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Forestry Policy and Institutions Working Paper 36
ForestConcessions-PastPresentandFuture?
2016
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Disclaimer
The Forestry Policy and InstitutionsWorking Papers report on issues in the work programme of Fao. These working papers do not reflect any official position of FAO. Please refer to the FAO Web site (www.fao.org/forestry) for official information. The purpose of these papers is to provide early information on ongoing activities and programmes, to facilitate dialogue and to stimulate discussion. The Forest Economics, Policy and Products Division works in the broad areas of strenghthening national institutional capacities, including research, education and extension; forest policies and governance; support to national forest programmes; forests, poverty alleviation and food security; participatory forestry and sustainable livelihoods. For further information please contact: For further information, please contact: Cesar Sabogal Forestry Officer Forestry Department, FAO Viale Delle terme di Caracalla 00153 Rome, Italy Email: [email protected] Website: www.fao.org/forestry Comments and feedback are welcome.
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ForestConcessions-PastPresentandFuture?
BertyvanHensbergenConsultant
Food and Agriculture Organization of the United Nations
Rome, 2016
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TableofContents
1 ExecutiveSummary...........................................................................................................1
2 Introduction......................................................................................................................7
2.1 Background............................................................................................................................7
2.2 Objective................................................................................................................................8
2.3 TheConcessionSystem..........................................................................................................8
2.3.1 Foresttenuresandforestrights..................................................................................11
2.3.2 Concessionsandresponsibilities.................................................................................11
2.4 Concessionsandtheirbenefits............................................................................................12
2.4.1 Concessionsandsustainableforestmanagement(SFM)............................................12
3 Concessionsaroundtheworld:successes,failuresandlessonslearned........................14
3.1 ConcessionsinLatinAmerica,WestandCentralAfricaandSoutheastAsia.......................15
3.1.1 Wherearetheconcessions?........................................................................................16
3.1.2 Whatarethebenefitsofconcessions?........................................................................18
3.1.3 Concessionsasameansforprotectingforests............................................................21
3.2 Publicforestconcessionsinotherregions..........................................................................22
3.3 Whyaresomeconcessionsmoresuccessfulthanothers?..................................................23
3.3.1 Smallconcessionsversuslargeconcessions?..............................................................24
3.3.2 Arecommunityheldconcessionsmoresuccessfulthanothers?................................26
3.4 Howcanforestcertificationhelp?.......................................................................................27
3.5 Whathavetropicalforestconcessionsachieved?...............................................................31
4 Whyistropicalforestrysodifficult??..............................................................................32
4.1 Thediversitydilemma?........................................................................................................32
4.2 Economicsoftropicalforestmanagement..........................................................................36
4.3 Theroleofmarkets..............................................................................................................38
4.4 Whyhavegovernmentsfailedtokeepthevalueinthecountry?.......................................41
4.5 Tropicalforestryandselfregulation?..................................................................................43
4.6 Illegality................................................................................................................................44
5 Thefutureofconcessions...............................................................................................47
5.1 Scenariosforthefutureoftropicalforestmanagement.....................................................47
5.2 Whatiswrongwiththeconcessionmodel?........................................................................52
5.3 Rightsbasedapproaches.....................................................................................................53
5.3.1 Workersrights,treatmentofworkersandhealthandsafety.....................................55
5.4 Theroleofcertification.......................................................................................................56
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5.5 Towardsanewmodelfortropicalforestbusiness(Concessions2.0).................................57
5.5.1 Recommendationsforanimprovedconcessionsystem.............................................57
6 Bibliography....................................................................................................................60
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ListofFigures
Figure1ExtentofIFLin2013..............................................................................................................30Figure2Diversityoftreespeciesbycountry.......................................................................................33Figure2LogabandonedinconcessioninCameroonforbeingtooshort(<3m).................................35Figure3Majortradeflowsoftropicaltimber.....................................................................................39Figure4Volumesoftropicaltimberforexportandforlegalandillegalconsumptiononthelocalmarket................................................................................................................................................41Figure5Informally/illegallyharvestedrosewoodandotherhardwoodlogsinBusekoMarket,LusakaZambia(HJVH,2015)...........................................................................................................................44Figure6WorkersfieldaccommodationinaconcessioninGuyanaconsistsofatarpaulin................55
ListofTables
Table1Summaryofforestarea(1000sha)andconcessionareasincludedintheregionalreports.DetailsinTable3...................................................................................................................................7Table2Dimensionsoverwhichforestresourcerightscanbeallocatedindicatingbroadlyhowcommonlythisoccursforeachcriterionvalueinthecaseofconcessions.........................................16Table3Forestrevenuesbyregion.......................................................................................................17Table4Naturalforestandconcessionareasinthestudiedregions(Areas1000sHa).......................18Table5Volumesoflogsharvestedandexportsalesvaluesinselectedcountries(datafromconsultantreports)..............................................................................................................................19Table6AreasandbeneficiariesoftheMayaBiosphereReserveConcessions...................................20Table7Sometypicalsocialbenefitsassociatedwithforestconcessions...........................................29Table8CorrectiveactionrequestsrequiringimprovedmanagementintropicalforestscertifiedbyFSC.......................................................................................................................................................29Table9CostsoflogsincountriesoforiginandsellingpricesofboardsintheUKofarangeofhardwoodspecies................................................................................................................................39Table10Quantitiesoftimberrequiredforarangeofproducts.........................................................39Table11Scenariosfortropicalforestmanagement...........................................................................49
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ListofAbbreviations
AAC annualallowablecut
CIFOR CenterforInternationalForestryResearch
CIRAD CentredeCoopérationInternationaleenRechercheAgronomiquepourle Développement
CSR corporatesocialresponsibility
DRC DemocraticRepublicofCongo
FAO FoodandAgriculturalOrganizationoftheUnitedNations
FMU forestmanagementunit
FOB freeonboard
FPIC FreePriorandInformedConsent
FRA ForestResourcesAssessment
FSC ForestStewardshipCouncil
GDP grossdomesticproduct
IFL IntactForestLandscapes
ILCF InvestinginLocallyControlledForestry
ILO InternationalLabourOrganization
ITTO InternationalTropicalTimberOrganization
NGO non-governmentalorganization
NTFP nontimberforestproduct
OHSAS OccupationalHealthandSafetyAdvisoryServices
PES paymentforenvironmentalservices
PNG PapuaNewGuinea
PPP publicprivatepartnership
PUP PrivateUsePermit(Liberia)
REDD reducingemissionsfromdeforestationandforestdegradation
REDD+ reducingemissionsfromdeforestationandforestdegradationand
theroleofconservation,sustainablemanagementofforestsand
enhancementofforestcarbonstocks
RIL reducedimpactlogging
SFB BrazilianForestService
SFM sustainableforestmanagement
SRA SocialResponsibilityAgreement
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1 ExecutiveSummaryConcessionsasmeansforallocatingrightsinrelationtonaturalresourceshaveexistedforhundredsofyears.Inforestryconcessionsarethedominantmeansofgrantingrightsinborealandtropicalpublicforests.Intropicalforestsconcessionshavereceivedamixedpresswithsomecasesbeingheavilycriticisedandothershighlypraisedbystakeholders.
Thisreportformspartofareviewprocessoftheconcessionsystemaimedatprovidingadviceonhowtheconcessionsystemintropicalforestscanbeimproved.ThisreviewisbeingcarriedoutbyFAOincooperationwithITTO,SFB(theBrazilianForestService),CIFORandCIRAD.Thereportisbasedonthreeregionalreportsproducedbyconsultants,discussionsduringanexpertmeetingheldinRomeinNovember2015andanextensiveliteraturereview.
Concessionsareoneofthemanywaysinwhichtheownerofforestrightsmaytransferthoserightstoathirdparty.Concessionsgenerallyinvolveamediumtolongtermtransferoftherightsandusuallydealwithlargeareasofpublicforestland.Theconcession-holderwillnormallypayfortimberrightsonavolumeextractedbasisoronanareabasisorsomecombinationofthese.
Inadditiontotherightstoharvesttimber,mostmodernforestconcessionsnowincludeavarietyofdutiesthattheconcession-holdermustfulfil.Thesedutiesoftenincludesomemeasureofforestmanagementandsilvicultureaswellastheprovisionofsocialservicesandinfrastructureforlocalcommunities.Forthisreason,somepeopledistinguishbetweenforestuseconcessionsandforestmanagementconcessions.Inpracticethereisawiderangeofrightsandresponsibilitiesassociatedwithforestconcessionswhichmaybesharedbetweenthegovernmentandtheconcession-holder.
Intheoryconcessionsofferameansforforestowners(usuallygovernmentsbutsometimescommunitiesorprivatelandowners)torealisethecapitalvalueoftheforestresourceinsituationswheretheyhaveneitherthenecessaryforestryskillsnorthecapitaltofinanceforestryactivities.Governmentscanusethisforestcapitaltomeetarangeofsocioeconomicandenvironmentalobjectivessuchas,generatingforeignexchange,creatingemployment,maintainingecosystemservicesandearninggovernmentrevenue.
Withinthetropicalareasencompassedbytheconsultantreports(LatinAmerica,SouthEastAsiaandWest&CentralAfrica)forestconcessionscoverabout123millionhaaccountingforapproximately14%ofthepubliclyownedforest.HowevertherearecurrentdifferencesbetweenthesituationinLatinAmericaandtherestofthetropicsduelargelytotheverylowconcessionareainBrazil-whichaccountsforaveryhighproportionofthetotaltropicalforestareaoftheregion,whileintropicalAfricaandSoutheastAsiaover20%ofpublicforestlandsareunderconcessions.Itshouldbenotedthatthesituationinrelationtoconcessionareasisverydynamicwithsomecountriesterminatingconcessionsystemswhileothersarestartingnewprogrammes.
Concessionshaveperhapsunfairlybeentargetedforfailuresthataremoregeneralfailuresofforestgovernanceandwidersocietalproblemsinthecountriesinwhichtheyoperate.Inparticularlargeconcessionsownedandoperatedbywellknownactorsindevelopedcountriesareperhapsmorelikelytocomeunderscrutinythanmoresecretiveorsmalleroperations.
