TheEconomicsofEcosystemsandBiodiversityfortheForestrySectorofAdjaraAutonomous

Republic,Georgia

PreparedbyDr.LukeBrander,Mr.ChansopheaktraSovann,Dr.DavitKharazishviliandMs.NinoMemiadzeonbehalfofWWF-CaucasusProgrammeOfficeDecember2016

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TableofcontentsExecutiveSummary...................................................................................................31.Background...........................................................................................................5

ProjectBackground...............................................................................................5Background:Historical,PoliticalandEconomicContexts.....................................5

2.Introduction..........................................................................................................9Objectivesofthisstudy.........................................................................................9EcosystemServices...............................................................................................9StateoftheEnvironmentandForestsinAdjaraandGeorgiainGeneral...........15KeyChallenges....................................................................................................23

3.StakeholdersandInstitutions.............................................................................26OverviewofForestManagementinGeorgia......................................................26OrganizationsinAdjaraForestManagement.....................................................27RegulatoryOverviewofAdjaraForestManagement..........................................31

4.Scenariosforforestecosystemservices.............................................................39Methodologicalframework................................................................................39Scenario1:Business-as-Usual.............................................................................40Scenario2:Degradation......................................................................................41Scenario3:ManagedUseandRestoration.........................................................42Scenariomaps.....................................................................................................43

5.EconomicvalueofforestecosystemservicesinAdjara......................................46Provisioningservices...........................................................................................46Carbonstorage....................................................................................................56Naturalhazardregulation...................................................................................61Summaryofecosystemservicevalues................................................................69

Acknowledgments...................................................................................................77References..............................................................................................................78Appendix1.Abbreviations......................................................................................82Appendix2.Forestuserquestionnaire...................................................................83Appendix3.Householdsurveyonnaturalhazarddamage....................................85Appendix4:CarbonStorage...................................................................................86Appendix5:SedimentExport.................................................................................90

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ExecutiveSummary

• The Economics of Ecosystems and Biodiversity (TEEB) is an international initiativepromoting sustainable economies in which the values of biodiversity and ecosystemservicesarefullyreflectedindecision-making.

• ThisdocumentdescribesaTEEBstudythatwasconductedfortheforestrysectorofAdjaraAutonomousRepublic.Thestudyassessestheeconomicvalueofforestecosystemservicesunderalternativescenariosforfutureforestmanagement,focusingonecosystemservicesthat are of high importance and potentially threatened, and prepares relevant policyrecommendations.

• TheAutonomousRepublicofAdjaraislocatedinsouthwesternGeorgiaonthecoastoftheBlackSea. Ithasapopulationof333,953spreadover2,880km2.Adjaraispredominantlymountainousandhashighlyvariedclimateconditions.IthasthehighestdensityofforestcoverofanyregioninGeorgia,covering66percentoftheterritory.

• Adjaran forests provide a rangeof ecosystem services including timber, fuelwood, non-timberforestproducts(NTFPs),tourismandrecreation,huntingandfishing,regulationofnatural hazards such as flooding and landslides, and global climate regulation throughstorage of carbon. Following stakeholder discussions, the following ecosystem serviceswereidentifiedasthefocusofthisstudy:fuelwood,NTFPs,carbonstorageandlandslideregulation.

• Three alternative descriptions of future forest management paths for the period 2015-2035aredevelopedandassessed:

o Business-as-Usual Scenario represents the region as narrowly oscillating aroundcurrent capacities and interests. Present conditions continue into the future andthereisnoappreciablechangeinforestqualityorquantity.

o DegradationScenariorepresentsaregionincrisis.Thereareintertwinedeconomicand political pressures, from within and outside which buffet Adjara, leading toreduced budgets for forest management and less international cooperation.Localisedover-exploitationof forest resources results in an 18%decline in forestcoverclosetopopulationcentresby2035.

o ManagedUseandRestorationScenario represents the full implementationof theAdjara Forest Agency Strategic Plan (2015). Degraded forests are restored andcommunitiesnolongerharvesttheirownwoodforsocialusesandtheirneedsaresuppliedbytheForestAgency.Forestcoverinthevicinityofvillagesisincreasedby16%throughtherestorationofpasture,scrubandsparsevegetation.

• The purpose of the scenario analysis is to provide useful reference points for policydevelopment. The Degradation and Restoration scenarios are assessed relative to theBusiness-As-Usual scenario to understand how the provision and value of ecosystemservices changes with changes in forest management. Land use changes under eachscenarioaremodelledinaGISandtheresultingchangesintheflowsofecosystemservicesare modeled using the InVEST tool. Changes under each scenario are assessed at twopoints in time (2020and2035) inorder toenable theevaluationof short termand longterm impacts on ecosystem services. The economic value of changes in the flows ofecosystemservicesaresubsequentlyestimatedusingaselectedsetofvaluationmethods.

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• ThechangesintheeconomicvalueofforestecosystemservicesinAdjaraarerepresentedinFigureE1.UndertheDegradationScenario,thereisanannuallossinwelfareofalmostUS$1.3millionin2035.Over50%ofthislossisduetoincreasedlandslidedamages.UndertheRestorationScenario, there isanannualwelfaregain forAdjariansequivalent to justoverUS$300,000in2035.Thesegainsaremainlyduetoincreasedprovisionoffuelwoodandreducedlandslidedamages.AnadditionalpotentialbenefitofalmostUS$400,000peryearcouldbeobtainediftheadditionalcarboncapturedbyincreasedforestcovercouldbecertifiedandcarboncreditssold.

• The results suggest that there is a strong economic case for well-conceived policyinterventions that can improve forest conditions and increase forest cover in Adjara. Tofacilitate the design and implementation of such policies in Adjara, it is necessary toaddressseveralunderlyingconstraints,including:1.knowledgedeficitregardingthevalueof forestecosystemservices;2.gaps in the frameworkof lawsandregulations for forestmanagement;3.capacityconstraintsintheAdjaraForestAgency;4.lackofempowermentforlocaldecisionmaking;and5.lackofreliablesourcesanddataonforestcondition.

FigureE1.ChangesinannualecosystemservicevaluesfromAdjaranforests(US$/year)

-800,000

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

Degrada/on2020

Degrada/on2035

Restora/on2020

Restora/on2035

Ecosystemse

rvicevalue(US$/year)

Fuelwood

NTFPs

Landslideregula/on

Carbon

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1.Background

ProjectBackgroundTheEuropeanUnionfunded“EuropeanNeighborhoodandPartnershipInstrument(ENPI)EastCountries Forest Law Enforcement and Governance (FLEG) II Program” aims to support theparticipatingcountriestostrengthenforestgovernance,policy,legislationandinstitutions.TheProgramis implementedinsevencountries:Armenia,Azerbaijan,Belarus,Georgia,Moldova,Ukraine, and the Russian Federation. It is carried out over a four-year period, ending inDecember2016.ItsimplementationisledbytheWorldBank,workinginpartnershipwiththeInternationalUnionforConservationofNatureandtheWorldWideFundforNature(WWF).

The Austrian Development Agency (ADA) provides additional funds to support Programactivities in Armenia and Georgia. The main Program activities which are implemented byWWF-CaucasusProgrammeOffice(WWF-CauPO)withthesupportofADAinGeorgia includeevaluation of biodiversity and ecosystem functions of forests, promoting sustainable forestmanagement,restorationofnaturalforestlandscapesandconservationofforestbiodiversity.

TheEconomicsofEcosystemsandBiodiversity(TEEB)isoneoftheimportantcomponentsoftheProgram.TEEBisaninternationalinitiativepromotingsustainableeconomiesinwhichthevaluesofbiodiversityandecosystemservicesare fully reflected indecision-making. In2007,the German Federal Ministry for the Environment and the European Commission initiatedwork on TEEB. In 2013, as a joint effort of the Government of Georgia, United NationsEnvironment Programme (UNEP) andWWF–Caucasus ProgrammeOffice (WWF-CauPO), the“TEEBScopingStudyforGeorgia:MainFindingsandWayForward”wasproduced.Thestudyassessed five sectors of the Georgian economy – energy, tourism, agriculture, mining andforestry,demonstratingthatthesesectorslargelydependonnaturalecosystems.Theneedforafull-scaleTEEBstudywasalsoidentified.

IntheframeworkoftheFLEGIIProgram,itwasdecided(basedontheagreementwiththekeystakeholders,includingrespectivestateforestryauthorities)toconductafull-scaleTEEBstudyfor forests and the forestry sector of Adjara Autonomous Republic (Georgia).Main reasonswerethehighpercentageof forestcoverandtheessentialprotective(ecological)andsocio-economicfunctionsofforestsinAdjara.

This first interim report of the TEEB study for the forestry sector of Adjara AutonomousRepublicprovidesdetailsofthescopingphaseofthestudy.Specifically,itprovidesasummaryof discussions at the kick-off stakeholder workshop; summary of discussions at subsequent(individual) stakeholdermeetings; a refined set of objectives for the study; a list of the keyecosystemservicestobeassessedinthestudyandtheassessmentmethodstobeapplied;anoutlineoftheforestmanagementscenariostobeassessed;alistofdataneedsandthemeansofcollection;andanoutlinefortheTEEBstudyreport.

Background:Historical,PoliticalandEconomicContextsLocated at the intersection of Asia and Europe, Georgia straddles the Caucasus mountainswhichformedwhentheArabianplatecollidedwiththeEurasianplate25millionyearsago.ToitswestliestheBlackSea,toitssouthTurkeyandArmenia,toitssoutheastliesAzerbaijanandto its north liesRussia.Although it is notdenselypopulated—Georgiahas about3.9million

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peoplespreadoveranareaofapproximately70,000squarekilometers—it isa fairlydiversecountry. Theyaredivided into11administrativeunits comprisingof9provinces, the capitalcityTbilisiandtheAutonomousRepublicsofAdjaraandAbkhazia.

Afterpeaking inpolitical andeconomicpower in the12th centuryunder theKingDavidandQueen Tamar, Georgia remained for centuries dominated by its much larger neighboringempires. Till the 18th century, the Islamic Ottoman and Persian empires were the maincontendersoverthisterritory.Afterthemid-18thcentury,theRussianempirebegantoemergeas themain power in the region. Over the following decades, the territory of Georgia wasgradually absorbed into the Russian empire. Revolution in Imperial Russia and the ensuingchaosledtoabriefperiodofGeorgianindependencein1918-1921.In1921,thecountrywasinvaded by the Red Army and Georgia was absorbed into the Soviet Union as the SovietSocialist Republic. After the dissolution of the Soviet Union, Georgia became independentagainin1991.

Civil,politicalandeconomicturmoilfollowedthedissolutionoftheSovietUnionandparalyzedGeorgia’spost-independenceprogress.FissiparoustendenciessuppressedduringSoviettimesre-emerged in the entire South Caucasus region leading to enduring and still unresolvedterritorialconflicts.EconomicoutputalsosufferedwiththerapiddismantlingofeconomictiesexistingintheSovietperiod.Consequently,by2010,GeorgianGNPremainedlessthanwhatithadbeenduringSoviettimes.

The Rose Revolution in 2003 was the beginning of Georgian efforts to restructure andmodernizeitsgovernanceandeconomy,movingawayfromitsSovietunderpinning.Aseriesofsubsequent economic reforms and anti-corruption measures swiftly implemented by theGeorgian government gainednotablemention in the international press and in publicationssuchasthoseoftheWorldBank.Thiswasfollowedbyaperiodofsustainedeconomicgrowthinwhichforeigninvestmentplayedaprominentrole.GrossDomesticProduct(GDP)increasedfromaboutUS$3billiontoUS$14billionandGNIpercapita increasedfromUS$750toUS$4,160between2000and2015(Figure1).Asanindicatorofthisprogress,Georgiawasrecentlyreclassified by the World Bank from a lower middle income country to an upper-middleincomecountry(WorldDevelopmentIndicators).

Figure1:GeorgiaGDPandFDInetinflows2000-2015.Source:WorldDevelopmentIndicators

However,thisperiodofgrowthcameonlyaftermajoreconomicdeclineinthe1990s,duringwhichGeorgia’sGDPhadhalved(Figure2),whichmeansthatsofarthecountryhasonlymade

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up lost ground. The annual GDP growth rate peaked in 2006-07 (at 12.3 percent),correspondingwithamassiveten-foldriseinFDIfrom2002to2007.Externalshocks,i.e.thearmedconflictwithRussiaandglobalfinancialcrisisbetween2008-09,ledtoadipintheGDPgrowth in 2009. Although the economy recovered in the subsequent years up to 2014, FDIinflows have not recovered to their previously high levels. GDP growth slowed down onceagain in 2015 due to recessions in major trading partner countries such as Azerbaijan andRussia.

Figure2:GeorgiaGDPandannualgrowthrate,1990-2004.Source:WorldDevelopmentIndicators

Despite these travails, Georgia is starting to consolidate its political and economicmodernization.Politicalpowerwasrelativelysmoothlytransferredfromtherulingpartytotheoppositionaftertheelectionsof2012.Theeconomyisalsodiversifying.Tradeandindustryarethe largest sectors of the economy (16.5 percent each), followed by Transport andCommunication services (10.7percent), andPublicAdministration (9.3percent).Agriculture,Forestry and Fishing (9.2 percent), and Construction (8.0 percent) are the other importantsectors of the economy (Figure 1, Geostat 2015). Tourism is one of the fastest growingeconomicsectorsinGeorgia–totalcontributionsaccountingfor23.5percentofGDPand20.1percentoftotaldirectandindirectemploymentin2015.Thesectoralsocurrentlyprovidesasmuch as 36.4 percent of total export earnings. Georgia’s major industrial activities includemining,energyproduction,andmanufacturingmetalsandmachinery.Inagriculture,livestockbreedingandcultivationofgrapes,hazelnuts,andcitrusfruitsarethemainactivities(UNEP&WWF2013).ApercapitaGNIwasUS$4,160in2015(WorldDevelopmentIndicators).

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Figure3:GeorgiaGDPStructurein2015.Source:Geostat(2015)

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2.Introduction

This chapter sets out the objectives of the study and provides a brief overview of theEcosystemsServicesapproach;TheEconomicsofEcosystemServices(TEEB);thestateoftheenvironmentandforestsinAdjara;andthekeychallengesfacingAdjaranforests.

ObjectivesofthisstudyThemainobjectiveofthisstudyistoconductafull-fledgedTEEBstudyfortheforestrysectorofAdjaraAutonomousRepublicandpreparerelevantpolicyrecommendations.ThestudywillcontributetothefulfillmentoftheFLEGIIProgramDevelopmentObjective“Revieworreviseforest sector policies and legal and administrative structures; improve knowledge of andsupportforsustainableforestmanagementandgoodforestgovernance(includingtheimpactof relatedEU regulations) in theparticipatingcountries”.Theoutcomesof this studyshouldhelpachievesustainable forestmanagement inAdjara.To thisendthespecificobjectivesofthestudyareto:

1. DevelopalternativefuturescenariosforforestmanagementandforestconditioninAdjara.

2. Assesstheeconomicvalueofforestecosystemservicesunderalternativescenariosforfutureforestmanagement,focusingonecosystemservicesthatareofhighimportanceandpotentiallythreatened.Theanalysisshouldrepresentspatialvariationinpressuresandecosystemservicevaluesandexaminetheirimplications.

3. Developpolicyrecommendationsforforestmanagementinlightoftheresultsoftheeconomicanalysis.

EcosystemServicesHumanWell-Being&EcosystemServices

Ecosystem services have been gaining increasing interest from policymakers and researchcommunities in recent years (Costanza et al. 1997;MillenniumEcosystemAssessment (MA)2005;TEEBforNationalandInternationalPolicymakers2009;DeGrootetal.2010;Costanzaetal.2014).Natureprovidesawiderangeofindispensableservicesincludingfood,water,andclimate regulation that contribute to the health, livelihoods, and security of communitiesacrosstheworld.Untilpopulationandindustrialpressuresstartedputtingseverepressureonecosystems,littleattentionwaspaidtothevaluetheyprovidedtosociety.Oncecarryingandabsorptivecapacitiesbegantobevisiblystressedinthelatterhalfofthe20thcentury,interestinecosystemservicesandhowtosafeguardthembegantopermeatepolicyagendas.

Since ecosystem services are generally not traded, conventionalmarkets do not reflect thetrue value of these services and they are often ignored in the financial and economiccalculations that guide decision making. This leads to a bias against protecting theenvironment,which is usually not apparent or visible in the short-termbut can havemajordeleterious effects in the longer term on human health and the economy. As a result, 60percent of ecosystem services are “being degraded or used unsustainably” (MA 2005). Toillustrate this tendency, the TEEB Guide for National and International Policymakers (2009)highlightsthat:

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• Overthelastcentury,theplanethaslost35percentofmangroves,40percentofforestsand50percentofwetlands.

• Morethanabillionpeopleindevelopingcountriesrelyonfishasamajorfoodsource,yet80percentoftheworld’sfisheriesareover-exploited.

• Deforestationisamajorproblem,accountingforbetween18-25percentofglobalCO2emissions,yettheglobalnetlossofforestareabetween2000-2005was7.3millionhectares/year.

• Studiesestimatecostsupto$500billionby20101asaresultoffailuretostopbiodiversityloss.

Policyinterventionsbasedonmoreaccurateinformationprovidedbyvaluationofecosystemsserves are needed. In the 1990s, a series of innovative studies made the first attempts toestimate the value of ecosystems services (Costanza et al. 1997,Daily 1997). The results ofthese studies indicated the extent of our dependenceupon thenaturalworld.More recentestimates suggest that ecosystems services are now providing as much as US$ 145 trillionannually(Costanzaetal.2014).2Thesestudiesalsosuggestthatignoringecosystemsserviceswillleadtoasignificantdeclineinhumanwell-beingandeconomicwealth(MA2005,TEEBforNationalandInternationalPolicymakers2009).EcosystemServices&ConceptualFrameworksThe concept of ecosystem services provides a useful means to identify the economicimportanceof thenaturalenvironmenttohumans.Theterm“ecosystemservices”hasbeendefinedinanumberofdifferentways(seedefinitionbox1)butputmostsimply,theyarethevarietyofbenefitsthatpeopleobtainfromtheenvironment.

1estimatedvalueofecosystemservicesthatwouldhavebeenprovidedifbiodiversityhadbeenmaintainedat2000levels2$125trillion/yearassumingupdatedunitvaluesandchangestobiomeareas,$145trillion/yearassumingonlyunitvalueschanged(Costanzaetal.2014)

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DefinitionBox1:EcosystemServices

A number of different definitions of ecosystem services have been developedthroughdifferentinitiatives.Theseinclude:

Ecosystemservicesarethebenefitsthatecosystemsprovideforpeople(MillenniumEcosystemAssessment–MA,2005).

Ecosystemservicesarethedirectandindirectcontributionsofecosystemstohumanwell-being(TheEconomicsofEcosystemsandBiodiversity–TEEB,2010)

Ecosystemservicesrefertothosecontributionsofthenaturalworldthatareusedtoproduce goodswhich people value (UKNational EcosystemAssessment – UKNEA,2011).

Ecosystem services are the contributions that ecosystems make to human well-being(CommonInternationalClassificationofEcosystemServices–CICES,2012).

Similarly there are a number of different classification systems for ecosystemservicesincludingthosedevelopedbytheMA(2005),TEEB(2010),andCICES(2012).All classifications make a distinction between “provisioning”, “regulating” and“cultural” services. The Millennium Ecosystem Assessment classification alsoincludesthecategory“supporting”services.

Provisioning services are the “tangible products obtained from ecosystems”.Examplesincludefood,timberandfuel.

Regulating services are the “benefits obtained from the regulation of ecosystemprocesses”. Examples include water flow regulation, carbon sequestration andprotectionfromstorms.

Cultural services are the “non-material benefits people obtain from ecosystemsthrough spiritual enrichment, cognitive development, reflection, recreation, andaestheticexperiences”.

Supporting services “are necessary for the production of all other ecosystemservices”.Examplesincludenutrientcycling,soilformationandprimaryproduction.

Thedistinctionbetweensupportingservicesandotherecosystemservicesisrelatedtothedistinctionbetween“intermediate”and“final”ecosystemservices,whichcanbedefinedas:

Final ecosystem services are the last item in the chain of natural processes thatprovide inputstothegenerationofproducts(goodsandservices)thatareusedbyhumans. Some ecosystem services are used as inputs in the production ofmanufactured products (e.g. trees used to make timber) whereas others areconsumeddirectly(e.g.anaturalareausedforrecreation)(UKNEA,2011).

Intermediate ecosystem services are natural processes that contribute to otherecosystem functions, but do not directly input into the production of goodsconsumedbyhumans(UKNEA,2011)

The concept and understanding of ecosystem services and their economic values has beengreatlyadvancedduring thepastdecadethroughanumberof international initiatives,most

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notablytheMillenniumEcosystemAssessment(MA,2005)andTheEconomicsofEcosystemsand Biodiversity (TEEB, 2010a) – both supported by the United Nations EnvironmentProgramme(UNEP).

TheEconomicsofEcosystemsandBiodiversity(TEEB)isaglobalinitiativefocusedondrawingattentionto theeconomicbenefitsofecosystemservicesandbiodiversity.TEEBpresentsanapproach that can help decision-makers recognize, demonstrate and capture the values ofecosystem services and biodiversity. The TEEB initiative was started in 2007 by theenvironmentministersoftheG8+5countrieswhowantedto“initiatetheprocessofanalysingtheglobaleconomicbenefitofbiologicaldiversity,thecostsofthelossofbiodiversityandthefailuretotakeprotectivemeasuresversusthecostsofeffectiveconservation.”

