Safa Fanaian, Susan Graas, Yong Jiang & Pieter van der Zaag

Valuing ecosystem services linked to river flows in Lower Zambezi basin, Mozambique

WaterNet conference Dar es Salaam, 31 Oct 2013

• Introduction • Problem statement • Research Objective & Research questions • Methodology • Data analysis

• Economic value • Service suitability Curves • Service Provision Index

• Results • Limitations and advantages • Conclusion • Q&A

Con

tent

Intro

duct

ion

Ronco et al., 2010

Back

grou

nd

0

1000

2000

3000

4000

5000

6000

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Flow

in m

3 /se

c

Unregulated (1907-1958)

Post Kariba dam (1959-1970)

Kafue gorge+ Kariba dam (1970-1974)

Post Cahora Bassa dam (1980-2011)

•Cahorra Bassa dam constructed in 1974, with an installed capacity to produce 2075MW. •The dam produces base load power; is owned by the Govt of Mozambique and run by Hidroeléctrica de Cahora Bassa (HCB) through a concession.

0

1000

2000

3000

4000

5000

6000

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Flow

in m

3/se

c

Flows at the Cahora Bassa gorge

Unregulated (1907-1958)

Post Kariba dam (1959-1970)

Kafue gorge+ Kariba dam (1970-1974)

Post Cahora Bassa dam (1980-2011)

Prob

lem

Sta

tem

ent

Operating policy of Cahora Bassa dam caters

to maximize hydroelectricity

production

This leads to uniformity in flows of the river and

removes seasonal high and low flows

Uniformity has caused changes in ecosystems

downstream.

Changing operating policy= Less power = lower economic

return

At present there is no collective economic value of ecosystem

services in the Lower Zambezi Basin

There is not enough information to compare or derive trade-offs between regulation for hydropower or peaks for

environment.

Con

cept

s Ecosystem service

approach

Ecosystem goods

Economic value

Environmental flows

Link flows of the Lower Zambezi river, with the ecosystem goods to estimate their economic value.

Assess the economic trade-offs between the goods that are provided by the ecosystem service in the Lower Zambezi basin as flows change: ? What are the ecosystem goods provided by the

water flows downstream of Cahora Bassa dam? ? How are these goods defined and dependent

on the flows of the Zambezi River? ? What are the economic values of these goods? ? What is the trade-off between the dam

operating flows for environment and those for hydropower production?

Rese

arch

Que

stio

ns

1. Not to double count ecosystem services UK NEA (2010)

2. To assign a value to a flow regime rather than a specific flow or volume Korsgaard (2006)

Cha

lleng

es a

nd In

nova

tion

Six Scenarios

Value goods for different scenarios Analyze trade-offs

Korsgaard et al. (2008a, b) method to link economic value to flows

Calculated Service Suitability Curves

Calculate Service Provision Index

UK NEA (2010) ecosystem classification approach used for

Identification of Ecosystem Goods

Application of economic valuation

Met

hodo

logy

Identification of ecosystem goods

Ecos

yste

m p

roce

sses

/Int

erm

edia

te

serv

ices

Primary production Nutrient cycling Soil formation Water cycle

Fina

l eco

syst

em s

ervi

ces Water for subsistance

Commercial Fish/shrimp/crab Medicinal plants Commercial agriculture Chemical water quality Physical water control Ground water replenishmnet Invasive species regulation Erosion control Carbon trapping Biodiversity conservation wildlife services and goods Cultural /religious / historical actvities

Goo

d(s)

Drinking water Fish/shrimp catch Energy (hydropower) Subsistence crops & fishing commercial crops Recreational fisheries/ hunting Flood damage avoided Invasive species damage livestock Tourism navigation Carbon sequesteration timber Biodiversity existance value Mining

Identification of ecosystem goods

Goods: •Hydropower •Fisheries •Irrigated Agriculture •Wildlife Tourism (Marromeu complex) •Flood damage avoided

Goods Valuation method used

Information used Sources

Hydropower Adjusted market price

-Power generated/ yr -Sale price/yr -Costs

HCB annual reports (2008, 2010) Discussion

Fisheries Adjusted market price

-Catch rate -Current Market price

IIP, IDPPE (2007 fisheries survey), Mafuca (2007) Source data

Irrigated agriculture

Adjusted market price

-Hectare under cultivation -Average Yield/ha -Production cost

Sena sugars, Discussions with planters

Wildlife tourism (Marromeu Reserve)

Adjusted market price

Wildlife stock Hunting permits & tourism

Guveya and Sukume (2009)

Flood damage avoided

Cost avoided -Area flooded -Infrastructure, agricultural, housing asset damage

World Bank (2010)

Application of economic value

(Korsgaard et al. 2008)

Service Suitability curve

where: i = period identification SSi (q) = Service Suitability of period i; q = flow available for a period (m3/s); j = service/good identified; n = total number of periods; Wi = weightage of period i subject to the constraint The final economic value is

Service Provision Index

,

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Flow

s m3/

s

S1

S2

S 3

S 4

S 5

S 6

Baseline 2010

Scenarios

S1 = Pre-dam era flows S2 = post-dam average flows (1997-2011) S3 = December high flow of 6,200 m3/s S4 = January high flow 5,250 m3/s S5 = Jan and Feb high flows of 3,300 & 5,400 m3/s S6 = High flow in February of 8,250 m3/s

• The calculated values are temporally limited to the same year.

• Spatially, the benefits are calculated for only the lower Zambezi basin.

• The valuation is purely financial and does not take into account existence, option or bequest values.