Agenericproblemintropicalforestryaffectingconcessionforests,stateforestsandprivatelyownedforestsisthelackofforestmanagement.Thislackofforestmanagementisbasedonthelackoflongtermobjectivesfortheforestanditsresources.Withouttheseobjectivesnoactivitiesarecarried
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outthataredesignedtoensureasustainedsupplyofgoodsandservicesfromtheforest.Forestmanagementplansinthetropicsareinmostcasesharvestingplansandinthebestcasestheseincludemeasuresaimedatreducingthenegativeimpactsofharvestingactivities.Thereisrarelyanyplantoeffectivelyreplacethedesirablespeciesthatareselectivelyremovedsothattheeffectofharvestingisthesequentialeconomicextinctionofcommerciallyimportantspecies.
Thepracticeofsilvicultureintropicalforestscancounteractthesenegativeimpactsbyensuringthereplacementofthecommerciallyimportanttrees.However,silvicultureisrarelypracticedsincethecostsofproducingseedlings,sitepreparation,weeding,thinningetc.haveoftenbeenconsideredtobeapoorinvestmentforacropthatwillbeharvestedin40to60years.However,recentstudieshaveshownthatcertaininterventionsareinfactprofitableforthelongterminvestor.
Afurtherproblemthatbesetsnotonlyforestrybutallsectorsoftheeconomyinmanydevelopingcountriesisweakgovernance.Thisisexacerbatedbythefactthatforests,althoughaverysignificantlandusetypeinmosttropicalcountries,israrelygiventhesignificanceitdeservesingovernment.ThusinEuropemorethan90%offorestagencieshaveaheadreportingdirectlytotheministerwhileinWesternAfricaonly11%ofheadsofagenciesreportdirectlytotheminister.Thisleadstoasituationwhereforestagenciesdonothavestaffofthecalibrerequiredtooperateeffectivelyinthemarketplaceandparticularlyinrelationtoevaluatingandmanagingconcessions.
Asaresultofthisweakness,concessionsmaybespecificallytargetedbyunethicalcompaniesseekingtoexploitweakgovernance.Thismaybecombinedwithcorruptionofpoorlypaidgovernmentemployeesandafailureofgovernmentagenciestocollecttheconcessionfeesduetothem.
Inmanycountriestheforestgovernancesystemfailstotakeproperaccountofthecustomaryrightsofforest-dependentpeople.Thisleadstosituationswhereconcessionallocationimpactsontherightsoflocalcommunitieswhichoftenresultsinconflict.Atthesametimeuncertaintysurroundingtenurewilldissuadeconcession-holdersfrominvestinginthekindofsilviculturalactivitiesrequiredtomaketropicalforestmanagementsustainable.
Ifanimportantobjectiveofforestconcessionsistoraiseforestrevenuesthenthiscouldbeusedassomemeasureofthesuccessoftheconcessionsystem.Worldwide,grossforestrevenuesareratherlowaveragingaboutUS$6/ha/yrwhileinAfricathefigureisUS$1/ha/yr.ItshouldbenotedthatinAfricaanincreasingpartofthebenefitsfromconcessionsaresupposedtobeintheformofsocialserviceprovision.Inpracticealmostanyotherlandusecouldgeneratemorerevenuethanforestry.
Forestrevenuestocentraladministrations,however,arenottheonlyeconomicfactortobeconsideredsinceothereconomicbenefitssuchasforeignexchangeandemploymentcreationarealsoimportant.ExportrevenuesarehighlyvariablerangingfromameagreUS$0.20toUS$233perm3oflogsproducedinasampleofcountries.AtthelocalleveltheseamountsmaybecomeimportantwithonecommunityconcessioninGuatemalageneratingUS$3760foreachfamilyfromtimberandafurtherUS$2000fromNTFPs.
Inmanycaseswhereconcessionshavebeendemonstratedtobesuccessfulinthetropicsthishasbeenachievedagainstabackgroundofsignificantdonorinvestment.
Socialbenefitsofconcessionsincludethegenerationofjobs(generallyintherangeof1jobper100-500ha)andotheraspectssuchassupportforeducation,watersupply,medicalcareandtransportinfrastructure.InWestandCentralAfricatheprovisionoftheseservicesisoftenarequirementoftheconcessionagreementwhileinotherareasthisisoftenenhancedwhereconcession-holders
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undertakeforestcertification.Forestcertificationalsohasastrongsocialimpactwhenitrequiresconcession-holderstomaintainhighhealthandsafetystandards.
Wellmanagedconcessionsalsohaveapotentialtogeneratesignificantenvironmentalbenefits.Successfulconcession-holdersactinginpartnershipwithlocalrightsholderscanbeaneffectiveforceinpreventingtheillegalsettlementanddegradationofforestreservesandsomeconcessionshavebeenestablishedpreciselyforthispurpose.
Itiswidelybelievedthatsmallconcessionsheldbycommunitieswilloperatebetterthanlargeindustrialconcessions.Thishasledtocriticismoflargeconcessions,someofwhichcanexceed1millionhaandmanyfallinginthesizerangeof100,000to200,000ha.Verylargeconcessionscanleadtoaninefficientuseoflandparticularlywheretherearenoarea-basedfeessothatconcessionbidderscanapplyforlargeareaswithoutcostandconcentrateononlytheverybestpartswhileignoringtherest.Thiscanalsoleadtowastefuluseofthetimbersinceonlythebestisworthextractingbeforemovingontothenextsite.Asaresultlogsareoftenabandonedinforestorsawnwithpoorequipmentthatwasteslargevolumesduetosawinginaccuracyandkerfwidth.
Ontheotherhand,concessionsthataretoosmallfacetheirownproblems.Inmanytropicalforeststhedensityofcurrentlyvaluabletreesisverylowabletogenerateonly5-10m3/ha.Theminimumeconomicsizeforanefficientsawmillislikelytorequiretheinputfromanareaof20,000haharvestedoveraforty-yearperiodtoproducemarketableamountsoftimberfromasmallgroupofspecies.However,withbetterknowledgeandmoreintensivemanagementofsmallerareasitmaybepossibletoincreasetheproductionrateofdesirabletimberbysilviculturalinterventions.
Thereissomeevidencethatwherepopulationpressureisnottoohighcommunitymanagedforestsaremoreeffectivethancentrallymanagedforestsatpreventingforestdegradation.Manycommunities,however,lackthecapacitytomanageforestsandrequiresignificanttechnicalandfinancialsupporttolearnhowtodothis.
Forestcertificationstandardsareanimportanttoolforimprovingmanyaspectsoftropicalforestmanagementascarriedoutinconcessions.Themostfrequentimprovementshavecomeintheformofimprovedhealthandsafety,developmentofimprovedmanagementplansanduseofreducedimpactloggingtechniques.InAfricacertifiedconcessionshavehadsignificantpositivesocialandenvironmentalimpactsandtheengagementwithcommunitieshasledtoanimprovedsocialcontractwithforestdwellers.
Ithasbeenarguedthattropicaltimberbusinessesarenotprofitableenoughtogeneratelargeforestrentsfromconcessionsystems.Thislowprofitabilityisduetothelowdensityofdesirabletreescoupledwiththehighcostsofextractionandtransport.Ifthiswerereallythecase,thentherewouldbegreaterincentivestomakefarmoreefficientuseofthetimberthatisactuallyharvestedinordertoachieveacompetitiveadvantageinthemarket.
Whensilviculturalactivitiescanbeshowntobeprofitablethenitislikelythatconcession-holderswouldplacemuchmoreemphasisondoingthemcorrectlythanwhentheyaresimplyaregulatoryorcontractualrequirementthatisnotenforcedbyaweakadministration.
Onlyasmallproportionofthetimberspeciesavailablefromtropicalforestsareusedsincetheremainder-eventhoughtheyhavedesirableproperties-areunknownonthemarket.Increasingthenumberofspeciesacceptedbythemarketshouldimprovethesituationoftropicalforestsbyincreasingvaluedensity.Unfortunatelythecostsassociatedwithbringinganewspeciestomarketaresohighthatonlythelargestcompaniescouldattemptitontheirown.
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Increasinglycountrieshavetriedtokeepasmuchaspossibleofthetimbervalueinthecountrybyinstitutinglogexportbans.Thiscommencedinthe1990sandhasbeenmoreorlesssuccessful.Insomecountriesthishasledtothedevelopmentofaninternalprocessingcapacitytomanufacturevalueaddedproductsandvirtuallyeliminatedlogexports,butinmanycountriesithasledtolarge-scaleillegalexportoflogs.Inothercountriesthesuddenimpositionoflogexportbanshasledtothetemporarycollapseoftheexportmarket.
Perhapsthegreatestreasonforcountriesfailingtoretainthetimbervaluehasbeentheirinabilitytocollecttherevenuesduetothem.Itisrareforcountriestocollectmorethan20%oftheirentitlementduetocorruptionandsystematicevasion.
Partoftheproblemrelatestofailuretoretainvaluewithinthecountryisduetothepoorindustrialperformanceoftheprocessingfacilitiesandtheinefficiencyofthetimbermarket.Manysawmillsindevelopingcountriesareequippedwitholdandwornoutequipmentwhichisincapableofsawingwithprecision.Thisleadstotimberwastageduringprocessingandcustomersdemandanexcessivedegreeofover-measuretoaccountfortherisksthatsomeboardsorpartsofboardswillbebelowmarketdimensions.Poordryingorcompletelackofseasoningleadstofurtherlossesduetosplittingoryetfurtherover-measurerequirements.Inaddition,oldandpoorlymaintainedmachineryisfarmoreenergydemandingthanmodern,wellmaintainedmachinerysothatenergycostsareexcessive.
Themarketfortropicaltimberishighlyinefficient.Itdemandsstandarddimensionsandunnecessarilylonglengthsofdefect-freetimberwhichleadstolargevolumesbeingrejected.Thebuyersarepresentedwiththesestandarddimensionswhichinmostcasesbearnorelationtotheproductstheywishtomanufacture.Improvedcommunicationbetweenusersandproducersshouldleadtosignificantincreasesintimberrecoveryforproducersandreductionsineffectivecostsforbuyerswhileallowingeachtoincreaseprofitssubstantially.Manufactureofvalueaddedcomponentsisrareintropicaltimber.
