PAYMENTS FOR ENVIRONMENTAL SERVICES AND SUSTAINABLE WATERSHED MANAGEMENT: An Integrated Local Development Approach of Lake Barombi Mbo in the Mount Cameroon Region

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MOUKAM, Claudiane Yanick
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University of Yaoundé II
Most water policies (Decrees) in Cameroon have been focused on expanding infrastructures, in particular networks of ‘safe’ water supplies rather than sustainably manage water resources. Moreover, comparing the budget of water sector to those in social sectors, it occupied the last position with that of Social Affairs, with an average annual budget respectively of CFA 310 and 87.6 billion francs over the period 2004-2008, both being preceded by education and health sectors. As a result, there is increasing pressure on watershed services in general and water quality in particular, and therefore, the unsustainability of watersheds. To reconcile social welfare and the sustainable management of watersheds, this thesis builds a payment for watershed protection framework for the sustainability of Lake Barombi Mbo watershed in the Mount Cameroon zone. Using Contingent Valuation method (CVM) and Choice Experiment method (CE), two environmental valuation methods based on stated preferences, we assumed that a positive aggregate willingness to accept (WTA) compensation and willingness to pay (WTP) compensation express both supply and demand for watershed protection. In addition to these two methods and using a basic game theoretic approach within the framework of a Pricinpal-Agent model, we assumed that the coordination of upstream WTA and downstream WTP by the Municipality as intermediary reduces the transaction cost and makes the payment scheme effective and equitable. The results of the Tobit model estimation under the CVM give an aggregate WTA of FCFA 84.5million/year, which represents a total cost of reforestation by farmers to protect the watershed. Variables age (-), sex (+), education (-), knowledge of bio-fertilizers (+) are significant determinants of WTA. The aggregate WTP of downstream users is sensitive to the design option and the models used. The aggregate WTP varies from FCFA 69.7million with Binary Logit estimates under CVM to FCFA 185.7million with the Conditional Logit model, and to FCFA 293.2million/month with Random Parameter Logit (RPL) estimates under CE. Variable age (+), education (+), availability of a tap-water at home (+) significantly increase the probability to pay the proposed bid, while water bill (-) significantly decreases this probability. Moreover, the RPL model highlights heterogeneity in the preferences among respondents. The total benefits derived from these various watershed management attributes and the CVM reveal an estimated value of what could be the amount of payments by downstream households to upstream farmers for the provision of environmental services in the watershed. Per year, the ratio maxWTP/minWTA is about 41 (largely greater than 1) and underlines the fulfilment of the economic precondition for the payment scheme. The results of the basic game theory highlighted the role of the council as principal in reducing monitoring costs (inspection) if upstream farmers as agents decide not to shirk and cooperate. Therefore, the government should develop a genuine water policy in Cameroon based on a bottom up approach that takes into account households/farmers and councils contribution to watershed protection. Furthermore a revision of water, environmental, forestry and land tenure laws which incorporates PES mechanism would reduce watershed degradation in the country and increase the availability of the scarce financial resources required for their sustainable management.