TEEBidentifiesthreetiersforusingeconomicvaluationofecosystemsandbiodiversity(TEEB2010b). The first is recognising valueor a qualitative acknowledgementof thebenefits thatecosystems and biodiversity provide. The second tier is demonstrating value and requiresquantifyingecosystemservicesinmonetaryterms.Thethirdandfinaltier iscapturingvalue,which consists of a detailed economic analysis for policies that provide incentives forecosystemconservation.Foreachdecisionmakingcontexttheneedfordetailintheeconomicassessmentofecosystemsandbiodiversitywillbedifferent.Insomecasestherecognitionofvaluemaybesufficienttoinitiateconservationefforts,whereasinothercasesafulleconomicassessmentthatdemonstratesandcapturesecosystemservicevaluesmaybeneededtoaligntheinterestsofallpartiesinvolved.

The TEEB framework can be used to achieve a variety of goals. One is to make people ingeneral and policy makers in particular explicitly aware of the benefits they obtain fromnatural resources.Manyecosystemservicesare taken forgranted, suchas thebenefitsofastable climate but also of going out to fish or collect wood for a fire. Another goal is toillustratewhose livelihoodswill be affected by a change in ecosystems. The loss of a largesection ofmangrove forestmay be lamentable to thosewho value its biodiversity, but thelandowner who acquired the rights to develop the area is unlikely to accept a delay ordecreaseinhisreturnoninvestment.

TheTEEBframeworkfordemonstratingandcapturingeconomicvalueconsistsofsixsteps:

1. Specifyandagreeontheproblem.

2. Identifywhichecosystemservicesarerelevant.

3. Defineinformationneedsandselectappropriatemethods.

4. Assessexpectedchangesandrisksfortheflowofecosystemservices.

5. Identifydistributionalimpactsofpolicyoptions.

6. Review,refineandreportresults.

The TEEB guidancemanual for country studies (TEEB, 2013) provides detailed guidance onthesesixstepstogetherwithillustrativecasestudies.

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Economicvaluationofecosystemservices

Therationaleforeconomicvaluationofecosystemservicesistosupportdecisionmaking.Thereasoning isas follows.Ecosystemservicescontributesubstantially tohumanwelfareand insomecasesarefundamentaltosustaininglife(e.g.climateregulation,nutrientrecycling).Thenaturalresourcesfromwhichtheseservicesfloware,however, finiteandcannotnecessarilybe regenerated or replaced.With growing human populations and consumption per capitaincreasingovertime, it ishighly likelythathumanuseofnaturalresourceswilloutstriptheiravailability(i.e.humanuseoftheenvironmentwillbeunsustainable).Thesesimplerealitiesofresourcelimitationmeanthatchoiceshavetobemadebetweenalternativeusesofavailableresources;andeverytimeadecisionismadetodoonething,thisisalsoadecisionnottodoanother. In other words, values are implicitly placed on each option. This valuation isunavoidableandistheessenceofdecisionmaking.Soifvaluationofalternativeresourceusesis unavoidable in making decisions, it is arguably better to make these values explicit andensurethattheyarewellinformedinordertoaiddecisionmaking.Theeconomicvaluationofnaturalresourcesandecosystemservicesattemptstodothis.

The economic value of ecosystem services is a quantitativemeasure of the contribution ofthese services to human wellbeing (Pascual et al., 2010). Economic values for ecosystemservicesaregenerallyexpressedinmonetaryunitssothattheycanbedirectlycomparedwithother economic values in decision-making processes. Inmarket-based economies, economicvalues for goods and services are conventionally observed asmarket prices that reflect thebenefitsofconsumption(demand)andthecostsofproduction(supply).Formostecosystemservices, however, markets do not exist due to their open-access nature and so economicvaluesarenotreadilyobservable. Insuchcases,economicvaluescanbeestimatedusingso-callednon-marketvaluationmethods.

The concept of Total Economic Value (TEV) of an ecosystem is used to describe thecomprehensivesetofutilitarianvaluesderivedfromthatecosystem.Thisconceptisusefulforidentifyingthedifferenttypesofvaluethatmaybederivedfromanecosystem.TEVcomprisesof use values and non-use values. Use values are the benefits that are derived from somephysicaluseoftheresource.Directusevaluesmayderivefromon-siteextractionofresources(e.g.fuelwood)ornon-consumptiveactivities(e.g.recreation).Indirectusevaluesarederivedfromoff-siteservicesthatarerelatedtotheresource(e.g.downstreamfloodcontrol,climateregulation).Optionvalue is thevalue thatpeopleplaceonmaintaining theoption touseanecosystem resource in the future. Non-use values are derived from the knowledge that anecosystemismaintainedwithoutregardtoanycurrentorfuturepersonaluse.Non-usevaluesmay be related to altruism (maintaining an ecosystem for others), bequest (for futuregenerations) andexistence (preservationunrelated toanyuse)motivations. The constituentvaluesofTEVaredescribedinTable1andrepresentedinFigure4.

Itisimportanttounderstandthatthe“total”inTotalEconomicValuereferstotheaggregationofdifferentsourcesofvalueratherthanthesumofallvaluederivedfromaresource.TEVisameasureoftotalvalueasapposedtopartialvalue.Accordingly,manyestimatesofTEVareformarginalchangesintheprovisionofecosystemservicesbut“total”inthesensethattheytakeacomprehensiveviewofsourcesofvalue.ThemainpurposeofestimatingTEVistoshowthemarginaleffectonecosystemsarisingfrompolicychanges,andtheresultantbenefitsorcostsforwellbeing.TheTEVandecosystemserviceconceptsarecomplementary,andtheirrelationisshowninTable2.

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Figure4:ThecomponentsofTotalEconomicValueTable1:ThecomponentsofTotalEconomicValue.Source:TEEBFoundations2010

Table2:CorrespondencebetweenecosystemservicesandcomponentsofTotalEconomicValue.Source:AdaptedfromTEEBFoundations(2010) TotalEconomicValue Ecosystemservice Directuse Indirectuse Option

valueNon-use

Provisioning X X Regulating X X Cultural X X XBroadly, thereare threeapproaches formethodsofeconomicvaluation–marketvaluation,revealed preference, and stated preferences (TEEB Foundations 2010). The first approach,direct market valuation includes methods that rely primarily on data from actual marketsregarding costs and benefits. The second approach is termed the revealed preferenceapproach and relies on observations of individual choices in existing markets. Finally, inabsenceofanymarketsrelatedtotheecosystemservice,thestatedpreferenceapproachcanbeusedtogetdatafromsurveysregardinghypotheticalmarkets.

TotalEconomicValue

UseValue Non-UseValue

DirectUse IndirectUse Option Altruism Bequest Existence

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Themarketvaluationapproachcanfurtherbedividedintoprice,cost,andproductionbasedsubtypes.Pricebasedmethodsmeasurethevalueofanecosystemserviceforwhichthereiswell functioningmarket, so that theprice is a good indicator of its value. Productionbasedmethodsestimatetheeffectofecosystemservicesongoodstradedinthemarketwiththeaimofbringingoutthelinkagebetweenimprovementsinecosystemsandeconomicoutcomes.

Costbasedmethodsestimatethecostsincurrediftheserviceshavetobereplacedbyartificialmeans(GarrodandWillis1999inTEEBFoundations2010). Incostbasedmethods,therearemultipletechniquesthatcanbeapplied.Theavoidedcostmethodaccountsforthecoststhatwouldbeincurredintheabsenceofgivenecosystemservices.Thereplacementcostmethodaims to measure the costs of replacing ecosystem services with artificial technologies. Themitigation/restoration cost method estimates the costs of restoring damaged ecosystemservicesormitigatingtheeffectsoftheirloss/damage.

Selectionofavaluationapproachandmethod is linked to theMAandTEV frameworks.Forexample,thevaluationofculturalservicesistypicallythroughstatedorrevealedpreferencesmethodsgiventhe lackofmarkets for this typeofservices.Ontheotherhand,provisioningandregulatoryservicesaretypicallyvaluedinmarketapproachesduetotheabilitytoaccessorgeneratedataoncostsofproductionorconsequencesofdamage.

Consider the example of valuation methods used for ecosystem services in forests. Themethodsthathavebeenusedinthesevaluationsdifferconsiderablydependinguponthetypeofecosystemserviceoftheforestbeingstudied.Forculturalservices,themajorityofstudiesusea revealedpreferenceapproach (57%), followedbya statedpreferenceapproach (37%)(TEEBFoundations2010).When it comes toprovisioning services,most studiesuseeitheracost based (30%) or production based (30%) approach with the most commonly usedtechniquebeingthefactorincomemethod.Regulatingservicesarealmostalwaysvaluedusingthecostbasedapproach (69%),withavoidedcost, replacementcostanddamagecostbeingthemost commonly used valuationmethods. Finally, supporting services are usually valuedusingthestatedpreferenceapproach(50%)andoccasionallythroughtherevealedpreferenceapproach(36%).

Thus, there are several options for valuationof ecosystem services, and the selectionof anappropriatevaluationapproachandmethoddependsonthenatureoftheecosystemservicebeingstudiedandthetypeofvaluebeingmeasured.

StateoftheEnvironmentandForestsinAdjaraandGeorgiainGeneralTheAutonomousRepublic ofAdjara is located in southwesternGeorgiaon the coast of theBlack Sea. It has a population of 333,953 spread over 2,880 km2 (2014 Census). Adjara isdivided into 6 administrative units – Batumi city, Qeda, Khelvachauri, Khulo, Kobuleti, andShuakhevi Municipalities (districts). Adjara, due to its status, enjoys more autonomy thanotherGeorgianregions.

EcologicalConditions

Georgia is well known for its highly diverse ecology. It is mostly a mountainous country.Forests cover about40percentof the total territory,which is thehighestproportion in theCaucasusregion.Theclimatevariesbyregion,withacontinentalclimateinsouthernregions,

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humidsubtropicalclimateinthewest,andamoderatelyhumidclimateineasternGeorgia.Itsdiversity in natural conditions corresponds with a richness in biodiversity that is of globalsignificance.Forthisreason,Georgiaisonthelistof200ecoregionsidentifiedbyWWFacrossthe globe (WWF2007 inUNEP&WWF2013). In addition,Georgia is part of twoof the 34global biodiversity hotspots—areaswith a high concentration of endemic biodiversity and ahighdegreeofvulnerabilitytoenvironmentalthreats(Mittermeiretal.2005inUNEP&WWF2013).

Like the restofGeorgia,Adjara is alsopredominantlymountainous.Mountains comprise80percent of its territory, while foothills and lowlands cover only 15 percent and 5 percentrespectively. Themountainous relief itself is quite diverse. Thehighestmountains ofAdjarahaveanaltitudeof less than3,000manddonothaveapermanent snowshield,buton theGoderdzipass(2,025meters)andonthehillsofsomeothermountainsremainsnowcoveredfor7-8monthsoftheyear.TheMeskhetian,ArsianiandShavshvetihillsareatanaltitudeof1,000to2,000monaverage,whiletheeasternpartoftherangeis200to1,000minaltitude.There are low-lying regions and mountain slopes in the coastal region, between 100-200metersofaltitude(UNDP2013).

The climate conditions in Adjara’s regions are varied. The temperatures differ significantlybetweenthecoastalandmountainousareaswiththeaveragecoastaltemperateofaround140C and going as low as 2.40 C in Goderdzi Pass. Adjara receives the highest amounts ofprecipitationinGeorgiaaswellastheCaucasuswithanaverageof1,500to2,500mmannualprecipitationandamaximuminexcessof4,000mm.Thehighestprecipitationisinthecoastalareas, particularly Batumi, and decreases at greater heights. The overall high level ofprecipitationindicatesanabundanceofwatersources.

Adjara ishome tomanyprotected speciesof floraand fauna (AdjaraRegionalDevelopmentStrategy2011).TheflorainAdjaracoversalmost1,900speciesfrom138families.Thisincludes13narrowlyendemicspecies.Adjaraissimilarlyrichinfaunaaswell,withatotalof1837wildspeciesofwhich20areprotectedundertheRedListinGeorgia,includingthoseclassifiedbythe IUCNasunderextinctionalertandasvulnerablespecies.Theforestecosystemshousealarge number of these flora and fauna species, further highlighting their importance inpreservingbiodiversityinthisregion.

Georgia, including Adjara, faces several environmental threats, primarily regarding landdegradation and natural hazards, and also in terms of deteriorating air quality and wastemanagement.Forestshavebeenmassivelydepletedovertheyearswithestimatesindicatingthatcanopycoverhas reachedcritically low levels inmore thanhalfof the total forestarea(NBSAP-1 2005 in UNEP &WWF 2013). Natural disasters have had a devastating impact -between 1995 and 2010, the national environment agency recorded 164 flood events inGeorgia, including in Ajara. Finally, the climate patterns are shifting notably, with a 10-15percent increase in precipitation in lowland areas and at the same time a 15-20 percentdecreaseinsensitivemountainareasinGeorgia(WorldBank2015).Anotherworryingtrendisvisible in themean annual temperature which has increased between 0.2 and 0.3 degreesCelsius from the1990’sonwards, and is projected to1.6 to1.7degrees inGeorgiaby2050(UNDP2013).

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OveralldescriptionofAdjaranforests

Adjara has the highest density of forest cover in Georgia (MENRP 2015), with Forest Fundcovering around 66% (nearly 192,500 ha of the 290,000 ha total area) (UNDP 2013). Themajorityofthisforestcovercomprisesofnaturalforests.Artificialforests,pastures,andforestfarmsmakeuptherestofthearea,alongwithburnedgroves,hayfields,andvineyardswhichcoveranegligibleportion.

Adjara’s forestsarehometoawiderangeof treeandshrubspecies,withmorethan400 intotal.Thedominantspeciesarebeech,chestnut,spruce,andfir(Figure5).Anotablefactoristheaverageageofthesespecies,withmostofthemover70yearsold,andsomespecieslikefirandbeechaveragingmorethan120years(Table3).

Figure5:MainWoodyspeciesinAdjaranForests.Source:UNDPinGeorgia(2013)Table3:TreespeciesandcoverinAdjaranForests.Source:UNDPinGeorgia(2013)

Species Totalarea,ha Percentagearea

Averageage,year

Totalstockofphyto-mass,thousandm3

Fir 19,213 10.24% 120 12,735Spruce 24,223 12.92% 84 14,086Pine-tree 1,587 0.85% 53 542Beech 80,255 42.79% 130 42,484Oak 6,807 3.63% 70 1,205Hornbeam 6,656 3.55% 70 2,091Chestnut 26,324 14.04% 71 10,127Alder 11,818 6.30% 52 2,845Rhododendron 8,683 4.63% 29 403Cherry-laurel 1,988 1.06% 41 56Total 187,554 100% 87,572

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Themajorityof vegetationcover isbetween1000mto2000mabove sea level (50percent),while about 12 percent of vegetation lies above 2000m (Table 4). The accessibility of theforestsisdifficultgiventhatmorethan60percentoftheforestsarelocatedonslopeswithaninclinationofmore than25degreesandof thisabouta third lieon slopesofmore than35degreesinclination(MENRP2015).

Table4:VegetationCoverbyElevationinAdjara.Source:MENRP(2015)

Adjara has four protected areas: Mtirala national park,Machakhela national park, Kobuleti(Ispani) protected area, and Kintrishi protected area covering a total area of about 40,000hectares(Table5).ThemainfunctionoftheseprotectedareasistopreservetheuniquefloraandfaunaspeciesofColchis.TheKintrishiprotectedareasandMachakhelanationalparkaremostly forest areas with an extremely high number of relict, relict-endemic, and endemicspecies.TheMtiralanationalparkhasdiverselandscapeandisdividedinto3areas–astrictprotectionzonewithsensitiveecosystems,avisitor’szone,andatraditionalusezonewherethe locals continue controlled traditional uses of forests. Kobuleti protected areas mainlyconsistofwetlandswithbiologicalsignificance,suchasthegrassymarshIspani-2,preservedinitsnaturalstate(UNDPinGeorgia2013).

Table5:ProtectedAreasinAdjara.Source:UNDPinGeorgia(2013)

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EcosystemServicesfromAdjaranForests

Timber

ForestinAjaraisrichinwoodwiththetotalstockestimatedatmorethan51millionm3(Table6).Thewoodstockamountsto266m3perhectare.Growingannuallyat2.7m3perhectare,thetotalannualincrementisabout519,700m3.

Table6:AdjaraTimberResourcesOverview.Source:MEPNR(2015)

TheforestareaswithtimberresourcesareparticularlyconcentratedintheQeda,Shuakhevi,andKhuloMunicipalities (Table7).ShuakheviMunicipalityhas themaximumforestcoveraswell as timber reserves estimated at around 14 million m3, followed by Qeda which hasreserves of around 12millionm3. Khelvachauri has the least timber reserves amongAdjaraMunicipalities,estimatedat3.8millionm3.

Table7:TimberResourcesinAdjarabyMunicipality.Source:AdjaraRegionalDevelopmentStrategy(2011)

TheauthorizedfellingoftimberinAdjarawasestimatedin2015tobe3,914m3,whichislessthan half of the total allowable cut (11,119 m3). Most logging took place in Khulo andShuakhevi Municipalities. The extent of actual logging volumes in the remaining threemunicipalitieswaslimited.

UnauthorizedanddetectedlogginginAdjaranforestsislimited,andestimatedtototalon449m3 in 2009 (Adjara Regional Development Strategy 2011). It was mainly concentrated inKhelvachauri and QedaMunicipalities, followed by Shuakhevi. Kobuleti and Khulo had onlylimited amounts of officially revealed unauthorized felling (Adjara Regional DevelopmentStrategy2011).

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Figure6:UseofTimberResourcesinAdjaranForestsin2015.Source:DEPNRofAdjaraAutonomousRepublic(2016).

FuelWood

Morethan90percentofallauthorizedtreefelling intheregion is for fuelwood. In2009, itwasestimatedthatof130,478m3ofauthorizedfelling,about122,607m3wasforfuelwood.ThebulkofthisauthorizedcuttingoccursintheKhuloandQedamunicipalities.Theactualuseofauthorisedfuelwoodresources,however,islessthanhalfofwhatisallowed(seeFigure6).

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Figure7:UseofFuelwoodresourcesinAdjaraForestsin2015.Source:DEPNRofAdjaraAutonomousRepublic(2016).Theamountofunauthorizedloggingoffuelwoodwasmuchhigherthanthatfortimber.Illegalcuttingoffuelwoodtotalled2,015m3,almostfivetimestheamountofillegalfellingoftimber(Figure8). Thiswashighest in theQedaarea, but alsohigh inKhelvachauri, Shuakhevi, andKhulo.

Figure8:UnauthorizedUsageofFuelwoodinAdjaraForests.Source:AdjaraRegionalDevelopmentStrategy(2011)

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RecreationandTourism

Tourism is an important industry in Adjara with over a million visitors coming to Adjaraannually (Dept. of Tourism-Adjara). This industry has grown particularly rapidly since 2008,withvarious large investments intourist infrastructurebeingmadeinthepastseveralyears.Mostof thetourism is restrictedtoBatumi,butecotourism, introducedonly in2007, isalsobecoming increasinglypopular inrecentyears.Still, thenumbersofvisitorstotheprotectedareas are relatively low, though itwas estimated that in 2011 therewereover 30,000 suchvisitors.

Regulationofnaturalhazards

Adjara’s forests are fundamental to regulation of erosion and water and protection fromlandslidesandnaturalhazards.Morethantwo-thirdsof theforests inAdjaraare involved insoil protection and water regulation functions (UNDP 2013). The region of Adjara is highlysusceptible to frequent landslides occurring 4-5 times a year. It causes damage toinfrastructure and houses, leading to displacement among local community members andrequirementofcompensationfromthegovernment.Thus,protectionfromlandslidesisakeyecosystemserviceprovidedbyAdjara’sforests.

Figure9:FunctionalDistributionofAdjaraForests.Source:UNDPinGeorgia(2013)

Climateregulation

Further, Adjara’s forests contribute to the global community through carbon sequestration,absorbinggreenhousegasessuchascarbondioxide.PreviousstudiesestimatethattheforestcoverinAdjaraabsorbs167,000tonnesofcarbondioxideannually(UNDP2013).

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KeyChallenges

PolicyChallengesContext

Policydecisionsandinterventionsacrossmultiplelevelsofgovernanceareoftentakenwithoutsufficientlyconsideringthecostsandbenefitsrelatedtoecosystems.Whilethereisagrowingawarenessoftheimportanceofecosystemsandbiodiversity,incorporatingthemfullyinpolicymakingisstillawork-in-progress.

Policy interventionscandeliversocio-economicoutcomesmoreeffectivelyandsustainably ifthey capture the economic value of ecosystem services. The impacts of undervaluedecosystem services leads not just to large scale environmental degradation but also workscounter to economic development. Countering these negative impacts often requiresexpensive policy interventions at a later stage, even though the considerationof these freeservicesinpolicydecisionscouldhavehelpedavoidthenecessityoftheseinterventions,andatalessersocialcost.

Further, since the fundamental nature of policymaking involves making trade-offs, aneconomic valuation of ecosystem services would greatly aid in guiding policy decisions(DepartmentforEnvironment,FoodandRuralAffairsofU.K2007).Policychoicescanbemademoreefficientlywhenthecostsandbenefitsareclearandmeasurable.Mappingthelinkagesbetween ecology and human welfare scientifically, interpreting the economics of theselinkages, and including them in policy assessments would therefore lead to more optimalpolicyoutcomes.