Privatelyownedforestsinthetemperatezoneareeffectivelyselfregulating.Ithasbeenarguedthatitisthesecurityoftenureofferedbyprivateownershipthatisthemajorfactorcontributingtoselfregulatingandthatthiswouldbereplicatedinthetropicsifsecurityoftenurecouldbeguaranteed.Withsecurityoftenureinvestmentsinsilviculturewouldbemadetoensurethelongtermproductivityoftheforest.Unfortunatelygiventheslowgrowthofforestsitislikelythatbusinessesseekingtooptimisetheirreturnoncapitalmaysimplyharvesttheentireforestestateasquicklyaspossibleinordertoreinvesttheircapitalelsewhere.Itisclearthatsomeformofenforceableregulationisnecessary.
Thesituationisexacerbatedbyotherrisksfacedbyinvestorspotentiallyleadingtoevenhigherdemandsontherateofreturnoncapital.Suchrisks,whicharecommonplaceindevelopingcountries,arepoliticalinstabilitythatcouldleadtoarbitrarychangesintenurerulesorevencompletelossoftenure.
Illegalityisamajorissueintropicaltimbermarkets.Mostofthisillegalityisassociatedwiththeinformalsectorwhichissuppliedbysmall-scalesawyersandaccountsforthemajorityoftheinternalmarketandexportswithintheregion.Mostoftheinformalsectorissmall-scalewithindividualoperatorsaccountingfor10sofcubicmetersoftimberannually.However,sincethissectorischaracterisedbynotpayingforthetimberandnopaymentoftaxes,thishastheeffectofdepressingprocessedtimberpricesmakingcompetitionfromlargerformaloperatorsalmostimpossible.Theinformalsectorisoftenaccompaniedbypettycorruptionofjuniorofficials.
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Illegalityofmanyformsalsooccursinthelargerscaleformalsectorandisusedtoinflateharvestfarabovethevolumeslegallyallocatedparticularlyforhighvaluespecies.Thisillegalityisoftenaccompaniedbysmall-scalecorruptionandgrandcorruptionofseniorofficialsandpoliticians.Illegalityoccursformanyreasonsandisoftenacceptedaspartofthewayofdoingbusiness.
Theeliminationofcorruptionisdifficultandforthisreason,whenforestpolicymeasuresareproposed,analysisoftheireffectshouldassumeandtakeintoaccounttheexpectedimpactofillegalityandcorruption.
Thereportdiscussesarangeofscenariosforthefutureoftropicalforestmanagementandconcludesthatsuccessisonlypossibleiftherearesignificantimprovementsin:
• Forestgovernance• Forestmanagement• Timberbusinessperformance
Forestgovernancemustensurethatstakeholdersreceivetheirfairshareofbenefits.Forestmanagementmustbeappliedtoincreasethefutureyieldofhighvaluespecies.Timberbusinessesmustbecomemuchmoreefficientandreducewastageatallstagesofthesupplychain.
Concessionshavefailedforawidevarietyofreasonsincluding:
− concession-holdersdonothaveadequateskillsintropicalforestmanagementandsilviculture;
− scientificunderstandingoftropicalsilvicultureanditseconomicbenefitsispoorlydeveloped;
− weakgovernancemeansthatconcession-holdersdonotfollowthetermsoftheircontractsorthelaw.
Rightsbasedapproachesmaybeusedtoimprovegovernanceandtoensurethatstakeholderscustomaryrightsarerespected.Rightsbasedapproachescanensurethatthosewithcustomaryrightsareadequatelyrewardedwhentheserightsareallocatedtoothers.Wherelocalrightsholdersreceiveadequatebenefitsfromtheforesttheyaremuchmorelikelytoprotectandimprovetheforestresource.Wherelocalrightsholdersdonotreceivesuchbenefitstheyaremuchmorelikelytoseeforestlandasbeingofnovalueandtoactivelyconvertforeststootherlanduses.
Therightsofworkersareoftenbetterrespectedintheformalsectorthanintheinformalsectorsothatworkersemployedbyresponsibleandcertifiedconcessionsarefarbettertreatedthanelsewhereinthesector.
Forestcertificationisanimportantbutoftenmisunderstoodtoolforimprovingforestmanagement,butitcannotonitsownmakeabusinesssuccessful.However,theperformancestandardsusedinforestcertificationcanbeusedforguidancewhereforestmanagersareattemptingtoimprovetheirbusiness.Toooftentherelationshipwithforestcertificationsystemsandforestmanagersisoftheform"letusdotheabsoluteminimumrequiredtoobtainthecertificate".Ifinsteadtheobjectivebecomes"letusdothemaximumpossibletoimproveourforestmanagementbusiness",thentheforestcertificatewillbecomeeasilyavailableifandwhenitisneededtosupportthebusiness.Withabettermanagedbusinessandimprovedproductivityprofitswillflowduetoreducedcostsandincreasedrevenues.
Thereportconcludeswitharangeofrecommendationsforimprovementsintropicalforestmanagementandconcessionsgroupedasfollows:
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• Revisedandimprovedgovernance• Facilitatingforestbusiness• Improvedforestmanagement• Involvinglocalstakeholders
Forconcessionstobecomesuccessfultheymustbebasedonasuccessfulbusinessmodelfortropicalforestmanagement.Insuchabusinessmodel,forestsarewellmanagedandabletoprovideanassuredflowofallresources,thetenurerightstotheseresourcesareallocatedwithinaframeworkofgoodgovernancethatallowsbusinessestooperatewiththeminimumpossibleinterferenceandwithoutcorruption,andtheproductsfromtheforestareprocessedefficientlyintohighvaluegoodsthatreturnsignificantvaluetotheforest.
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2 IntroductionBackgroundForestconcessionshaveintherecentpastbeenthedominantgovernancetoolfortheharvestingandmanagementofnaturalpublic/State-ownedforestsinmanytropicalcountriesaswellasbeingdominantinborealareasofRussiaandCanada.TheyarelessimportantintemperatezonesbutareinuseintheforestareasofEasternEuropeaswell.However,theconceptofconcessionsisnotanewoneandtheyhavebeeninusesincethe1700sforawiderangeofnaturalandothertypesofresources1wheretheyhaverangedfromconcessionsofperpetualtransferrablerightstomuchmorelimitedrights.
Forestconcessionshavereceivedamixedpress.Insomecases,beinghailedasnotablesuccessesintropicalforestmanagement2,3whileinothercasesbeingvilifiedasfocusofcorruption,disenfranchisementofcommunitiesanddeforestation4,5.
Thereisnointernationalsystemforreportingonconcessions.Theregionalreports6producedforthisstudyindicate(Table1)indicatethatthereareatleast122millionhaoftropicalforestsconcessionsaccountingfor14%ofState-ownedforests.Thesuccessorfailureofforestmanagementunderconcessionsisthereforeakeyfactorinfluencingthesafeguardingofforestresourcesatthegloballevel.
Table1Summaryofforestarea(1000sha)andconcessionareasincludedintheregionalreports.DetailsinTable4
Totalforestarea
Publicforestsarea
Publicproductionforestsarea
%offorestinpubliclands
%ofpubliclandsforproduction
Industrialconcessions
area
%ofpubliclandsunderconcessions
LatinAmerica 718,820 425,368 43,582 59% 10% 18,597 4%
West&CentralAfrica
262,365 260,227 68,173 99% 26% 56,114 22%
SouthEastAsia 222,694 180,909 114,920 81% 52% 48,122 27%
Studyregions
1,203,879 866,503 226,675 72% 19% 122,833 14%
1HardinR.2011.ConcessionaryPoliticsProperty,Patronage,andPoliticalRivalryinCentralAfricanForestManagement.CurrentAnthropology,Vol.52,No.S3.2Radachowsky,J.,etal.2011.ForestconcessionsintheMayaBiosphereReserve,Guatemala:Adecadelater.ForestEcol.Manage.doi:10.1016/j.foreco.2011.08.043.3Anon.2004.ConservationConcessionProtectingforestecosystemswithpaymentsforecosystemservicesinGuyana.https://www.cbd.int/financial/pes/guyana-pesconcession.pdf.4WorldRainforestMovement.2015.Whytheforestconcessionmodeldoesnotsolvethestructuralproblemsofloggingandwoodextraction?Bulletin217.5GrayJ.A.2002.ForestConcessionPoliciesandRevenueSystems:CountryExperienceandPolicyChangesforSustainableTropicalForestry.6(1)KarsentyA.2015.TheContemporaryForestConcessionsinWestandCentralAfrica:ChronicleofaForetoldDecline?.(2)ChanB.2015.StatusofForestConcessionsinSoutheastAsia.(3)GretzingerS.2015.LatinAmericanexperiencesinforestconcessions.
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Againstthisbackground,FAOandITTOhavelaunchedaninitiativeincollaborationwiththeBrazilianForestService(SFBinitsPortugueseacronym),CIFORandCIRAD,toreviewthecurrentsituationofconcessionsandtopreparerecommendationsaimedatguidingdecisionmakersintheimplementationofforestconcessionsystemswhichshouldbeabletoanswertheneedsoflocalpeople,tobeeconomicallyefficientwhilemaintainingtheintegrityofforestresources7,8.
TheimmediatepurposeofthisreportistoserveasbackgrounddocumenttotheInternationalWorkshopWhatfutureforforestconcessionsandalternativeallocationmodelsformanagingpublicforests?,tobeheldinBrazilinthesecondhalfof2016.Itisalsoexpectedthatthedocumentwillbeofwiderinteresttopolicymakersandotherstakeholdersinterestedinregulationofrightstoaccessanduse,mainstreamingofsustainableforestmanagementandtenure.
Thereportbuildsonthreeregionalreports9,10,11completedin2015andpresentedatanexpertmeetingconvenedbyFAOinRomeon24thand25thofNovember2015.
ObjectiveTheoverallobjectiveofthisreportistoproviderecommendationsonhowcurrentforestconcessionsystemscanbeimprovedsothatconcessionsarebetterabletomeetforestpolicyobjectives,especiallyregulationofrightsandmanagementpractices.Itisexpectedthattheserecommendationswillhavetheflexibilitytobeapplicableinawidevarietyofsituations,contributingtomaximiseforestcontributiontosociety.
