 0 0 0 0 0 0 0 0 Wildebeest 983 0 0 0 0 0 0 0 0 0 0 0 Zebra 1211 0 0 0 0 0 0 0 0 0 0 0 Cattle 800 0 0 0 0 0 0 0 0 0 0 0 Goats 50 0 0 0 0 0 0 0 0 00 0 Donkeys/horses 20 0 0 0 0 0 0 0 0 0 0 0

TOTAL SALES VALUE 27391 19641 27391 19641 27391 19641 27391 19641 27391 19641 27391 % OF FULL PROD. SALES 100% 72% 100% 72% 100% 72% 100% 72% 100% 72% 100%

PURCHASES VAL. Year Year Year Year Year Year Year Year Year Year Year (FINANCIAL) /UNIT 0 1 2 3 4 5 6 7 8 9 10

Buffalo 500 0 0 0 0 0 0 0 0 0 0 0 Crocodile 500 0 0 0 0 0 0 0 0 0 0 0 Eland 500 0 0 0 0 0 0 0 0 0 0 0 Elephant 500 0 0 0 0 0 0 0 0 0 0 0 Hartebeest 500 0 0 0 0 0 0 0 0 0 0 0 Impala 500 0 0 0 0 0 0 0 0 0 0 0 Kudu 500 0 0 0 0 0 0 0 0 00 0 Leopard 500 0 0 0 0 0 0 0 0 0 0 0 Lion 500 0 0 0 0 0 0 0 0 00 0 Oryx 500 0 0 0 0 0 0 0 0 00 0 Ostrich 500 0 0 0 0 0 0 0 0 0 0 0 Springbok 500 0 0 0 0 0 0 0 0 0 0 0 Steenbok 500 0 0 0 0 0 0 0 0 0 0 0 Warthog 500 0 0 0 0 0 0 0 0 0 0 0 Wild dog 500 0 0 0 0 0 0 0 0 0 0 0 Wildebeest 500 0 0 0 0 0 0 0 0 0 0 0 Zebra 500 0 0 0 0 0 0 0 0 0 0 0 Cattle 500 0 0 0 0 0 0 0 0 0 0 0 Goats 500 0 0 0 0 0 0 0 0 0 0 0 Donkeys/horses 500 0 0 0 0 0 0 0 0 0 0 0

TOTALS 0 0 0 000 0 0 000

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 133

TABLE Sa9A: STOCK PROJECTION (Continued)

PURCHASES VAL. Year Year Year Year Year Year Year Year Year Year Year (ECONOMIC) /UNIT 0 1 2 3 4 5 6 7 8 9 10

Buffalo 1154 0 0 0 0 0 0 0 0 0 0 0 Crocodile 2500 0 0 0 0 0 0 0 0 0 0 0 Eland 928 0 0 0 0 0 0 0 0 0 0 0 Elephant 4115 0 0 0 0 0 0 0 0 0 0 0 Hartebeest 1375 0 0 0 0 0 0 0 0 0 0 0 Impala 160 0 0 0 0 0 0 0 0 0 0 0 Kudu 496 0 0 0 0 0 0 0 0 00 0 Leopard 425 0 0 0 0 0 0 0 0 0 0 0 Lion 582 0 0 0 0 0 0 0 0 00 0 Oryx 1504 0 0 0 0 0 0 0 0 0 0 0 Ostrich 225 0 0 0 0 0 0 0 0 0 0 0 Springbok 5750 0 0 0 0 0 0 0 0 0 0 0 Steenbok 85 0 0 0 0 0 0 0 0 0 0 0 Warthog 133 0 0 0 0 0 0 0 0 0 0 0 Wild dog 100 0 0 0 0 0 0 0 0 0 0 0 Wildebeest 491 0 0 0 0 0 0 0 0 0 0 0 Zebra 606 0 0 0 0 0 0 0 0 0 0 0 Cattle 800 0 0 0 0 0 0 0 0 0 0 0 Goats 50 0 0 0 0 0 0 0 0 00 0 Donkeys/horses 20 0 0 0 0 0 0 0 0 0 0 0

TOTALS 0 0 0 000 0 0 000

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 134

MAKGADIKGADI FINANCIAL/ECONOMIC MODEL - GENERAL CBNRM LEASE AREA - BASE CASE Typical CBNRM lease area for Makgadikgadi Wetland System (P, 2010)

TABLE Sa10: LOAN FINANCING SCHEDULE

ITEM PERIOD Year Year Year Year Year Year Year Year Year Year Year (Yrs) 0 1 2 3 4 5 6 7 8 9 10

LONG TERM LOANS

TWENTY YEAR LOAN 20 Total Expenditure 0 Loan Disbursements 0 0 0 0 0 0 0 0 0 0 0 Loan Payments 0 0 0 0 0 0 0 0 0 0 0 Amortisation 0 0 0 0 0 0 0 0 0 0 0 Interest Payments 0 0 0 0 0 0 0 0 0 0 0 Loans Outstanding 0 0 0 0 0 0 0 0 0 0 0

FIFTEEN YEAR LOAN 15 Total Expenditure 0 Loan Disbursements 0 0 0 0 0 0 0 0 0 0 0 Loan Payments 0 0 0 0 0 0 0 0 0 0 0 Amortisation 0 0 0 0 0 0 0 0 0 0 0 Interest Payments 0 0 0 0 0 0 0 0 0 0 0 Loans Outstanding 0 0 0 0 0 0 0 0 0 0 0

SIX YEAR LOAN 6 6 Total Expenditure 0 0 Loan Disbursements 0 0 0 0 0 0 0 0 0 0 0 Loan Payments 0 0 0 0 0 0 0 0 0 0 0 Amortisation 0 0 0 0 0 0 0 0 0 0 0 Interest Payments 0 0 0 0 0 0 0 0 0 0 0 Loans Outstanding 0 0 0 0 0 0 0 0 0 0 0

FOUR YEAR LOAN 4 Total Expenditure 0 0 0 Loan Disbursements 0 0 0 0 0 0 0 0 0 0 0 Loan Payments 0 0 0 0 0 0 0 0 0 0 0 Amortisation 0 0 0 0 0 0 0 0 0 0 0 Interest Payments 0 0 0 0 0 0 0 0 0 0 0 Loans Outstanding 0 0 0 0 0 0 0 0 0 0 0

SHORT TERM LOANS

Working Capital 1 Overdraft 0 0 0 0 0 0 0 0 0 0 0 Interest Payments 0 0 0 0 0 0 0 0 0 0 0

TOTAL LONG TERM LOAN DISBURSMENTS

Domestic Component 0 0 0 0 0 0 0 0 0 0 0 Foreign Component * 0 0 0 0 0 0 0 0 0 0 0

TOTAL LONG TERM LOAN AMORTISATION

Domestic Component 0 0 0 0 0 0 0 0 0 0 0 Foreign Component * 0 0 0 0 0 0 0 0 0 0 0

TOTAL INTEREST PAYMENTS

Domestic Component 0 0 0 0 0 0 0 0 0 0 0 Foreign Component * 0 0 0 0 0 0 0 0 0 0 0