ForestSectorChallengesinAdjara

There are several challenges to sustainable forestmanagement inAdjara such as the forestdisease, overgrazing, and illegal logging. Although the precise scale of forest degradation isunclear,employeesof the forestagencyestimate thatup to60percentof the forest is inastate of degradation and has lost the ability for natural restoration and self-generation.Current efforts to counter this trend, including production and distribution of saplings andfencingoffcertainareashaveproveninsufficient.

Table8:DiseasesandForestDegradationinAdjaraForests.Source:UNDPinGeorgia(2013)

IllegalLogging

Thenational statisticalbodyGeostatestimated that in2014, theamountof timberofficially(legally) harvested from Georgian forests amounted to 670,241 cubic metres, from whichabout11.6percentor77,981cubicmetreswasharvestedinAdjara.Sociallogging(i.e.loggingoffuelwoodandsmall-sizedtimberforpersonalconsumptiononly)inAdjaraispermittedwith

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limitsof100to150thousandm3oftimberperannum(UNDP2013).LogginginAdjaraforestsismainlybytheruralpopulationratherthanonacommercialscaleduetoalackofeconomicviability.

Illegalloggingisanissuealthoughitslevelshavereducedinrecentyears.In2013thereweremorethan500casesregisteredofillegallogging,whereatotalof2646m3oftimberwascutdown in Adjara (UNDP 2013). Logging has spillover effects as well. It increases the risk oflandslides,andsincea largeportionofassimilatedwood isnotpulledout, it is left todecayandtherebyreducesthecarbonsequestrationfunctionsoftheforest. Illegal logging isoftendonebylocalcommunitiesinordertouseitasfuelwoodgiventhelackofaccesstoalternateenergysources.Studieshave indicatedthat the levelsof loggingarenothighpersebut theproblemisoffellingtreesinareaswhereitisnotpermitted.Theissueisfurthercomplicatedby the poverty of the communities engaging in these activities – their poverty and socialvulnerabilitymeansthatpenaltiesintermsoffinescannotbeeffectivelyenforced.

Table9:Unauthorisedlogging.Source:UNDPinGeorgia(2013)

Climatechange

Climate change further compounds these challenges and increases the vulnerability of thecommunities.Thespreadofdiseaseintheforesttreesishastenedbytherisingtemperaturesand precipitation in Adjara. Themunicipalitieswith highest incremental rise in temperaturehavealsoexperiencedhigh incidentsofdisease spread. Further, climate change inAdjara isassociatedwith the introduction of newdiseases in the forests such asCameraria ohridelladeschka andCylindrocladium buxicola, posing a great threat to biodiversity of endemic andrelict host species. Increased precipitation has led to higher soil erosion and subsequentlyrecedingforestboundaries.ThereisalsoanincreasedriskofforestfiresduetothedryingupofAdjara’sconiferousforests(UNDP2013).

Overgrazing

The Strategic plandocumentof theAdjara ForestAgency identifies overgrazing as a centralreasonforthis lossofabilityoftheforesttonaturallyrestoreitself,notingthattheregionisoverburdened with cattle (AFA Strategic Plan 2015). This problem and its impacts areespeciallynoticeablenearpopulationcentresandalongseasonalcattlemigrationroutes.

Disease

Disease among the trees is a major issue since estimates show that it is spread across 6percentofthetotalforestcover(UNDP2013).Thisispartlybecauseoftheagingoftheforest

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treesasmostoftheforestisonaveragemorethan70yearsold.Itismainlyprevalentamongchestnut trees in Kobuleti, Khelvachauri, Qeda Municipalities; and among spruce and firspecies in the Kobuleti, Shuakhevi and Khulo Municipalities. As a result, the erosion anddegradedforestareahasincreasedandtheforestsdensityisreduced.

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3.StakeholdersandInstitutions

OverviewofForestManagementinGeorgia

InstitutionalandOrganizationalEvolutionofForestManagementinGeorgia

WhenGeorgiawasapartof ImperialRussia, forestswereclassifiedasstate,private,church,andcommunal.AfteritsintegrationintotheSovietUnionin1921,allforestswerenationalizedandclassifiedaseitherstateorcollectivefarmforests.Fromthe1930sonwards,forestswereused primarily for industrial purposes, mostly logging (Macharashvili, 2009). In the Sovietperiod, forestsweremanaged in all of the republics by state agencieswhichmainly viewedthem in terms of their commercial value. In the case of Georgia, and Adjara in particular,logging was somewhat controlled because of the inclination of the land and the relativelydifficultaccesswhichmademoresensefortheSovietUnionasawholetosourcetimberfrommoreeasilyaccessibleforestssuchasthoseinSiberia.

Immediately after independence in 1991, during the period of crisis, crime and corruptionwhichfollowed,Georgianforestsweredegradedonalargescale.Illegalloggingwasthemainproblemandthoughtherewereregulationsinplacesettingtheupperlimitsforannualloggingwellbelowonemillionm3,varioussourcesindicatethattheactualamountfarexceededthislimit(Macharashvili2009).Noaccuratefigureswereavailable.Theestimatesofactualloggingrangedwidelyfrom2.5millionto6millionm3.Thislevelofloggingwasclearlyunsustainable,butgiventhatitwasrootedinthesocio-politicalstructuresofthetime,withtheinvolvementof high ranking government officials and employment of residents, therewas little done tocontrolit.

FollowingthedissolutionoftheSovietUnion,Georgiansalsohadtosufferthroughaperiodofdifficultaccess to fuel forcookingandheating,and therefore turned to fuelwood for thesepurposes.Thismeantthat inadditiontothetrade in illegal timber, treeswerecutdownforfuelwood,especiallybyruralcommunitiesduetotheirinabilitytoaccessotherenergysources(Osepashvili2016),resultinginthefurtherdegradationofforests.

A few attempts to improve management took place between 1992 and 1995, resulting informationofaunifiedStateForestFund,whichalso includedforestswithinprotectedareas.TheresponsibleauthorityforforestswastheForestryDepartmentoftheRepublicofGeorgia,whose name was changed in 1997 to State Department of Forestry of Georgia. This bodyremainedinchargeofforestmanagementuntil2004.ProtectedforestsweremanagedbytheStateDepartmentofNatureReserves,ProtectedAreasandGameFarms.

TheForestCodeof1999wasoneof the first initiatives tomodernize forestmanagement inindependent Georgia. This legislation separated the commercial functions of forestmanagement from its protective function and also attempted to decentralize forestgovernancebyprovidingforthemanagementofforeststobeundertakentosomedegreebylocalself-governments.OnenotableclauseoftheCodelegalizedthegrantingoflicensestotheprivate sector for various types of forest use. The reforms regarding privatization anddecentralization however remained more on paper than in practice (Macharashvili 2012).Forestswerestillmainlyusedforlogging,basedon1yearlicenses.

The Rose Revolution ushered in more legal and organizational changes, including theincorporationof theStateForestryDepartment into theMinistryofEnvironmentProtectionandNaturalResources (MEPNR). Twonewdepartmentswere createdunder theMEPNR for

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forestry and protected areas: The Forestry Department and the Department of ProtectedAreas respectively. Other departments relating to management of biodiversity, includingforests,wereunifiedundertheMEPNR(Macharashvili2012).

These reforms, however, did not have many qualitative impacts on forest management inGeorgia.Theforestecosystemscontinuedtodeteriorateduetoaplethoraofissuesincludingalack of preventive and restoration measures and unavailability and unreliability of forestresourcesandusagedata.Systemicproblemsremainedpersistent intermsof illegal logging,corruption, and poor human resource management in forest sector organizations(Macharashvili2009)

Thissparkedanotherroundoforganizationalchangesin2007,primarilytakingeffectintermsofdecentralizationandpersonneldownsizing.TheForestryDepartmentwasrenamedastheForestAgencyontheprinciplethatthestateshouldonlyretainlicensingandcontrolfunctionsover the forests, releasing it from forest management functions. Decentralization meantcutting down the size of the central office and introducing 10 regional forestmanagementinstitutions.ThetotalnumberofForestDepartmentpersonnelwentdownfrom1694to692,but thiswasaccompaniedwiththeirsalariesbeingmorethandoubledtoanaverageof400GEL. In the neworganizational set-up, each forest rangerwas put in charge of about 5,000hectaresonaverage.Criticshowevernotethatseveralkeycomponentsofthesereformssuchastransferringmanagementrightstolocalgovernmentsandmakingfunctionaldifferentiationofforestswerenotimplemented(Macharashvili2009).

From2007tothepresent,therehavebeenaseriesofstructuralchangeswhichculminatedintheconcentrationofall forestmanagement functionswithinMinistryofEnergyandNaturalResources (MENR). Reflecting the Saakashvili administration’s focus on economic growth,which it felt would be better facilitated by centralization and streamlining of approvalsprocedures,theMEPNRwasdivestedoftheresponsibilityofgrantinglicensesin2009andthisauthority was transferred to the Ministry of Economy and Sustainable Development. Thestructural changes in 2011 resulted in the establishment of a MENR which handledenvironmentalprotectionandforests.Thisclearly indicatedadowngradingofenvironmentalprotectioninthestrategicplansofthegovernment.

After the Georgian Dream coalition won the national elections in 2012, the MEPNR wasrenamedtheMinistryofEnvironmentandNaturalResourcesProtection.Manyof itspowerswere restored and the Ministry regained control of forest related functions. Several newstrategicdocumentson the forest sector andbiodiversitywereproduced. Thesedocumentshavemappedthecurrentandemergingproblemsandissues inenvironmentalmanagement,butnomajorlegislativeorinstitutionalchangeshavebeenimplementedasyet.

In thismanner, forestmanagement practices, issues, and governance structures in Georgiahaveco-evolvedwithitseconomicandpoliticalhistory,reachingacrisisperiodduring1990s.While attempts havebeenmade consistently since independence to address environmentalmanagement issues,mosthavehad limited impact andanumberof key challenges remain,whicharediscussedbelow.

OrganizationsinAdjaraForestManagement

StakeholdersinForestManagement

ThemainsetsofstakeholdersinGeorgia(includingAdjara)Forestmanagementare:

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1. AdjaraRegionalForestManagementOrganizationsa. AdjaraForestAgency(AFA)b. Directorate of Environment Protection and Natural Resources of Adjara

AutonomousRepublic(DEPNR)c. MunicipalitiesinAdjara

2. NationalForestManagementOrganizationsinGeorgiaa. MinistryofEnvironmentandNaturalResourcesProtection(MENRP)b. NationalForestAgency(NFA)c. AgencyforProtectedAreas(APA)d. ForestPolicyService,BiodiversityProtectionservice

3. DonorOrganizationsandImplementingPartners(thislistisnotexhaustive)a. EuropeanUnion(EU)andAustrianDevelopmentAgency(ADA)b. WorldWildlifeFund(WWF)forNature,CaucasusProgrammeOfficec. InternationalUnionforConservationofNature(IUCN)d. WorldBanke. UnitedNationsDevelopmentProgram(UNDP)f. GermanAgencyInternationalCooperation(GIZ)

4. EcosystemServicesBeneficiariesa. LocalCommunitiesinAdjaraforestregionsb. LoggersandTimberinterests

5. RelatedGovernmentalOrganizationsinAdjaraa. MinistryofEnergyb. MinistryofAgriculturec. MinistryofInfrastructureandRegionalDevelopmentd. MinistryofHealthandSocialAffairse. Department of Relations with Administration Bodies of Government of Adjara

RegionalRepublic.f. DepartmentofTourismofAdjaraRegionalRepublic.

6. NGOs

OrganizationalRolesandObjectives

RegionalForestManagementOrganizations

TheDEPNRofAdjara, theAdjaraForestAgency (which is incorporated into theDEPNR)andAgency of Protected Areas of Georgia are the main managers of forests in Adjara. Localgovernment bodies such as the municipalities are responsible for the areas designated as“LocalForestFund”.

TheAdjaraForestAgency(AFA)istheorganizationprimarilyinchargeofimplementingforestmanagementfunctionsinAdjara.Ofthetotalareaof192,488hectaresundertheforestfundinAdjara,almost85%(162,103.7hectares)ismanagedbytheAFA.

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TheAFAisalegalentityofpubliclaw(LEPL)establishedonDecember7,2010bytheDecree№55oftheGovernmentoftheAutonomousRepublicofAdjara.ThisdecreefurtherspecifiesthattheAFAisabodywithintheDEPNR,subordinatetotheGovernmentoftheAutonomousRepublicofAdjara.

The main objectives of AFA are to protect, maintain and restore forests and promote thesustainable use of biodiversity componentswithin the forest fund territory. Accordingly, itsmaintasksaretoidentifyandverifytheforestfundboundariesandmanageandregulatetheusesoftheresourcestherein.In2014,theAFAdefinedthefollowingoperationalpriorities:

a. Assistingtheprocessofnaturalregenerationofdegeneratedsub-Alpineforests

b. Fighting against tree pests and diseases, rejuvenation of damaged forests andpreventivemeasuresagainstinfectionandinfestation

c. ImprovementoftheAgency’smaterialandtechnicalbaseinordertomakeforestusebythepopulationmoreconvenient

d. Cultivationofenergyforestplantations

Toexecutethesetasks,theorganizationalstructureoftheAFAconsistsofthreetechnicalunits(Forest Monitoring, Forest Management and Forest Pest and Disease Fighting) and twoadministrativeunits(EconomicandAdministrative).TheorganizationalstructureoftheAFAisshowninthechartbelow.AtthetopleveltheAFAhasaHeadoftheagencyappointedbytheAdjara government on the recommendation of the DEPNR. The head of the AFA has twodeputies, one in charge of the forest functions and the other in charge of economic andadministrativefunctions.Theunitsunderthechiefforesterincludetheforestmonitoringunit,theforestmanagementunit,andtheforestpestanddiseasefightingunit.TheeconomicandadministrativeunitsaremanagedbytheotherdeputyheadofAFA.

Figure10:OrganizationalStructureoftheAdjaraForestAgency.Source:AdjaraForestAgency(LEPL)StrategicPlan2015

Head of Adjara Forestry Agency

Deputy Head of Adjara Forestry Agency (Chief Forester)

Deputy Head of Adjara Forestry Agency

Forest Pests and Disease Fighting UnitForest Monitoring Unit Forest Management Unit Economic Unit Administrative Unit

Kobuleti Forestry Administration Khulo Forestry Administration Keda Forestry Administration Khelvachauri Forestry

AdministrationShuakhevi Forestry

Administration

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NationalForestManagementOrganizationsinGeorgia

The management of biodiversity and ecosystems in Georgia, including the forest sector, islargely concentrated in the Ministry of Environment and Natural Resources Protection(MENRP) and several subordinate agencies. Its main function is the administration ofenvironment protection and use of natural resources. Other functions of the MENRPpertainingtoforestpolicyandecosystemservicesare:

• Governanceofprotectedareas

• Monitoringofbiologicaldiversity

• Ensuringaccessibilityofenvironmentalinformation

• Supportingenvironmentaleducationandenvironmentalawarenessraising

• Co-operating with international organizations and co-ordinating the fulfilment ofenvironmental agreements, including those related to the European integrationprocess

Inaddition,thefollowingbodiesundertheMENRParecompetentauthoritiesregardingforestmanagement–

• AgencyofProtectedAreas(APA):managesprotectedareasoverGeorgia,includingtheautonomousrepublicofAdjara

• NationalForestAgency (NFA):managesmostof the forest fundsexcludingprotectedareasandtheautonomousrepublicsofAdjaraandAbkhazia.

• Forest Policy Service: supports the development and implementation of forestmanagementnationalpolicy

• Biodiversity Protection Service: planning and coordination of the protection ofbiodiversity components (species, habitats, ecosystems) and the species listed inGeorgian“RedList”,managementofbiological resources (except forwoodyspecies),coordination/administration of issues related to species listed in the Convention onInternationalTrade inEndangeredSpeciesofWildFaunaandFlora (CITES); the latterhasbeenrecentlymergedwiththeForestPolicyService

• Environmental Supervision Department: enforcement of environmental legislation:prevention,detectionandsuppressionofthecasesofillegaluseofnaturalresources;monitoringexecutionoftermsoflicenses/permits

• NationalEnvironmentAgency:determiningquotasonextractionofnatural resourcesandissuingoflicensesonuseofnaturalresources

DonorOrganizationsandImplementingPartners

TheEuropeanUnion,AustrianDevelopmentAgency (ADA) andGermanFederalMinistry forEconomicCooperationandDevelopment(BMZ)areamongthekeydonorswithcurrentlargescale forest governance relatedprojects inGeorgia. For instance, EUandADA-fundedENPI-FLEGII involvestheimplementingorganizationsofWWF,WorldBank,andIUCN.ThecentralgoalofWWFistostopthedegradationoftheearth’snaturalenvironment. ItsbranchintheCaucasusistheimplementingbodyoftheTEEBstudyoftheforestsectorinAdjara(Georgia).

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EcosystemServicesBeneficiaries

TheruralcommunitiesinandaroundtheforestareasarethemainbeneficiariesofGeorgian(includingAdjaran)forestecosystemservices.Thewoodfromtheforestsisusedasasourceofenergy,andtheforestsarealsothespotforgrazingtheircattle.

ConcerningAdjara, excluding Batumi, almost 10 percent of residential energy supply comesfromfuelwood.Themainpurposedrivingthefellingoftreesistheirutilityasfuelwood.Theforests reduce the vulnerabilities of surrounding communities to landslides and similardisasters. Adjara is particularly susceptible to landslides and the risk is high for residentialhousing,makingtheregulatingfunctionsoftheforestsofparamountimportancetothelocalsintheseareas.

RelatedGovernmentOrganizationsinGeorgia

OtherMinistriesthatmayhaveinterestorrelevancetoforestmanagementare–

• MinistryofEnergyofGeorgia,giventheoverlapofsocial loggingissueswithneedforenergysources

• MinistryofEconomyandSustainableDevelopment,duetotheeconomiccausesaswellasimplicationsofecosystemsandbiodiversityissues

• Ministry of Infrastructure and Regional Development, since large portions of currentandpotentialdamagefromnaturalhazardsaffectsinfrastructuresuchasroads

• Ministry of Health and Social Affairs; authority in charge of remunerating damagecausedbynaturalhazards.

RegulatoryOverviewofAdjaraForestManagement

FrameworkofForestLegislations

ListofLaws

Thefollowingarethemainstatutoryactsgoverningtheprotectionofforestbiodiversityanduseofforestresources(Matcharashvili2012):

• ForestCode,1999

• LawofGeorgia“On“RedList”and“RedBook”ofGeorgia”,2003

• LawofGeorgia“Onfeesforuseofnaturalresources”,2004

• LawofGeorgia“Onlicensesandpermits”2005

• LawofGeorgia“OnForestFundmanagement”,2010

• GovernmentResolution“Onapprovalofregulationsontherulesandtermsof issuinglicensesforuseofforest”–No.132,11August2005

• GovernmentResolution“Onapprovalofrulesofestablishingboundariesofstateforestfund”–No.240,13August2010

• GovernmentResolution“Onapprovalofrulesofforestmaintenanceandrestoration”–No.241,13August2010,Tbilisi

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• GovernmentResolution“Onapprovalofrulesofforestuse”–No.242,20August2010

• GovernmentResolution“Onapprovalofrulesoftimbertransportationontheterritoryof Georgia and approval of technical rules for initial processing of roundwood (logs)facility(sawmills)”,2014

• Government Resolution “On approval of rules of forest inventory, planning andmonitoring”,2013.

Huntingisgovernedthroughthebylawsofthe“LawonWildlife”,whichsetprovisionssuchasthe list of animals intended for hunting, the weapons and devices permitted for capturinganimals,andtheapprovalprocedures.

DescriptionofLaws

Themostpertinentpiecesoflegislationarebrieflydescribedbelow:

ForestCode,1999-regulatedlegalrelationsregardingcare,protection,restorationanduseofGeorgia’sforestfundanditsresources.Itdefinesforestownershipandclassifiesareasasstateforests and the landand resources coveredby thisdefinition. This codedeclared theentire‘forest fund’ as state property and left the process of denationalization to be undertakenthroughsubsequentlegislation.

LawofGeorgia“On“RedList”and“RedBook”ofGeorgia”,2003–definestheGeorgian“RedList”and“RedBook”whichlistendangeredwildanimalsandplants.ItdefinesthestructureofRedList,proceduresforselectingspecies,drafting,approvingandupdating(revising)theRedList. It also regulates the issues related to endangered species, planning and financing theactivitiesfortheirprotection,extraction,restorationandpreservation.

LawofGeorgia “On fees for use of natural resources”, 2004 – provides for conservation ofstate owned resources by introducing payments for using the resources. A per unit fee isdefined according to the specifics relating to the resource such as plants, mammals, birds,fishes, fossils, etc. It also defines penalty calculations in case of illegal extraction of theresources.Thefeesgotothebudgetofthelocalitywheretheresourcewasextracted.

Law of Georgia “On licenses and permits” 2005 – defines a set of activities pertaining tonaturalresourcesthatrequirelicensesorpermits,andthetypeofthelicense/permitrequiredforeachactivity.Thiscoversmining,oilandgasprospectingandproduction,logging,hunting,commercial fishing,exporting fir,etc.Licensesare issuedthroughauctions,andthe lawalsogovernsthegrantofenvironmentalimpactpermits.