Therecommendationswillcoverawiderangeofissuesincluding:
• howtheallocationofconcessionscanbeimproved;• howthegovernanceofconcessionscanbeimproved;• howconcessionscanbefittedbetterintothesocial,politicalandenvironmentallanduse
frameworks;• howconcessionscanbemademoreprofitableforentrepreneurs,landownersandlocal
communities;and• thefutureofcommunitymanagedconcessions.
Basedonevidenceraisedfromthethreeregionalreports,theexpertmeetingandotherrelevantsources,itisenvisagedthatthereportwillcontributetomakeforestconcessionsamoreeffectiveandefficientforestandtenurepolicies’instrumentandafullysustainablebusiness.
TheConcessionSystemConcessionsarelegalinstrumentsbetweentwopartiesusuallytheStateandaprivateentitythatconferrightsfromtheStatetotheprivateentityinexchangeforapaymentorprovisionofservices.Inthecontextofforestry,concessionsmayrefertosimplerightstoharvesttimberorotherforestproductsorontheotherhandrightstomanageforestresourcesinthelongterm.
7GrayJ.A.2002.ForestConcessionPoliciesandRevenueSystems:CountryExperienceandPolicyChangesforSustainableTropicalForestry.8FAO.2001.Governanceprinciplesforconcessionsandcontractsinpublicforests.FAOForestryPaper139.9KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?10ChanB.2015.StatusofForestconcessionsinSoutheastAsiaconcessionsinSoutheastAsia.11GretzingerS.2015.LatinAmericanexperiencesinforestconcessions.
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Concessionsaresimplyoneformofallocatingrightsoverforestresources.Thereisenormousvariationinthespecificrightsandresponsibilitiesassociatedwithconcessions.Concessionsarewellknownfromotherspheresofbusinesswheretheyaresimilarlyvariable.Asaresultdefinitionsofconcessionsareequallyvariable).
Somedefinitionsof(forest)concession
Atitsmostgeneral,the‘concession’issimplyanygrantingofrightsbetweentwopartiesanditisusuallygovernedbytermssetoutinacontract(concessionagreement)betweentheparties.
However,whenspeakingofforestresourcerightsconcessions,theusagehasbecomesomewhatmorerestrictedsothatitismorenormaltotalkofconcessionsbetweenstatesasownersofresourcerightsandotheractorsincludingindividuals,communitiesandcorporationsasusersoftheseresources.SuchrightsmayormaynotbetransferrableandmayalsoinvolvemultiplepartiessuchasthecaseofPUP(PrivateUsePermit)concessionsinLiberia12.
Thetermsofconcessionagreementsareextremelyvariablebothintermsoftheirscope,responsibilitiesandduration.Differentcountrieshaveverydifferentapproachestoconcessionsbothintermsoftheirdurationandinthewaythattheylevycharges(Table2).
12deWit,P.2012.LandRights,PrivateUsePermitsandForestCommunities.LandCommissionofLiberia.
ForestConcession1.Atemporary(orterminable)anddefinedfacilityinvolvingtheuseofaforestoritsproduce,sanctionedbytheownerofaforesttoindividualsorcommunities—synonymforestprivilege.2.Acontract,license,orpermitgrantedtoafirmorapersontoextractandmarkettimber(timberconcession)orotherproducecommerciallyfromadefinedareaoftheforestwithinagivenperiod—Noteatimberconcessionmayspecifythenumber,type,andsizeoftreesthatmaybeharvested.http://dictionaryofforestry.org/dict/term/forest_concession
ForestconcessionSystemofawardingharvestingrightstoindividuals,privatecompaniesand/orcommunitieswhoassumetheriskandresponsibilityofforestresourcesexploitationand/ormanagement.[FSC(2015)FSCDirectiveonFSCForestManagementEvaluations.FSC-DIR-20-007EN]
ConcessionAsitisdefinednowadays,the“modern”concessionisviewedasawaytodeliverservicesofpublicandcollectiveinterestthroughanassociationofprivateinvestmentandpublicregulation.[Karsenty(2007).OverviewofIndustrialForestConcessionsandConcession-basedIndustryinCentralandWestAfricaandConsiderationsofAlternatives.CIRAD].
ConcessionAnygrantofrights,land,orpropertybyagovernment,localauthority,corporation,orindividualhttp://www.collinsdictionary.com/dictionary/english/concession
ConcessionAgreementAnegotiatedcontractbetweenacompanyandagovernmentthatgivesthecompanytherighttooperateaspecificbusinesswithinthegovernment'sjurisdiction,subjecttocertainconditions.Aconcessionagreementmayalsorefertoanagreementbetweentheownerofafacilityandtheconcessionownerorconcessionairethatgrantsthelatterexclusiverightstooperateaspecifiedbusinessinthefacilityunderspecifiedconditions.Regardlessofthetypeofconcession,theconcessionaireusuallyhastopaythepartythatgrantsittheconcessionongoingfeesthatmayeitherbeafixedamountorapercentageofrevenues.http://www.investopedia.com/terms/c/concessionagreement.asp#ixzz3teXRDW61
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Withinthisvariability,however,itispossibletostatethatforestconcessionsaregenerallybasedon:
• longertermagreements(>20years)usuallycoveringatleastonecompleteharvestingcyclefortheforest.
• landthatisdirectlyownedbytheStateorallocatedtocommunities• theallocationoftherighttoharvesttimberand/orotherabovegroundresources.• verylargeareasofland(>50,000ha)forindustrialconcessionsandsomewhatsmaller(3,000
–50,000ha)forsmall/medium-scaleoperationsandcommunityconcessions.• concession-holdersacquiringresponsibilitiesandrightsfortimberharvestingandforest
management.
Table2Dimensionsoverwhichforestresourcerightscanbeallocatedindicatingbroadlyhowcommonlythisoccursforeachcriterionvalueinthecaseofconcessions.Cellshighlightedingreenarethecommonsituationforconcessions,thoseinorangearelesscommonwhilethoseinyellowarerarelyfoundforconcessions.Notethattimbermaybefurthersubdividedbyspeciesandpurpose.
DIMENSION CRITERION
Duration 1yr 2-5yr 6-20yr 21-40yr 41-99yrLandOwnershipbeforeconcessiongranted
Private Lease State Communal Privateundercommunallaw
Resourceclassesgrantedbyconcessionagreement
Timberonly NTFPonly Timber+NTFPs
AllAboveGround
AllResources
Responsibilitiesofconcession-holder
TimberHarvestingonly
AllaspectsofForestManagement
DevelopmentofPublicInfrastructure
ProvisionofPublicSocialServices
Fees&Taxesleviedonconcession-holder
FeespaidwithApplication.
FeesbasedonVolumeharvested
FeesbasedonAreaofconcession
FeesbasedoncombinationofVolumeandArea
FeebasedonStandingVolume
Typeofconcession-holder
PrivateIndividual
Anycommercialentity.
Nationalcommercialentity.
Non-ResidentCommunity
ResidentCommunity
Areaofconcession
1-100ha 100-3000ha 3000-30.000ha
30.000-1.000.000ha
Typeofprocessforgrantingconcession.
ClosedProcess,privateandsecretnegotiationbetweengovernmentandconcession-holder
QualifiedProcess.Negotiationbasedonapre-qualificationoftechnicalandfinancialcompetence
TransparentProcess
ProcessInitiatedbyconcession-holder
ProcessInitiatedbyAuthorities
Stateshaveotherwaysofallocatingtimberrightswhicharenotgenerallyconsideredtobeconcessions.Themostcommonalternativestoconcessionsusedbygovernmentstoderiverevenuefromforestresourcesinclude:
• standingtimbersales• logsales(roadside,forestgate,delivered)
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• shorttermharvestpermits• mediumandlongtermlandleasesthatincludeforestresourcerights• forestlandsales• jointventureforestrycompany• State-owned‘independent’forestrycompany
Inmorerecenttimesthereareincreasingdemandsthatconcession-holders,inadditiontotheirrightstomanageforests,haveobligationstoprovidearangeofsocialserviceswhicharemoreusuallythedirectresponsibilityofgovernments.Theseincludesuchthingsastheprovisionofeducationalandhealthcareinfrastructureandservicesaswellasthedevelopmentoftransportinfrastructure.
Foresttenuresandforestrights
Theconcessionconferstheholderacertainparcelofrights.Theserightsareusuallydifferentfromandindependentoftherightsassociatedwithlandtenure.Therearesignificantdifferencesbetweencountriesinthewayinwhichtheserightsaredividedsothatinsomecasesforesttenureprovidesmanyoftherightsassociatedwithlandtenure(i.e.privacy,rightstoconstructinfrastructure)whileintheotherhandtherearecaseswherelandtenuredoesnotincludetreetenure.
Foresttenuresexistunderavarietyofrightssystemsrangingfromformallawtocustomarylawincludinginformallyacceptedtraditionsandpractices.Thisresultsinmanysituationswheretherearetenureconflictsarisingoutofthedifferentrightssystems.Thisislikelytooccurwherethereareoverlappingtenureseitherunderthesametenuresystemortenuresunderdifferentsystems.
Sinceconcessionsaregrantedbygovernmentsundertheformallegalsystemitismostlikelythattherewillbetenureconflictsbetweenlegalrightsoftheconcession-holderandcustomaryortraditionalrightsofcommunitieslivingonorusingthesameland.InAfrica,forexample,only16%oftheState-ownedforesthasnootherforesttenurerightassociatedwithit13.
InmostcasesitisimpossibletotalkofFreePriorandInformedConsent(FPIC)forlandallocatedtoconcessionssincecommunitiesandindigenouspeoplesarenotconsultedatthetimeofconcessiondelineation.
Concessionsandresponsibilities
Allpartiestoconcessioncontractshaveresponsibilitiesinrelationtothemasdosomeotherparties(NGOsetc.).
Forgovernmentsthismeansthattheconcessionsofferedshouldensurethattheforestresourcesareusedforthebenefitofthepeople.Atthesametime,governmentshaveresponsibilitiestotheglobalcommunityofnationsasdescribedinanyinternationalconventionandtreatytowhichtheysubscribeandwhichmaylimithowtheycandealwiththeirforests.Itisalsoimportanttorecognisethattherightsassumedbygovernmentstodisposeofforestresourcesoftenpredateindependence.Suchrightswereusuallyputinplaceforthebenefitofthecolonialauthoritiesandwithlittleornoconsiderationforlocalpopulations.