TOTAL LOANS OUTSTANDING

Domestic Component 0 0 0 0 0 0 0 0 0 0 0 Foreign Component * 0 0 0 0 0 0 0 0 0 0 0

* Economic Values

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 135

MAKGADIKGADI FINANCIAL/ECONOMIC MODEL - GENERAL CBNRM LEASE AREA - BASE CASE Typical CBNRM lease area for Makgadikgadi Wetland System (P, 2010)

TABLE Sa11: PROJECT FINANCIAL ANALYSIS - 5 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

EXPENDITURE Capital Expenditure 946254 409567 0 0 281138 0 Variable Expenditure 10724 64341 107236 107236 107236 107236 Overhead Expenditure 154705 154705 154705 154705 154705 154705 TOTAL EXPENDITURE 1111683 628614 261941 261941 543079 261941

INCOME Gross Income 160422 181947 206311 235098 267886 306448 Asset Residual Value 0 0 0 0 0 3076425 TOTAL INCOME 160422 181947 206311 235098 267886 3382873

NET BENEFIT/COST -951261 -446667 -55631 -26843 -275193 3120932

PROJ. FINANCIAL RATE OF RETURN (FRR) OVER 5 YEARS= 14.91% PROJ. NET PRESENT VALUE (NPV) @ 8.00% = 451791

TABLE Sa12: PROJECT FINANCIAL ANALYSIS - 7 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

EXPENDITURE Capital Expenditure 946254 409567 0 0 281138 0 142146 60920 Variable Expenditure 10724 64341 107236 107236 107236 107236 107236 107236 Overhead Expenditure 154705 154705 154705 154705 154705 154705 154705 154705 TOTAL EXPENDITURE 1111683 628614 261941 261941 543079 261941 404088 322861

INCOME Gross Income 160422 181947 206311 235098 267886 306448 350586 402338 Asset Residual Value 0 0 0 0 0 0 0 3666241 TOTAL INCOME 160422 181947 206311 235098 267886 306448 350586 4068580

NET BENEFIT/COST -951261 -446667 -55631 -26843 -275193 44507 -53502 3745719

PROJ. FINANCIAL RATE OF RETURN (FRR) OVER 7 YEARS= 13.15% PROJ. NET PRESENT VALUE (NPV) @ 8.00% = 505599

TABLE Sa13: PROJECT FINANCIAL ANALYSIS - 10 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

EXPENDITURE Capital Expenditure 946254 409567 0 0 281138 0 142146 60920 281138 0 0 Variable Expenditure 10724 64341 107236 107236 107236 107236 107236 107236 107236 107236 107236 Overhead Expenditure 154705 154705 154705 154705 154705 154705 154705 154705 154705 154705 154705 TOTAL EXPENDITURE 1111683 628614 261941 261941 543079 261941 404088 322861 543079 261941 261941

INCOME Gross Income 160422 181947 206311 235098 267886 306448 350586 402338 461815 531418 611689 Asset Residual Value 0 0 0 0 0 0 0 0 0 0 4970963 TOTAL INCOME 160422 181947 206311 235098 267886 306448 350586 402338 461815 531418 5582652

NET BENEFIT/COST -951261 -446667 -55631 -26843 -275193 44507 -53502 79477 -81264 269477 5320711

PROJ. FINANCIAL RATE OF RETURN (FRR) OVER 10 YEARS= 13.62% PROJ. NET PRESENT VALUE (NPV) @ 8.00% = 890972

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 136

TABLE Sa13B: PLANNED SUBSIDIES TO COMMUNITY

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

SUBSIDIES ON INCOME On Gross Income 0 0 0 0 0 0 0 0 0 0 0 On Asset Residual Value 0 0 0 0 0 0 0 0 0 0 0 TOTAL INCOME 0 0 0 0 0 0 0 0 0 0 0

TOTAL SUBSIDIES 806805 349209 0 0 239706 0 121198 51942 239706 0 0

TABLE Sa13C: COMMUNITY FINANCIAL ANALYSIS - 5 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

EXPENDITURE Capital Expenditure 139449 60358 0 0 41431 0 Variable Expenditure 10724 64341 107236 107236 107236 107236 Overhead Expenditure 144705 144705 144705 144705 144705 144705 TOTAL EXPENDITURE 294878 269405 251941 251941 293372 251941

INCOME Gross Income 160422 181947 206311 235098 267886 306448 Asset Residual Value 0 0 0 0 0 3076425 TOTAL INCOME 160422 181947 206311 235098 267886 3382873

NET BENEFIT/COST -134456 -87458 -45631 -16843 -25487 3130932

COMM. FINANCIAL RATE OF RETURN (FRR) OVER 5 =YEARS 72.19% COMM. NET PRESENT VALUE (NPV) @ 8.00% = 1707592

TABLE Sa13D: COMMUNITY FINANCIAL ANALYSIS - 10 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

EXPENDITURE Capital Expenditure 139449 60358 0 0 41431 0 20948 8978 41431 0 0 Variable Expenditure 10724 64341 107236 107236 107236 107236 107236 107236 107236 107236 107236 Overhead Expenditure 144705 144705 144705 144705 144705 144705 144705 144705 144705 144705 144705 TOTAL EXPENDITURE 294878 269405 251941 251941 293372 251941 272889 260919 293372 251941 251941

NET BENEFIT/COST -134456 -87458 -45631 -16843 -25487 54507 77697 141419 168442 279477 5330711

COMM. FINANCIAL RATE OF RETURN (FRR) OVER 10= YEARS 40.69% COMM. NET PRESENT VALUE (NPV) @ 8.00% = 2390627

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 137

MAKGADIKGADI FINANCIAL/ECONOMIC MODEL - GENERAL CBNRM LEASE AREA - BASE CASE Typical CBNRM lease area for Makgadikgadi Wetland System (P, 2010)

TABLE Sa14: ECONOMIC ANALYSIS - 5 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

ECONOMIC COSTS Capital Expenditure 878558 374614 0 0 268205 0 Unskilled Wages 45247 45247 45247 45247 45247 45247 Other Domestic Costs 19516 29274 39032 48790 48790 48790 Tradable Costs 7406 29623 59246 74057 74057 74057 Foreign Amortisation 0 0 0 0 0 0 Foreign Profits 0 0 0 0 0 0 Foreign Loans Outst. 0 0 0 0 0 0

TOTAL COSTS 950727 478758 143525 168094 436299 168094

ECONOMIC BENEFITS Gross Income 169928 192728 218535 249029 283759 324606 Asset Residual Value 0 0 0 0 0 2787250 Foreign Financing 0 0 0 0 0 0

TOTAL BENEFITS 169928 192728 218535 249029 283759 3111856

NET BENEFIT/COST -780799 -286031 75010 80934 -152541 2943762

ECONOMIC RATE OF RETURN (ERR) OVER 5 YEARS = 24.51% NET PRESENT VALUE (NPV) @ 8.00% = 902101 Per Hectare = 31.76

TABLE Sa15: ECONOMIC ANALYSIS - 10 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