LawofGeorgia“OnForestFundmanagement”,2010–thefoundationforthecreationoftheForest Agency replacing the Forest Department. This law defined the basic principles of itsfunctioning, organizational and legal structure, authorities and main activities. The mainobjectivesoftheAgencyweretocareforandrestoretheforest,toensurethesustainableuseof biodiversity components on the forest fund area. Itsmain functionswere defined as thedeterminationofforestfundboundaries,controlofforestfundterritory,monitoringtheforestfundandcreationofamonitoringdatabase,thepreventionoffire,andtheissuanceofpermitdocumentsforforestuse,includingloggingandhunting(exceptformigratorybirds).

Law on changes to Georgian Forest Code (rs. No. 4677), 2011 – made several significantchangestotheregulationssetbytheforestcode.Itintroducedtheconceptofsocialcutting,defined as the implementation of appropriate arrangements of providing wood for non-

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commercial purposes to population, budget organizations, legal entities of public law andGeorgian Orthodox Church. Further it set out general requirements for the transport andprocessingoflogsandlegitimizedtimberlabelling,theregistrationanddatabasemaintenanceof logsusingelectronicmarkers.This lawchangedthedefinitionof longtermuseof forests,increasingitfrom20yearsto49years.

DefinitionofForestLands

ForestlandsaredefinedprimarilyonthebasisoftheForestCodeadoptedin1999.Theforestcode defines a forest as “a part of geographical landscape, comprising trees attributed toforestbyGeorgian legislation, landunder these trees, aswell as shrubs, grass, animals, andothercomponentsbiologicallylinkedintheprocessoftheirdevelopment,affectingeachotherandtheenvironment”.

OtherrelevanttermsintheforestcodeincludeStateForestfund,Usablestateforestfund,andlocalforestfund.“StateForest”isdefinedas“forestownedbytheState”andStateforestfundis defined as the “integrity of State Forests of Georgia, as well as lands and resourcesattributed to these forests”. “Georgian Forest Fund” is the integrity of forests and theirresourcesownedbythe“StateForestFund”andforestsunderdifferenttypesofownership.

LocalforestfundhasmultiplecontradictingdefinitionsbasedontheforestcodeandorganiclawofGeorgia.Theforestcodedefineslocalforestfundas“apartoftheUsableStateForestFundlegallyregulatedbythelocalgoverningandself-governingbodiesinaccordancewiththisCodeandGeorgianlegislation”.However,inthecurrentformoflegislationtherearenolocalgoverningbodies.Ontheotherhand,theorganiclawprovidesforthemunicipalitybeingtheowner and manager of local forest fund without interference of other governing bodies(Matcharashvili2012).

DivisionofForestManagementinGeorgia

ThegovernanceofforestlandsinGeorgiaisdividedasfollows(GreenAlternative2016):

• State Forest –ManagedbyeitherAgency for ProtectedAreasor theNational ForestAgency

a. Agency for Protected Areas manages the protected areas of forests, i.e. thosedefined as reserve, national park, nature monument, wildlife sanctuary, andKintrishi and Tusheti protected landscapes. This includes protected areas in theterritoriesofAutonomousRepublicsofAdjaraandAbkhazia.

b. NationalForestAgencyisinchargeofforestareadefinedasUsableForests

• Local Forest – managed by local self-government bodies (such as municipalities),including

a. Forests in protected areas under the jurisdiction of local self-government bodies(Tusheti protected landscape, Pshav-Khevsure multiple use territory, Javakhetimultipleuseterritory)

b. Usableforestsownedbylocalself-governments

c. Forest ownedby local self-government, and enjoying recreation zone status (e.g.Tbilisi)

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• ForestofAdjaraAutonomousRepublic–managedby theAdjaraForestAgency,withtheexceptionofprotectedareasinAdjara,whichfallunderjurisdictionoftheAgencyforProtectedAreas

StrategicDirections

There are several policy documents laying down strategic directions for improving forestmanagementinGeorgia,includingAdjara.GivenbelowisasummaryofthestrategicdirectionssetbytheAdjaraForestAgencyStrategicPlan,theAdjaraRegionalDevelopmentStrategy,andtheNationalForestPolicyConcept.

NationalForestPolicyConcept

The Forest policy document for Georgia has the central goal of “establishing a system ofsustainableforestmanagementwhichwillensureimprovementofquantitativeandqualitativecharacteristicsof theGeorgian forests,protectionofbiologicaldiversity,effectiveuseof theeconomicpotentialofforeststakingintoaccounttheirecologicalvalues,publicparticipationinforestmanagementrelatedissuesandfairdistributionofderivedbenefits”.Inordertoachievethisgoal,itsetsoutfivemainguidingprinciplesandfourprioritydirections:

• PrincipleofSustainableManagementofForests:meaning“thestewardshipanduseofforests and forest lands in a way, and at a rate, that maintains their biodiversity,productivity,regenerationcapacity,vitalityandtheirpotentialtofulfilnowandinthefuture,relevantecological,economicandsocialfunctionsatlocal,national,andgloballevels,andthatdoesnotcausedamagetootherecosystems”(MCPFE1993)

• Precautionaryprinciple:tomaintainprotectivefunctionsofforestsandtheirecologicalbalance

• AllForestsareLocal:prioritygiventoneedsoflocalpopulation

• Separationofregulation,management,andsupervisionfunctions

• Forestryisanintegralpartofthesustainabledevelopmentofthecountry

PriorityDirections–

• Forest Management Planning – including restoration of forests, balancing economicandenvironmentalfunctionsoftheforest

• Rational use – including update of forest inventories and developing monitoringsystems

• Forest ownership, management and use rights – legislation for changing ownershipstructureofforestsandreclaimingforestsleasedtoprivatesector

• Adaptation to impacts of climate change – assessing vulnerabilities and formingmitigationandadaptationstrategies

Keylegalandmanagementframeworksrecommendations–

a. LegalFramework

• Preparing a new Forest Code that provides for the new or revised systems andmechanismsthatwillbeimplementedwithintheframeworkoftheConcept

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• Preparing the secondary legislation, including regulations that define forestmanagementstandards,andregulationsgoverningrelationsbetweentheforestownerandbodies responsible formanaging forests (communities, private sector, the State,etc.);

• AmendingotherprimarylegalactsthatcontradictthenewForestCode.

b. ForestAdministration

• Regulateforestuse;

• Detect and suppress illegal forest use, including by reviewing the functions andcapacitiesrelatedtotheadministrationandmanagementofforests.

• Prepare and implement plans aimed at increasing the capacities of the authorizedbodiestocarryouttheirfunctionseffectively.

• Broaden and strengthen participation in the development of the concept and policyinstruments, including by developing mechanisms to involve forestry sectorstakeholdersinthedevelopmentoftheconceptandpolicyinstruments.

c. ForestManagementinstitutions

• Prepareandimplementaplanforthedevelopmentoftheforestmanagementbodies,including a budget, technical assistance and an indicative financing and/or businessplan.

• Develop a scheme for staffing and capacitating all institutions according to therequirementsofthetasks.Securingsustainablefundingfrombudgetandnon-budgetsources(salesofproductsandservices,compensations,etc.)

AdjaraForestAgencyStrategicPlan2015

TheAFAStrategicPlansets itsvisionas“Aforestrysectorfoundedontheprinciplesofstableforest management and rational use of forest resources, which ensures preservation of ahealthy, ecologically safe environment and biodiversity, reduction of negative influence ofclimate change and anthropogenic factors, effective satisfaction of the population’s socialdemands, increasing and strengthening the forest’s functional workload”. Accordingly, itsmissionistherationalmanagementoftheregion’sstateforestfund,tending,protectingandrestoringit,preservingitsbiodiversityandraisingthelocalpopulation’sawarenessregardingforest management issues. Based on this vision and mission, the strategic plan lays out 4strategicgoalsanddefinesobjectiveswithineachofthesegoals:

1. IntroductionofprinciplesofSustainableForestManagement

1.1. ForestManagementPlanning–incorporateenvironmentalrisksindecisions,assigncategoriesoffunctionalzonesinforests,co-operatewithMinistryofEconomyandsustainabledevelopmenttodrawforestboundaries

1.2. ProtectForestsfromNaturalandAnthropogenicsourcesofdegradation–minimizeillegal woodcutting, regulate commercial use of non-timber resources, controlovergrazing

1.3. RestoreDegradedForests–deviserestorationandplantingscheme,developearlywarningsystemfornaturalhazards,etc.

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2. Enhancingtheefficiencyofservices

2.1. Design Effective service provision model – undertake study of market, forestresourceconsumers,technicalcapacitiesofforestsectororganization,etc.forbasisofappropriatemodel

2.2. Developappropriate services to ensureeffectiveuseof forest resources – createnewunittoprocessdataandpreparereportsontheforestryfund’sopportunities

3. Increasingpublicawarenessandsupportenvironmentaleducation

3.1. Raiseawarenessofresourceusersaboutforestmanagement–developsystemforregularandeffectivecommunicationwiththelocalpopulation

3.2. Support education in forest sector – training programs for staff, createapprenticeships

4. Increaseorganizationalefficiency

4.1. Implement Modern human resource management system – develop andimplement periodical appraisal and incentives system for employees, createprofessionaldevelopmentandretentionsystems

4.2. Alignorganizationalstructurewithstrategy–reorganizeunitsbyfunctions,createnewunitsfornewfunctions

4.3. Implement modern approaches of organizational management - create unifiedelectronic management system, develop appropriate monitoring and evaluationtools

4.4. Develop organization’s material-technical capacities and infrastructure – developroadsandfirepreventioninfrastructure,equipwarehouses,etc.

AdjaraRegionalDevelopmentStrategy2014

BasedonobjectivessuchasensuringwelfareofAdjara’spopulation,improvingtheecologicalenvironmentandmanagementofnaturalresources,theAdjararegionaldevelopmentstrategysetsoutthefollowingstrategicdirectionsfortheimprovinguseofforestresources–

• Providingpropermaterialandtechnicalequipmenttoforestprotectingpersonnel;

• Combattingforestdiseasesandpests,aswellastakingforestrestoration,renewalandfire-preventionmeasuresinordertomaintaindiversityofforestecosystems;providingfavourableconditionstoattractprivateinvestments;

• Draftinginitiativesfortheimprovementoflegislativebasisrelatedtothereformsinthesystemofaforestindustry;

• Engagement in the process of elaboration of integrated strategy and action plan forguidingtheprocessfullforeststock-takinganddetailedanalysesofitsagro-ecological,socialandeconomicaspects,aswellaslocalforestresourcesmanagementandrelatedsustainableforestindustry;

• Buildingofnewforestindustrialroadsinwoodlotsandforestblocksforsecuringlocalpopulationwithheatingfuelwoodatspecifiedchoppingplaces.

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This information,summarizedinTable10, indicatesthattherearethreemajoralignments ingroups of stakeholders. One group is concerned primarily with improving the quality andextentof forests inAdjara,a secondgroup isconcernedwithavoidingdamage fromnaturaleventsandthereforeinterestedintheregulatoryfunctionsofecosystemsservices,andfinallythethirdgroupisinterestedintheprovisioningservices,particularlyfuelwood.Thereisalsosomeoverlapintheconstituentsofthesegroups.

Table10.Summaryofstakeholderanalysis

Stakeholder Interests Powers&Strategies

AdjaraRegionalOrganizations

AFA Expandscopeofforestmanagementactivities.

Increaseforestcover.

Increasevalueofecosystemsserviceprovision

Managementauthority.

Locallevelon-the-groundknowledge.

Fieldimplementationofpoliciesandregulations.

DEPNR Increaseforestcover.

Reducelossesfromenvironmentalevents.

Inputintopolicyandregulatoryprocesses.

Municipalities Increaserevenuefromforestrelatedactivities.

Increasemanagerialauthorityoverlocalforests.

Reducelossesfromenvironmentalevents.

Haverelativelylimitedpowerbutaretryingtohaveagreatersayandcontroloverlocalresourcesandrevenuebases.

MinistryofEnergy Protectionofenergyinfrastructurefromnaturalevents.

Inputintopolicyandregulatoryprocesses.

MinistryofAgriculture Maintenanceandexpansionofagricultureactivities,includingcattlehusbandry.

Influenceonpolicyandregulatoryprocesses.

MinistryofInfrastructureandRegionalDevelopment

Protectionofinfrastructure,especiallyroadsandbridges,fromnaturalevents.

Inputintopolicyandregulatoryprocesses.

MinistryofHealthandSocialAffairs

Reducelossesandamountsofcompensationfromenvironmentalevents.

Influenceonregulations.

DepartmentofRelationswithAdministrationBodiesofGovernmentofAdjaraAutonomousRepublic.

Coordinationbetweendifferentpublicorganizationsandagencies.

Providespaceforinterdepartmentalandinter-organizationaldiscussionsandjointdecisionmaking.

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Stakeholder Interests Powers&Strategies

DepartmentofTourism IncreaseanddiversifytourismpotentialofGeorgia,includinginnaturalandprotectedareas.

Liaisonandlobbyingwithotherrelevantstakeholders

LocalCommunityMembers/EcosystemBeneficiaries

Increaseinavailabilityofecosystemservicesandproducts,particularlyfuelwood.

Reductionoflossesfromenvironmentalevents.

Increaseinincomegenerationactivities.

Minimizeprohibitoryregulations.

Voiceandvotes.

NationalLevelOrganizations

MENRP Regulationandprotectionofforestsandnaturalresources.

Managementofpolicyandregulatoryprocesses.

NFA Expandscopeofforestmanagementactivities.

Increaseforestcover.

Increasevalueofecosystemsserviceprovision

Managementauthority.

Fieldimplementationofpoliciesandregulations.

APA Defineboundariesofprotectedareas.

Expand(properly)managedtourisminprotectedareas.

Onthegroundknowledgeandinputsintopolicyprocesses.

Others

DonorsIncreaseinforestqualityandquantity.

Reductionofpoverty.

Projectfinance

Connectiontointernationalnetworksofknowledge.

Influenceonpolicyandregulatorydevelopment

NGOS Environmentalandsocialqualityissues.

Contractsforconsultancywork.Lobbying

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4.Scenariosforforestecosystemservices

MethodologicalframeworkThegeneralmethodologicalframeworkfortheeconomicvaluationofecosystemservicesfromAdjaranforestsfollowsthatofBalmfordetal.(2011),Batemanetal.(2011)andBranderetal.(2012b). In particular it incorporates several critical insights from the environmentaleconomics literature by comparing future scenarios that are driven by alternative policyinterventions;quantifyingnon-overlappingecosystemservices;andmodellingspatiallyexplicitvariation in the values of ecosystem services. The general methodological framework isrepresentedinFigure11.

Figure11.Methodologicalframeworkforassessingthevalueofchangesinecosystemserviceprovisionunderalternativelandcoverscenarios.

To answer the main questions posed by this study (i.e., what are the economic values ofecosystem services and how will they change over time under alternative managementregimes?), it was necessary to develop descriptions of the future (scenarios) for whatalternative management paths might look like. Then it would be possible to assess theeconomicvalueofecosystemservicesundereachalternative“landcoverscenario”relativetoa“business-as-usual”or“baseline”scenario.Thepurposeofthisscenarioanalysisistoprovideuseful reference points for policy development. In the context of the TEEB Adjara study,scenariosdescribehowforestswillchangeandbemanagedovertime.

Thescenariosdevelopedforthisstudyarenotpredictionsofthefuture(i.e.projectionswithestimated levelsof likelihood); theyarealternativestorylinesforwhatthefuturemight looklike inAdjara followingdifferentdevelopmentandpolicypaths. The scenariosare thereforespeculativeand intendedtoenable thecomparisonofcontrastingbutplausible futures.ThescenariosaretobeusedasreferencepointsforthedevelopmentofforestpolicyinAdjara.

FortheTEEBAdjarastudythreealternativefuturescenariosaredefinedfortheperiod2015-2035.LandusechangesundereachscenarioaremodeledinaGISandtheresultingchangesinthe flows of ecosystem services are modeled using the InVEST tool V. 3.3.1(http://www.naturalcapitalproject.org/invest/).Changesundereach scenarioareassessedattwopoints intime(2020and2035) inordertoenabletheevaluationofshorttermandlongtermimpactsonecosystemservices.Theeconomicvalueofchangesintheflowsofecosystemservicesaresubsequentlyestimatedusingaselectedsetofvaluationmethods.

Baselinelandcovermap

Scenariolandcovermaps

Changesinecosystem

services(InVEST)

Changesinecosystem

servicevalues

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Thestorylinesunderlyingeachscenario intermsofthedevelopment, institutionalandpolicychangearedescribedinthesectionsbelow.

Figure12.ScenariosforlandcoverchangeinAdjara.

Scenario1:Business-as-UsualBusiness-as-Usualrepresentstheregionasnarrowlyoscillatingaroundcurrentcapacitiesandinterests. The transitions that began with independence of Georgia are stabilizing. Beforeindependence, the forest sector provided about 4-5% of Georgia’s GDP, though the forestswere better protected as wood was supplied from Russia rather than being cut on thesensitivesteepslopesofAdjara.After independence, therewaswidespreaddeforestation inthe region because of fuel shortages and political and economic chaos.With the return ofpoliticalandeconomicstability,thesetendencieshavestopped.

The political system is competitive, and challenges around more fundamental political andadministrativeissuesleaveslittlefinancialorpolicyattentiontoenvironmental issues.Forestmanagement systems which abruptly ended at the time of independence have beenincompletely rebuilt, with equipment, staffing, building and infrastructure and executingcapacityallsubstantiallyconstrained.AforestinventoryforAdjaraisstillongoing.

Policyframeworksarestill inevolutionandincompleteandofteninconflictwithsustainableforest management requirements. The Forest Code of 1999 which still governs themanagement of Georgian forests requires updating as noted in the 2013 National ForestConcept. This new conceptwill focus on sustainable forestmanagement, the precautionaryprinciple, greater involvement of local agencies in forest management and separating theregulationandmanagementstructures.The1999Codeshiftedcommercialuseofforestlandstotheprivatesectorthroughshort(from1-year)andlong(upto20-year)wooduserights,butthispolicyhashadlimitedsuccessandfewprivateinvestorshaveemerged.Instead,muchoftheforestharvestisillegalorunofficialorinadequatelyplanned,monitoredorregulated.

Nevertheless, the rate of forest degradation is slowing because of less population andeconomic pressure. Rural to urban migration as well as a general population declinethroughout the country has reduced the pressure on the forests as direct demand for fuelwood and pasture has declined.Moreover, it is cheaper to importmost of the food itemsinsteadofproducingthemlocally.

Business-As-UsualScenario

Degrada4onScenario Reforesta4onScenario

Baselinelandcovermap

2020 2035 2020 2035

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However,thepost-independencefuelshortages,conflict,andlackofstablegovernmenthavealready led towidespreadandunregulated forest cuts.Thishasdegraded forests,especiallyaroundvillageswherethefarmersharvestedfuelwood,cutforestsforexpandingpasturesorinsomecasessmuggledwood.Bysomeestimateshalfoftheforestcanopycoverisinastateofseveredegradation.

The largely stable commercial and tourist activity allows for only a basic municipalmaintenanceandupgradingbutdoesnotleadtogovernmentrevenueswhicharesufficienttofundmajor public sector expansion in environmental areas. Donor funding is also relativelytight.Theforestservicesarestillshort-staffed,witheachforesterresponsibleforaround5,000haofforests.Givenvehicleandotherequipmentandfinancingshortages,theregulatoryandmanagement functions are inadequate to regenerating degraded forests, but becausepopulation and economic pressures have stabilized, further degradation of forests is not asignificantthreat.

Nevertheless, there are continuing damages and losses from soil erosion and landslidesprovokedbyearlierforestdegradation.Withclimatechange,itisfearedthattheincidenceoflandslideswillonlyincrease,causinglossestothepopulationandputtingfiscalstrainsonthelocalgovernmentasittriestocompensatetheselosses.

Scenario2:DegradationDegradation represents a region in crisis. There are intertwined economic and politicalpressures, from within and outside. Political uncertainties and conflicts in neighbouringcountries reduce tourism in Adjara and investments in it and other related sectors.UnemploymentinBatumiincreasesandwithitthereisareductioninruraltourbanmigration,andevensomereversemigrationasout-of-workAdjariansreturntotheirvillages.

These factors result in thedecreaseof tax revenues inGeorgia, includingAdjara,andpublicsector budgets are under pressure. Overall economic pressures may even lead to higherinflation.Asgovernmentagencieshavetoworkwithlimitedandinmanycasesevenreducedfinancing, budgetary cuts in personnel, equipment and activities become necessary. In thecaseoftheForestAgenciesthereisa10percentcutinbudgets.Onlythemoreessentialpublictasks areundertakenbyorganizations such as theGeorgia andAdjara ForestAgencies. Thismeans that patrolling and enforcement activities are curtailed. The AFA Strategic Plan isshelved.Therearenobudgetaryallocationsforpurchasingtheequipmentneededtoharvestwoodtosupply the localcommunities’ socialneeds.Budgetscutsalso lead tohiring freezesand a slow attrition of the workforce with longer term negative consequences for forestmanagement.Budgetarypressuresresultinlessexpansionandmaintenanceofinfrastructure,particularly roads. As a result, there is increasing pressure on more easily accessed forestareas,suchasthosearoundvillages,andlessofanemphasisonsoundforestmanagement.

