Environment, Global Green Growth Institute (GGGI), Green Economy

3Returns Blog

SEOUL, South Korea, Mar 20 2020 - On Thursday 20 and Friday 21 February, the Global Green Growth Institute (GGGI) in partnership with the Ministry of Natural Resources and Environmental Conservation (MONREC) and the University of Queensland (UQ) held a validation workshop on the 3Returns Model and Framework, presenting an Investment Case for Coastal Landscape Mangrove Restoration in Myanmar through the findings from an Economic Appraisal of Ayeyarwady Mangrove Forests, Bio-based Value Chains for Mangrove Restoration and Benefit Sharing Mechanisms. The event proved informative for both participants and presenters alike, providing critical insights and opening dialogue between multiple government departments.

The Importance of Mangroves on the Ayeyarwady Delta

The mangroves of the Ayeyarwady Delta are an important natural resource for local residents as well as the nation-at-large. They provide significant ecological, social and economic benefits. Ecologically, mangrove habitats provide breeding grounds and hatcheries for birds, fish, crustaceans and other organisms. Additionally, mangroves constitute a major source of carbon sequestration, making them an important asset for Myanmar’s climate change mitigation.

Mangrove forests support coastal disaster resilience through their protection of communities from inundation from tidal surges and strong winds. Importantly, for neighbouring communities, mangroves also provide economic benefits. The collection of fuelwood, fish and crustaceans supplements the incomes of many people in the delta, with products reaching as far afield as China. However, not all members of local communities have been able to share in the benefit from these activities, in particular landless – who account for 73% of people in coastal areas – and women.

Above: U Hla Maung Thein, Director General Environmental Conservation Department – ‘conservation of mangroves is a national responsibility’

The mangroves’ positive impacts have been degraded by unsustainable land use practices. Less than 10,000 hectares of good quality mangroves exist within a total habitat range of 85,000 hectares. This degradation has largely occurred as a result of illegal logging and fuelwood extraction and the conversion of mangrove habitat into agricultural rice paddy and large-scale shrimp ponds. The significance of the mangroves of the Ayeyarwady Delta from an ecological, social and economic perspective highlights the need for a change in landscape management practises in order to preserve their benefits.

Above: Dr. Aaron Russell, GGGI Country Representative delivering welcome remark

The 3Returns Model and Framework

In order to assess sustainable landscape management practices and support green growth alternatives for the local communities, the Global Green Growth Institute has developed a 3Returns Model and Framework for analysing different green growth forest governance scenarios compared with continuation of current practices, known as a “Business as Usual” (BAU) scenario. The 3Returns Framework provides a holistic approach which considers each intervention’s benefits through natural capital, social and human capital as well as economic/financial capital. It differs from a Cost Benefit Analysis (CBA) as the Return on Investment Analysis considers not only financial investment but also natural, social and human investment. This allows measuring a Return on Investment Ratio that considers the benefits from investment in capitals and defines a desired intervention scenario measured as the most efficient when compared with the Business as Usual (BAU) scenario. It also differs from a CBA as the Return on Investment Analysis also quantifies non-monetary benefits and capitals’ status as indicators for decision making.

The Economic Appraisal of Ayeyarwady Mangrove Forests used the 3Returns approach to consider four policy intervention scenarios. A key difference between each scenario was the percentage of land allocated between the two types of community user groups by 2026. The two community user groups types are Village Woodlots (VW) and Community Forest User Groups (CFUG). All the scenarios other than BAU implement the enhanced Myanmar Reforestation and Rehabilitation Program (MRRP).

The scenarios were the following:

    1. Scenario 1, allocates 11% of mangroves to be managed by CFUG and an annual increase in area under VW management until 2026. The maximum community forestry mangrove area is 35% of the Reserve Forest area.
    2. Scenario 2, allocates 25% of mangrove management to VW and 25% mangrove management to CFUG. The community forestry mangrove area is 50% of the Reserve Forest area.
    3. Scenario 3, allocates 47% of mangroves to CFUG and only 3% to VWs. The community forestry mangrove area is 50% of the Reserve Forest area.
    4. Scenario 4, allocates 39% of mangroves to be managed VWs and 11% to be managed by CFUGs. The community forestry mangrove area is 50% of the Reserve Forest area.

There are important differences between these two forms of community management. VW officially remain under the control of the Forestry Department, but are a community managed common with a mandate for sustainably managing logging/fuelwood production. They are regarded as democratic in structure, giving all local people the ability to influence decision making. An important aim of VWs is to reduce poverty through enabling community participation for marginalised groups.

CFUGs are less democratic in structure. They only require five people to form a group to apply for a land permit – as a result they have the potential to be susceptible to elite capture. CFUGs enable groups to participate in a wider range of activities including agriculture, aquaculture as well as logging.

CFUGs have a low rate of female participation – only 8% of female headed households are involved. The level of female participation in VWs is not yet know.

