VALUING HABITAT PROTECTION: THE CASE OF RUTHUMBI FOREST IN KENYA Primary Research Series: The 2002 Socio-Economic Baseline for Longitudinal Afro-montane Ecosystem Analysis

The study presented by this Working Paper provides a foundational economic valuation of habitat protection within the Ruthumbi Forest block of the critical Mt. Kenya Afri-montane ecosystem. Using the Contingent Valuation Method (CVM), the 2002 study estimates rural households’ willingness to pay (WTP) for the protection and preservation of the forest, establishing a "Pre-treatment" baseline immediately prior to the implementation of the Forests Act of 2005. The survey targeted 215 households from two selected geographical locations forming part of the forest community, defined by the study as people living within a five-kilometer radius of the forest edge. To address inherent challenges of non-market valuation including the prevalence of invalid responses—particularly protest zeros—that could introduce sample selection bias, a Tobit model with sample selection was employed, estimated via the Heckman two-step procedure. The first stage used a Probit model to predict the probability of providing a valid WTP response, while the second stage incorporated the Inverse Mills Ratio into the WTP function to correct for selection bias. Empirical results confirmed significant sample selection (ρ significant at 1%), validating the need for this correction. The adjusted model revealed that household income and respondent age significantly influence WTP, with mean monthly WTP estimated at KSh 125.00 per household. However, to provide a statistically robust and conservative estimate for policy purposes, a population-wide mean of KSh. 86.35 was utilized for aggregation. This figure, derived from the Tobit expected value of the dependent variable, accounts for non-participation across the broader community. Aggregated across the target forest-adjacent population, this results in a 2002 baseline ecosystem service value of KSh. 145,627.15 per month, or KSh. 1,747,526.00 annually. Further, the study findings supported the policy conclusion that forest communities are aware of forest benefits and are willing to pay for communal management—laying groundwork for community-based forest governance. By documenting these parameters before the institutionalization of Participatory Forest Management (PFM), this research serves as a primary longitudinal anchor. It offers essential benchmarks for evaluating return on investment (ROI) of Kenyan forest policy reforms and climate-resilience strategies from 2002 to 2026 and beyond.