Economic stagnationmeans thatefforts toconverthouseholdenergyuse fromwood togasslowdown.Asunemploymentrises,theeconomicalternativesforvillagersarereduced,whichincreasestheirwillingnesstocutdowntreesforpersonaluseaswellastosupplementincome.Withreducedcashincome,demandoffuelwoodforheatingandcookingmayincreaseeveninsemi-urbanareas.Demandofwoodforconstructionalsoincreases.Lowercashincomesmayalso lead to fewer imports and the need formore local production, leading to pressures toclearlandimmediatelysurroundingvillagesforfoodproductionneeds.

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Finally, economic and political crises lead to less international environmental cooperation.Difficultiesofworkingintheregionleaddonoragenciestocuttheirfinancingandinvolvementintheregion.

Thecombinedimpactofthesetrendsleadstomorewoodcuttingaroundvillages.Theexistingandnewlydenudedareas increasetheriskand incidenceof landslides leadingtodamageofresidential and agricultural assets, compensating which puts further fiscal pressure on thegovernment.

The Degradation scenario represents a decline in forest cover and density relative to thebusiness-as-usualsituation.ThedeclineinforestcoverinAjarais1%peryear.Thelandcoverchangeisfromforestwoodlandtoscrubandsparsevegetation.Intheshortterm(2015-2020),thereisa5%declineinforestcover.Overthetimehorizonofthescenario(2015-2035)thereisan18%declineinforestcover.Thesechangestakeplaceinareasclosetopopulationcentresreflecting human use as themain driver of change. The changes in land cover are spatiallylocatedwithina5kmradiusofvillages.

Scenario3:ManagedUseandRestorationTheManaged Use and Restoration scenario represents a full implementation of the AdjaraForest Agency Strategic Plan (2015). Degraded forests are restored. Communities no longerharvesttheirownwoodforsocialusesandtheirneedsaresuppliedbytheForestAgency.TheForestAgency expands anddevelops energy forest plantations. It aims to reforest currentlyclearedforestattherateof2%peryearatadistancewithin5kmradiusofruralvillages.Thetargetedlandusechangeisfrompasture,scrubandsparsevegetationtoforestwoodland.

Managed Use and Restoration represents a region of relative stability where politicalinstitutionsarematuringandtheeconomyisgrowing.Asaresult,taxrevenuesarepredictableandincreasingandthepoliticalandadministrativeinstitutionsareabletotakeonincreasinglycomplex governance tasks including social and environmental obligations. The budgets,staffing and equipment of the Forest Agency are increased and they are able to undertakemorestrategicandlongtermplanningforforestsinAdjara.

Tourism,domesticaswellas international, ismoreestablishedandgrowing, including intheoff-season, leading to an appreciation of preserving the general environment of the regionamongthedifferentsocialgroups.Highercashincomescontributetoanabilityandwillingnessinthecommunitytospendinsocialandenvironmentalarenas.

Because of the increased budgets, staffing and equipment, the Forest Agency is able todevelop more sustainable forest management plans and a more comprehensive executioncapacity. Included in the plans are developing energy forest plantations and a network offorestroadsthathelptheAgencytopatrol,monitorandenforceforestregulationsaswellastodoproperly circulating forest cutswhichpreserve the integrityandoveralldensityof theforests. By aiming tomanage the cutmore scientifically, theAdjara ForestAgency channelsresourcestocentralizeandprofessionalizetheforestcut.Italsoobtainsresourcestoreforestthedegradedforestareasaroundthevillages.TheprocessoffuelwoodharvestingandsalebytheForestAgencybecomesanattractiveservice,overcomingthetendencyoflocalcommunitymemberstocutthetreesthemselves.Asaresult,forestcutsoutsidedemarcatedareasorofunmarkedtreesarelargelyeliminated,leadingtoaregenerationofcurrentlydenudedforestsandmaintenanceofthelargerlandscape.

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Pasturesarereforestedbyimprovinggrazingandfeedingsystemstoreducepressureonland.Areas cleared by fuel wood harvesting that have scrub or sparse remaining vegetation areallowed to regrow and become dense woodland. The better forest cover around villagesreduces the risk and incidence of landslides, thus protecting habitations and farms andfacilitatinginvestmentsinruralproductionsystems.

Inquantitativeterms,reforestationactivitiestargetregeneratingclearedforestinthevicinityofallvillages.Intheshortterm(2015-2020),10.5%ofpastureand8.3%ofscrubandsparselyvegetatedlandisconvertedtoforest.Overthetimehorizonofthescenario(2015-2035)34.5%ofpastureand27.3%ofscrubandsparselyvegetatedlandisconvertedtoforest.Thisresultsina4.8%increaseinforestareaby2020anda15.7%increaseby2035.Thesechangesinlandcoverarespatiallyconcentratedwithin5kmradiusofruralvillages.

ScenariomapsTo transformtheabove-mentionedscenariostorylines into landusemapsandsubsequentlyinto appropriate parameters for the input into the InVEST tool, certainmethodologies havebeenapplied.Generally,twoapplicationshavebeenemployedinthemappingprocess:ArcGISV.10.4andQGISV.2.14.1.Thestepbystepprocessofpreparingfuturescenariolandusemapsaredescribedhere.

Insummary,thescenariostorylinesprovidethefollowingassumptions:

• Degradation2020:5%offorestareawillbeconvertedtoscrubandsparsevegetation.This change is spatially allocated randomly across forestswithin 5 km radiusof eachvillage.

• Degradation 2035: 18% of forest area will be converted into scrub and sparsevegetation.Thischangeisspatiallyallocatedrandomlyacrossforestswithin5kmradiusofeachvillage.

• Restoration 2020: 10% of both pasture and scrub and sparse vegetation will bereforested.Thischangeisspatiallyallocatedrandomlyacrosspastureandscrub/sparsevegetationwithin5kmradiusofeachvillage.

• Restoration2035:33%ofbothpastureandscrubandsparsevegetationwillreforested.Thischangeisspatiallyallocatedrandomlyacrosspastureandscrub/sparsevegetationwithin5kmradiusofeachvillage.

Togeneratemapsoffuturelanduse,randompointsaregeneratedwithinthetargetareas(5kmradiiofeachvillage).For instance, tomapthe5%of forestareaconverted toscrubandsparsevegetation,randompointsaregeneratedwithintheforestareasinthestudyarea.Eachpoint represents the location of the forest area that will be converted into the scrub andsparse vegetation in the future. From the random points, 5% are selected randomly torepresent the land cover in the future scenario. The points are then converted into rasterformatforfurtheranalysis.Thestepsaresimilarlyappliedfortheotherfuturescenarios.LandusemapsforeachscenarioarepresentedinFigure13.Underthedegradationscenarioitcanbeseenthat forestedareasbecomemoreorangeastheproportionofscrubandsparsevegetationincreases.TheareaforeachlanduseclassundereachscenarioisreportedinTable11. Thepercentage changes in the areaof forest, pasture, and scrub and sparse vegetationrelativetothebaselinearerepresentedinFigure14.

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Figure13.BaselineandfuturelandusemapsforAdjara

Table11.Area(ha)forlanduseclassesinAdjaraunderfuturescenarios

Landuseclass BAUDegradation

2020Degradation

2035Restoration

2020Restoration

2035 ArableLand 11,516 11,516 11,516 11,516 11,516ArtificialLakes 48 48 48 48 48Beach 221 221 221 221 221Bridge 10 10 10 10 10Built-up 16,422 16,422 16,422 16,422 16,422Canal 46 46 46 46 46ForestWoodlands 160,141 152,134 131,316 167,783 185,359FreshwaterWetlands 649 649 649 649 649Gullies 1,182 1,182 1,182 1,182 1,182Lake 21 21 21 21 21Pasture 60,690 60,690 60,690 54,346 39,772Perennials 12,630 12,630 12,630 12,630 12,630Railways 28 28 28 28 28Reservoir 1 1 1 1 1River 2,976 2,976 2,976 2,976 2,976RiverPebblesandIslands 904 904 904 904 904Roads 4,419 4,419 4,419 4,419 4,419ScrubandSparseVegetation 15,727 23,734 44,552 14,429 11,428WindBreakingLines 171 171 171 171 171

Degradation 2020

Degradation 2035

Restoration 2020 Restoration 2035

Baseline

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Figure14.Percentagechangesinareaofforest,pasture,andscrubandsparsevegetationrelativetobusiness-as-usuallandcover

-5-18

516

51

183

-8

-27

0 0

-10

-34-50

0

50

100

150

200

Degrada2on2020

Degrada2on2035

Restora2on2020

Restora2on2035

%cha

ngefrom

business-as-usual

ForestWoodlands

Pasture

Scrubandsparsevegeta2on

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5.EconomicvalueofforestecosystemservicesinAdjara

ThischapterdescribesthemethodsandresultsoftheeconomicvaluationofforestecosystemservicesinAdjara.Asfaraspossiblethedistributionofbenefitsacrosslocationsanddifferentstakeholdergroupsisalsodescribed.

Here the ecosystem services assessed in the study and the methods that were used toestimatetheireconomicvaluesarebrieflyoutlined.

• Provisioning services: Fuel wood and non-timber forest products (NTFPs). Theeconomic value of these services are estimated using a net factor income approach.This method involves computing the gross revenues for each service (quantitymultipliedbyprice),minusthecostsofproduction(quantitymultipliedbyunitcost).

• Carbonstorage.This regulating service is valued in twoways:1.As thepotentialnetrevenuefromcreditingandsellingadditionalstoredcarbon;2.Astheavoidedclimatechange damages resulting from the storage of additional units of carbon in forests.FluxesinthequantityofcarbonstoredinforestsunderalternativefuturescenariosareestimatedusingtheInVESTtool.

• Natural hazard regulation. The value of landslide regulation is estimated using theavoided damage costs approach. This involves assessing how the risks of damageevents change with changes in forest cover; and then estimating the associatedchanges in expected damage costs. Physical changes in erosion control under eachscenarioismodelledusingtheInVESTtool.Expecteddamagecostsareestimatedusinghistoricdataonlandslidefrequenciesandcompensationpayments.

ProvisioningservicesForests in Adjara provide a number of important provisioning services to local people,particularly in ruralareas.Theseservices include theprovisionof fuelwoodandnon-timberforestproducts(NTFPs)suchasmushroomsandberries.Ifforestsareconvertedtootherlandusesordegraded,thelevelofprovisionislikelytodecrease.Ifforestsarewellmanagedanddegradedareasarereforested,thequantityoffuelwoodandNTFPsislikelytoincrease.Inthissectionchanges in theprovisionof fuelwoodandNTFPsundereachscenarioarequantifiedandvalued.

The methodology for the assessment and valuation of provisioning services provided byforestsinAdjaraisrepresentedinFigure15.Eachstepisexplainedindetailinthetextbelow.

Areaofforestundereachscenario

Toobtaindataontheareaofforestineachscenariowithinaradiusof5kmofeachvillage,thelocations of all villages were fed into ArcMap application and 5 km buffer zones weregenerated.The future landuseand landcover (LULC)werealsoprocessedusingArcMap toobtainonlythe informationonforestarea.Twosetsof informationwereobtained:1.5-km-buffer zones from the villages in vector format; and 2. A raster containing information onforestarea.ThesesetsofinformationwerefedtoQGISsoftwaretoobtaintheinformationoftheforestareaswithin5kmofeachvillage.TheabovestepswereappliedtotheLULCmapforeachscenario.

47

Figure15.Methodologyforassessmentofprovisioningservices

Householdsurveyofforestuses

AsurveyofhouseholdsinAdjarawasconductedinDecember2015tocollectinformationontheuseofprovisioningservices.Intotal,73householdsfrom40villageswereinterviewed.ThedistributionofthesampleacrossmunicipalitiesisrepresentedinFigure16.Thisdistributionisnot proportionately representative of the population, with households in Khelvachauri andKobuleti under-represented and households in Shuakhevi over-represented in the samplerelativetothe2014populationcensus(GEOSTAT,2016).

The questionnaire includes questions on wood use, quantity, source, cost, preference forwood to be supplied by the Forest Agency, and use of NTFPs. A copy of the surveyquestionnaireisprovidedinAppendix2.Theaveragequantityofwoodusedperhouseholdinayearis9.5m3,withaminimumuseof4m3andmaximumof15m3.ThedistributionofthequantityofwoodusedacrossthesampleofhouseholdsisrepresentedinFigure17.Intermsofwooduse,allrespondentsusewoodforheating,justover80%usewoodforcooking,and46%use wood for preparing animal fodder (see Figure 18). Almost all households cut woodthemselves(95%)withveryfewbuyingwoodatthemarket.

Household use of wood and NTFPs (household

survey)

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each village GIS scenario mapping

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Figure16.Distributionofsampledforestusersacrossmunicipalities

Figure17.Annualconsumptionofwoodbysampledhouseholds(m3)

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Figure18.UsesofwoodbysampledhouseholdsRespondents to the surveywere also asked questions regarding illegal cutting of trees thathave not been marked by the Forest Agency. Although respondents were reluctant toacknowledgethatsuchpracticestakeplace,theywerewillingtoexpressanopiniononwhyittakes place. 50% of respondents indicated that the reason is due to marked trees beinginaccessible,11%citedthe lowqualityofmarkedtrees,and14%statedthatthequantityofmarkedtreesisinsufficient–seeFigure19.

Figure19.ReasonsforillegalcuttingofwoodoutsideofareasmarkedbytheForestAgencyRespondentstothesurveywereaskedwhethertheywouldbeinfavouroftheForestAgencyprohibiting thecuttingof treesand insteadproviding thepublicwithsufficient fuelwoodtomeettheirneeds.Almost90%ofhouseholdswereinfavourofthisproposal,mainlybecause

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they see the harvesting of fuelwood as a costly or difficult task and believe that the costswouldbe lower if theForestAgencysuppliedtheirneeds.Approximately4%ofthesampledhouseholdswereagainsttheproposaland8%declinedtoanswer(seeFigure20).Respondentswere also asked to state theirmaximumwillingness to pay (WTP) for the Forest Agency tosupply all their fuel wood needs. The mean statedWTP for the sampled households is 19US$/m3,withaminimumof3US$/m3andamaximumof77US$/m3.ThedistributionofWTPacrossthesampleisrepresentedinFigure21.

Figure20.RespondentspreferencesregardingtheForestAgencysupplyingallfuelwood

Figure21.WillingnesstopayforForestAgencysuppliedfuelwood(US$/m3)

RegardingNTFPs, 30%of households collect blueberries, 26%mushrooms, 16%blackberriesand7%chestnuts(seeFigure22).ThemajorityofsampledhouseholdsdonotcollectNTFPs.

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Figure22.CollectionofNTFPsbysampledhouseholds

Provisioningserviceharvestfunctions

In order to predict how changes in land cover under each scenario affect the quantity ofprovisioning services that are harvested, harvest functions are estimated for each forestproductthatrelatethequantityofeachproductharvestedtotheareaofforest.Datafromthehouseholdsurveyareaugmentedwithadditionaldataontheareaofforest inthevicinityofeachsurveyedhousehold(measuredinhectaresofforestwithina5kmradiusofthevillageinwhich the household is located). These data are then used to estimate bivariate linearregressions,withthequantityharvestedbyeachhouseholdasthedependentvariableandthearea of forest as the explanatory variable. The estimated harvest functions are reported inTable12.

Table12.Harvestfunctionsforprovisioningservices

Fuelwood(m3;ln)

Blackberry(kg;ln)

Blueberry(kg;ln)

Mushroom(kg;ln)

Constant -1.453 -5.944* -13.541*** -12.36***Forestarea(ha;ln) 0.436*** 0.769** 1.743*** 1.588**SE 0.112 0.360 0.500 0.476P 0.000 0.036 0.001 0.028AdjustedR2 0.165 0.047 0.132 0.122N 73 73 73 73

***,**,*indicatesstatisticalsignificanceatthe1%,5%and10%levelsrespectively

Theestimatedcoefficientsonforestareaarestatisticallysignificantatthe5%levelorbetter(P< 0.05) in all harvest functions.3The adjusted R2 statistics for each regression are not highindicatingthatthereisahighproportionofunexplainedvariationinharvestedquantities.Inall

3ItwasnotpossibletoestimateastatisticallysignificantmodelforchestnutharvestandsothisNTFPisexcludedfromfurtheranalysis.

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harvest functions both the dependent and explanatory variables are included in naturallogarithms.Thisenablestheestimatedcoefficientsontheexplanatoryvariables(forestarea)tobeinterpretedaselasticities,i.e.thecoefficientsmeasuretheresponsivenessofharvestedquantitywithrespecttoapercentagechangeinforestarea.Forexample, inthecaseoffuelwood,householdsthatliveinareaswith10%moreforestareathanaverage,tendtoharvest4.4%morefuelwoodthanaverage.

TheseestimatedharvestfunctionsareusedincombinationwithdataontheareaofforestinthevicinityofeachvillageinAdjaraundereachscenario,topredictthequantityofeachforestproduct that is harvested under each scenario. Note that the harvest functions predict thequantity harvestedper household in each village, so this information is extrapolated to thevillage levelbymultiplyingby thenumberofhouseholds ineachvillageusingdata fromthe2014 population census (GEOSTAT, 2016). The predicted changes in harvested quantitiesundereachscenarioarerepresentedinFigure23(fuelwood)andFigure24(NTFPs).Underthedegradationscenario(S2)thereisalargepredicteddeclineinboththeharvestingofwoodandNTFPs.Intheyear2035,thedecreaseinwoodharvestrelativetothebaselineisover23,000m3.Undertherestorationscenario(S3)thereisanincreaseinharvestsofforestproducts.Intheyear2035,woodharvestincreasesbyalmost8,600m3relativetothebaseline.Itisnotedthatrestoredforestsrequireaperiodofgrowthbeforetheycanbeusedfortheharvestoffuelwood.Nevertheless, it is assumedunder the restoration scenario that the ForestAgencyofAdjaracanincreaseharvestingvolumesfrommatureforeststandstoanextentequivalenttotheareaofrestoredforest.

Figure23.Predicted change inannual fuelwoodharvestundereach scenario relative to thebaseline(m3/year).

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Figure 24. Predicted change in annual NTFP harvests under each scenario relative to thebaseline(m3/year).

DemandfunctionsforfuelwoodandNTFPs

In order to estimate theeconomic valueof changes in thequantity of harvested fuelwoodundereachscenario,ademandfunctionthatrelatesthehouseholdWTPforfuelwoodtothequantityharvestedisconstructed.DatafromthehouseholdsurveyonWTPforForestAgencysupplied fuel wood and quantities of wood used by each household in a year are used toestimate a bivariate linear regression. The dependent variable is WTP (US$/m3) and theexplanatory variable is the quantity of fuel wood used per year (m3). These data and thedemandfunctionarerepresentedinFigure25.TheestimateddemandfunctionisreportedinTable13.Asexpected,thereisastatisticallysignificantnegativerelationshipbetweenquantityoffuelwoodandWTP.Householdsthatconsumemorewoodarewillingtopaylessperunitofwood. Thedemand function estimatedon thebasesof thesedatahas a highR2 statistic of0.635, indicating that approximately 64% of variation in WTP is explained by variation inquantity.

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Figure25.DemandrelationshipbetweenquantityandpriceoffuelwoodTable13.Demandfunctionforfuelwood

Coefficient SE P

Constant 7.815*** 0.486 0.000Fuelwood(m3;ln) -2.449*** 0.219 0.000AdjustedR2 0.635

N 72

***indicatesstatisticalsignificanceatthe1%level

Thisestimateddemandfunctionisusedincombinationwithdataonthepredictedquantityofwood harvested per household under each scenario (see previous step in the analysis), topredictthemarginalWTPforfuelwoodundereachscenario.Notethatthedemandfunctionpredicts the WTP per household in each village, so this information is extrapolated to thevillage levelbymultiplyingby thenumberofhouseholds ineachvillageusingdata fromthe2014populationcensus(GEOSTAT,2016).

ThereisinsufficientdatatoestimateequivalentdemandfunctionsforNTFPs.Instead,marketpriceswereusedforeachforestproduct.ThemarketpricesusedarereportedinTable14.

Table14.MarketpricesforNTFPs(priceperkg)

GEL USD

Blackberries 5–10 2.20–4.40Blueberries 7–10 3.08–4.40Mushrooms 5–15 2.20–6.60Chestnuts 2–3 0.88–1.32

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ValueoffuelwoodandNTFPs

The changes in economic value of forest products under each scenario are represented inFigure26 (fuelwood)andFigure27 (NTFPs). Thevalueof changes in theavailabilityof fuelwoodissubstantial.Underthedegradationscenario(S2),theannuallossinvalueisjustoverUS$100,000in2020,risingtooverUS$400,000in2035.Thisrepresentsthepotentialcostofallowing forest degradation. The increase in availability andharvest of fuelwoodunder therestorationscenario(S3)alsohassubstantialvalue.TheannualbenefitisjustoverUS$40,000in 2020, rising to US$ 120,000 in 2035. This represents the increased household wellbeingderived from fuel wood resulting from improved management and restoration of forests.ChangesinthevalueofNTFPsarelowerthanforfuelwoodbutstilleconomicallysignificant,particularlyforthesmallernumberofhouseholdsthatharvestNTFPs.

Figure26.Changeineconomicvalueoffuelwoodrelativetothebaselinescenario(US$/year)ThespatialdistributionofchangesintheeconomicvalueoffuelwoodisrepresentedinFigure28.Eachvillageisrepresentedbyacircle,thesizeofwhichindicatesthescaleofchangeinfuelwood value. The loss in value of fuel wood under the degradation scenario is fairly evenlydistributed across all villages. Villages with larger populations are expected to face higherlosses.Thegainsfromrestoration,however,aremoreconcentratedinvillagesforwhichtherearesignificantareasofscrub,sparsevegetationandpasturethatcanberestoredtoforest.