Concession-holdershaveresponsibilitiesassetoutintheircommercialcontractswiththeStateaswellasresponsibilitiestofollowlocal,nationalandinternationallaws.ResponsiblebusinesseswouldbeexpectedtooperateinlinewiththeUNGlobalCompactwhichincludesfairtreatmentoflabour,
13FAO(2014)Tenuresecurityforbetterforestry.UnderstandingforesttenureinAfrica.ForestPolicyBrief.
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respectforhumanrights,avoidanceofcorruptpracticesandminimisingnegativeenvironmentalimpacts.
Insomecasescommunitiesaredirectlyimplicatedintripartitecontracts(State,company,community)inthemanagementofconcessionswhilstinallcasescommunitieswillbeaffectedparties.Inpracticecommunitybenefitsareoftencontainedinsocialresponsibilityagreements(SRA)whichusuallyoffercommunitieslimitedbenefits.CommunitiesneedsupportfromNGOsandothersinordertonegotiatefairSRAs.
ConcessionsandtheirbenefitsStategovernmentsshouldmanagetheirnaturalresourcesprincipallyforthebenefitoftheircitizens.Forestsformasignificantpartofthenaturalcapitalinmanycountries.Inmostdevelopedcountries(withtheexceptionofCanadaandRussia)governmentsmanagetheirforestsusingtheirownresourcesandderivevaluefromthemultipleresourcesthatforestsprovide(e.g.fromtourism,hunting,watersupplyandtimbersales).TimbersalesaremostoftensoldintheformofstandingtimberbutinsomecountriesState-ownedforestorganizationsselllogsatroadsideordeliveredtoprocessingfacilities.
Intropicalcountriesmostgovernmentsdonothavethehumanresourcesorcapitalrequiredtomanagetheirownforestsandthereforeemployagentsbymeansofconcessionstodosoforthem.Governmentsdevelopconcessionsystemsinordertomeetmultipleobjectivesandtoachievemultiplebenefits.Thesebenefitsincludesocial,environmentalandlocaleconomicdevelopmentaswellasrevenuegenerationandforobtainingforeignexchange.
Concessionsareallocatedtocommercialcompanieswhoareexpectedtopayforthetimberharvested(forestrent)andtorenderarangeofsocial,environmentalandeconomicdevelopmentservicesinexchangefortheirexclusiverights.Inrelationtotheforestresourcetheseservicesmaybelimitedinscopeormayincludeallaspectsoftheforestmanagementcycleincluding,inventory,harvesting,regenerationandsilvicultureaswellasmanagementofbiodiversityassets.Socialdevelopmentservicesoftenincludeaspectssuchasschoolsandmedicalfacilities,facilitiesforforestregulatoryagencies,andgeneralinfrastructuresuchaswater,powersupplyandroadsandbridges.
Inorderforthismodeltowork,companiesmustbecapableofmakingaprofitfromtimberresourceswhileatthesametimemeetingthecostsofthesocio-economicandenvironmentalservicestheyareexpectedtosupply.
Recentlygovernmentshavemadesomeforestlandsavailableforconservationconcessionswherethemainobjectiveismaintenanceofbiodiversityandenvironmentalservices.Suchconcessionsareusuallyexternallyfundedwhichmayincludepaymentforenvironmentalservices(PES).
Concessionsandsustainableforestmanagement(SFM)
Concession-holdersinpartnershipwithgovernmentagenciesareexpectedtoachieveSFM.Responsibilitiesinsuchpartnershipsmaybedividedinmanywayswithgovernmentagenciestakingmoreorlessresponsibilityformanyaspects(e.g.inventory,landuseallocation,harvestallocation,biodiversityconservationetc.).
FAOcommissionedaseriesofstudiesduringthelast15yearsaimedatidentifyingcasesofexemplarytropicalforestmanagementandoutof227casesthatwerenominatedorselected,27wereconcessions.Althoughthisisasmallpercentageofthetotalnumberofcases,theyaregenerallyofmuchlargersizethantheotherexamplesandthereforerepresentaverysignificantarea
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ofthetropicalforestareaundermanagementconsideredinthestudies.TheexemplarycaseslargelyoverlappedwiththecountriesandregionssummarisedinTable1andwouldrepresent3%ofthetotalareaofconcessions.
Ifthese27casescanbeconsideredexemplarytheremustalsobeotherconcessionsthatcanbeconsideredasrepresentinggoodoradequateforestmanagement.Thismustincludeconcessionsthatarecertifiedunderavarietyofschemesandwhichwerenotincludedinthestudies.
CriteriadevelopedforevaluatingSFMrarelydealwiththebenefitsfromtheforestinaquantitativeway.Thiscanbeconsideredtolimittheirusefulnesssinceatthelocallevelitisindividualdecisionsbasedonlandusebenefitsthatdeterminesthefuturewellbeingoftheforest.Wherebenefitsfromalternativelandusestotheindividualaregreaterthanforestbenefitsrationalindividualswillchoosetoreplaceforestswithalternativecrops.
Thelevelofbenefitsfromtheforestwillsimilarlyinfluencegovernmentdecisionmaking,withfewgovernmentsbeingpreparedtomakelargeinvestmentsinthemanagementofforeststhatprovidelittlerevenue.ThisisquiteclearfromtheemphasisofpaymentsforforestprotectionintheREDDdiscussions.
PoorForestManagement
Forestmanagementinthetropicsincludingforestmanagementinconcessionsremainspoorforarangeofreasons.Perhapsthemostimportantofthesereasonsisthefailuretoseta-prioriobjectivesfortheforest.Theseobjectivesshouldbebasedontherangeofgoodsandservicesthattheforestisexpectedtosupplynowandintothefuture.Oncetheseobjectiveshavebeendetermineditisnecessarytodevelopamodelforhowthiscanbeachievedinthelongterm.Thiswillrequireavisionofthespeciesandage/sizedistributionofthefutureforestandasilviculturalplanonhowthiscanbeachieved.
Thislackoflongtermobjectivesfortheforestmeansthatinrealityforestmanagementplanshavelittletodowithmanagementoftheforest.Theycanbebetterdescribedasreducedimpactharvestingplanswithenvironmentalandsocialsafeguards.
Thelackofproperforestmanagementplanninghasledtoarangeofforest‘management’systemswhichhavelittleornobasisinascientificunderstandingofforestdynamicsandwhichcanbeshowntoleadtoforestdegradationandtheeconomicextinctionofthespeciestargetedforcurrentharvesting.
Silviculture,thatis,theactivemanagementofforestvegetationtoachieveforestresourceobjectives,isalmostabsentintropicalforests.Silviculturefortheproductionoftimberrequiresanunderstandingoftheecologyoftimbertreeswithintheforestecosystem.Thisunderstandingisincreasinginthetropicsalthoughitstillfallsfarbehindtheknowledgeintemperatezoneswhereresearchwasstartedmuchearlierinresponsetothedepletionofthetemperatetimberresourceandthesubsequentestablishmentoflarge-scale,industriallyorientedforests.
Thereishoweversufficientknowledgetoshowthatcertaininterventionsaimedatsustainingtimberresourcescanbebothsuccessfulandeconomicallyviable.Forexample,theactivemanagementandenrichmentplantingofcanopygapscreatedbyharvestinghasbeenshowntobebothecologicallyandeconomicallyviable.
Theapplicationofsilviculturecarriescostswhichshouldbesupportedbyreturnsfromthefuturebenefitsandwherethisisnotclearthencostlyinterventionswillbeavoided.Concession-holdersare
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unlikelytoengageinsilvicultureonavoluntarybasiswhenfutureforesttenureisuncertain.Theyareequallyunlikelytocarryoutlegallyrequiredsilviculturewhengovernanceandenforcementofcontractsisweak.
Thefailuretoimplementforestmanagementanditsassociatedsilvicultureislikelytoprovedisastrousforthefutureoftheforestsandtheiraccompanyingbiodiversity.
Aretheexpectationsfromconcessionsrealistic?
ConcessionsareexpectedtodeliverSFMwhilesimultaneouslyofferingsignificantfinancialreturnstostatesandtoconcession-holders.UntilrecentlySFMinitsbroadsensewasnotconsideredintheconcessionmodelatallandconcession-holderssimplyharvestedtimberand‘shared’incomeswiththeState.Concession-holderscouldbeexpectedunderthismodeltobegoodatthelowestcostextractionoftimberfromtheforestwithlittleconsiderationofotheraspects.
Inthemodernconcessiontheconcession-holderisexpectedtofulfilanenormousrangeofadditionaltasks,manyofwhichhavenothingtodowithforestry(e.g.provisionofhealthcare,provisionofeducation)aswellastheadditionaltasksthatcomeaspartofSFM(e.g.biodiversitymanagement,silviculture).Mostoldconcessionmanagerswillnothavethetrainedstafftodealwiththeseissuesandinmanycasessincethetasksarerelativelynewthiscapacityisrarelyfoundinthecommercialenvironment.Experiencedtropicalforestbiodiversitymanagersarenotwidelyavailablesincemostoftheexpertiseisconcentratedinacademicandresearchorganizations.
Institutionalsettingsandconcessions
Inalmostallcasestropicalcountrieswithconcessionsystemshaveinstitutedthematleastpartlybecauseofalackofhumanresourcecapacity.Thislackofcapacityisendemictotheentiresystemandmeansthatgovernanceisgenerallyveryweak.Forestagenciesarenotusuallyapriorityofgovernmentsandthisisreflectedinthefactthatalthoughforestoftenaccountformorethan40%ofthelandtheheadsofforestagenciesrarelyreportdirectlytotheministerresponsibleforforests.Thislackofcapacityfurtherimpactsonthecompetenceofthestaffinvolvedintheevaluationofconcessionsandthesupervisionoftheconcessioncontract.Furthermore,thislackofcapacityencouragesconcessionstobetakenupbycompaniesthatseektomakeuseofthisweaknesstoavoidhavingtocomplywiththetermsofconcessionsandwithforestrylawsingeneral.
Whencombinedwithpoorlypaidstaffintheregulatoryauthoritythisleadstosituationswherecorruptionofgovernmentofficialsbecomescommonplaceintheforestsector.PoorlypaidstaffcometorelyonfacilitationpaymentsinordertosurvivewhichhasthefurtherconsequencethatStaterevenuesfromforestsarereducedduetonon-collectionofrevenues.
