Catchment Ecosystems and Downstream Water: The Value of Water Resources in the Pangani Basin, Tanzania Jane K. Turpie, Yonika M. Ngaga & Francis K. Karanja IUCN Water, Nature and Economics Technical Paper No. 7 Water and Nature Initiative This document was produced under the project "Integrating Wetland Economic Values into River Basin Management", carried out with financial support from DFID, the UK Department for International Development, as part of the Water and Nature Initiative of IUCN - The World Conservation Union. The designation of geographical entities in this publication, and the presentation of materials therein, do not imply the expression of any opinion whatsoever on the part of IUCN or DFID concerning the legal status of any country, territory or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. The views expressed in this publication also do not necessarily reflect those of IUCN, or DFID. Published by: IUCN — The World Conservation Union Copyright: © 2005, International Union for Conservation of Nature and Natural Resources. Reproduction of this publication for educational and other non-commercial purposes is authorised without prior permission from the copyright holder, providing the source is fully acknowledged. Reproduction of the publication for resale or for other commercial purposes is prohibited without prior written permission from the copyright holder. Citation: J. Turpie, Y. Ngaga & F. Karanja, 2005, Catchment Ecosystems and Downstream Water: The Value of Water Resources in the Pangani Basin, Tanzania , Lao PDR. IUCN Water, Nature and Economics Technical Paper No. 7, IUCN — The World Conservation Union, Ecosystems and Livelihoods Group Asia. ISBN: 955-8177-49-0 Cover illustration: Images from the Pangani Basin (Jane Turpie) Produced by: IUCN — The World Conservation Union, Ecosystems and Livelihoods Group Asia, Colombo. Available from: IUCN Ecosystems and Livelihoods Group Asia, 53 Horton Place, Colombo, SRI LANKA. Email: [email protected] IUCN Water & Nature Initiative, Rue Mauverney 28, 1196 Gland, SWITZERLAND. Email: [email protected] IUCN Eastern Africa Regional Office, PO Box 68200, Nairobi, KENYA Email: [email protected] EXECUTIVE SUMMARY As water resources become increasingly scarce in Africa, the need for the use of economics to aid in decision-making and management becomes apparent. Indeed, global experience shows that economic approaches may achieve the best results. Water is the basis of the economy as well as essential for human life and biodiversity. The Pangani River Basin in north-eastern Tanzania provides a good starting point for evaluating the economic issues around water resources and how economics can be used to improve their management to align with national goals. This document presents the findings of in-depth research into the economic benefits of the various activities in the Pangani River Basin. Decisions about the management, allocation and use of water should ideally maximise economic outputs from basin water uses and water utilisation over the long term. It should also sustain the ecosystems that supply and depend on water resources. Macroeconomic and sectoral policies in Tanzania have a major impact on how water resources are used and managed, and currently provide little incentive for landowners to conserve catchment areas important for water supply, for industries and households to curb pollution, or for anyone with access to water to use it sparingly. At the same time, landowners in important catchment areas are not rewarded for conserving forests and soil, which would usually carry a cost to the landowner. A drastic improvement in the management of the basin’s water resources will also require improved funding. As it is, the Pangani Basin Water Office cannot meet their obligations adequately with their existing funding. There is an enormous capacity to increase the revenues from user fees due to the large degree of non-payment, and due to the fact that most users are currently not charged for water use at all. At the same time the high value of water in various uses underlines the capacity to institute some form of “payment for environmental services” scheme, where downstream water users compensate upstream catchment managers for the provision of ecosystem water services. The increasing scarcity of water resources in the Pangani River Basin calls for strategic water resources management that will ensure the sustainability of water supply and the goods and services supplied by aquatic environments, as well as the efficient and equitable use of these resources. Sustaining water supplies for the numerous users in the basin will depend on reducing losses due to catchment degradation and wastage due to inefficient practices. The former will need to be addressed by creating incentives for catchment managers to maintain catchment forest areas, preferably through a system of ‘payments for ecosystem services’ which involves payment by those that benefit from the service, via the PBWO, to catchment managers. The price increases required for this will also serve as a demand management tool that encourages more efficient use of the water that is allocated to various uses. ACKNOWLEDGEMENTS This study was carried out in as a joint initiative between IUCN Eastern Africa Regional Office and the Pangani Basin Water Office. We are grateful to a number of people without whom this task would not have been possible. In particular, we would like to thank our enumerators: • Stephano Kingazi (Sokoine University of Agriculture), • Riziki Shemdoe (Sokoine University of Agriculture), • Angela Mwakatobe (Tanzania Wildlife Research Institute), • John Lazimah (Tanzania Electric Supply Company), • Engineer Mkuba (Pangani Basin Water Office), • Mtoi Kanyawanah (Ministry of Water and Livestock Development), • Ladislaus Kahana (College of African Wildlife Management, Mweka), and • Joseph Nasari (Maji Arusha) Thanks are also due to: • Julius Sarmett and Engineer Mkuba (both of Pangani Basin Water Office) for their valuable inputs into several aspects of the study, • Musimu Makunga (TANESCO) for the effort he went to in providing data for the study, • Kelly West (IUCN-EARO) for her inputs and guidance, • Our drivers from Pangani Basin Water Office, • Mweka Wildlife College, Moshi, for hosting the course and providing computer facilities during the survey design and training phase, and • Conrad Savy for assistance with data entry and graphics We are grateful to the numerous government officials, farm managers and villagers that willingly participated in our interviews and provided valuable data. Finally, thanks to Dr Kassim Kulindwa, Joseph Nasari, Washington Mutayoba, Julius Sarmett, DEP Ngulla, Dr Wilson Kipkore and David Barton for comments on an earlier draft. TABLE OF CONTENTS BACKGROUND ................................................................................................. 1 INTRODUCTION: Valuing ecosystem water services.................................... 3 Objectives of the study...................................................................................................3 Study approach .............................................................................................................3 Limitations of the study ..................................................................................................4 CONTEXT: Tanzania and the Pangani Basin.................................................. 7 The national economy and macro-economic reforms .....................................................7 National issues affecting water resources management .................................................7 Policy and legal framework for water resources management in Tanzania .....................8 Definition of the Pangani River Basin .............................................................................9 Topography and rainfall ...............................................................................................11 Rivers and wetlands ....................................................................................................11 Vegetation...................................................................................................................13 Land use in the Pangani River Basin ...........................................................................15 Population ...................................................................................................................15 ISSUES AND CONCERNS: Water supply, use and allocation .................... 17 Threats to water supply................................................................................................19 Increasing demand for water........................................................................................20 Shortages for power generation...................................................................................20 Environmental degradation due to water use ...............................................................20 Conflicts over water resources.....................................................................................21 Financing of water resources management..................................................................22 VALUES: Water in alternative uses............................................................... 23 Irrigated agriculture......................................................................................................23 Water for livestock .......................................................................................................33