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Figure27.ChangeineconomicvalueofNTFPsrelativetothebaselinescenario(US$/year)

Figure28.Spatialdistributionofchangesintheeconomicvalueoffuelwood(US$/year)

CarbonstorageForests play an important role in global climate regulation by removing CO2 from theatmosphereandstoring it in livingbiomassandtheforestsoil.Byremovingthisgreenhousegas from the atmosphere, forests reduce the rate and severity of climate change and theexpecteddamages thatareassociatedwith it. If forestsareconverted toother landusesordegraded,theyceasetosequesterCO2andmayreleasestoredcarbonintotheatmosphere.If

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forests arewellmanagedanddegradedareas are reforested, thequantityof carbon storedcanincrease.

Themethodology for theassessmentandvaluationofcarbonstorageby forests inAdjara isrepresentedinFigure29.

Figure29.Methodologyforassessmentandvaluationofcarbonregulation

Bio-physicalchangesincarbonstorage

Forestsremovecarbondioxidefromtheatmosphereandstoreitintheirfibresandinthesoil.Theamountofcarbonthatiscapturedfromtheatmospherebydifferentplantspeciescanbequantifiedintermsofarateofsequestration.Ifatreeorplantisdestroyedordamaged,thecarbonstoredintheplant’scellsisreleasedasthebiomassdecaysorburns.Carbonstoredinthe soil may be released over time if left un-vegetated, or released quickly if the soil isdisturbed. The rates atwhich carbon is added to biomass/soil (sequestration rate) and anyrelease of stored carbon can be used together to calculate the net change in atmosphericcarbondioxideinagiventimeperiod.Thenetamountofcarbonsequesteredbyanecosystemisthesumoftherateofsequestrationofeachspecies(rs,t)andtheamountofstoredcarbonthatwouldbe released if theecosystemweredamagedordestroyed (qs,t) per a given timeperiod.

𝐶𝑎𝑟𝑏𝑜𝑛 𝑆𝑒𝑞𝑢𝑒𝑠𝑡𝑟𝑎𝑡𝑖𝑜𝑛! = (𝑟!,! + 𝑞!,!)

BaselineScenarioMap Degrada2onScenarioMap

Reforesta2onScenarioMap

BaselinelandcoverMap

InVESTCarbonstoragemodule

Carbonstorageforlandcoverscenarios

Carbonpricesandsocialcostofcarbon(USEPA)

Valueofcarbonstorage

Model

Data

Analysis

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The subscript s refers to the species; the subscript t refers to the length of time analysed,usuallyoneyear.Dataontheratesofcarbonsequestrationbydifferentecosystemsandtheextentofthoseecosystemscanbeusedtoestimateannualquantitiesofcarbonsequestration.Dataonthequantityofstoredcarbonindifferentecosystemsandchangesinextentofthoseecosystemscanbeusedtoestimatetheannualquantityofcarbonpreventedfromreleaseordecayintotheatmosphere.Byconvention,quantitiesofcarbonareoftenexpressedintermsof tonnesofCO2-equivalent inorder toallowcomparisonwithothergreenhousegases.TheconversionratebetweencarbonandCO2is1tC=3.67tCO2.

Economicvaluationofcarbonstorage

The annual value of carbon sequestration can be estimated bymultiplying the annual (net)quantityofsequesteredcarbonbythevaluepertonneofcarbon,asrepresentedbyequation:

𝑉𝑎𝑙𝑢𝑒 𝐶𝑎𝑟𝑏𝑜𝑛 𝑆𝑒𝑞𝑢𝑒𝑠𝑡𝑟𝑎𝑡𝑖𝑜𝑛! = (𝑟!,! − 𝑞!,!) ∗ 𝑉𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑡𝑜𝑛𝑛𝑒 𝑐𝑎𝑟𝑏𝑜𝑛 Theeconomicvaluationofcarbonstorageexaminestwoaspectsofcarbonvalue:

1. Potential value of marketed carbon credits from enhanced sequestration and avoidedemissions.This ispotentiallyuseful informationforresourcemanagement,whichmaybeinterested in examining financing mechanisms to pay for ecosystem conservation. Theobservedpriceofmarketedcarboncreditsprovidesanindicationofthepotentialrevenuefromcreditingandsellingstoredcarbon.One limitationof thisapproach is thatprices incarbonmarketsarelargelyartefactsofthesetupandregulationofthemarketanddonotreflectthefullbenefitsofcarbonstorage.

2. Social cost of carbon (SCC). The SCC is the estimateddamage causedby climate changeresulting from additional units of carbon emitted to the atmosphere. It thereforerepresents the global benefit of reducing carbon concentrations in the atmosphere (e.g.throughsequestrationinforests).TheSCCisintendedtobeacomprehensiveestimateofclimate change damages but due to current limitations in the integrated assessmentmodelsanddataused toestimateSCC, itdoesnot includeall importantdamagesand islikelytounder-estimatethefulldamagesfromcarbonemissions.

Thedatausedtoestimatethevalueofcarbonsequestrationandstorageare:

− The change in carbon stocks under alternative land use scenarios (tonnes of carbon) isobtained from InVESTmodelledoutput.Quantitiesof carbonareconverted to tonnesofCO2-equivalent using the conversion factor 1 tC = 3.67 t CO2. The additional quantity ofcarbon released or stored under each scenario is computed as the total carbon storedunderthescenariominusthetotalcarbonstoredunderthebaselinescenario.

− Thesaleableproportionofadditionalstoredcarbon isestimatedfromexisting initiatives.Existingprojectstocertifyandmarketcarboncreditsareobservedtoonlybeabletosellalimited proportion of the potential total volume due to the challenges of establishing acrediblebaseline,obtainingandmarketingcredits.Thesaleableproportionisassumedtobe20%ofthephysicalpotential.

− Thepriceof carbon credits is 4.9US$per tonneCO2-equivalent,which isobtained fromForestTrends(2015).

− The costs of setting up,monitoring, enforcing, crediting andmarketing carbon credits isobtained from existing initiatives. The total costs are divided by the quantity of carbon

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creditsgeneratedtoobtainanestimateofcostintermsofUS$pertonneCO2-equivalent.Thecostpercreditisestimatedtobe0.73US$/tCO2-equivalent.

− The potential producer surplus obtained from crediting and selling avoided carbonemissions is computed by multiplying the total quantity of avoided carbon emissions(tonnesCO2-eq)bythemarketprice4,minusthecostsofmanagingandcreditingemissionsreductions.

− Theestimated social costof carbon is 59US$per tonneCO2-equivalent (US InteragencyWorkingGroup,2013).

− TheglobalsocietalbenefitorcostfromchangesinstockofstoredcarboniscomputedbymultiplyingthechangeinthequantityofstoredcarbonbytheSCC.

TheestimatedquantitiesandvaluesofcarbonstoragearepresentedinTable15.Theannualpotential net revenues from selling carbon credits under each scenario are represented inFigure30.Underthereforestationscenario,thepotentialannualnetrevenue(revenueminuscosts)in2020isestimatedtobeUS$347,000.TheannualnetrevenuerisestoUS$381,000in2035, reflecting the increasing areaof forest sequestering carbon, resulting in an increasingnumberofcarboncreditsthatcanbesold.Thesepotentialannualnetrevenuescouldbeusedto fund theadditional forestmanagementactivitiesunder the reforestationscenario.Underthedegradationscenariothequantityofstoredcarbondecreasesrelativetothebaselineandthereisnoscopeforsellingcarboncredits.Inthiscase,theestimatednegativenetrevenuesrepresentthelossinvalueofthecarbonstockunderthisscenario.

Theannualglobalbenefits fromchanges inthequantityofcarbonstored inAdjaranforests,measuredusing thesocialcostofcarbon, is represented inFigure31.Under therestorationscenario,theannualglobalvalueofavoidedclimatechangedamagesduetoincreasedstorageof carbon isestimated tobeUS$24.5million in2020, rising toUS$27million in2035.Thisreflectsthehighavoideddamagecostsassociatedwithclimatechangebut it is importanttonote that theseare global benefits thatdonot accrueexclusivelyordirectly to theAdjaranpopulation. Under the degradation scenario the increase in annual global climate changedamagesduetothereleaseofcarbonisestimatedtobeUS$18.5millionin2020risingtoUS$22millionin2030.

4Thiscalculationismadewiththeassumptionthatavoidedemissionsthatwilloccurinthefuture(i.e.asbiomassandsoilcarbonisreleasedovertime)canbecreditedandsoldinthecurrentyear.Ifthisisnotthecase,itwouldbenecessarytoestimatethequantityofcarbonreleasedineachyearfollowingthelandusechangeandthencomputeapresentvalueofthestreamofcredits.

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Table15.Annualchangesincarbonstorage(allquantitiesandvaluesinthousands)

Degrade2020

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Restore2020

Restore2035

Changeinstoredcarbon(tCO2-eq/year) -313 -376 416 457Saleablecarboncredits(tCO2/year) -63 -75 83 91Revenuecarboncredits(US$/year) -307 -369 408 448Costscarboncredits(US$/year) -46 -55 61 67NetRevenuecarboncredits(US$/year) -261 -314 347 381Socialcostofcarbon(US$/year) -18,493 -22,191 24,539 26,987

1Changeincarbonstoredrelativetothebaselinestockofcarbon2Usingtheassumptionthat20%of‘additional’carbonstoragecanbesold.AdditionalcarbonisassessedrelativetotheBAUscenario.

Figure30.Annualpotentialnetrevenuefromsaleofcarboncredits

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Figure31.Annualglobalbenefitsofcarbonstoragemeasuredusingthesocialcostofcarbon

NaturalhazardregulationForests play an important role in stabilizing steep mountain slopes and regulating rates oferosionandnaturalhazardssuchasfloodsandlandslides.HeretheeconomicvalueofAdjaranforestsfortheirroleinregulatingtheoccurrenceoflandslidesisestimated.Riskfromnaturalhazards is generally modelled as a combination of the hazard itself (e.g. frequency oflandslides) andexposure (e.g. assets thatmaybedamaged) (deMoelandAerts,2015). Themethodology for theassessmentandvaluationof landslideregulationby forests inAdjara isrepresented in Figure 32. The approach combines spatial data on land cover under eachscenario with a bio-physical model (InVEST) of sediment retention and export to estimatespatiallyvariable ratesof sedimentexport foreachscenario.Thebaselinedataonsedimentexport is combined with data on the frequency of landslide damage to houses in Adjaranvillagesandusedtoestimateapredictivefunctionforlandslidedamage.Villageleveldataonsediment export under each scenario is then fed into this function to predict changes inlandslide damage frequency in each village under each scenario. The costs of predicteddamages are estimated using data on average compensation payments. The steps,assumptionsanddatausedinthisanalysisaredescribedindetailinthesectionsbelow.

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Figure32.Methodologyforassessmentoflandslideregulation

Sedimentexportmodel

Soilerosionisanaturalprocessthatoccurswhenraindetachessoilparticlesandwashesthemoverlandandeventuallyintostreamsandrivers.Soilerosionisprevented,oratleastreduced,through forest or plant cover. The root structure of trees holds topsoil in place preventingerosion.Soilerosioncanbedamagingtotheenvironmentbyaffectingwaterquality,causinglandslides,sedimentationofreservoirsanddamagingdamsdownstream.TheInVESTmodelisusedheretoquantifythechangesinsedimentexportduetochangesinlandcover(Sharpetal.,2016).

Annual sedimentdelivery/exportmodeloneachpixel i (ton.ha-1yr-1) isbasedon the reviseduniversalsoillossequationwhichisgivenas:

uslei = Ri x Ki x LSi x Ci x Pi

Where:Riistherainfallerosivity(MJ.mm(ha.hr)-1)Ki isthesoilerodibility(ton.ha.hr(Mj.ha.mm)-1)LSi istheslopelength-gradientfactorCi isthecropmanagementfactorPi isthesupportpracticefactor

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Toquantifytheflowofsedimentfromupstreamtodownstream,theestimationrequiresinputfromadigitalelevationmodel.Theaboveformulaisappliedtoeachgridcelltoestimatetheannualsoillossfromeachcellwithinacatchmentarea.Sincemanyfactorsaffectthesoilloss,including land management, slope gradient, vegetation, soil property, etc., the model alsoassesses the sediment delivery ratio (SDRi),which is the proportion of actual soil loss fromeachpixel.ThesetwoparametersarethenusedtofindthetotalamountofsoillossfromeachpixelascanbeseenintheFigure33.

Figure33:ConceptualrepresentationofsedimentexportquantificationinInVEST.

Thesedimentlossfromagivenpixeliscalculatedbythefollowingformula:

Ei=usleixSDRiAnd,thetotalsoillosswithinacatchmentareaiscomputedbytheformula:

𝐸 = 𝐸!!

Given the simplicity of the model, there are several recognised limitations. The model issuitableforestimatingoverlanderosionbutothertypesoferosionsuchasgullyerosion,bankerosion,andmasserosion(suchaslandslides)arenotincorporatedintothemodel.Themodeltopredictlandslidesdirectlywasnotused;instead,theestimatedchangesinsedimentexportasapredictoroflandslidedamagewereused.

Thestepstoextractdataonsedimentexportwithin5kmradiusofeachvillagearesimilartothe steps used to extract data regarding forest area. Buffer zones for each village wereprocessedusingtheArcGISapplicationandthentheresultantinformationwasfedtoQGIStoobtainthesedimentexportforeachbufferzone.

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SpatiallyexplicitchangesinsedimentexportundereachscenarioarerepresentedinFigure34.For the purposes of presentation, these maps show the quantity of sediment exportaggregated at the level of water sub-catchments. The level of analysis, however, is forindividual pixels and subsequently 5 km buffers around each village location. The mapsindicate where sediment export increases under the degradation scenario and decreasesundertherestorationscenario.

Figure34.Sedimentexportperwatersub-catchment

Landslidedamagefrequencyfunction

HistoricdataonlandslidedamagesinAdjara(2009-2014)wasobtainedfromDEPNRofAdjara(2016).Thisdatahasbeenreorganizedintocountdataindicatingthenumberofhousesthataredamagedbylandslidesineachvillageineachyear.Thedatacover383villagesand6years,giving2,298datapoints.

This data on landslide damage frequency was combined with data on sediment export forbaselinelandcoverestimatedusingInVEST.Usinginformationonthegeographiccoordinatesofeachvillage,theannualquantityofsedimentexportedwithina5kmradiusofeachvillagewas extracted.Geographic coordinates are only available for 237 out of 383 villages so theremaining146wereomittedfromtheanalysis.

Datawasalsoaddedonthenumberofhouseholdsineachvillage(DEPNR,2016),whichwasused as a measure of exposure to landslide hazard. Data on the number of households isavailable for only 41 villages so the sample is further restricted leaving a total of 246 data

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points(41village*6years=246).Table16providesadescriptionofthevariablesusedinthelandslidedamagefrequencyfunction.

Table 16. Descriptive statistics for village level data used to estimate landslide damagefrequencyfunction

Mean S.E.Mean Median Min. Max.

Numberofhousesdamagedbylandslides 3.22 0.41 1.00 0.00 67Sedimentexport(tonnes;5kmradius) 1,814 33.49 1,879 584 3,068Households 246 18.87 105 23 1,000

This data was then used to estimate a function for predicting changes in the frequency oflandslidedamagetohousesfollowingchangesinlandcover.ThefunctionwasestimatedusingageneralisedPoissonloglinearmodelsincethedependentvariableiscountdata.5

Theestimated landslidedamage frequency function is reported in Table 16. Thedependentvariable is thenumberofdamagedhousespervillageperyear.Allestimatedcoefficientsonthe explanatory variables are statistically significant at the 5% level or better. The positiveestimated coefficient on the sediment export variable indicates that landslide damages arehigher in areaswithhigher sedimentexport. Similarly, landslidedamagealso increaseswiththenumberofhouses inavillage (i.e. there isahigher likelihoodofdamage invillageswithmorehousesthatmaybedamaged).Thedummyvariablesforeachyear2010-2014areusedtocontrolforyearspecificvariationinthenumberofhousesdamagedbylandslides,possiblyrelatedtotheoccurrenceofextremeweathereventsineachyear.Theomittedcategoryyeartowhich other years are compared is 2009. Relative to the number of houses damaged bylandslidesin2009,thereweresignificantlymorehousesdamagedin2013.

The validity of using the estimated function was checked to predict landslide damage byperforminganin-sampletesttopredictthenumberofdamagedhousesintherespectivedata.Themeannumberofhousesdamagedbylandslidespervillageperyearinthedatais3.22andthemean predicted number is 2.79, indicating that the landslide damage function tends toslightly(13%)underpredictthescaleoflandslidedamage.Inparticular,thefunctiondoesnotpredictwell extremeevents inwhichmultiple (>10) houses aredamaged in a single village.Sincethisanalysis is focusedonestimatingaverage levelsof landslidedamageacrossAdjara

5Poisson regression assumes the response variable(in this case the number of houses in a villagedamagedbylandslides)hasaPoissondistribution,andassumesthelogarithmofitsexpectedvaluecanbe modelled by a linear combination of unknown parameters. A Poisson distribution is adiscreteprobabilitydistributionthatexpressestheprobabilityofagivennumberofeventsoccurringinafixedintervaloftime if theseeventsoccurwithaknownaveragerateandindependentlyofthetimesincethelastevent.Poissonregressionisappropriatewhenthedependentvariableisacount,forinstancethenumberofhousesdamagedbylandslidesinayear.Theeventsmustbeindependentinthesensethatonehousedamagedbyalandslidedoesnotmakeanothermoreorlesslikely,buttheprobabilityofeventsperunittimeisrelatedtocovariatessuchasthequantityofsedimentexportinthevicinityofavillageandthenumberofhouseholdsinthevillage.

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ratherthanspecificevents, thefunction isconsideredtobesufficientlyaccurateandslightlyconservative.

Table17.Landslidedamagefrequencyfunction.Dependentvariableisthenumberofhousesdamagedbylandslidespervillageperyear.

Parameter Coefficient Std.Error95%WaldConfidence

Interval

Lower Upper

Constant -11.225*** 1.2998 -13.773 -8.678Sedimentexport(tonnes;ln) 0.995*** 0.1447 0.711 1.279Households(ln) 0.847*** 0.0513 0.747 0.9482010dummyvariable 0.346** 0.1509 0.05 0.6422011dummyvariable -0.68*** 0.1991 -1.07 -0.292012dummyvariable 0.617*** 0.1433 0.336 0.8982013dummyvariable 1.476*** 0.128 1.225 1.7262014dummyvariable 0.346** 0.1509 0.05 0.642 N 246 Likelihoodratio 706.131 ***,**indicatesstatisticalsignificanceatthe1%and5%levelsrespectively

Predictedlandslidedamage

To predict how the frequency of landslide damage to houses changeswith changes in landcover,aseparatedatabasewaspreparedforallvillagesinAdjarathatincludesinformationonthe explanatory variables used in the damage function (i.e. sediment export within a 5 kmradiusofeachvillage;andthenumberofhouseholds).EstimatedsedimentexportundereachscenariowasobtainedfromtheInVESTmodeloutputandextractedfora5kmradiusbufferaround each village using a GIS. Data on the number of households in each village wasobtained fromDEPNR (2016)and the2014populationcensus (GEOSTAT,2016). In cases forwhich village specific information on sediment export and number of households was notavailable (due to missing coordinates for some villages), the municipality averages wereassigned.

Thisdatawas thencombinedwith theestimateddamage functiontopredict thenumberofhousesdamagedbylandslides ineachvillageperyear.TheresultsarepresentedinTable18and Figure35. The total numberof housespredicted tobedamagedby landslidesper yearunderthebusiness-as-usuallandcoveris549,whichisslightlylowerthantheannualaverage(632 houses) for the period 2009-2014. The number of houses damaged by landslidesincreases substantially under the degradation scenario, rising to an additional 326 housesdamaged in 2035 relative to thebusiness-as-usual scenario.Under the restoration scenario,thenumberofhousesdamagedbylandslidesispredictedtodecreaseby58housesperyearin2035.

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Table18.Numberofhousesdamagedbylandslides

BAU

Degradation2020

Degradation2035

Restoration2020

Restoration2035

Meanpervillage 1.43 1.65 2.29 1.38 1.28Total 549 632 876 528 492Dif.FromBAU 0 83 326 -21 -58

Figure 35. Change in the number of houses damaged by landslides per year relative to thebusiness-as-usualscenario

Avoidedlandslidedamagecosts

The economic value of the role forests play in regulating the occurrence of landslides isestimated as the damage costs that are avoided due to forest cover.More specifically, thechange in damage costs due to changes in land cover under each scenario is estimated.Damagecostswerecomputedbymultiplyingthenumberofhousesdamagedbytheaveragegovernmentcompensationpaymenttohouseholdsthathadsufferednaturalhazarddamageduringtheperiod2013-2015.ThisisUS$2,010perhousehold(DEPNR,2016).6

The results of this valuation are represented in Figure 36. Avoided damage costs decreasesubstantiallyunderthedegradationscenariorelativetothebusiness-as-usualcase.Damagesincrease byUS$ 166,000 in 2020, rising toUS$ 656,000 in 2035. To put this in perspective,currentannualcompensationpaymentstohouseholdsfordamagecausedbynaturalhazardsisUS$196,000.Undertherestorationscenariothereisamoderatedecreaseindamagesfromlandslides ofUS$ 42,000 in 2020 rising toUS$ 116,000 in 2035, relative to the business-as-

6TotalcompensationpaymentsduetonaturaldisasterswereUS$590,000to293householdfortheperiod2013-2015.ThisisequivalenttoUS$196,000peryearorUS$2,010perhousehold.