3 Concessionsaroundtheworld:successes,failuresandlessonslearned
Thereiscurrentlynoconsolidateddataforforestconcessions.TheGlobalForestResourcesAssessment14reportsonmanagementrightsofpublicly-ownedforests.Itshowsanincreaseintheshareofpublicforestsmanagedbyprivatebusinessfrom3%in1990to15%in2010.Somecountries,onavoluntarybasis,reportonareaand/ortimberproductionfromforestconcessionsintheirFRAcountryreport(e.g.Cambodia,Mozambique)basedonadministrativerecordsorad-hocstudies.14FAO(2010)Globalforestresourcesassessment2010.MainReport.FAOTechnicalPaper163.
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Althoughthisdocumentfocusesonconcessionsintropicalcountries,thereareforestconcessionsalsoinotherpartsoftheworld.ByfarthelargestconcessionareasoccurnotinthetropicalforestbutinthecooltemperateandborealforestzonesofCanadaandRussia.Canadaalonehas265millionha(76%ofitstotalforestcover)underforestconcessions15.Russiahasover600millionha(68%ofitstotalforestcover)definedasproductionforest16,withalmostallofthisareacurrentlyState-ownedandavailableasconcessions.
Theforestsectoroutlookstudy17hasidentifiedillegalloggingasasignificantprobleminRussiawithupto20%ofalltimberand50%oftimberintheRussianFarEastbeingharvestedwithoutproperpermits.Corruptioninthesectorappearstoplayanimportantpartinfacilitatingtheillegalbusiness.Itisclearthatlargevolumesareeitherbeingdirectlytaken(byharvestingoutsideofpermittedareas)orarebeinglaunderedthroughconcession-holders.
Canadaappearstohaveamoresuccessfulconcessionsystembutithasreceivedcriticismforanumberofreasons.Mostconcessionsareallocatedbynegotiation18ratherthanbycompetitivetender,therearecasesofoverlappingtenureswhichhavebeenproblematical19andtherehasbeenacriticismthatthelowstumpagepricesareaformofsubsidytoCanadianforestcompanies20.
ConcessionsinLatinAmerica,WestandCentralAfricaandSoutheastAsiaThecurrentsituationofconcessionsinthesetropicalregionshasbeeninvestigatedbyconsultantsaspartofthisinitiative.Intheseareasmostforestrevenues21areexpectedtoflowtogovernmentfromconcession-relatedfeessothatitisinstructivetodeterminetowhatextenttheserevenuesactuallyflow.Itisthisrevenueflowthatinmanycasesistheprincipaljustificationforassigningconcessions.
InTable3wecanseethatworldwide,forestrevenuesaverageapproximatelyUS$6/ha/yronpublicly-ownedlandsbutthatrevenuesinAfricaaremuchloweratonlyUS$1/ha/yr.Furthermore,revenuespervolumeoftimberaremuchlowerinAfricathaninAsiaandSouthAmerica.ItshouldbenotedthatthefiguresforPapuaNewGuineaareincludedinOceaniaandthisleadstoalargeinflationoftherevenue/haforpublicareassinceonly3%ofthelandisStatelandandPNGleviestaxesontimberharvestedfromcommunityland.OnefurtherobservationisthattherevenuesinEuropearemuchmorelikelytobebasedonsoftwoodsthantherevenuesfromtropicalforestswhicharebasedonhighervaluehardwoods.
15GlobalForestWatch.2014.PressRelease,IndustrialConcessionsCoverOverOneQuarterofCanada.27Feb2014.16FAO.2012.TheRussianFederation:forestsectoroutlookstudyto2030.FAO.17FAO.2012.TheRussianFederation:forestsectoroutlookstudyto2030.FAO.18GrayJ.A.2003a.ForesttenuresandconcessionexperienceinCanadaandselectedothercountries.19GrayJ.A.2003a.ForesttenuresandconcessionexperienceinCanadaandselectedothercountries.20MyersN.&KentJ.2001.PerverseSubsidies:HowTaxDollarscanUnderminetheEnvironmentandtheEconomy.IslandPress.Washington.21SomecountriesalsocollectrevenuesforNTFPsandfirewoodfromlocalcommunitymembers.
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Table3Forestrevenuesbyregion22.
Wherearetheconcessions?
ThetropicalregionscoveredbytheconsultantstudiesdiffermarkedlyintheareacurrentlyunderconcessionswithLatinAmericahavingamuchlowerpercentageofpubliclandsallocatedtoconcessions.FromTable4belowwecanseethatthisdifferencebetweentheregionsislargelyduetotheeffectofBrazilwhichaccountsforalmost75%oftheforestareaofthestudiedcountrieswith516millionha,ofwhich313millionhaisinpublicownershipbutonly840,000haisallocatedtoconcessions.IfBrazilisremovedfromconsideration,thentherestofLatinAmericaissimilartotherestofthetropicalregionsherecovered.
Thesituationinrelationtoconcessionsinaregionisquitedynamicwithcountriesincreasingordecreasingtheirconcessionareasrapidlyinresponsetochangesofgovernmentandpressuresfromstakeholders.ThusinBoliviathe2000ssawarapiddecreaseinforestconcessionsaslandwasallocatedforindigenouscommunityforestryinstead,Cambodiasawadecreaseasconcessionswerecancelledduetoperceptionsofmismanagement,whileBrazilhasseenanincreaseduetothestart-upofanewconcessionsprogramme.
22FAO.2010.Globalforestresourcesassessment.MainReport.FAOTechnicalPaper163.
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Table4Naturalforestandconcessionareas23,24,25,26inthestudiedregions(Areas1000sha)
Totalforestarea
Publicforestsarea
Publicforestsforproduction
area
%offorestinpubliclands
%ofpubliclandsforproduction
Industrialconcessions
area
%ofpubliclandsunderconcessions
Bolivia 53,500 38,611 8,987 72% 23% 2,107 5%
Brazil 516,000 313,000 4,300 61% 1.37% 840 0.27%Peru 67,992 18,821 5,513 28% 29% 7,110 38%
Guatemala 3,657 1,536 450 42% 29% 450 29%Guyana 15,200 12,200 6,850 80% 56% 6,500 53%Suriname 14,758 11,300 4,482 77% 40% 1,090 10%Venezuela 47,713 29,900 13,000 63% 43% 500 2%
LatinAmerica
718,820 425,368 43,582 59% 10% 18,597 4%
Cameroon 19,916 19,916 14,539 100% 73% 7,059 35%Congo 22,411 22,411 19,722 100% 88% 12,600 56%Gabon 22,000 22,000 9,900 100% 45% 14,272 65%
EquatorialGuinea
1,626 1,626 81 100% 5% 740 46%
CAR 22,605 20,571 4,747 91% 21% 3,059 15%DRC 154,135 154,135 7,707 100% 5% 12,184 8%
Liberia 4,329 4,329 1,082 100% 25% 2,300 53%Ghana 4,940 4,940 1,136 100% 23% 3,200 65%Cote
d'Ivoire10,403 10,299 9,259 99% 89% 700 7%
West&CentralAfrica
262,365 260,227 68,173 99% 26% 56,114 22%
Cambodia 10,094 10,094 3,331 100% 33% 3,300 33%Indonesia 94,432 85,933 56,093 91% 59% 23,992 28%LaoPDR 15,751 15,751 3,623 100% 23% 600 4%Malaysia 20,456 20,047 12,683 98% 62% 9,230 46%PNG* 28,726 862 7,182 3% 25% 11,000 38%
Phillipines 7,665 6,515 5,825 85% 76% 0 0%Vietnam 13,797 9,934 6,485 72% 47% 0 0%
Myanmar^ 31,773 31,773 19,699 100% 62% Unknown^ Unknown^SouthEast
Asia 222,694 180,909 114,920 81% 52% 48,122 27%
*InPNGConcessionsareissuedoverlandownedbycommunities(%isofTotalForestArea).^InMyanmarconcessionsareknowntoexistbuttheirscaleisunknownbutlargeintheborderareas
StudyRegions
1,203,879 866,503 226,675 72% 19% 122,833 14%
23KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?24ChanB.2015.StatusofForestconcessionsinSoutheastAsiaconcessionsinSoutheastAsia.25GretzingerS.2015.LatinAmericanexperiencesinforestconcessions.26FAO.2010.Globalforestresourcesassessment.MainReport.FAOTechnicalPaper163.
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Whatarethebenefitsofconcessions?
3.1.1.1 Economicbenefits
Theinitialmotivationforofferingconcessionsisinmostcasestoprovideeconomicactivityinthecountry.Informationaboutthisisavailableinanumberofwaysbutisoftennotdirectlycomparable.FromTable3wehaveseenthatatleastinSouthAmericaandSoutheastAsiaforestsinmanycaseshaveapositiveimpactongovernmentrevenuewithavalueofaboutUS$5/ha/yr.ThesituationinAfricaissignificantlyworsethanthiswithacontributionofaboutUS$1/ha/yr.Itmaybethatthisdifferenceisnotasgreatasitseemsif,ashasbeensuggested,moreofthecontributionsinAfricaarecontributionsinkindsuchassocialservices.However,therearenotabledifferencesbetweencountries:MyanmarappearstogenerateapproximatelyUS$0.20inexportrevenuesperm3oftimberharvestedwhileMalaysiageneratesUS$215/m3(Table5Table5).BrazilappearstogenerateameagreUS$32/m3,butthemajorityofitslogproductionfromnaturalforestsgoesintoitsenormousinternalmarket.Cambodiaisalsoanomaloussincemostofthetimberproducedisfromforestconversion(atarateofapproximately200,000ha/yrrecently)27andmuchlargervolumeshavebeenproduced,mostofwhichhavebeenexportedillegallysothattheactualreturnpervolumeoftimberharvestedismuchlowerthangiveninthistable.