ECONOMIC COSTS Capital Expenditure 878558 374614 0 0 268205 0 135608 58118 268205 0 0 Unskilled Wages 45247 45247 45247 45247 45247 45247 45247 45247 45247 45247 45247 Other Domestic Costs 19516 29274 39032 48790 48790 48790 48790 48790 48790 48790 48790 Tradable Costs 7406 29623 59246 74057 74057 74057 74057 74057 74057 74057 74057 Foreign Amortisation 0 0 0 0 0 0 0 0 0 0 0 Foreign Profits 0 0 0 0 0 0 0 0 0 0 0 Foreign Loans Outst. 0 0 0 0 0 0 0 0 0 0 0

TOTAL COSTS 950727 478758 143525 168094 436299 168094 303702 226212 436299 168094 168094

ECONOMIC BENEFITS Gross Income 169928 192728 218535 249029 283759 324606 371360 426178 489179 562907 647934 Asset Residual Value 0 0 0 0 0 0 0 0 0 0 4488104 Foreign Financing 0 0 0 0 0 0 0 0 0 0 0

TOTAL BENEFITS 169928 192728 218535 249029 283759 324606 371360 426178 489179 562907 5136038

NET BENEFIT/COST -780799 -286031 75010 80934 -152541 156512 67658 199966 52880 394813 4967943

ECONOMIC RATE OF RETURN (ERR) OVER 10 YEARS = 20.51% NET PRESENT VALUE (NPV) @ 8.00% = 1633167 Per Hectare = 57.51

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 138

MAKGADIKGADI FINANCIAL/ECONOMIC MODEL - GENERAL CBNRM LEASE AREA - BASE CASE Typical CBNRM lease area for Makgadikgadi Wetland System (P, 2010)

TABLE Sa16: SUMMARY OF RESULTS

ITEM UNITS TOTAL

Conservancy Extent Hectares 28400 Conservancy Stock Large Stock Units (LSU) 692 BWP

ITEM % of TCI BWP/LSU BWP/HECTARE BWP

Total Financial Capital (TCI) - 1,959.90 47.74 1,355,821

Financial Gross Income 45.12% 884.22 21.54 611,689

Variable Financial Costs - 155.01 3.78 107,236 Fixed Financial Costs - 413.22 10.07 285,861

Net Cash Income 0.16122523 315.98 7.70 218,593 Community Cash Income 0.23534606 461.25 11.24 319,087

Land Rental - 14.46 0.35 10,000 Resource Royalty - - - -

Project FRR (@ 10 Years) - - - 14% Community FRR (@ 10 Years) 41%

Project FNPV (@ 8%, @ 10 Years) - - 31.37 890,972 Community FNPV (@ 8%, @ 10 Years) 84.18 2,390,627

Total Economic Capital - 1,811.51 44.13 1,253,172

Economic Gross Income 0.51703507 936.62 22.81 647,934

Economic Costs 0.21413499 387.91 9.45 268,348

Net Economic Benefit 0.30290008 548.71 13.37 379,586 Net Value Added 0.20385938 369.29 9.00 255,471

ERR (@ 10 Years) - - - 21%

ENPV (@ 8%, @ 10 Years) - - 57.51 1,633,167

Economic Capital Cost/Job - - - 139,241 Domestic Resource Cost Ratio - - - 0.52

Policy Analysis Matrix : Effects of Policy / Market Imperfections : on Output (36,245) : on Tradable Inputs (3,571) : on Domestic Factors 2,937 : Net Effects of Policy / Market Imperfections : on Annual Net Income (36,878) : on Net Present Value (10 Years) (742,195)

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 139

3. South Sua Pan Co-management Model

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 140

MAKGADIKGADI WS FINANCIAL/ECONOMIC MODEL - SOUTH SUA PAN CO-MANAGEMENT - BASE CASE Protected area co-managed between Sua Pan Flamingo Sanctuary and surrounding CBNRM Lease Areas (P, 2010)

ASSUMPTIONS*

Production System: 72 beds. A combined community-based trust around the Flamingo Sanctuary involved in Tourism.

Site: MWS area 3.5 Times Generic

Game Density: 100% 20.02 LSU Equivalents/Sq. Km. or, 5 Hectares per LSU Equivalent

Carrying Capacity: 100% 0.417 Tourist Beds/Sq. Km. or, 240 Ha. per Tourist Bed

Conservacy Size: 17281 Hectares or, 173 Square Kilometres Core Wildlife Area Size: 3456

Tourist Category: Overseas 35% Regional 35% Resident 5% Citizen 25% Adults 100% Children 0%

Occupancy Rate: 100% 50.0% Average Length of Stay: 10 Days

Daily Tariffs (BWP): 100% Overseas 350 Regional 350 Resident 350 Citizen 350 Children 75% of Adult Price

Capital Item Prices: 350% (Variation from Normal for Sensitivity Analysis)

Capital Sources: 100% Loan = 0% Equity = 100% and: 100% Foreign 0% Domestic 100%

Interest Rates: Rate for Capital Loans: 9% Rate for Working Capital Loans: 12%

Working Capital as Proportion of Annual Operating Costs: 0%

Park Entry Fees: 100% Fee per Tourist Night/Day: BWP 30.00

Household Dividends: 450 Households @ BWP0

Land Rental and Resource Royalty (BWP):100% Rental: 0.00 per Ha. 100% Royalty: 0%

Manpower Needs: 100% Managers 3.5 Skilled Labour 14 Unskilled Labour 4 100% Management: Foreign 0% Citizen 100%

Shadow Wage Adjustment: 100% Managers 1.00 Skilled Labour 1.00 100% Unskilled Labour 0.50

Foreign Exchange Premium: 100% 6% Adjustment Factor = 1.06

Tax Adjustments: 100% General Sales Tax: 10% Import Taxes: from SACU: 0% to SACU: n/a

Discount Rates: 100% Financial Discount Rate: 8% Economic Discount Rate: 8%

Opportunity Cost of Capital 100% 8%

* Shaded cells indicate degree of conformity with base case values. Underlined shaded cells can be changed

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 141

TABLE Sa1: CAPITAL REQUIREMENTS

ITEM QUANT. PRICE FINAN. LIFE AMORT. DEPREC- ECON. FOREX TAX ECON. BWP COST Years + INT. IATION DEPR. ADJ. ADJ. COST

FIXED CAPITAL DOMESTIC ITEMS Houses Manager 0 34000 0 40 0 0 0 1.00 0.90 0 Ablution blocks 1 50,000 175000 40 19171 4375 3938 1.00 0.90 157500 Buildings 1 185,802 650307 40 71239 16258 14632 1.00 0.90 585276 Cultural village/campsite/lodge 1 575,000 2012500 40 220462 50313 45281 1.00 0.90 1811250 Boreholes 1 25000 87500 40 9585 2188 1969 1.00 0.90 78750 Reservoirs 0 0 0 40 0 0 0 1.00 0.90 0 Reticulation/Pans 0 0 0 40 0 0 0 1.00 0.90 0 Road Maintenance (km) 0 0 0 40 0 0 0 1.00 0.90 0 Hiking Trails (km) 0 0 0 40 0 0 0 1.00 0.90 0 Transaction Costs 0 0 0 40 0 0 0 1.00 0.90 0 CONTINGENCIES @ 5% 146265 40 16023 3657 3291 1.00 0.90 131639 SUBTOTAL DOMESTIC ITEMS 3071572 2764415