-100

-50

0

50

100

150

200

250

300

350

Degrada.on2020

Degrada.on2035

Restora.on2020

Restora.on2035

Chan

geinnum

bero

fhou

sesd

amaged

by

land

slidesperyearrela4

veto

BAU

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usualcase.Figure37representsthespatialdistributionofchanges inavoideddamagecosts.The increases in landslide damages under the degradation scenario are fairly evenlydistributedacrossvillagesinallfivemunicipalities.Thebenefitsofreducinglandslidedamagesunder the restoration scenario are largely received in Khulo and Shuakhevi municipalities,wheremostforestrestorationtakesplace.

Figure36.Annualavoidedlandslidedamages(US$/year)

Figure37.Spatialdistributionofannualchangeinlandslidedamages(US$/year)

-700,000

-600,000

-500,000

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

Degrada2on2020

Degrada2on2035

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Restora2on2035

Avoide

dda

magecosts(US$/year)

Degrada'on2020 Restora'on2020

Degrada'on2035Restora'on2035

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SummaryofecosystemservicevaluesChangesinthevaluesofecosystemservicesprovidedbyAdjaranforestsundereachscenarioaresummarisedinTable19andFigure38.TofocusonservicesthatdirectlybenefitthepeopleofAdjara, theestimated valueof carbon storagemeasuredas theavoideddamage costsofclimatechange (socialcostofcarbon) is leftout.Theprovisionof fuelwood,NTFPsandtheregulationof landslides are all services that directly and currently benefit the populationofAdjara.Thevaluesof theseservicesdecreasesubstantially if forestsareallowedtodegrade.Underthedegradationscenario,an18%declineinforestcoverby2035leadstoanannuallossin welfare equivalent to almost US$ 1.3 million. Over 50% of this loss is due to increasedlandslide damages. Under the restoration scenario on the other hand, converting 34.5% ofpastureand27.3%ofscrubandsparselyvegetatedlandtoforestby2035(anincreaseoftotalforestareato185,359haor15.7%)results inanannualwelfaregainequivalentto justoverUS$ 300,000. In this case the gains due to increased provision of fuel wood and reducedlandslidedamagesareapproximatelyequalinvalue.Althoughtheregulationoftheglobalclimatethroughthestorageofcarbonisaglobalbenefit,itmaybepossibletocapturepartofthisbenefitforAdjariansthroughthemarketingandsaleofcarboncredits.This,however,iscurrentlyonlyapotentialsourceofrevenueforAdjara.Thisrevenue stream would add substantially to the benefits received under the restorationscenario.

Table19.SummaryofannualecosystemservicevaluesinAdjara(US$)

EcosystemService Degradation2020

Degradation2035

Restoration2020

Restoration2035

Fuelwood -102,042 -412,548 41,559 120,582NTFPs -58,453 -203,021 20,080 68,553Landslideregulation -166,127 -655,758 42,051 116,301Carbon(potentialcredits) -261,353 -313,621 346,805 381,402Total -587,976 -1,584,948 450,495 686,839

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Figure38.Annualecosystemservicevalues(US$/year)The results presented above are in terms of changes in annual values, i.e. the value ofecosystem services received in specific years (2020 and 20135) relative to the baseline. Inordertoprovideameasureofthedifferences invalueofecosystemservicesovertheentiretime horizon of the analysis, Table 20 and Figure 39 report the total changes in ecosystemservicevaluesfortheperiod2016-2035undereachscenario.Thesevaluesrepresentthesumof losses or gains due to alternative policy directions over the period 2016-2035. The totalvalueof lostecosystemservicesunder thedegradation scenarioapproachesUS$19million;whereasthegainsfromrestorationareapproximatelyUS$10million.

Table20.TotalvalueofchangesinecosystemserviceprovisioninAdjaraunderalternativeforestmanagementscenario(2016-2035;US$)

Degradation Restoration

Fuelwood -4,320,805 1,380,249NTFPs -2,208,692 749,227Landslideregulation -6,907,341 1,350,911Carbon(potentialcredits) -5,122,499 6,519,273Total -18,559,337 9,999,660

-800,000

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

Degrada/on2020

Degrada/on2035

Restora/on2020

Restora/on2035

Ecosystemse

rvicevalue(US$/year)

Fuelwood

NTFPs

Landslideregula/on

Carbon

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Figure39.TotalvalueofchangesinecosystemserviceprovisioninAdjaraunderalternativeforestmanagementscenario(2016-2035;US$)

-8,000,000

-6,000,000

-4,000,000

-2,000,000

0

2,000,000

4,000,000

6,000,000

8,000,000Degrada/on Restora/on

Fuelwood

NTFPs

Landslideregula/on

Carbon

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6.ConclusionsandPolicyRecommendations

Basedontheoutcomesoftheforestecosystemservicevaluation,thischapterdiscusseswhichmanagementchallengesarise,identifiesrelevantpolicyandregulatorystructuresandhowtoaddressthechallengesthroughappropriateinterventions.

This analysis suggests that there is a potential for increasing social and economic benefitsthroughwell-conceivedpolicy interventions that can improve forest conditionsand increaseforest cover in Adjara. The analysis compares two alternative scenarios for the futureconditionof forests inAdjara (degradationandrestoration) in theyears2020and2035toabusiness-as-usualscenario.Underthebusiness-as-usualscenariopresentconditionscontinueintothefutureandthereisnoappreciablechangeinforestqualityorquantity.ItisassumedthattheAdjaragovernment’sbudgetforforestrelatedactivitiesremainsatthepresentlevel,international donors continue their current support, and the Ministry of Social WelfarecontinuestopayoutapproximatelyUS$200,000incompensationfordamagetoprivateassetsinthecaseoflandslidesandotherrelateddisasters.

However, with climate change and the possibility of significantly increased precipitation,incidenceof landslidesmay increaseevenwithoutanychange intheunderlyingconditionofforests. Hence, in this respect, the estimates are conservative (i.e. the value of forests inregulating landslideswillbehigherwithclimatechange).TheDegradationScenario indicatesthat if forestcoverweretobereducedby1%peryeartoan18%totaldeclineby2035,thiswould result in a potential annual loss in value from ecosystems services exceeding US$ 1million per year by 2035. The Managed Use and Restoration Scenario describes animprovementinforestcoveraspasture,scrubandsparsevegetationisrestoredtoforestatarateof2% (ofpasture, scruband sparce vegetation)per year, leading toa total increaseof16%by2035.Underthisscenario,proactivemeasures in improvingforestqualitywillcreateadditionalvaluefromecosystemsservicesestimatedtoreachalmostUS$700,000peryear.

Theadditionalvaluecreatedbyincreasedforestationderivesfromfourmainsources.First,theavailability of more fuel wood and the ability to harvest it at less expense would createadditionalusevalueofUS$40,000in2020,risingtoUS$120,000peryearin2035.AdditionalpotentialharvestsofNTFPs(blackberries,blueberriesandmushrooms)wouldyieldUS$70,000peryearby2035.SavingsfromavoidedlandslidedamagesadduptoUS$42,000in2020andUS$116,000in2035.Thesevalueshavebeenestimatedunderconservativeassumptionsandthus considered to represent lower bound estimates. Furthermore, an additional potentialbenefit of US$ 347,000 per year in 2020 rising to US$ 381,000 per year in 2035 could beobtained if the additional carbon captured by increased forest cover could be certified andcarboncreditssold.Thisfigureisaconservativeestimatebasedontheassumptionthatonly20%ofthephysicalpotentialforcarboncreditsaresaleable.Evenif itprovesdifficulttosellcarbon credits, the global benefits accruing from increased carbon storage would still berealized,justnotappropriatedbyAdjara,andthatthesewouldtotaluptoUS$27millionperyearin2035.Therearelikelytobeseveralothersmallerandlesssignificantbenefitsobtainedfrom the restoration scenario, such as from positive impacts on tourism, which are notincludedinthisstudysoastofocusattentiononthemosteconomicallyimportantecosystemservices.

From these findings, the central policy challenge that emerges is how to enable theseadditionaleconomicbenefitstobegeneratedandcapturedlocally.Ataminimum,thisanalysis

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suggeststhataconservativefigureofUS$100,000peryearin2020,risingtoUS$200,000by2035,couldbespentadditionallyonforestregenerationactivitiestoincreaseforestcoverby16% by 2035. In other words, the benefits in terms of locally received ecosystem serviceswouldjustifytheseadditionalcostsofforestmanagement.

Implementationofpoliciesthatwouldachievethisrequiresattentiontobepaidtocontextualinstitutionalandorganizationalinterestsandcapacities.ThereviewofstakeholdersinChapter3 of this report indicated that a holistic approach to this issue in Adjara involves multipleactorsandlevelsofgovernance.Insuchcontextswherepolicydecisionshavetoconsiderthecosts and benefits related to ecosystemmanagement acrossmultiple levels of governance,although there is a growing awareness of the importance of biodiversity and ecosystemsservices, incorporating them fully in policymaking is subject to various challenges, rangingfrom the ecological to the economic and the political (Ring et.al. 2010). To address theseissues,forestmanagementinAdjarafacesfiveinstitutionalandorganizationalfactorsthatmaylimititsresponse.

First, there isaknowledgedeficit.DecisionmakersandAFApersonnelmaybe inadequatelyawareofthebenefitsprovidedbyforestsandthevaluethattheforestscreate.Thispointwasmade in the National Forest Policy Concept, which noted that foresters “do not take intoaccount theconsequenceswhichmaycasedegradationof forestecosystemsandeventuallyleadtohumaninducednaturaldisasters.”

Second,therearegapsintheframeworkoflawsandregulationsaroundforestmanagementinAdjara, whichmany reviews have found to be unclear and inconsistent. The foundation offorest law inGeorgia is the ForestCodeof 1999.Clarityof the codeand consistencyof thesubsequent legislations have both proved to be problematic. Terminology such as “forestfund” forexample, isa legacy fromtheSovietera referring to forestsor forest lands,but isinternationally defined and understood as the financial resources for forest management.Closely linked is the issue of inadequate legal framework for protecting biodiversity andforests.Thisismostapparentintheabsenceofclearcategorizationorzoningofforests(UNEPandWWF2013).Forinstance,thecategoryofAreawithSpecialfunctionsisdefinedby“Forestuse rules” (GovernmentResolutionNo.242,20.08.2010)with certainprovisions suchas theprohibition of commercial logging (final cuts) in these areas. However, the location of thiscategoryofforestareasisnotdemarcatedunderanystatutoryact(GreenAlternative2016).TheunderlyingissueisthatforestmanagementinGeorgiaisgearedtowardsaperceptionofforests as having primarily commercial functions, with environmental management beingsecondaryandnotlinkedtoeconomicvalue.InAdjara,thestrategicplanoftheAFAnotestheproblemofan“inadequate, insufficient legislativebase”,statingthatasaresultof impreciseboundaries of forest lands, it is not able to enforce laws when other organizations orindividualstakeovertheland.

Third, there are capacity constraints in theAFA, both in terms of finance and staffing. As aresult, existing regulatory and legal frameworks are weakly enforced. This is particularlyevidentwhenitcomestologgingoftimberorfuelwood.Theproblemistwo-fold,withoftenillegalactivitiesgoingundetected,andwhendetectedgoingunpunished(Machavariani2014).As locals are legally allowed to use certain areas of the forests andwith set limits, there isoftenplentyofactivity in the forestsandhencehighriskof illegalactivityaswell.However,thesystemsformonitoringandenforcinglawsonforestactivityareinadequate,andthereisonlylimitedstaffofregulatingauthoritiesoverseeingtheseactivities.Further,thehighlevelsof ruralpoverty inAdjaranotonlyexacerbate theriskof illegalactivitybutalso implya low

74

abilitytoenforcepenaltiesonvulnerablepopulations.Indeed,finesimposedbyenforcementauthorities on poor violators of the forestry law are routinely rescinded in the courts.Moreover, forest management organizations lack resources to carry out their statutoryfunctions effectively. Funding is a major constraint, and remains so for several forestryoperationsincludingrestoration,thinning,pestanddiseasecontrolandcontrollingforestfires.Further, even as funding is increasing, there are impediments to using the funds efficientlyincluding inadequatecompetencyofstaff, lackofupdatedforestmanagementplans,andanabsenceofmoderninformationtechnologysystems(Machavariani2014).

Fourth,localgovernmentshavenotbeenempoweredtomanagetheirforestareasdespitethe1999 Forest Code’s emphasis in this area. Decision-making power remains centralized andcurrently located in the MENRP and the National Forest Agency. Decentralization iscomplicated by the fact that there are still no clear boundaries of the local forest fund(Macharashvili2009)and,furtherbythefactthat,asnotedintheearlierTEEBscopingstudyforGeorgia,“localself-governingbodiesarenotreadytotakeovertheresponsibilityforforestmanagement…becausetheylackfunding,capacityandexperience”.

Finally, datamanagement on forests suffers from the lack of reliable sources and updatedinformation. For instance, assessmentsof the statusofnon-timber resources inGeorgia areincomplete(UNEP&WWF2013).Thisgreatlyimpedeseffortstoevaluatethestateofaffairsandtherebyhinderstheprocessofpolicylearning.

Eachoftheseareasrequiresattentionfromtheauthoritiesastheyareessentialtofacilitatingotherpolicyinitiativesaimedatimprovingthemanagementofforestecosystemservices.

PolicyAlternativesKeepingthesecontextualissuesinmind,severalalternativescanbedevelopedwithanaimtoimprovingforestcover, includingbothdemandside(wherethedemandforforestservicesisreducedtherebyallowingnaturalregenerativeforcestoimproveforestcondition)andsupplyside (where the supply of forest services is increased through targeted interventions inregenerationandreforestation)approaches:

1. Promotingandsubsidizingtheuseofalternativefuelsandenergysourcesforheating

andcooking,suchasthroughgasificationandsolar.

2. Strengtheningtheenforcementofthepermitsystemforfuelwoodcollectionsothatonlydesignatedtreesandprescribedamountsarecollected.

3. CreatingasystemwherebytheAFAundertakestheharvestingandmarketingoffuelwoodcombinedwithstrictcontrolsonsocialforestry.

A choice among these alternatives implies trade-offs among competing desirable impacts.Evaluatingthepotentialalternativescanbeaidedbytheuseofdecisionsupporttoolssuchasmulti-criteriaanalysis(MCA).7Theevaluativecriteriashouldincludeeconomic,social,political

7Multi-criteriaanalysis(MCA)isawell-establishedtoolfordecision-makingthatinvolvesconflictingormultiple objectives. MCA can be used to establish preferences between alternative options byreference to a set ofmeasurable criteria that the decisionmaking body has defined. The basic ideabehindMCAistoallowtheintegrationofdifferentobjectives(orcriteria)withoutassigningmonetaryvaluestoallof them(unlikeacost-benefitanalysis). Inshort,MCAprovidesasystematicmethodfor

75

andenvironmentalfactors,includingtherequiredbudgetarycommitments,publicacceptance,easeofimplementationandthevalueofenhancedecosystemservices.TheweightingforeachcriteriawouldneedtobedecidedbythepeopleofAdjarathroughamulti-stakeholderprocessthataimstoreflecttheneedsanddesiresofthepopulation.

OPTION1Facilitatingashifttowardsotherfuels,suchasgas,hasdistinctadvantagesanddisadvantages.Thiswouldcreateapermanentlysuppresseddemandforfuelwoodforheatingandcooking,whichwouldreducefuturepressuresonforestresources.Whilethesefuelswouldbecleanerandmoreconvenient,theyarealsomoreexpensivethanfuelwood,andmayrequiresubsidiesfor a number of low-income citizens. Administratively, the burden of managing fuel woodsupplyandforestregulationwouldbereducedwhilethatofmanagingasubsidyprogramforlower income citizens would increase. The standard challenges of administering subsidyprogramssuchaserrorsofinclusionandexclusionandleakageswouldalsoapply.

Privatesectorinvolvementintermsofcreatingsupplylinesforgasandotherfuelswouldalsoberequired.OPTION2Astrengthenedpermitsystemforfuelwoodcollectionwouldrequirelittleadditionalplanning.The AFA would need to be strengthened with more equipment and personnel. The AFApersonnel would also needmore training in identifying the correct places tomark for treeharvestandplanforestationactivitiessothatthesupplyoffuelwoodismaintainedandableto meet demand. In the absence of compensatory policies, users’ time and expense inharvesting fuelwoodwould increase, and socialwelfare for the lower incomegroupsmightdecreasetoanundesirableextent.

OPTION3CreatinganewsystemwherebytheAFAharvestsandmarketsfuelwoodwouldaddresstheproblemofunauthorizedfellingastheforestagencywouldbeabletoavoidfellinginsensitiveareasandalsointhelongertermbeabletocreateharvestlotswhichsustainablysupplyfuelwood to the communities. This initiativewould require that AFA have adequately qualifiedpersonneltoidentifyidealareasforharvesting,andalsotheinitialinvestmentsinequipmentandpersonnelrequiredtoharvestandsupplyfuelwood. IncasetheAFAweretooutsourcethis to private contractors, then AFA would need to ensure adequate oversight andmonitoring.Inaddition,thepolicyenvironmentwouldneedtoensurethatthepricechargedbytheAFAisnottoolowasotherwisethesupplyoffuelwoodwillrequiresubsidies.Sinceanyoperationthatisnotself-financingmaybevulnerabletobudgetrestrictionsandeventuallytoadeteriorationoftheservice.

Table 21 provides an outline template that could to be used to apply aMCA framework todeterminetheattractivenessofeachoption.

comparingthesecriteria,someofwhichmaybeexpressedinmonetarytermsandsomeofwhichareexpressedinotherunits(BranderandvanBeukering,2015).

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Table21Multi-CriteriaAnalysisscoring Budgetary

commitmentEcosystemservicevalues

Publicacceptance

Easeofadministration

Totalweightedscore

Option1

ScoreXWeight

ScoreXWeight

ScoreXWeight

Option2

ScoreXWeight

ScoreXWeight

Option3

ScoreXWeight

Fortheimplementationofanyofthesepolicies,thefollowingorganizational issueswillneedtobeaddressed:

First, it is generally difficult to get approval for policy initiatives that require significant andrecurring financial outlays in budget constrained environments, even if such initiatives areeventually financially advantageous. In the context of disaster prevention, it has beenrepeatedlyverifiedthatinspiteofthefactthatexpendituresondisasterpreventionroutinelyaremore economical that in disaster response, there is a policy bias towards response andreliefoverprevention.Acommonhurdle isthatfinancialallocationsarehotlycontestedandwhileprevention,givenitsnon-immediatenatureoftenlosesinbudgetaryallocations,disasterresponses,giventheirurgentnature,generallysucceedinobtainingfunds.IntheAdjaraforestmanagement context, the challenge is to exploremechanisms for howbudgetary resourcescanbetransferredfromareactivedisbursementallocationfor landslideandnaturaldisastercompensationstoproactiveafforestationandforestregenerationpurposes.

Second,mechanismswouldneed tobedeveloped so that revenues from the supplyof fuelwood to communities would pay not only for the immediate costs of supply but also forimproving the conditions of the supply such that in the longer term fuel wood is madeavailableinlargerquantitiesandalsomademoreeasilyandcheaplyaccessible.

Finally,mechanismsneedtobedevelopedforcreditingandmarketingcarboncreditsthroughexistingandpotentialchannelssothatthepeopleofAdjaracaninternalizesomeoftheglobalbenefitscreatedbypreservingandexpandingforestcarbonstocksintheirregion.Thiswouldrequireadesignatedagencythatwouldconductthenecessaryinventorytasksandliaisewiththe internationalbodiesthatcommercializecarboncredits. Intheabsenceofdirectsalesofcarbon credits, proposals fordonor fundingof afforestationand regenerationmeasures canalsobemade in light of the significant global positive environmental externalities that suchinitiativeswouldentail.

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Acknowledgments

Thedevelopmentand implementationof this studyhasbenefited from indispensable inputsfrom numerous sources. In particular the authors are sincerely grateful to Dr. GiorgiSanadiradze, the Director of WWF-Caucasus Programme Office for the promotion of TEEBinitiativeinGeorgiaandDr.NugzarZazanashvili,theConservationDirectorofWWF-CaucasusProgrammeOfficefortheconstantsupporttothestudy.OurthanksalsogotoMr.VakhtangTsuladze, Head of Directorate for Environment Protection and Natural Resources of AdjaraAutonomous Republic (at present,Member of the Supreme Council of Adjara AutonomousRepublicandtheChairmanofAgrarianandEnvironmental IssuesCommitteeoftheSupremeCouncil)forhisgreatsupportindatacollection;toMr.IliaOsepashvili,WWF-Caucasus,forhisguidance, knowledge and detailed reviews; toMr. Giorgi Beruchashvili,WWF-Caucasus, forprovidingGISsupportandmaps;toallparticipantsofthestakeholderworkshopheldon26-27November 2015 in Batumi for advice and insights into the bio-physical and institutionalcontextoftheAdjaraforestrysector;toTarielTuskia(DirectorateforEnvironmentProtectionandNaturalResourcesofAdjara),RamazJincharadze(MinistryofHealthandSocialAffairsofAdjara) and ZurabManvelidze (forestry expert) for advice, data and expert knowledge. Thephotographs used in the cover page are credited to WWF-CauPO (upper, left and lowerimages)andZurabManvelidze(righthandimage).

