The miombo woodlands of Tanzania have been subjected to continuous deforestation due to mainly agricultural expansion. Understanding the linkage between deforestation and economic efficiency of the subsequent land use is important for better land use planning and management. Ex-post costbenefit analysis (CBA) was used to examine the profitability of conversion of unmanaged miombo woodlands into cropland considering the environmental cost of the activity in terms of emissions of CO2. Ex-ante CBA was also used to compare profitability of keeping currently managed miombo woodland for the purpose of carbon sequestration with profitability of converting it into crop land. Net benefit (NB) of deforestation was calculated as the sum of agricultural rent and forest revenue during land conversion, minus cost of deforestation in terms of CO2 emissions. NB of maintaining the managed woodland was based on returns from carbon sequestration. The NBs were discounted to provide an estimate of the net present value (NPV) of clearing and cropping, and maintaining the managed woodland. The value of CO2 emissions and carbon sequestration was estimated by assuming different prices of CO2 (USD ton-1). Data collected from 54 randomly selected households were used for estimation of current maize and charcoal production in the area. Data required for the estimation of profitability of historic deforestation and carbon densities of the current land uses in the area were gathered from various secondary sources. Deforestation history was obtained from land use and cover change since 1964 reported from the area. A simple growth model was also developed to describe the biomass development of the woodlands and thus to estimate the carbon sequestration rate. We found that deforestation of miombo woodlands in Maseyu village has been, and still is, profitable if environmental costs of deforestation are not accounted for. However, fairly low prices of CO2 emissions would make deforestation unprofitable in the social analysis. At 10 % discount rate, the break-even price was USD 11 tCO2e-1 for the historic deforestation that took place since 1964 in the common land. At the same discount rate, CO2 prices higher than USD 6 tCO2e-1would turn future deforestation of the managed woodland in Kitulangalo Forest reserve (KFR) unprofitable. Incorporating other environmental costs of deforestation such as loss of biodiversity and emissions of other GHGs could potentially reduce the profitability of deforestation further, particularly deforestation of the woodlands in the forest reserve.


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