TRADABLE ITEMS Boma/Pens 0 15000 0 20 0 0 0 1.06 0.90 0 Campsite 0 100000 0 15 0 0 0 1.06 0.90 0 Pump/Windmill 1 140,800 492800 15 61136 32853 31342 1.06 0.90 470131 Fencing Perimeter (km) 0 4510 0 15 0 0 0 1.06 0.90 0 Other Items 0 2050 0 15 0 0 0 1.06 0.90 0 CONTINGENCIES @ 5% 24640 15 3057 1643 1567 1.06 0.90 23507 SUBTOTAL TRADABLES 517440 493638

SUBTOTAL- FIXED CAPITAL 3589012 3258053

MOVABLE CAPITAL TRADABLE ITEMS LDVs/Trucks 1 330750 1157625 4 357323 289406 276094 1.06 0.90 1104374 Tools/Office Equipment 1 61,115 213903 6 47683 35650 34010 1.06 0.90 204063 Other equipment 1 26,000 91000 6 20286 15167 14469 1.06 0.90 86814 Training 1 100000 350000 6 78022 58333 55650 1.06 0.90 333900 CONTINGENCIES @ 10% 181253 6 40405 30209 28819 1.06 0.90 172915 SUBTOTAL TRADABLES 1993780 1902066

SUBTOTAL- MOVABLE CAPITAL 1993780 1902066

WORKING CAPITAL LOAN INTEREST VARIABLE 0 0 1.06 1.00 0 OVERHEAD 0 0 1.06 1.00 0 SUBTOTAL- WORKING CAPITAL 0 0 0

TOTALS 5582793 0 944391 540051 511062 5160119

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 142

TABLE Sa2: STOCK COMPOSITION BY SPECIES AT FULL PRODUCTION

ITEM HEAD POT. OFF-TAKE OFF-TAKE PROP. LSU LSU (%) (NO.) (%) (NO.) LIVE FACTOR

TOTAL 3687 724 362 70 692

STOCK DENSITY ON LAND:20.02 LSU PER SQ.KM.; CONSERVANCY SIZE: 3456 HECTARES

TABLE Sa3: SALES AT FULL PRODUCTION

ITEM QUANTITY @ VALUE (BWP) FINANCIAL FOREX TAX ECON. VALUE ADJ. ADJ. VALUE

Trophy Hunting Rental 1 camp @ 635875 635875 1.06 1.00 674028 Trophy Hunting: Royalty 0 @ 67500 0 1.06 1.00 0 Trophy Hunting: Meat 0 animals @ 327 0 1.06 1.00 0 Tourism Rentals: Lodges 3 camp @ 437373 1312118 1.06 1.00 1390845 Campsite Net Income 3 sites @ 269675 809025 1.06 1.00 857567 Tourism Rentals - Other 0 site @ 210420 0 1.06 1.00 0 Live Game Sales 0 animals @ 0 0 1.06 1.00 0 Venison: Biltong 0 animals @ 327 0 1.06 1.00 0 Livestock sales 0 animals @ 0 0 1.06 1.00 0 Crafts 0 units @ 33396 0 1.06 1.00 0 Poles 0 h'holds @ 525 0 1.00 1.00 0 Other 1 @ 7608 7608 1.00 1.00 7608

TOTALS GROSS INCOME 2764626 2930047

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 143

TABLE Sa4: VARIABLE EXPENDITURE AT FULL PRODUCTION

ITEM FINANCIAL VALUES FOREX TAX ECONOMIC VALUES BWP/LSU BWP/HA. VALUE ADJ. ADJ. P/LSU P/HA. VALUE

TRADABLE ITEMS 0.78 Marketing Costs: Advertising 6.93 1.39 4797 1.06 0.90 6.62 1.32 4576 : Agents Fees 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Campsite Running Costs : Accomodation 21.17 4.24 14643 1.06 0.90 20.19 4.04 13969 : Utilities 12.57 2.52 8,692.63 1.06 0.90 11.99 2.40 8293 Temporary employment 18.89 3.78 13,069.68 1.06 0.90 18.02 3.61 12468 : Bar 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Crafts 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Fodder and Supplements 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Other Costs : Office Supplies 27.89 5.58 19,295.06 1.06 0.90 26.61 5.33 18407 : Capture Team 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Biltong Distribution 0.00 0.00 0 1.06 0.90 0.00 0.00 0 : Live Game Distribution 0.00 0.00 0 1.06 0.90 0.00 0.00 0 Consultancies, Travel and Training 4.79 0.96 3,314.96 1.06 0.90 4.57 0.92 3162 General Vehicle Running Costs 19.97 4.00 13,815.87 1.06 0.90 19.05 3.81 13180

SUBTOTAL TRADABLES 112.21 22.46 77628 107.05 21.43 74057

DOMESTIC ITEMS

Veterinary and Medicine Costs 0.00 0.00 0 1.00 0.90 0.00 0.00 0 Meat Board Levy 0.00 0.00 0 1.00 1.00 0.00 0.00 0 Bank Fees 7.07 1.41 4,889.00 1.00 1.00 0.00 0.00 0 Sales Tax 35.73 7.15 24,718.70 1.00 1.00 0.00 0.00 0

SUBTOTAL DOMESTIC ITEMS 42.80 8.57 29608 0.00 0.00 0

TOTAL VARIABLE EXPENDITURE 155.01 31.03 107236 107.05 21.43 74057

TABLE Sa5: OPERATING OVERHEAD EXPENDITURE AT FULL PRODUCTION

ITEM FINANCIAL VALUES FOREX TAX ECONOMIC VALUES BWP/LSU BWP/HA. VALUE ADJ. ADJ. P/LSU P/HA. VALUE

DOMESTIC ITEMS 0.78 Salaries and Wages: 130.81 26.18 90,494.59 1.00 1.00 130.81 26.18 45247 : Skilled Labour 0.00 0.00 1.00 1.00 0.00 0.00 0 : Managers 0.00 0.00 1.00 1.00 0.00 0.00 0 Administration 2.11 0.42 1,458.52 1.00 0.90 2.11 0.42 1313 Maintenance and Repairs 32.77 6.56 22,669.73 1.00 0.90 32.77 6.56 20403 Insurance 112.40 22.50 77757 1.00 0.90 112.40 22.50 69982 Miscellaneous Fixed Costs 16.19 3.24 11,198.62 1.00 0.90 16.19 3.24 10079

TOTAL OPERATING OVERHEAD EXPENDITURE294.28 58.90 203579 294.28 58.90 147023

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 144

TABLE Sa6: STATIC FINANCIAL MODEL (AT FULL PRODUCTION)

ITEM UNITS TOTAL

PA Extent Hectares 17281 PA Stock Large Stock Units (LSU) 692 Total Capital Requirement BWP 5582793

BWP/LSU BWP/HA. BWP

GROSS INCOME 3996.38 159.98 2764626

VARIABLE COSTS 155.01 6.21 107236

GROSS MARGIN 3841.37 153.78 2657390

OVERHEAD COSTS

Overhead Operating Costs 294.28 11.78 203579 Loan Amortisation and Interest 0.00 0.00 0 Provisions for Capital Replacement 780.67 31.25 540051 Interest on Variable Working Capital 0.00 0.00 0 Interest on Overhead Working Capital 0.00 0.00 0 Land Rental 14.46 0.58 10,000.00 Resource Royalty 0.00 0.00 0

TOTAL OVERHEAD COSTS 1089.40 43.61 753630

NET CASH INCOME 2751.97 110.16 1903760

NET CASH INCOME/BWP100 TOTAL CAPITAL INVESTMENT 34.10 "TOTAL BENEFITS"*/BWP100 TOTAL CAPITAL INVESTMENT 36.43 "TOTAL BENEFITS"*/HECTARE 117.69

* "Total Benefits" = all of Net Cash Income, Salaries and Wages, Licences and Duties, Rental and Royalties.

