The Economics of Ecosystems and...

The Economics of Ecosystems and Biodiversity TEEB for Agriculture & Food

Global Symposium, February 2019

Traditional livestock systems in Tanzania 27 February 2019, Nairobi

Pietro Galgani - True Price/Impact InstituteTraditional livestock systems in Tanzania - An Application of the TEEB AgFood Framework (2019). W. Baltussen, S. van Berkum,

Y. Dijkxhoorn, R. Helmes, S. Ozkan-Gulzari, G.D. Massawe, P. Galgani, F. v.d. Elzen and T. Smith

Image credit: Anup Deodar

Content

• Study setup

• System descriptions

• Potential technical improvements

• Policy implications

Study setup

Objective

• Assess traditional livestock systems in Tanzania using the TEEB AgriFoodFramework

1. Systems as they are today

2. Technical improvements

3. Livestock policy

4

Scope: focus on three systems as they are now and potential technical improvements

97% of national milk supply

70% of rural supply, 20% of urban supply

90% of country’s cattle herds

Smallholder dairy in the Southern Highlands

Backyard poultry in rural Tanzania

Pastoralist livestock systems Maasai steppe

Methods

Area

Monetary assessment

Qualitative assessment

Economic

Value chain model

Qualitative review

Household economy

model

Environmental

Biophysical herd model

Ecosystem services model

(pastoralism)

Social and

Human

Literature review

System descriptions

Smallholder dairy system

• Traditional smallholder dairy farms are the backbone of the dairy industry.

• Commercial dairy activities in the country are at an infancy stage with 3% of the milk to the formal markets

• Artificial Insemination (AI) is practiced by only by few farmers

• Use of inputs is minimal

• The Zebu is the most widespread cattle breed in the nation and dominates milk production.

• Diary is mainly located in the highlands

• Milk is sold raw in local market via middlemen

• Crop production is an integral part in the dairy system as animals feed on crop residues

8

Backyard poultry system

• Most common poultry system in the country

• Generally kept by the rural poor and managed by women and children

• Average 30 birds per household

• Important for the rural household economy, supplying high quality nutrition, and financial income

• Eggs are usually hatched or sometimes eaten

• Meat is sold via middlemen to markets in rural centres

• Feed exclusively on food scraps

• No costs

• No environmental impacts for feed production

• Contribution to woman empowerment

• Chicken consumption is lower than other African countries.

• Risks for human health are not well understood

9

Pastoralist cattle system

• Tanzania has the third largest cattle population in Africa

• Located in North of the country

• Cattle is dominant, also goats, sheep

• Livestock are mainly kept for subsistence, storage of wealth and cash earnings.

• Fed almost exclusively on grassland grazing

• Traditional roles and labour division

• Potential to improve animal health to increase yield and climate impact

• Practiced in areas characterized by poor soils and insufficient rainfall

• Competing for space with sedentary farming

• Land degradation

• Closure of wildlife corridors

10

0

50

100

150

200

250

300

350

Pastoralist Market Trader Butcher Consumer

Profit, costs and consumer price for a reference pastoralist value chain (US$/head of cattle)

Income Costs Consumer price

0

1

2

3

4

5

6

Producer Middleman Market trader Consumer

Profit, costs and consumer price for a reference poultry value chain (US$/chicken)

Income Price markup Consumer price

-

0,10

0,20

0,30

0,40

0,50

0,60

Producer Trader Consumer

Profit, costs and consumer price for a reference dairy value chain (US$/kg

milk)

Price markup Income Costs Consumer price

Short value chains

• Few and local inputs

• Final markets are local

• Low natural capital impacts in chains, besides GHG

• Relatively high margin for households

Potential technical improvements

Improvements choice: feasibility and sustainability

• Same scale

• Higher yield

• Increased use of inputs

• Improved breeds

• Improved access to knowledge

Smallholder dairy: Transition to commercial system promises high positive impact on climate and income

14

0.0

20.0

40.0

60.0

80.0

100.0

Baseline Improvementscenario

Climate Impact of Herd (t CO2eq / year)

0.0

5.0

10.0

15.0

20.0

25.0

Baseline Improvementscenario

Contributions to Climate Impact of product

(kg CO2eq / kg milk)

-2000

0

2000

4000

6000

Baseline Improved

Comparison between scenarios

(US$/year)

Financial income In-kind income

Costs per household

Household income from smallholder dairy: baseline and improved ($/year)

• The same herd of 5 cows can potentially increase yield 10-fold

• Increased feed and water rations and medicines

• Artificial insemination

Backyard poultry: Potential impact of technical improvements is small but positive

