Economic Valuation of Forest Ecosystem Services in Kenya: Implication for Design of PES Schemes and Participatory Forest Management

Working paper 693
Author(s): 
Boscow Okumu and Edwin Muchapondwa
Publication date: 
July, 2017
Classification-JEL: 

Forest ecosystem services are critical for human well-being as well as functioning and growth of economies. However, despite the growing demand for these services, they are hardly given due consideration in public policy formulation. The values attached to these services by local communities are also generally unknown in developing countries. Using a case study of the Mau forest conservancy the study applied a choice experiment technique employing the efficient design criteria to value salient forest ecosystem services among forest adjacent communities. The values attached to various ecosystem services were estimated using the conditional logit, random parameter logit model and random parameter logit model with interactions. The results revealed high level of preference heterogeneity across households and that communities would prefer conservation programs that would guarantee them improved forest cover, reduced flood risk and high water quality and quantity for drinking but would experience a loss in welfare for choosing an alternative with medium wildlife population. One significant finding from the study is the altruistic nature of forest adjacent communities as revealed by the high willingness to pay for flood mitigation showing that they are not just concerned with the private benefits accruing to them but also the welfare of the society. Overall, we found that there is much appreciation for the role of forest ecosystem services and that forest adjacent communities are more pro conservation mainly motivated by the direct use and non-use values. In terms of policy, the information forms a basis for the design of market based incentives such as PES and the roll out, design and implementation of participatory forest management. Policy makers also need to focus on policy options with higher mean welfare impacts to deepen community involvement in forest conservation while taking into account the heterogeneity in preferences to ensure equity.

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