Table5Volumesoflogsharvestedandexportsalesvaluesinselectedcountries(datafromconsultantreports)
Country Logproduction(m3)
TotalExports(US$) US$/m3
Myanmar 5,290,000 1,053,284 0.20Thailand 8,700,000 658,663,000 75.71Cambodia 275,000 61,416,000 223.33Philippines 3,627,000 124,928,000 34.44Malaysia 17,170,000 3,695,633,000 215.24Indonesia 45,587,000 2,571,763,000 56.41Brazil 13,500,000 437,000,000 32.37
Surinam 308,000 1,900,000 6.17Guyana 299,000 48,100,000 160.87
Fromthisitisclearthatinatleastsomecaseslogsharvestedfromconcessionsaremakingsignificantcontributionstothebalanceofpayments.
ThefiguresinTable3areforrevenuesofalltypesincludingalltypesofforest.ThefiguresinformofUS$/m3aremorecomparablesincetheyincludeonlyrevenuesfrompublicly-ownedforestsandexcludefirewood.TheyrangefromaboutUS$6/m3inAfricatoUS$26/m3forSouthAmerica.Inbothcasesthetimberspeciesusedarepredominantlytropicalhardwoods.
Intheory,tropicalhardwoodsinLiberiahavemuchhigherrevenues/m3,28buttherehavebeensignificantproblemsincollectingthisrevenuesothatonly5%oftheannualfeewasactuallycollected.
Estimatesofbenefitsofconcessionsatthelocallevelarehardtofind;however,fortheconcessionsinnorthernGuatemala,consideredtobeanexampleofasuccessfulconcessionsystem,thereare
27BanksA,SlothC,HadleyGarciaD.&KoyRa(2014).Forest-LandConversionandConversionTimberEstimates:CambodiaCaseStudy.NEPCon&ForestTrends28IBIConsultants.2013.Forestconcessions—commercialforestrevenueprojectionmodelfinalreport:June2013.USAID.
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somepublishedfigures29,30TheseconcessionsoccupyabouthalfamillionhaoftheMayaBiosphereReserveandareofseveraltypesincludingindustrialconcessions,non-residentcommunityconcessionsandresidentcommunityconcessions.Someoftheresidentcommunityconcessionshavesignificantnumbersofrecentimmigrantswithnoforesthistory.FromTable6belowwecanseethattheownershipandbeneficiarydensityisverylowwithabout11km2offorest/memberand2km2perbeneficiary.Notethatthenumbersdifferbetweenauthorswhohavelookedatdifferenttimes(e.g.Reyesetal.2014)31;however,theorderofmagnitudeofkm2/beneficiaryratherthanha/beneficiaryissimilar.Landparcelsof100ha/beneficiaryormorecanbeconsideredlargeformanypartsoftheworld.
Table6AreasandbeneficiariesoftheMayaBiosphereReserveConcessions
Industrial Nonresident Residentcommunity
Residentcommunity
withimmigrants
Total
NoofConcessions 2 6 2 4 14
Areaha 132,304 195,084 137,356 68,392 533,136Beneficiaries 708 916 380 2,004Members 129 167 69 365
Area/Member 1,512 822 991 1,098Area/
Beneficiary 276 150 180 200
In1994inoneoftheconcessionstheharvestratewasofapproximately4m3/haofroundwoodandyieldedareturnofUS$218/ha32;thiswouldequatetoaboutUS$8/ha/yrona25yearcuttingcycle.By2011thecommunityofSanAndreswassellingtimberproductsworthUS$830,000fromitsconcessionof51,939haprovidinganaveragenetprofitofUS$3761foreachofitsmemberfamiliesatarateofUS$16.30/ha/yr.Thiswouldbeconsideredaverysignificantbenefitforitsmembers.Thishasbeenachievedbyinvestinginharvestingandprocessingequipmentandsellingdimensionedlumberonthenationalandexportmarket.
ItisalsoimportanttorecognisethatinthecaseoftheMayaBiosphereReserveconcessionstheharvestingofNTFPsisalsoanimportantsourceofincomegeneratingaboutUS$2500perpersonperyearfor2000fulltimeequivalentworkers.InpracticefamiliesearnaboutUS$2000fromNTFPsonaverage33.
29RadachowskyJ.,etal.2011.ForestconcessionsintheMayaBiosphereReserve,Guatemala:Adecadelater.ForestEcol.Manage.30GómezI.andV.E.Méndez.2005.AssociationofForestCommunitiesofPetén,Guatemala:Context,AccomplishmentsandChallenges.CIFOR.31ReyesRodas,R.,J.Kent,T.AmmourandJ.Gálvez.2014.ChallengesandopportunitiesofsustainableforestmanagementthroughcommunityforestryconcessionsintheMayaBiosphereReserve,Petén,Guatemala.32GretzingerS.P.1998.CommunityForestConcessions:AnEconomicAlternativefortheMayaBiosphereReserveinthePetén,Guatemala.33Radachowsky,J.,etal.2011.ForestconcessionsintheMayaBiosphereReserve,Guatemala:Adecadelater.ForestEcol.Manage.
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TheeconomicbenefitsoftheconcessionsystemintheReservehaveonlybeenmadepossibleagainstabackgroundofsignificantforeignaidinvestmentestimatedatUS$92million34between1989and2003.ThisistheequivalentofUS$180/haorUS$46,000perbeneficiary.
3.1.1.2 Socialbenefits
Socialbenefitsfromconcessionscancomeinavarietyofforms(Table7).Someofthesearisetoagreaterorlesserextentsimplyduetothepresenceoftheactivitiesassociatedwiththeconcession35whilstothersariseduetoeithercorporatesocialresponsibility(CSR)programmesorasaresultofcontractualobligationsplacedontheconcession-holder36.Finallythereisagroupofbenefitsthatismorestronglyassociatedwithforestcertification.
InthecaseoftheMayaBiosphereReserve,inadditiontotheincomesharingthereisalsoasignificantamountofworkcreatedbytheharvestingandprocessingactivitieswhichwilladdsignificantlytotheincomeofsomeindividualseitherwithinorfromoutsidetheconcessionsmembers37.Theforeignaidexpenditurehighlightedabovewillalsohavecreatedsignificanteconomicactivityinthedistrictalthoughthemajorityislikelytohavebeenspentonsalariesforexternalconsultantsandfortheirsupportinthefield.
InBrazilitisestimatedthatconcessionscreate1jobforevery500haputundermanagement38andthiscompareswellwiththeapproximately1jobforevery250hacreatedintheMayaReserve.
Table7Sometypicalsocialbenefitsassociatedwithforestconcessions
Socialbenefitsassociatedwiththeoperationofaconcession• Employment• Skillstraining• Roadandtransportdevelopmentandmaintenance
SocialbenefitsasaresultofCSRprogrammesorcontractualobligations• Improvedcommunicationwithstakeholders• Educationalfacilities• Medicalfacilities• Companyshops• Localsourcingofgoodsandservices
Socialbenefitsassociatedwithforestmanagementcertification• Improvedhealthandsafetyconditionsforworkers• Improvedjobsecurity• Provisionofwater• Provisionofelectricity• Recognitionofindigenouspeoples’rights
ItisclearthatintheabsenceofforestcertificationinWestandCentralAfricaitisthecontractualobligationsassociatedwiththeconcessionthatarethemaindrivingforceforsocialbenefits.Thisseemstobelargelyduetoanincreasingemphasison‘inkind’contributionsinlieuofmonetary34GómezI.andV.E.Méndez.2005.AssociationofForestCommunitiesofPetén,Guatemala:Context,AccomplishmentsandChallenges.CIFOR.35Lescuyer,G.,S.AssembeMvondo,J.N.Essoungou,V.Toison,J.-F.Trébuchon,andN.Fauvet.2012.LoggingconcessionsandlocallivelihoodsinCameroon:fromindifferencetoalliance?EcologyandSociety17(1):7.36KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?37GómezI.andV.E.Méndez.2005.AssociationofForestCommunitiesofPetén,Guatemala:Context,AccomplishmentsandChallenges.CIFOR.38GretzingerS.2015.LatinAmericanexperiencesinforestconcessions.
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payments39bywestandcentralAfricanGovernments.Whereforestconcessionshavebecomecertifiedthereisamuchhigherdegreeoflegalcomplianceandalsoahigherdegreeofvoluntarysocialactivitiesbeyondthelegalorcontractualrequirements.
Improvedhealthandsafetyconditionsforworkersisstronglyinfluencedbytherequirementsofforestcertificationschemes.ThisaspectisparticularlyimportantinAfricawherethesocialsafetynetisalmostnon-existentandwherethelossorincapacitationofalabourerhascatastrophicconsequencesforthedependents.
InSoutheastAsiaandLatinAmericathereisatendencyforthesocialbenefitstoberestrictedmuchmorecloselytothoseassociatedwiththenormaloperationoftheconcession,althoughinSoutheastAsiathereareoftenmoresignificantproblemsassociatedwithviolationofcustomaryrights.EventheexemplaryforestconcessionsinSoutheastAsiaarenothighlightedfortheirsocialdevelopmentimpactalthoughbettercommunityrelationsismentionedasapositiveaspect40.
3.1.1.3 Environmentalbenefits
Thepotentialenvironmentalbenefitsofsustainablymanagedandprofitableconcessionsarehuge.Wheresuccessfulforestmanagersareinapositiontopreventillegalsettlement,forestclearing,timbertheftandoverharvestingofNTFPs41,forestswillremainfunctional.Suchforestswillcontributetomaintainingbiodiversityandwillalsoprovideimportantenvironmentalservicestotheoutside,suchasadequatesuppliesofcleanwaterandcleanair.
IncasessuchastheMayaBiosphereReserve,wheretheconcessionswereestablishedaspartofapolicytoprotecttheforests,theyappeartohavebeenhighlysuccessfulatthis(albeitataveryhighcost).Oftheconcessionsoriginallyissuedbythegovernment,onlytwohavesufferedfromsignificantencroachmentandconversionfromforesttograzingpastureandhaveasaresultbeencancelledbytheauthorities.
InSoutheastAsiaandelsewheretheintroductionofreducedimpactlogging(RIL)hasinmanycasessignificantlyreducedthenegativeimpacts.
Wherepaymentforenvironmentalservices(PES)canbeeffectivelyimplementedasanadditionalincomestreamthisislikelytofurtherenhancetheenvironmentalimpactsofconcessionsasforexampletheRukingaWildlifeSanctuaryinSavannahWoodlandinKenya42.ItseemslikelythatthiscouldapplydirectlytotheMayaBiosphereReservewherepaymentsundertheREDD+frameworkhavebeensuggestedwhichwouldeffectivelydoubletheincomeperhectare43.