15

Household income from backyard poultry: baseline and improved ($/year)

0.0

0.1

0.2

0.3

0.4

0.5

0.6

Baseline Improvementscenario

Climate Impact of Flock (t CO2eq / year)

0

2.5

5

7.5

10

12.5

Baseline Improvementscenario

Contributions to Climate Impact of product

(kg CO2eq / kg meat)

• Small addition of purchased feed improves slaughter weight

• Fences to improve health conditions

Pastoralist cattle system: Technical improvements can improve both climate impact and income

16

• Less feed of better quality

• Improved animal health through use of medicine

• More animals slaughtered with the same herd size

Pastoralist household income and costs per herd: baseline and

improved ($/year)

Policy implications

Policy focus areas for improvement of traditional livestock systems

• Make inputs and infrastructures available

• Feed quality

• Artificial insemination

• Animal health

• Fodder for dry season

• Milk processing and distribution

• Cooperatives

• Strengthen knowledge services

• Increase resources for extension services

• Create awareness of good practices related to input use

• Prevent intensification beyond carrying capacity of ecosystems

18

The framework allows to identify the potential pitfalls of livestock development policy

• Risk of losing local side-benefits with commercial scale only

• Income of the poor, women empowerment, waste , tourism

• Overuse of inputs

• Increase both access and knowledge

• Link agri-subsidies to environmental requirements

• Overgrazing

• If it becomes profitable everybody starts doing it

• Sustainable intensification to protect water and ecosystem quality

• Incentives: Short- vs long-term, local vs global

• Yields vs Local benefits for poor households, ecosystem services

• Local chains for agri-inputs

• Payments for Ecosystem Service

• Institutional barriers to pastoralism development

• Link livestock policy with land policy

• Link livestock policy and education policy

www.wur.nl www.trueprice.orgwww.impactinstitute.com

The Economics of Ecosystems and Biodiversity TEEB for Agriculture & Food

Global Symposium, February 2019

Thank you

Pietro Galgani - True Price/Impact InstituteTraditional livestock systems in Tanzania - An Application of the TEEB AgFood Framework (2019). W. Baltussen, S. van Berkum,

Y. Dijkxhoorn, R. Helmes, S. Ozkan-Gulzari, G.D. Massawe, P. Galgani, F. v.d. Elzen and T. Smith

Image credit: Anup Deodar

Lessons learnt in using the framework

Challenges

• Data• Too much & Too little

• Too early?

• Synthesis• Framing the question

• Messaging of results

• Mediate between perspectives (agronomist, sociologist, environmentalist…)

Benefits

• Trade-offs and potential pitfalls of livestock development policy become visible

• Risk of losing local benefits

• Overuse of inputs

• Overgrazing

• Incentives: Short- vs long-term, local vs

global

• Institutional barriers to pastoralism

development

Traditional livestock in Tanzania from the perspective of four capitals

Benefits

• Income and savings value for poor households

• Use of agricultural and food waste • Manure an important reason to keep

livestock

• Woman empowerment (poultry)

• Short chains = low natural capital impacts• Land use and biodiversity• Water pollution

• Technical improvement is often win-win• Climate change & Household income

• Landscape management value (pastoralism)• Ecosystem services

• 1,5 times the retail price

Problems

• Low productivity• Low access to inputs

• Insufficient household income

• Low animal health• Low yields

• Potential impact on human health

• Little infrastructure• Extension service insufficient

• Milk value chain underdeveloped

• Pastoralism and development trends• Expansion of sedentary farming

• Land tenure issues

• Low schooling rates

Risks

• Low productivity• Low access to inputs

• Insufficient household income

• Low animal health• Low yields

• Potential impact on human health

• Low infrastructures• Extension service insufficient

• Milk value chain underdeveloped

• Pastoralism and development trends• Expansion of sedentary farming

• Land tenure issues

• Low schooling rates

Technical improvement is often positive for both climate and household income, but with risks

Smallholder dairy Backyard poultryPastoralist livestock system

Considered improvements Switch to commercial system• Same herd of 5 cows • Yield up 10-fold• Increased feed • Increased water rations

Medicines• Artificial insemination

Minor changes to improve animal health• Small addition of

purchased feed • Improved slaughter

weight• Fences• Lower mortality

Minimum improvements for extensive cattle• Less feed, better quality• Dry season fodder• Improved animal health

through use of medicine• More animals

slaughtered with the same herd size

Climate change externalities per kg product

-87% -13% -33%

Household income per year +466% 0% +29%

Key risk

Trespassing ecosystem carrying capacity (overgrazing, water pollution)