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Delaney,M.,Brown,S.,Lugo,A.E.,Torres-Lezama,A.andQuintero,N.B.(1998)‘TheQuantityandTurnoverofDeadWoodinPermanentForestPlotsinSixLifeZonesofVenezuela1’,Biotropica,30(1),pp.2–11.

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Dilley,M.andHeyman,B.N.(1995).ENSOandDisaster:Droughts,FloodsandElNiño/SouthernOscillationWarmEvents.Disasters19(3):181-193.

DirectorateofEnvironmentProtectionandNaturalResourcesofAdjara(2016).Informationonwoodharvest,landslidesandfloodsoccurringinAdjarain2009-2014andrespectivecompensationspaidtoaffectedhouseholds.SenttoWWF-CaucasusProgrammeOfficeintheformsofpostallettersandelectronicfiles.

FAO(2010)Globalforestresourcesassessment2010:CountryreportGeorgia.Report.ForestryDepartmentFoodandAgricultureOrganizationoftheUnitedNations.

FAO(2016).GeorgiaCaseStudy,PreparedforFAOaspartoftheStateoftheWorld’sForests2016(SOFO).FoodandAgriculturalOrganizationoftheUnitedNations.

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Gogichaishvili,G.P.andUrushadze,T.T.(2006)‘EstimationoferosiondangerlandsofthereclamationfundinGeorgia’,JournalofAgricultureandRuralDevelopmentintheTropicsandSubtropics,107(1),pp.85–94.Availableat:https://www.scopus.com/inward/record.uri?eid=2-s2.0-33745439199&partnerID=40&md5=1d5bcfe79152f879bbf668940205ae0c.

GreenAlternative(2016).ForestlandGovernanceinGeorgia:AssessmentofLegislationandPractice.Tbilisi2016.

http://earthexplorer.usgs.gov/(nodate).UnitedStatesGeologicalSurvey.[AccessedonMay10th,2016]

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Appendix1.Abbreviations

AFA AdjaraForestAgency

APA AgencyforProtectedAreasofGeorgia

CICES CommonInternationalClassificationofEcosystemServices

DEPNR DirectorateofEnvironmentProtectionandNaturalResourcesofAdjaraAutonomousRepublic

GDP GrossDomesticProduct

GIS GeographicInformationSystems

GNI GrossNationalIncome

InVEST IntegratedValuationofEcosystemServicesandTrade-offs

MA MillenniumEcosystemAssessment

MENRP MinistryofEnvironmentandNaturalResourcesProtectionofGeorgia

MEPNR MinistryofEnvironmentProtectionandNaturalResourcesofGeorgia

NFA NationalForestAgencyofGeorgia

NTFP Non-timberforestproducts

PES PaymentsforEcosystemServices

SEEA SystemofEnvironmentalEconomicAccountingSCC Socialcostofcarbon

TEEB TheEconomicsofEcosystemsandBiodiversity

TEV TotalEconomicValue

UNDP UnitedNationsDevelopmentProgram

UKNEA UKNationalEcosystemAssessment

WTP WillingnesstoPay

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Appendix2.Forestuserquestionnaire

LOCATION DATE INTERVIEWER

1. Doyouusewoodfor:

(a) Cooking YES/NO

(b) Heating YES/NO

(c) Preparinganimalfodder YES/NO

2. Inayear,howmuchwooddoyouuse? QUANTITY UNITS

3. Wheredoyouobtainthewood?

(a) Market QUANTITY UNITS

(b) Forest QUANTITY UNITS

(c) Other QUANTITY UNITS

4. Whatistheamountoftime,moneyandeffortyouspendcollectingwood?

(a) Time(ownlabour) DAYS

(b) HiredLabour DAYS LARI

(c) Costofrentingequipment LARI

(d) Costoftransportingwood LARI

5. DosomepeoplecuttreesthatarenotmarkedbytheForestAgency?YES/NO

IfYES,dotheycuttreesthatarenotmarkedbytheForestAgencybecause:

(a) ThetreesmarkedbytheForestAgencyaretoofaraway YES/NO

(b) ThetreesmarkedbytheForestAgencyarenotoftherightquality YES/NO

(c) ThetreesmarkedbytheForestAgencyareinsufficienttomeettheirneeds YES/NO

(d) Otherreason(s):

6. IftheForestAgencyweretoprohibityoufromcuttingtreesandinsteadprovideyouwithyourfuelwoodneeds,wouldyoubeinfavour? YES/NO

Pleasegiveyourreasons:

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7. WhatisthemaximumamountyouarewillingtopaytheForestAgencyfortheamountofwoodthatyouuseinoneyear? LARIPERYEAR

8. Whatotherproductsdoyouobtainfromtheforest?Foreachproduct,howmuchisforyourownuseandhowmuchissold?

(a) PRODUCT QUANTITY OWNUSE(%)

(b) PRODUCT QUANTITY OWNUSE(%)

(c) PRODUCT QUANTITY OWNUSE(%)

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Appendix3.Householdsurveyonnaturalhazarddamage

LOCATION DATE INTERVIEWER

1. Haveyoueverexperienceddamagescausedbynaturalhazards(e.g.landslides,flooding)? YES/NO

2. IfYES,whatwasthecauseofthedamageyousuffered?

3. Whendidtheincidentoccur? DATE

4. Whatwasthedamageyousuffered(asmuchdetailaspossible)?Describeand,ifpossible,givetheapproximatemoneyvalueofthedamage.

(a) House LARI

(b) Otherfixedassets LARI

(c) Animals LARI

(d) Lossofincome LARI

(e) Anyinjuries/humanloss

5. Aftertheincident,didyouchangeyourplaceofresidence? YES/NO

a. IfYES,wheredidyoumoveto?

b. Howmuchdidthenewresidencecost? LARI

6. DidyoureceivecompensationfromtheGovernment? YES/NO

a. IfYES,howmuchcompensationdidyoureceive? LARI

b. Howlongaftertheincidentdidyoureceivethecompensation?

c. Howsatisfiedareyouwiththeprocessofobtainingcompensation?

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Appendix4:CarbonStorage

Inputdatapreparationandprocessing

1. Currentlanduse/landcover:AGISrasterdataset,withaLULCcodeforeachcell.Thedatasetwasprojectedinmetersandtheprojectiontobeusedwasdefined.

ThedatasetwasproducedbyWWF-CauPObyrelyingonLandsat8OLIsatelliteimage2016(seeFigure1).

Figure1.Currentlandcover2016producedbyWWF-CauPO

2. Carbonpoolstable:AtableofLULCclasses,containingdataoncarbonstoredineachofthefourfundamentalpoolsforeachLULCclass.Carbonstoragedatacanbecollectedfromfieldestimatesfromlocalplotstudies,extractedfrommeta-analysesonspecifichabitattypesorregions,orfoundingeneralpublishedtables(e.g.,IPCC,seeAppendix).Ifinformationonsomecarbonpoolsisnotavailable,poolscanbeestimatedfromotherpools,oromittedbyleavingallvaluesforthepoolequalto0.Thetableshouldbestoredin*.CSVfileformateandeachrowofthetableinthefileisaLULCclass.

Thecarbonpooltableistableconsistingof[1]carbonaboveground,[2]carbonbelowground,[3]carboninsoil,and[4]carboninorganicdeadwoodandleafforeachlanduseclass(SeeTable1).

2.1 Carbonaboveground:ThevaluesofbiomassabovegroundofeachlandusetypesareshowninTable1.

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Table1.Estimatedvaluesofabove-groundbiomassforeachlanduseclass8LUCode

LULC_Name

C_above(Mg/ha)

Adoptedsourceforcarbonaboveground

1 Built-up 0.0 Valueof"Town"usedbyBhagabatietal.(2012)

2 Perennials 25.8 Khanetal.(2015)3 Pasture 2.1 IPCC(2014)4 Roads 0.0 5 Scrubandsparse

vegetation25.8 Khanetal.(2015)

6 River 0.0 7 RiverPebblesandIslands 0.0 8 WindBreakingLines 0.0 9 Bridge 0.0 10 Canal 0.0 11 ArtificialLakes 0.0 12 Gullies 0.0 13 FreshwaterWetlands 20.0 Mitschetal.,(2013)14 Lake 0.0 15 Railways 0.0 16 Reservoir 0.0 17 Beach 0.0 18 Rocks 0.0 19 ForestWoodlands 59.9 FAO(2010)20 ArableLand 2.7 IPCC(2014)

2.2 Carbonbelowground:Mostvaluesofcarbonbelowgroundofvegetationcoveredlanduseclasseswereretrievedbymultiplyingthecarbonabovegroundwithratioofbelow-groundbiomasstoabove-groundbiomass(R).TheRvaluewastakenfromIPCC(2006).

Table2.EstimatedvaluesofcarbonbelowgroundforeachlanduseclassLUCode

LULC_Name C_above(Mg/ha)

C_below(Mg/ha)

R AdoptedsourceforR

1 Built-up 0.0 0 0 2 Perennials 25.8 5.16 0.2 Subtropicalhumidforest

(Mokanyetal.,(2006)citedbyAaldeetal.,2006)

3 Pasture 2.1 3.36 1.6 Subtropicalgrassland(Aaldeetal.,2006)

4 Roads 0.0 0 0 5 Scrubandsparse

vegetation25.8 5.16 0.2 Subtropicalhumidforest

(Mokanyetal.,(2006)citedbyAaldeetal.,2006)

6 River 0.0 0 0 7 RiverPebblesandIslands 0.0 0 0 8ThetablewaspreparedtosimulatewithInVESTV.3.3.1

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LUCode

LULC_Name C_above(Mg/ha)

C_below(Mg/ha)

R AdoptedsourceforR

8 WindBreakingLines 0.0 0 0 9 Bridge 0.0 0 0 10 Canal 0.0 0 0 11 ArtificialLakes 0.0 0 0 12 Gullies 0.0 0 0 13 FreshwaterWetlands 20.0 32 1.6 Subtropicalgrassland(Aaldeet

al.,2006)14 Lake 0.0 0 0 15 Railways 0.0 0 0 16 Reservoir 0.0 0 0 17 Beach 0.0 0 0 18 Rocks 0.0 0 0 19 ForestWoodlands 59.9 11.98 0.2 Subtropicalhumidforest

(Mokanyetal.,(2006)citedbyAaldeetal.,2006)

20 ArableLand 2.7 0.54 0.2 Subtropicalhumidforest(Mokanyetal.,(2006)citedbyAaldeetal.,2006)

2.3 Carbonstoredindeadorganicmatter:BasedonIPCCreport(Aaldeetal.,2006),carbonstoredinorganicmattercanbecomputedbythefollowingformula:

Carbonstoredindeadorganicmatter=Carboninleaflitter+Carbonindeadwood.Where: CarboninleaflitterforeachlanduseclasscanbederivedfromTable2.2(p.2.27)ofAaldeetal.(2006)(whichentitled“DefaultcarbonstocksforleaflitterinforestedbyLULCtypes.”).Thevaluesofcarboninleaflitteroftheremaininglanduseclassesareassumedtobezero.

Carbonindeadwoodforeachlanduseclassexceptwaterbody,non-forest,andhuman-modifiedlanduseclassesiscalculatedbasedonDelaneyetal.,(1998)whoestimatescarbonstoredinstandinganddowndeadwoodin6tropicalforestsofVenezuela.Deadwoodistypically1/10theamountofcarbonaboveground.

2.4 Carbonstoredinsoil:Carbonstoredinsoil(sometimesknownassoilorganiccarbon,)forthisstudy,1metersdepthsoilisconsideredbyemployingthedatabasefromNachtergaeleandBatjes(2012).Thecarbonstoredinsoilforeachsoiltypecanbecalculatedby:

Soilorganiccarbonin1meterdepthpersoiltype=Soilorganiccarbonoftopsoil(0-30cmindepth)persoiltype+Soilorganiccarbonofsubsoil(30-100cmindepth)persoiltype

Where: SoilorganiccarbonisgivenbyBulkdensityx%organicCxSoildepth

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Bulkdensityand%organiccarbonwerederivedfromNachtergaeleandBatjes(2012)

After the soil organic carbon in 1meterdepthmapwasproduced, then the averageof soilorganic carbon in 1 meter depth for each land use class was computed by using land useclasses fromlanduse/covertoextractstatistic fromtheproducedcarbonsoilmap. It isalsohighlightedthatforwaterbodyandmanmadeenvironmentsuchas“Build-up”,“Road”andsoonwereassignedzerovaluefortheirsoilorganiccarbon.

Table2.CarbonpoolstableforcarbonmodelinAdjara,GeorgiaN C_above C_below C_soil C_dead lucode LULC_Name1 0 0 0 0 1 Built-up2 25.8 5.16 73.7 2.58 2 Perennials3 2.1 3.36 77.7 0 3 Pasture4 0 0 0 0 4 Roads5 25.8 5.16 74.7 2.58 5 Scrubandsparsevegetation6 0 0 0 0 6 River7 0 0 0 0 7 RiverPebblesandIslands8 0 0 0 0 8 WindBreakingLines9 0 0 0 0 9 Bridge10 0 0 0 0 10 Canal11 0 0 0 0 11 ArtificialLakes12 0 0 0 0 12 Gullies13 20 32 71.2 2 13 FreshwaterWetlands14 0 0 0 0 14 Lake15 0 0 0 0 15 Railways16 0 0 0 0 16 Reservoir17 0 0 0 0 17 Beach18 0 0 0 0 18 Rocks19 59.9 11.98 79.6 10.09 19 ForestWoodlands20 2.7 0.54 73.6 0.27 20 ArableLand

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Appendix5:SedimentExport

Inputdatapreparationandprocessing

1. DEMRaster:Arasterdatasetofelevationvalue.

Example:TheDEMusedforthemodelisASTERDEMV.2withtheresolutionof30metersanddownloadedfromhttp://earthexplorer.usgs.gov/accessedonMay18th,2016.Beforeinputtingto themodel, theDEMwas checked for themissing value and then the sinkswere filled inraster. There was no single missing value in the target area, and therefore only the fillprocessingwasdone for theDEMusing the Fill tool ofArcGIS’sHydrologymodel.After thesinkswerefilled,theDEMwasfedtothemodelfortheanalysis(SeeFigure1).

Figure1.PreparedfilledDigitalElevationModel(DEM)

2. RainfallErosivityIndexRaster:AGISrasterdatasetcontainingerosivityindexforeachcell.Thisvaluedependsontheintensityanddurationofrainfallanditis

MJ*mm*(ha*h*yr)-1.

BasedonZaslavskietal.(1981)citedbyGogichaishviliandUrushadze(2006),rainfallerosivityindex(R)isbasedonthefollowingformula:

R30=0.25841*H*I30–0.14921

Where:Hisannualprecipitation(mm)I30isthemaximumintensityofrain(mm/hr).I30wasassumedequalto96mm/hr.

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Figure2.Preparedrainfallerosivityindexraster

3. ErodibilityRaster:Arasterdatasetofsoilerodibility;itisameasureofthesusceptibilityofsoilparticlestodetachmentandtransportbyrainfallandrunoff.ItvalueisinT.ha.h.(ha.MJ.mm)-1.

Inthisstudy,thedataisbasedonOMAFRAFactSheet(seeTable1).

Table 1. OMAFRA Factsheet for estimating soil erodibility based on soil texture and organicmattercontent

TexturalClass KFactortonnes/hectare(tons/acre)AverageOMC Lessthan2%OMC Morethan2%OMC

Clay 0.49(0.22) 0.54(0.24) 0.47(0.21)Clayloam 0.67(0.30) 0.74(0.33) 0.63(0.28)Coarsesandyloam 0.16(0.07) – 0.16(0.07)Finesand 0.18(0.08) 0.20(0.09) 0.13(0.06)Finesandyloam 0.40(0.18) 0.49(0.22) 0.38(0.17)Heavyclay 0.38(0.17) 0.43(0.19) 0.34(0.15)Loam 0.67(0.30) 0.76(0.34) 0.58(0.26)Loamyfinesand 0.25(0.11) 0.34(0.15) 0.20(0.09)Loamysand 0.09(0.04) 0.11(0.05) 0.09(0.04)Loamyveryfinesand 0.87(0.39) 0.99(0.44) 0.56(0.25)Sand 0.04(0.02) 0.07(0.03) 0.02(0.01)Sandyclayloam 0.45(0.20) – 0.45(0.20)Sandyloam 0.29(0.13) 0.31(0.14) 0.27(0.12)Siltloam 0.85(0.38) 0.92(0.41) 0.83(0.37)Siltyclay 0.58(0.26) 0.61(0.27) 0.58(0.26)Siltyclayloam 0.72(0.32) 0.79(0.35) 0.67(0.30)Veryfinesand 0.96(0.43) 1.03(0.46) 0.83(0.37)Veryfinesandyloam 0.79(0.35) 0.92(0.41) 0.74(0.33)

(Source:http://www.omafra.gov.on.ca/english/engineer/facts/12-051.htm#t2accessedonJune01,2016).TheinformationofsoiltextureandorganicmatterofthedominantsoilobtainedfromFAO’sharmonizedworldsoildatabase(2012).

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Figure3.Preparedsoilerodibilityraster.

4. Watersheds:Ashapefile,withonepolygonperwatershed;thisisalayerofwatershedssuchthateachwatershedcontributestoapointofinterestwherehydropowerproductionistobeanalysed.

Thewatersheds/basinsusedinthisstudywereautomaticallysimulatedbyapplyingBasinToolinArcGISV.10onAsterDEMV.2(http://earthexplorer.usgs.gov/accessedonMay10th,2016).TheboundaryofbasinscanbeseeninFigure4.

Duetothelimitationsinwiderwatersheddata,thewatershedwasjustassumedthesameastheboundaryofthestudyarea.

Figure4.Watershedforthestudyarea.

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5. Sub-watersheds:Ashapefile,withonepolygonpersub-watershedwithinthemainwatershedsspecifiedintheWatershedsshapefile.

Thepolygonshapefileofthesub-watershedswasautomaticallygeneratedfromAsterDEMV.2withthestreamthresholdpixelvalueof20,000.

Figure5.Sub-watershedsforthestudyarea.

6. BiophysicalTable–Atablecontainingmodelinformationcorrespondingtoeachofthelandusetypes;thefileisstoredin*.CSV.Thetablehasthefollowingfield:

6.1 Lucode(Landusecode)–uniqueintegertoidentifierforeachLULCclass.

6.2 LULC_desc–nominalnameforeachLULCclass.

6.3 usle_c–ItreferstocovermanagementfactorfortheUniversalSoilLossEquation(USLE).Itsvalueisstoredinafloatvaluerangingfrom0to1

6.4 usle_p–ItreferstomanagementpracticefortheUSLE.Itsvalueisstoredinafloatvaluerangingfrom0to1.

6.5 sedret_eff–thesedimentretentionfactorforeachLULCclass.Thecolumncontainsinformationinafloatvaluerangingfrom0to1.ItreferstocapacityofeachLULCclassretainsediment.Thisvalueisapercentperpixelarea.Thevalueof1forLULCclassmeansthattheclasscontainsmostnaturalvegetation(forest,naturalpastureswetlands,andprairie)inthatclass.Thevalueof0meansotherwise.TheLULCclasswithvalueof0shouldbepavement,roads,orurbanareas.

Table2.Assumedbiophysicaltableforsimulatingsedimentdelivery/exportmodel.

LULC_desc LUCode

Kc root_depth usle_c usle_p LULC_veg

Built-up 1 0 0 0.27 0.95 0Perennials 2 0.5 2100 0.39 0.87 1

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LULC_desc LUCode

Kc root_depth usle_c usle_p LULC_veg

Pasture 3 0.4 2700 0.56 0.83 1Roads 4 0 0 0 0 0Scrubandsparsevegetation

5 0.4 2000 0.85 0.92 1

River 6 0 0 0.03 0.9 0RiverPebblesandIslands

7 0 0 0 0 0

WindBreakingLines 8 0 0 0 0 0Bridge 9 0 0 0 0 0Canal 10 0 0 0 0 0ArtificialLakes 11 0 0 0 0 0Gullies 12 0 0 0 0 0FreshwaterWetlands 13 0.9 5100 0 0.75 0Lake 14 0 0 0.03 0.9 0Railways 15 0 0 0 0 0Reservoir 16 0 0 0 0 0Beach 17 0 0 0 0 0Rocks 18 0 0 0 0 0ForestWoodlands 19 0.8 3000 0.06 0.81 1ArableLand 20 0.3 2100 0.39 0.87 1

Note:thevalueinthetableisderivedfromNaturalCapitalProjectSedimentdatabase(http://www.naturalcapitalproject.org/invest/#resourcesdownloadonJune1st,2016.)

7. Thresholdflowaccumulation:thenumberofupstreamcellsthatmustflowintoacellbeforeitisconsideredaspartofastream;thedefaultvalueof1000isused.

8. kbandIC0:twocalibrationparametersthatdeterminetheshapeoftherelationshipbetweenhydrologicconnectivity(thedegreeofconnectionfrompatchesoflandtothestream)andthesedimentdeliveryratio(percentageofsoillossthatactuallyreachesthestream);thedefaultvaluesarekb=2andIC0=0.5.

9. SDRmax:themaximumSDRthatapixelcanreach,whichisafunctionofthesoiltexture;morespecifically,itisdefinedasthefractionoftopsoilparticlesfinerthancoarsesand1000μm(Vigiaketal.,2012).Thisparametercanbeusedforcalibrationinadvancedstudies.Itsdefaultvalueis0.8.