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 145

TABLE Sa7: STATIC ECONOMIC MODEL (AT FULL PRODUCTION)

ITEM UNITS TOTAL

Conservancy Extent Hectares 17281 Conservancy Stock Large Stock Units (LSU) 692 Total Initial Capital Requirement BWP 5160119 Economic Depreciation Cost BWP 511062 Foreign Financing (Prorated) BWP 0 Foreign Amortisation BWP 0 Foreign Capital Replacement Provision BWP 0 Foreign Interest Cost BWP 0 Domestic Interest Cost BWP 428601

ECONOMIC BENEFITS BWP/LSU BWP/HECTARE BWP

Gross Income 4235.51 169.55 2930047

ECONOMIC COSTS

DOMESTIC COMPONENT Shadow Unskilled Citizen Wages 65.41 2.62 45247 Other Citizen Wages 0.00 0.00 0 Opportunity Cost of Capital 596.73 23.89 412810 Other Domestic Economic Costs 147.12 5.89 101776 SUBTOTAL DOMESTIC COMPONENT 809.26 32.40 559833

TRADABLE COMPONENT Foreign Remuneration 0.00 0.00 0 Foreign Services 2.32 0.09 1602 Foreign Interest 0.00 0.00 0 Foreign Lease Payments 0.00 0.00 0 Foreign Rentals 0.00 0.00 0 Foreign Net Income 0.00 0.00 0 Other Tradable Economic Costs 104.74 4.19 72455 SUBTOTAL TRADABLE COMPONENT 107.05 4.29 74057

TOTAL ECONOMIC COSTS 916.31 36.68 633890

NET ECONOMIC BENEFIT (Gross Value Added) 3319.19 132.87 2296157 NET VALUE ADDED (Excluding Depreciation) 2580.43 103.30 1785095

DOMESTIC RESOURCE COST RATIO = 0.35 NET VALUE ADDED/BWP100 TOTAL CAPITAL COST = 34.59 CAPITAL COST/EMPLOYMENT OPPORTUNITY CREATED = 240006 NUMBER OF EMPLOYMENT OPPORTUNITIES/1000 HA. 1.24

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 146

MAKGADIKGADI WS FINANCIAL/ECONOMIC MODEL - SOUTH SUA PAN CO-MANAGEMENT - BASE CASE Protected area co-managed between Sua Pan Flamingo Sanctuary and surrounding CBNRM Lease Areas (P, 2010)

TABLE Sa9: CAPITAL PHASING, DEPRECIATION SCHEDULE AND CALCULATION OF RESIDUAL VALUE

ITEM LIFE Year Year Year Year Year Year Year Year Year Year Year (Yrs) 0 1 2 3 4 5 6 7 8 9 10

DEPRECIABLE ASSETS

"Forty Year" Items 40

Total Expenditure 3071572 Phased Expenditure 1842943 1228629 0 0 0 0 0 0 0 0 0 Depreciation 46074 76789 76789 76789 76789 76789 76789 76789 76789 76789 76789 Residual value 1842943 3025499 2948709 2871920 2795131 2718342 2641552 2564763 2487974 2411184 2334395

"Twenty Year" Items 20

Total Expenditure 0 Phased Expenditure 0 0 0 0 0 0 0 0 0 0 0 Depreciation 0 0 0 0 0 0 0 0 0 0 0 Residual value 0 0 0 0 0 0 0 0 0 0 0

"Fifteen Year" Items 15

Total Expenditure 517440 Phased Expenditure 310464 206976 0 0 0 0 0 0 0 0 0 Depreciation 20698 34496 34496 34496 34496 34496 34496 34496 34496 34496 34496 Residual value 310464 496742 462246 427750 393254 358758 324262 289766 255270 220774 186278

"Six Year" Items 6 6

Total Expenditure 836155 836155 Phased Expenditure 585309 250847 0 0 0 0 585309 250847 0 0 0 Depreciation 97551 139359 139359 139359 139359 139359 139359 139359 139359 139359 139359 Residual value 585309 738604 599245 459885 320526 181167 627116 738604 599245 459885 320526

"Four Year" Items 4

Total Expenditure 1157625 1157625 1157625 Phased Expenditure 1157625 0 0 0 1157625 0 0 0 1157625 0 0 Depreciation 289406 289406 289406 289406 289406 289406 289406 289406 289406 289406 289406 Residual value 1157625 868219 578813 289406 1157625 868219 578813 289406 1157625 868219 578813

NON DEPRECIABLE ASSETS

TOTAL PHASED CAPITAL EXPENDITURE

Domestic Component 1842943 1228629 0 0 0 0 0 0 0 0 0 Tradable Component 2053398 457823 0 0 1157625 0 585309 250847 1157625 0 0 Total Financial Value 3896341 1686452 0 0 1157625 0 585309 250847 1157625 0 0 Total Economic Value 3617590 1542529 0 0 1104374 0 558384 239308 1104374 0 0

TOTAL ASSET RESIDUAL VALUE

Domestic Component 2928807 4257055 4345181 4463248 4608390 4792620 5014592 5288102 5613897 6008239 6474784 Tradable Component 2053398 2103565 1640303 1177042 1871406 1408144 1530191 1317776 2012140 1548879 1085617 Financial Value 4982205 6360620 5985484 5640290 6479795 6200765 6544784 6605878 7626037 7557118 7560401 Economic Value 4594868 5838151 5475512 5139821 5932872 5656728 5972936 6016450 6972089 6885046 6862984

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 147

TABLE Sa9A: STOCK PROJECTION

STOCK ON HAND Growth Year Year Year Year Year Year Year Year Year Year Year (NO.) 0 1 2 3 4 5 6 7 8 9 10

TOTALS 831 943 1074 1231 1416 1640 1907 2232 2624 3103 3687

LSU ON HAND LSU Year Year Year Year Year Year Year Year Year Year Year (NO.) FAC. 0 1 2 3 4 5 6 7 8 9 10

TOTALS 277 298 322 349 380 415 456 503 557 619 692 Stocking rate 38.8 35.3 32.1 29.1 26.4 23.8 21.5 19.4 17.4 15.6 14.0