No incentive for household

Low education of pastoralist herdersLand tenure

Economic modelling

Value chain model

Household economy

model

• Most common traditional chains of milk, beef and poultry meat

• Costs, revenues at farm

• Price mark-up at other steps

• In-kind benefits (milk, meat, eggs, skins, hides)

• Financial revenue (sales of milk, meat, eggs, crops)

• Costs (inputs and hired labour)

• Savings value of livestock

• Income per fulltime equivalent worked

Environmental modelling

Biophysical herd model

Ecosystem services model

(pastoralism)

• GLEAM model developed by the FAO (Global Livestock Assessment Model)

• Biophysical modelling of herds

• Agro-ecological zones

• Lifecycle assessment perspective

• GHG emissions from animals and feed production

• Positive externalities of pastoralist landscape management per $ of food produced

• Conservation of soil carbon, soil fertility and wildlife corridors

• Reference scenario is 1 $ of food produced in the same region by sedentary farming

• Expands Natural Capital valuation of Maasai steppe in 2017 TEEB Animal Husbandry feeder study

Pastoralism in the Maasai Steppe contributes to maintenance of Natural Capital

$7,73

$0,52 $0,35

$4,00

$2,03 $2,93

Carbon storage (high, medium, low) Land degradation prevention Contribution to tourism

Eco

syst

em s

ervi

ce ($

/kg

bee

f)

Positive externalities (ecosystem services) of pastoralism.

Meat price ($/kg beef)

• Soil carbon stocks

• Grassland vs abandoned

farmland

• Period of 20 years

Positive externalities (ecosystem services) of pastoralism in the Maasai

Steppe compared to the price of meat ($/kg beef)

Pastoralism in the Maasai Steppe contributes to maintenance of Natural Capital

$7,73

$0,52 $0,35

$4,00

$2,03 $2,93

Carbon storage (high, medium, low) Land degradation prevention Contribution to tourism

Eco

syst

em s

ervi

ce ($

/kg

bee

f)

Positive externalities (ecosystem services) of pastoralism.

Meat price ($/kg beef)

• Preserved Natural Capital

stock value, based on meat,

milk and crops yields.

• Compared to sedentary food

production

• Avoided depreciation of land

over 20 years

• ESS attribution based on

value of land vs human inputs

Positive externalities (ecosystem services) of pastoralism in the Maasai

Steppe compared to the price of meat ($/kg beef)

Pastoralism in the Maasai Steppe contributes to maintenance of Natural Capital

$7,73

$0,52 $0,35

$4,00

$2,03 $2,93

Carbon storage (high, medium, low) Land degradation prevention Contribution to tourism

Eco

syst

em s

ervi

ce ($

/kg

bee

f)

Positive externalities (ecosystem services) of pastoralism.

Meat price ($/kg beef)

• A share of annual tourism

revenues of adjacent

National Parks

• Attribution based on

economic and human capital

inputs

Positive externalities (ecosystem services) of pastoralism in the Maasai

Steppe compared to the price of meat ($/kg beef)

Economic modelling

Area

Monetary assessment

Qualitative assessment

Economic

Value chain model

Qualitative review

Household economy

model

Environmental

Biophysical herd model

Ecosystem services model

(pastoralism)

Social and

Human

Literature review

Environmental modelling

Area

Monetary assessment

Qualitative assessment

Economic

Value chain model

Qualitative review

Household economy

model

Environmental

Biophysical herd model

Ecosystem services model

(pastoralism)

Social and

Human

Literature review

Assessment of technical improvement based on literature, economic and biophysical herd models

Area

Monetary assessment

Qualitative assessment

Economic

Value chain model

Qualitative review

Household economy

model

Environmental

Biophysical herd model

Ecosystem services model

(pastoralism)

Social and

Human

Literature review

Ecosystem services model brings natural capital valuation in value chain perspective

Area

Monetary assessment

Qualitative assessment

Economic

Value chain model

Qualitative review

Household economy

model

Environmental

GLEAM herd model

Ecosystem services model

(pastoralism)

Social and

Human

Literature review

Pastoralism’s contribution to ES as a positive externality of food production

$7,73

$0,52 $0,35

$4,00

$2,03 $2,93

Carbon storage (high, medium, low) Land degradation prevention Contribution to tourism

Eco

syst

em s

ervi

ce ($

/kg

bee

f)

Positive externalities (ecosystem services) of pastoralism.

Meat price ($/kg beef)

Ecosystem services of pastoralism in the Maasai Steppe per kg of produced meat ($/kg beef)

Retail price ($/kg beef)