The results of the analysis revealed that scenarios 2,3 and 4 achieved roughly the same outcomes in terms of natural capital and net present value. However, Scenario 4 achieved the highest social and human capital not-monetary benefits, resulting in the engagement of 48,618 people in community forestry and capacity building by 2026. Furthermore, when analysing the loss of informal jobs and livelihoods through improved resource management scenarios, Scenario 4 shows the least reduction in jobs and livelihoods (64,978) compared to BAU (65,008). For this reason, the report concludes Scenario 4 is the most desirable landscape management strategy which best takes into account natural, social & human and economic capital benefits.

It must be noted that all scenarios are anticipated to reduce illegal logging activity. However, the removal of this activity will disproportionately affect poorer, landless groups who previously relied on mangrove resources to supplement their income. It is important that community management design incorporates these stakeholders, incentivising them to undertake sustainable activities with the larger landscape system.

Value Chain Interventions

In addition to analysing the impacts of forest governance structures, the report has identified two viable value chains which incentivise the conservation of mangroves. The two value chains are hard-shell mud crab and dried products through the implementation of solar dome dryers.

The hard-shell mud crab value chain provides a lucrative opportunity to connect people of the Ayeyarwady Delta with the markets of China. In 2016, the trade was valued at over 4 Million Euros. Currently 90% of mud crabs are exported to China. Mature crabs can reach over 20,000MMK/kg in local and export market. The value chain currently consists of small-scale village catchers and hatcheries, pond owners and farmers, and middlemen/traders who connect the crabs to markets in Yangon and China.

The financial assessment showed that primarily the pond owners/farmers and middlemen/traders are benefiting from the activity. The middlemen often provide informal finance to poor people engaged in crab catching. As part of this arrangement, debtors are required to provide juvenile crabs at discounted rates to the middlemen. However, the middlemen have also been found to provide equipment and interest free loans to the small-scale village catchers.

The middlemen gain from the higher prices associated with larger crabs through fattening them, earning a profit.

Several actions are required to fully realise the green growth opportunity of this value chain. Firstly, it is important that hatcheries are developed so that the natural populations of mud crabs are not depleted through overharvesting.

Secondly, it is important that an alternative pellet feed for the crabs are produced. Currently ‘trash fish’, small fish with no other practical use, are fed to the crabs. They are a cheap source of food for crab fattening; however, ongoing use of the resource could also have negative effects on fish stocks. Another reason to emphases the importance of feed is the cannibalistic nature of crabs – not feeding the crabs and relying on natural feeding results in an increased crab mortality rate. Investing in crab feeding enables crab farmers to operationally perform better.

Providing financial support to communities at the farmer production stage of the value chain will hopefully allow them to share in the benefits of the value chain by enabling them to grow crabs to larger sizes and receive higher prices than what is currently demanded by the middlemen.

An additional reason to prioritise this intervention is its capacity to empower women. Often it is women who are in charge of the crab ponds.

Left: Intensive hard-shell mud crab fattening; right: natural hard-shell mud crab fattening

Dried products through the implementation of a solar dome dryer is another intervention in the value chain which will assist in protecting mangrove habitat. It achieves this by reducing the amount of fuelwood which is sourced from mangroves required to dry fish, crustaceans, and other agroforestry products. There is also an indication that the dryer dome increases the success rate and quality of preservation, which will be hoped to increase the price at sale.

Dried shrimp production modelling from the report found that if drying occurred for 180 days within a solar dryer dome, the amount of fuelwood required would be 40% less than current drying methods. Savings from fuelwood are reduced to 15% if the facility is operated at its maximum capacity during the year (for 260 days).

Solar dome dryers are estimated to have a life-span of 10 years and are suitable for community-level or user group association investments as they are too expensive for one person to purchase. Through the increased efficiencies in drying and input use, the analysis based on dried shrimp found that most communities would be able to pay off their investment loan in less than 2 years.

Above: traditional sun-drying process of shrimp in Ayeyarwady Delta

Workshop Insights from Policy maker

A number of interesting insights arose during discussions and activities at the workshop. One observation made by a government participant was the need for more co-ordination and dialogue between government departments. There are multiple government departments which have jurisdiction over the Ayeyarwady Delta, often with significant overlap and conflicting policies and procedures. A possible solution to this problem was based on a delegate’s personal experience. They highlighted the need to firstly locate the conservation area, then discuss with other departments to consolidate laws and enforcement.

Another interesting insight relates to attendees’ perceptions of different management types (e.g. BAU, MRRP, VWs, CFUG). There was a broad understanding that BAU is untenable for mangrove landscape restoration, especially in regards to livelihoods and mangrove restoration. However, there was a recognition that it provides some beneficial employment opportunities though some of these are unsustainable or illegal.

Participants generally had positive perceptions on MRRP, CFUG and VWs. Despite the beneficial nature of VWs in terms of participation, conservation and job creation, the survey revealed on average a larger preference towards MRRP and CFUG by participants. In particular, this was displayed in the results in the livelihood and mangrove restoration sections.

This prompts the need for further advocacy on the benefits of inclusive and democratic institutions based off the principle of free, prior and informed consent of local stakeholders. This message should focus on the weakness of government management of forest reserves (MRRP) in order to convince the government to allocate more mangrove habitat to CFUGs and VWs for management. In all, the workshop was a success as it progressed the green growth agenda in the Ayeyarwady Delta.

Above: Group activity during workshop

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