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 148

TABLE Sa9A: STOCK PROJECTION (Continued)

STOCK SALES Off-Take Year Year Year Year Year Year Year Year Year Year Year (NO.) 0 1 2 3 4 5 6 7 8 9 10

TOTALS 7 5 7 575 7 5 757

STOCK PURCHASES Year Year Year Year Year Year Year Year Year Year Year (NO.) 0 1 2 3 4 5 6 7 8 9 10

TOTALS 0 0 0 000 0 0 000

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 149

TABLE Sa9A: STOCK PROJECTION (Continued)

NET IMMIGRATION Year Year Year Year Year Year Year Year Year Year Year (NO.) 0 1 2 3 4 5 6 7 8 9 10

TOTALS 0 0 0 000 0 0 000

VALUE OF STOCK VAL. Year Year Year Year Year Year Year Year Year Year Year (BWP) /UNIT 0 1 2 3 4 5 6 7 8 9 10

TOTAL VALUE OF STOCK 1085864 1231556 1396471 1591328 1813259 2074279 2373040 2723339 3125923 3597055 4140389 % OF FINAL RESID. VAL. 26.23% 29.74% 33.73% 38.43% 43.79% 50.10% 57.31% 65.77% 75.50% 86.88% 100.00%

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 150

TABLE Sa9A: STOCK PROJECTION (Continued)

VALUE OF SALES VAL. Year Year Year Year Year Year Year Year Year Year Year (BWP) /UNIT 0 1 2 3 4 5 6 7 8 9 10

TOTAL SALES VALUE 27391 19641 27391 19641 27391 19641 27391 19641 27391 19641 27391 % OF FULL PROD. SALES 100.00% 71.71% 100.00% 71.71% 100.00% 71.71% 100.00% 71.71% 100.00% 71.71% 100.00%

PURCHASES VAL. Year Year Year Year Year Year Year Year Year Year Year (FINANCIAL) /UNIT 0 1 2 3 4 5 6 7 8 9 10

TOTALS 0 0 0 000 0 0 000

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 151

TABLE Sa9A: STOCK PROJECTION (Continued)

PURCHASES VAL. Year Year Year Year Year Year Year Year Year Year Year (ECONOMIC) /UNIT 0 1 2 3 4 5 6 7 8 9 10

TOTALS 0 0 0 000 0 0 000

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 152

MAKGADIKGADI WS FINANCIAL/ECONOMIC MODEL - SOUTH SUA PAN CO-MANAGEMENT - BASE CASE Protected area co-managed between Sua Pan Flamingo Sanctuary and surrounding CBNRM Lease Areas (P, 2010)

TABLE Sa10: LOAN FINANCING SCHEDULE

ITEM PERIOD Year Year Year Year Year Year Year Year Year Year Year (Yrs) 0 1 2 3 4 5 6 7 8 9 10

LONG TERM LOANS

TWENTY YEAR LOAN 20 Total Expenditure 0 Loan Disbursements 0 0 0 0 0 0 0 0 0 0 0 Loan Payments 00000000000 Amortisation 00000000000 Interest Payments 0 0 0 0 0 0 0 0 0 0 0 Loans Outstanding 0 0 0 0 0 0 0 0 0 0 0

FIFTEEN YEAR LOAN 15 Total Expenditure 0 Loan Disbursements 0 0 0 0 0 0 0 0 0 0 0 Loan Payments 00000000000 Amortisation 00000000000 Interest Payments 0 0 0 0 0 0 0 0 0 0 0 Loans Outstanding 0 0 0 0 0 0 0 0 0 0 0

SIX YEAR LOAN 6 6 Total Expenditure 0 0 Loan Disbursements 0 0 0 0 0 0 0 0 0 0 0 Loan Payments 00000000000 Amortisation 00000000000 Interest Payments 0 0 0 0 0 0 0 0 0 0 0 Loans Outstanding 0 0 0 0 0 0 0 0 0 0 0

FOUR YEAR LOAN 4 Total Expenditure 0 0 0 Loan Disbursements 0 0 0 0 0 0 0 0 0 0 0 Loan Payments 00000000000 Amortisation 00000000000 Interest Payments 0 0 0 0 0 0 0 0 0 0 0 Loans Outstanding 0 0 0 0 0 0 0 0 0 0 0

SHORT TERM LOANS

Working Capital 1 Overdraft 00000000000 Interest Payments 0 0 0 0 0 0 0 0 0 0 0

TOTAL LONG TERM LOAN DISBURSMENTS

Domestic Component 0 0 0 0 0 0 0 0 0 0 0 Foreign Component * 0 0 0 0 0 0 0 0 0 0 0

TOTAL LONG TERM LOAN AMORTISATION

Domestic Component 0 0 0 0 0 0 0 0 0 0 0 Foreign Component * 0 0 0 0 0 0 0 0 0 0 0

TOTAL INTEREST PAYMENTS

Domestic Component 0 0 0 0 0 0 0 0 0 0 0 Foreign Component * 0 0 0 0 0 0 0 0 0 0 0

TOTAL LOANS OUTSTANDING

Domestic Component 0 0 0 0 0 0 0 0 0 0 0 Foreign Component * 0 0 0 0 0 0 0 0 0 0 0

* Economic Values

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 153

MAKGADIKGADI WS FINANCIAL/ECONOMIC MODEL - SOUTH SUA PAN CO-MANAGEMENT - BASE CASE Protected area co-managed between Sua Pan Flamingo Sanctuary and surrounding CBNRM Lease Areas (P, 2010)

TABLE Sa11: PROJECT FINANCIAL ANALYSIS - 5 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

EXPENDITURE Capital Expenditure 3896341 1686452 0 0 1157625 0 Variable Expenditure 10724 64341 107236 107236 107236 107236 Overhead Expenditure 213579 213579 213579 213579 213579 213579 TOTAL EXPENDITURE 4120644 1964372 320815 320815 1478440 320815 INCOME Gross Income 512879 581692 842407 854232 1210752 1385040 Asset Residual Value 0 0 0 0 0 6200765 TOTAL INCOME 512879 581692 842407 854232 1210752 7585805

NET BENEFIT/COST -3607765 -1382679 521593 533417 -267688 7264990

PROJ. FINANCIAL RATE OF RETURN (FRR) OVER 5 YRS= 11.49% PROJ. NET PRESENT VALUE (NPV) @ 8.00% = 676179

TABLE Sa12: PROJECT FINANCIAL ANALYSIS - 7 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

EXPENDITURE Capital Expenditure 3896341 1686452 0 0 1157625 0 585309 250847 Variable Expenditure 10724 64341 107236 107236 107236 107236 107236 107236 Overhead Expenditure 213579 213579 213579 213579 213579 213579 213579 213579 TOTAL EXPENDITURE 4120644 1964372 320815 320815 1478440 320815 906123 571661 INCOME Gross Income 512879 581692 842407 854232 1210752 1385040 1584529 1818432 Asset Residual Value 0 0 0 0 0 0 0 6605878 TOTAL INCOME 512879 581692 842407 854232 1210752 1385040 1584529 8424310