• Future market dynamics are not taken into consideration in scenario calculations.

Ass

umpt

ions

Data

ana

lysis

Good Net value

(million USD)

% of total

Production per good

Average values /unit

Hydropower 154 52% 14,662 GWh 11

USD/MWh

Irrigated agriculture 53 18% 10,850 ha 4,890

USD/ha

Fisheries (Lower Zambezi Basin )

33 11% 23,339 tons 1,403

USD/ton

Fisheries (Cahora Bassa lake)

47 16% 24,017 tons 1,941

USD/ton

Wildlife tourism (Marromeu delta)

4.5 2% 11,000 km2 6,774

USD/ km2 Flood damage avoidance

4.5 2% - -

Total value 296

Actual Economic Value for year 2010

•

Service Suitability Curves Da

ta a

naly

sis

0

0.2

0.4

0.6

0.8

1

Suita

bilit

y

Flow ranges

SS curve for Hydropower (Normal year) Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Feb

Apr

Jun

Aug Oct

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1 su

itabi

lity

flow ranges

SS curve for Agriculture Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

•

Service Suitability Curves Da

ta a

naly

sis

•

Service Suitability Curves Da

ta a

naly

sis

Dec

Feb Apr

Jun Aug

Oct

0

0.2

0.4

0.6

0.8

1 Su

itabl

ity

flow ranges

SS curves for fisheries

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

•

Service Suitability Curves Da

ta a

naly

sis

Dec

Feb

Apr Jun

Aug Oct

0

0.2

0.4

0.6

0.8

1

Suita

bilit

y

Flow ranges

SS curve for Flood damage avoidance Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Service Provision Index for the year 2010 Re

sults

• Hydropower: 1.0 • Fisheries: 0.38 • Irrigated agriculture: 0.77 • Flood damage avoided: 0.62 • Wildlife tourism: 0.40

The current flow regime maximises

hydropower generation only

Service Provision Index for the year 2010 Re

sults

• Hydropower

• Fisheries (shrimp)

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

2006 2007 2008 2009 2010

Econ

omic

Val

ue (m

illio

n M

ZN)

Max

Min

Actual

-

10.00

20.00

30.00

40.00

50.00

60.00

2008 2009 2010

Shrim

p va

lue

(*M

illio

n U

SD)

Max

Min

Actual

Sensitivity analysis

Calculated Economic Values based on scenarios Re

sults

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

Baseline (2010)

S1 S2 S3 S4 S5 S6

Mill

ion

USD

per

yea

r

Scenarios

Flood damage avoidance

Wildlife tourism

Fisheries (CB lake)

Fisheries (LZ)

Agriculture

Hydropower

• The total economic value for 2010 is 296 million of which hydropower is 52%.

• Service suitability curves have shown that: – hydropower and irrigated agriculture love

uniformity of flows – fisheries, wildlife tourism and flood damage

avoidance require peaks to be sustained • Scenario 5 (Jan & Feb high flows of 3,300 & 5,400 m3/s)

gives highest global benefits, with downstream users benefiting a lot (55 Million USD/yr) and hydropower losing less (-7 Million USD/yr)

• So trade-offs are, in theory at least, feasible.

Con

clus

ion

Challenges • Conceptual:

ecosystem goods vs. services

• Variation in values over the years

• Range of SPI values with large uncertainties

• The SPI method is limited, as damages occurring in one months are not carried over to the next month

Strengths • Utilizes the flow regime

rather than marginal value per volume of water

• Avoids double counting of ecosystem services

• Workable even in data scarce region

• Total economic value is likely to be higher, since some services were not included

Con

clus

ion

• Once the annual flooding events are implemented it is necessary to monitor how the ecosystem responds, in order to check and improve the current model.

• What if hydropower generation capacity (HCB left bank; Mpanda Nkuwa) would be increased significantly?

Futu

re c

onsid

erat

ions

…

Than

k yo

u!

Guveya, E., & Sukume, C. (2009). The economic value of the Zambezi Delta: WWF.

Korsgaard, L., Jonch-Clausen, T., Rosbjerg, D., & Schou, J. S. (2008). The Service Provision Index (SPI): Linking Environmental flows, Ecosystem Services and Economic Value. Water and Energy Abstracts, 18(1), 34-35.

Ronco, P., Fasolato, G., Nones, M., & Di Silvio, G. (2010). Morphological effects of damming on lower Zambezi River. Geomorphology, 115(1-2), 43-55.

World Bank. (2010). The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis (Vol. 1-4): The World Bank, Washington, D.C

Zambezi Atlas. (2011). Atlas for the Preparation for and Response to Disasters in the Zambezi River Basin- Mozambique: National Institute for Disaster Management (INGC), UEM Geography Department, and FEWS NET.

Refe

renc

es

Sens

itivi

ty te

st??

??

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

2008 2009 2010

Shrimp

high

low

Actual

Annex 1

0

50000000

100000000

150000000

200000000

250000000

300000000

350000000

400000000

450000000

2006 2007 2008 2009 2010

Pres

ent v

alue

(MZN

)

Hydro-power

Sens

itivi

ty

0

100

200

300

400

500

600

700

Max

Flood damage avoidance

Toursim

Fisheries (CB)

Fisheries (LZ)

Agrciulture

Hydropower

0

50

100

150

200

250

300

350

400

450

500

Min

Flood damage avoidance Toursim in Delta (Biodiversity) Fisheries (CB)

Fisheries (LZ)

Agrciulture

Hydropower

Annex 2 ( max-min values)