NET BENEFIT/COST -3607765 -1382679 521593 533417 -267688 1064226 678406 7852649

PROJ. FINANCIAL RATE OF RETURN (FRR) OVER 7 YRS= 13.10% PROJ. NET PRESENT VALUE (NPV) @ 8.00% = 1407031

TABLE Sa13: PROJECT FINANCIAL ANALYSIS - 10 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

EXPENDITURE Capital Expenditure 3896341 1686452 0 0 1157625 0 585309 250847 1157625 0 0 Variable Expenditure 10724 64341 107236 107236 107236 107236 107236 107236 107236 107236 107236 Overhead Expenditure 213579 213579 213579 213579 213579 213579 213579 213579 213579 213579 213579 TOTAL EXPENDITURE 4120644 1964372 320815 320815 1478440 320815 906123 571661 1478440 320815 320815 INCOME Gross Income 512879 581692 842407 854232 1210752 1385040 1584529 1818432 2087246 2401830 2764626 Asset Residual Value 0 0 0 0 0 0 0 0 0 0 7560401 TOTAL INCOME 512879 581692 842407 854232 1210752 1385040 1584529 1818432 2087246 2401830 10325027

NET BENEFIT/COST -3607765 -1382679 521593 533417 -267688 1064226 678406 1246770 608806 2081016 10004212

PROJ. FINANCIAL RATE OF RETURN (FRR) OVER 10 YRS= 16.03% PROJ. NET PRESENT VALUE (NPV) @ 8.00% = 3397183 Per Hectare = 196.58

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 154

TABLE Sa13B: PLANNED SUBSIDIES TO COMMUNITY

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

SUBSIDIES ON EXPENDITURE On Capital Expenditure 806805 349209 0 0 239706 0 121198 51942 239706 0 0 On Variable Expenditure 0 0 0 0 0 0 0 0 0 0 0 On Overhead Expenditure 0 0 0 0 0 0 0 0 0 0 0 TOTAL EXPENDITURE 806805 349209 0 0 239706 0 121198 51942 239706 0 0 SUBSIDIES ON INCOME On Gross Income 0 0 0 0 0 0 0 0 0 0 0 On Asset Residual Value 0 0 0 0 0 0 0 0 0 0 0 TOTAL INCOME 0 0 0 0 0 0 0 0 0 0 0

TOTAL SUBSIDIES 806805 349209 0 0 239706 0 121198 51942 239706 0 0

TABLE Sa13C: COMMUNITY FINANCIAL ANALYSIS - 5 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

EXPENDITURE Capital Expenditure 3089536 1337243 0 0 917919 0 Variable Expenditure 10724 64341 107236 107236 107236 107236 Overhead Expenditure 203579 203579 203579 203579 203579 203579 TOTAL EXPENDITURE 3303839 1605163 310815 310815 1228733 310815 INCOME Gross Income 512879 581692 842407 854232 1210752 1385040 Asset Residual Value 0 0 0 0 0 6200765 TOTAL INCOME 512879 581692 842407 854232 1210752 7585805

NET BENEFIT/COST -2790960 -1023470 531593 543417 -17982 7274990

COMM. FINANCIAL RATE OF RETURN (FRR) OVER 5 =YR 19.65% COMM. NET PRESENT VALUE (NPV) @ 8.00% = 1931980 Per Hectare = 111.80

TABLE Sa13D: COMMUNITY FINANCIAL ANALYSIS - 10 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

EXPENDITURE Capital Expenditure 3089536 1337243 0 0 917919 0 464110 198904 917919 0 0 Variable Expenditure 10724 64341 107236 107236 107236 107236 107236 107236 107236 107236 107236 Overhead Expenditure 203579 203579 203579 203579 203579 203579 203579 203579 203579 203579 203579 TOTAL EXPENDITURE 3303839 1605163 310815 310815 1228733 310815 774925 509719 1228733 310815 310815 INCOME Gross Income 512879 581692 842407 854232 1210752 1385040 1584529 1818432 2087246 2401830 2764626 Asset Residual Value 0 0 0 0 0 0 0 0 0 0 7560401 TOTAL INCOME 512879 581692 842407 854232 1210752 1385040 1584529 1818432 2087246 2401830 10325027

NET BENEFIT/COST -2790960 -1023470 531593 543417 -17982 1074226 809604 1308712 858512 2091016 10014212

COMM. FINANCIAL RATE OF RETURN (FRR) OVER 10= YRS 21.43% COMM. NET PRESENT VALUE (NPV) @ 8.00% = 4896838 Per Hectare = 283.37

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 155

MAKGADIKGADI WS FINANCIAL/ECONOMIC MODEL - SOUTH SUA PAN CO-MANAGEMENT - BASE CASE Protected area co-managed between Sua Pan Flamingo Sanctuary and surrounding CBNRM Lease Areas (P, 2010)

TABLE Sa14: ECONOMIC ANALYSIS - 5 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

ECONOMIC COSTS Capital Expenditure 3617590 1542529 0 0 1104374 0 Unskilled Wages 45247 45247 45247 45247 45247 45247 Other Domestic Costs 40710 61066 81421 101776 101776 101776 Tradable Costs 7406 29623 59246 74057 74057 74057 Foreign Amortisation 0 0 0 0 0 0 Foreign Profits 0 0 0 0 0 0 Foreign Loans Outst. 0 0 0 0 0 0 TOTAL COSTS 3710954 1678464 185914 221080 1325455 221080

ECONOMIC BENEFITS Gross Income 768438 871541 988247 1126142 1283197 1467914 Asset Residual Value 0 0 0 0 0 5656728 Foreign Financing 0 0 0 0 0 0 TOTAL BENEFITS 768438 871541 988247 1126142 1283197 7124642

NET BENEFIT/COST -2942516 -806924 802333 905062 -42258 6903562

ECONOMIC RATE OF RETURN (ERR) OVER 5 YEARS = 21.74% NET PRESENT VALUE (NPV) @ 8.00% = 2207462 Per Hectare = 127.74

TABLE Sa15: ECONOMIC ANALYSIS - 10 YEARS

ITEM Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

ECONOMIC COSTS Capital Expenditure 3617590 1542529 0 0 1104374 0 558384 239308 1104374 0 0 Unskilled Wages 45247 45247 45247 45247 45247 45247 45247 45247 45247 45247 45247 Other Domestic Costs 40710 61066 81421 101776 101776 101776 101776 101776 101776 101776 101776 Tradable Costs 7406 29623 59246 74057 74057 74057 74057 74057 74057 74057 74057 Foreign Amortisation 0 0 0 0 0 0 0 0 0 0 0 Foreign Profits 0 0 0 0 0 0 0 0 0 0 0 Foreign Loans Outst. 0 0 0 0 0 0 0 0 0 0 0 TOTAL COSTS 3710954 1678464 185914 221080 1325455 221080 779465 460388 1325455 221080 221080

ECONOMIC BENEFITS Gross Income 768438 871541 988247 1126142 1283197 1467914 1679340 1927237 2212136 2545544 2930047 Asset Residual Value 0 0 0 0 0 0 0 0 0 0 6862984 Foreign Financing 0 0 0 0 0 0 0 0 0 0 0 TOTAL BENEFITS 768438 871541 988247 1126142 1283197 1467914 1679340 1927237 2212136 2545544 9793031

NET BENEFIT/COST -2942516 -806924 802333 905062 -42258 1246834 899875 1466849 886681 2324463 9571951

ECONOMIC RATE OF RETURN (ERR) OVER 10 YEARS = 23.95% NET PRESENT VALUE (NPV) @ 8.00% = 5585808 Per Hectare = 323.23

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 156

MAKGADIKGADI WS FINANCIAL/ECONOMIC MODEL - SOUTH SUA PAN CO-MANAGEMENT - BASE CASE Protected area co-managed between Sua Pan Flamingo Sanctuary and surrounding CBNRM Lease Areas (P, 2010)

TABLE Sa16: SUMMARY OF RESULTS

ITEM UNITS TOTAL

PA Extent Hectares 17281 PA Stock Large Stock Units (LSU) 692

ITEM % of TCI BWP/LSU BWP/HECTARE BWP

Total Financial Capital (TCI) - 8,070.16 323.06 5,582,793

Financial Gross Income 49.52% 3,996.38 159.98 2,764,626

Variable Financial Costs - 155.01 6.21 107,236 Fixed Financial Costs - 1,089.40 43.61 753,630

Net Cash Income 0.341005 2,751.97 110.16 1,903,760 Community Cash Income 0.359006 2,897.24 115.98 2,004,255

Land Rental - 14.46 0.58 10,000 Resource Royalty - - - -

Project FRR (@ 10 Years) - - - 16% Community FRR (@ 10 Years) 21%

Project FNPV (@ 8%, @ 10 Years) - - 196.58 3,397,183 Community FNPV (@ 8%, @ 10 Years) 283.37 4,896,838

Total Economic Capital - 7,459.17 298.60 5,160,119

Economic Gross Income 0.567825 4,235.51 169.55 2,930,047

Economic Costs 0.122844 916.31 36.68 633,890

Net Economic Benefit 0.444981 3,319.19 132.87 2,296,157 Net Value Added 0.345941 2,580.43 103.30 1,785,095

ERR (@ 10 Years) - - - 24% ENPV (@ 8%, @ 10 Years) - - 323.23 5,585,808

Economic Capital Cost/Job - - - 240,006 Domestic Resource Cost Ratio - - - 0.35

Policy Analysis Matrix : Effects of Policy / Market Imperfections : on Output (165,421) : on Tradable Inputs (3,571) : on Domestic Factors 287,657 : Net Effects of Policy / Market Imperfections : on Annual Net Income 118,665 : on Net Present Value (10 Years) (2,188,625)

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 157

4. MWS Park Current (Status Quo) Scenario Model - Summary

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 158

MWS FINANCIAL/ECONOMIC MODEL - STATE PARKS STATUS QUO LIMITED CBNRM ALL PLAYERS - BASE CASE Focus on existing state parks with limited CBNRM and costs increasing to medium threat level (P, 2010)

TABLE Sa16: SUMMARY OF RESULTS

ITEM UNITS TOTAL

PA Extent Hectares 754900 PA Stock Large Stock Units (LSU) 3900

ITEM % of TCI BWP/LSU BWP/HECTARE BWP

Total Financial Capital (TCI) - 37955.34 196.08 148019704

Financial Gross Income 17.5% 6635.10 34.28 25875800

Variable Financial Costs - 2719.04 14.05 10603829 Fixed Financial Costs - 9016.17 46.58 35161606

Net Cash Income -13.4% -5100.12 -26.35 -19889635 Community Cash Income -13.2% -5017.23 -25.92 -19566384

Land Rental - 2.56 0.01 10000 Resource Royalty - 0.00 0.00 0

Project FRR (@ 30 Years) - - - 8% Community FRR (@ 15 Years) 46%

Project FNPV (@ 8%, @ 30 Years) - - -14.99 -11318480 Community FNPV (@ 8%, @ 15 Years) 14.09 10633959

Total Economic Capital - 35211.67 181.90 137319825

Economic Gross Income 20.0% 7033.08 36.33 27427891

Economic Costs 27.8% 9797.65 50.61 38209234

Net Economic Benefit -7.9% -2764.56 -14.28 -10781343 Net Value Added -18.4% -6485.65 -33.51 -25292994

ERR (@ 30 Years) - - - 23%

ENPV (@ 8%, @ 30 Years) - - 110.71 83573164

Economic Capital Cost/Job - - - 1766171 Domestic Resource Cost Ratio - - - 2

Policy Analysis Matrix : Effects of Policy / Market Imperfections : on Output -1552092 : on Tradable Inputs -457806 : on Domestic Factors 7413258 : Net Effects of Policy / Market Imperfections : on Annual Net Income 5403360 : on Net Present Value (10 Years) -94891644

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 159

1. MWS Park Co-management CBNRM or Contract Park Scenario Model - Summary

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 160

MWS FINANCIAL/ECONOMIC MODEL - STATE PARKS & CO-MANAGEMENT ALL PLAYERS - BASE CASE Park plus full CBNRM and or Contract Park with costs increasing to low threat level (P, 2010)

TABLE Sa16: SUMMARY OF RESULTS

ITEM UNITS TOTAL

PA Extent Hectares 2264700 PA Stock Large Stock Units (LSU) 19645

ITEM % of TCI BWP/LSU BWP/HECTARE BWP

Total Financial Capital (TCI) - 13616.99 118.12 267502694

Financial Gross Income 82.3% 11206.54 97.21 220150009

Variable Financial Costs - 4309.42 37.38 84657599 Fixed Financial Costs - 4761.73 41.30 93543103

Net Cash Income 15.7% 2135.39 18.52 41949308 Community Cash Income 15.9% 2165.43 18.78 42539401

Land Rental - 0.51 0.00 10000 Resource Royalty - 0.00 0.00 0

Project FRR (@ 30 Years) - - - 24% Community FRR (@ 15 Years) 46%

Project FNPV (@ 8%, @ 30 Years) - - 30.03 68004578 Community FNPV (@ 8%, @ 15 Years) 5.63 12743654

Total Economic Capital - 12632.66 109.58 248165766

Economic Gross Income 94.0% 11878.91 103.04 233358553

Economic Costs 62.4% 7882.51 68.38 154850106

Net Economic Benefit 31.6% 3996.40 34.67 78508447 Net Value Added 21.1% 2661.41 23.09 52282845

ERR (@ 30 Years) - - - 35%

ENPV (@ 8%, @ 30 Years) - - 123.02 278597560

Economic Capital Cost/Job - - - 3191843 Domestic Resource Cost Ratio - - - 0.63

Policy Analysis Matrix : Effects of Policy / Market Imperfections : on Output -13208544 : on Tradable Inputs -3662452 : on Domestic Factors 6537458 : Net Effects of Policy / Market Imperfections : on Annual Net Income -10333538 : on Net Present Value (10 Years) -210592982

Enhancing the value of Protected Areas of the Makgadikgadi Pans Wetland System 161