Concessionsasameansforprotectingforests
Thehistoryofconcessionsasameansforprotectingforestshasinthepastnotbeenahappyoneinanyofthethreeregions.InGhana,forexample,concessionshavebeenimplicatedinlargescale
39KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?40DurstP.B.,C.Brown,H.D.TacioandM.Ishikawa(eds).2005.Insearchofexcellence:ExemplaryForestManagementinAsiaandthePacific.FAO.41Itisassumedthatasuccessfulforestmanagerhascarriedoutthecommunityengagementnecessarytoensurethatforestconservationandprotectionisseenasbeneficialbythecommunity.42RukingaRanchLtd.2008.TheKasigauCorridorREDDProjectPhaseI–RukingaSanctuary.WildlifeWorks.43Hodgdon,B.D.,Hayward,J.andSamayoa,O.2013.Puttingtheplusfirst:communityforestenterpriseastheplatformforREDD+intheMayaBiosphereReserve,Guatemala.TropicalConservationScience.SpecialIssueVol.6(3):365-383.
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forestdestructionbothbylegallyapprovedoverharvesting44,illegalharvestingandbyfailuretoprotectforestsfromencroachment.
However,itistooeasytoblameforestlossonconcessionswhenthereisawiderangeofotheractivitiesthathavecontributedtoforestlossonalargescale45.Loggingisconsideredtobeasecondarycauseafterlargescalearableandpastoralagriculture.
Theprotectionofforestsisdependentonasocialcontractinwhichthepartiesinvolvedagreeaboutthelanduse.Thisagreementwillonlybereachedifallofthepartiesareabletoperceivebenefitsfromtheexistenceoftheforestsufficienttooffsettheopportunitycostsofotherlanduses.Inmostcountries,governmentsandlandownersareunabletoresisttheforcesofdeforestationduetothelargevarietyofforcesthatareinvolved.Deforestationforagriculturetakesplaceatthescaleoftheindividualaswellasthelargelandholder.Wherecorruptionisrifedeforestationisoftendonewiththeconnivanceofthemostseniorfiguresingovernment.
Concessionscouldbeanimportantmeanstoavoiddeforestationifthereisagreementbetweenallstakeholdersattheforestlevelaboutforestmanagementandaboutthedivisionofbenefitsfromtheforestthatproperlytakesintoaccountalllegalandcustomaryrights.ThishasprovedsuccessfulforcommunitymanagedlandsinZambiawhereasinglechiefdomcannowmustermoreforestguardsthantheentirenationalforestservice46.
PublicforestconcessionsinotherregionsPublicly-ownedforestsexistinalmostallcountriesandingeneralthosecountriesseektousethemforeconomicandsocialbenefits.Thebenefitssoughtdiffersignificantlyindifferenttypesofsocietyandfordifferentinterestgroupswithinsocieties.Thewaypeopleindifferentsocietiesvaluetheirforestresourcesdeterminestoalargeextenthowtheyareused.InsomecountriesforestsarevaluedmoreasrecreationalandlandscaperesourcesthanforthetimberandNTFPstheycansupply.
Thesedifferencesinpublicperceptionarelikelytoinfluencetheamountofresourcesthatgovernmentsarepreparedtoinvestinforests,theirprotectionandmanagement.IntheUnitedKingdon,forexample,therewasuproarwhenin2011thegovernmentproposedtoprivatisepartofthepublicforestestate47.ThispublicforestestateisfullymanagedbytheForestryCommissionanditscommercialarmForestEnterprise.AllmanagementactivitiesarecontrolledorcarriedoutdirectlybytheStateandtimberissoldeitherstandingoratroadside(30%).Theincomegeneratedbytimbersalesfromanareaof250,000haisvaluedat20millionpoundssterlingorUS$114/ha/yr48.
IncometoForestEnterprisefromallsourcesisaboutUS$350/ha/yr;however,thisisoffsetbyhighcostsofmanagementforpublicbenefitsothatoverallthenationsubsidisestheforestbyaboutUS$50/ha/yr.Thepublicbenefitderivedfromthispublic investmenthasbeenestimatedataboutUS$400/ha/yr49.Inanycase,thefiguresjustifytheinvestmentbythegovernmentintakingcontrolofallmanagement includingpartof theharvesting. It is notable that the timber revenues aloneare anorderofmagnitudegreaterthanthefigurefortheEuropeanaveragegiveninTable3above.
44Oduro,K.A.E.G.Foli,G.M.J.Mohren&W.K.Dumenu(2011)Ghana.45WWF.2015.WWFlivingforestsreport:chapter5savingforestsatrisk.WWF.46DaleLewis,COMACO.2015.Pers.Comm.47Bennett,O.andD.Hirst.2014.TheForestryCommissionandthesaleofpublicforestsinEnglandStandardNote:SN/SC/5734.HouseofCommonsLibrary.48ForestEnterpriseEngland.2015.AnnualReportandAccounts2014-15(Fortheyearended31March2015).HouseofCommons.49OurForests.2013.GovernmentWarnedonPublicForestEstate:GettheEconomicsRight!PressRelease.
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ThisappearstobethesituationinmostEuropeancountriesandintheU.S.whereStatemanagedforestsoffergoodnetreturnstothegovernment.InEuropealmostallcountriessellstandingtimberfromtheirforestsasthemajorformofrevenuegeneration.Thetimberparcelsonsaletendtoberelativelysmallrangingfromtensofcubicmetrestoafewhundredsofhectares50.Buyersarerequiredtoperformaccordingtostrictperformancestandardsinharvesting51.Theharvestinglicencesaretypicallyofshortduration(onetothreeyears).
InEuropemoretraditionalconcessionsarefoundinSloveniaandMontenegro52.TheseconcessionswereestablishedinSloveniaafterthecollapseoftheSovietsystemwhenState-ownedforestcompanieswereprivatised.Thesecompanieswereallocated20yearconcessions.InMontenegro,whereforestsweredepletedafterpreviousmismanagement,concessionsstartedtobeissuedafterchangesinlegislationin2008.Theseconcessionswerefordurationsof7–30yearsandforbothtimberharvestingandtherenderingofpracticalmanagementservices,butnotmanagementplanning.
Bothcountrieshaveexperiencedproblemswiththeconcessionsystem.Forvariousreasonsneithercountryhasachievedtheforestrevenuesexpectedandasaresultcentralforestadministrationshavebeenleftshortoffinances.InthecaseofSlovenia,revenuecalculationsarebasedonpricessetaccordingtocostsofproductionandtimberprices.Companiesarealwaysabletoarguethatpricesarelowerthanrealityandthatcostsarehigher,thusreducinggovernmentrevenues.InMontenegro,wherestumpagesarehigher,70%ofrevenuesareallocatedtolocalmunicipalitiesandvolumesharvestedhavebeenlowerthanexpectedsothatthecentralforestadministrationdoesnotreceiveenoughincometocarryoutitsfunctionsofmanagementplanningandsupervision.
InSloveniatheconcessionsystemmaybeterminatedwhenthecurrentconcessionscometoanend53.
Whyaresomeconcessionsmoresuccessfulthanothers?Thereareexamplesofentireconcessionsystemsthatcanbeconsideredlargelysuccessfulandtherearealsoindividualconcessionsthatareincludedintheexamplesofexemplaryforestmanagement.
InspiteoftheproblemswithforestconcessionsinCanada54theyhavebeenoverwhelminglysuccessfulineconomictermsevenifnotindirectrevenueterms.TheCanadianforestsectorhasanannualcontributiontoGDPof$Can20billion55.Thisisprimarilyderivedfromconcessionsintheover90%offorestlandthatisState-ownedeitherfederallyorbytheprovinces.Thesectoremploysapproximately300,000peoplewithapayrollinexcessof$Can8billion.Itdoesthisfromatotalforestbaseof347millionhageneratingacontributionof$Can57/ha.Thisisanaverageoverallforesttypesincludinglargeareasthatarenotcommerciallyused.Inaddition,almost50%oftheCanadianforestareahasbeenthirdpartycertifiedaccordingtoatleastoneindependentforestmanagementstandardwhileabout20millionhaiscertifiedaccordingtomorethanonestandard.
50BUREAUOFLANDMANAGEMENT.2015.ProspectusThunderKatTimberSale.51BUREAUOFLANDMANAGEMENT.2015.ProspectusThunderKatTimberSale.52FerlinF.andA.Golob.2012.ForestconcessionandrelatedpublicforestryadministrationmodelsinSloveniaandMontenegro.53FerlinF.andA.Golob.2012.ForestconcessionandrelatedpublicforestryadministrationmodelsinSloveniaandMontenegro.54GrayJ.(2003a)ForesttenuresandconcessionexperienceinCanadaandselectedothercountries.55CanadianForestService(2014)TheStateofCanada’sForests2014.NaturalResourcesCanada.
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Althoughonasmallerscaleandalsonotwithouttheirproblems,theMayaBiosphereReserveconcessionsdiscussedin3.1.1.1abovecanalsobeconsideredsuccessfulbutareyettoachievetheirfullpotentialtobenefitthecommunities.
InMalaysia,theDeramakotconcessionhasalsobeenconsideredsuccessful56generating20,000m3oftimberperyearfromanareaof51,000hawhilesimultaneouslyfulfillingconservationgoalsforarangeoflargemammalsincludingOrangUtang.ThishasbeenachievedbyintroducingRILandintensivesilviculture.However,asisthecasewiththeMayaBiosphereReserve,ithasbeenachievedonthebackofverysubstantialdonorsupport.
Ontheotherhand,manyconcessionshavefailedforawiderangeofreasonsincludinggovernance,economic,socialandenvironmentalfailures.
Smallconcessionsversuslargeconcessions?
Itiswidelyheldthatwhereforesttenureistransferredtoforestcommunitiesandwheretheareasinvolvedaresmallerthenthiswillleadtoimprovedforestmanagement.Itisnecessarytodetermineifthesepropositionsarereasonableandsupportedbyevidence.Inallcasesitisnecessarytorelatewhatcanbeconsideredassuccessfultotheforestmanagementobjectivesofthestakeholdersinvolved.
InAfrica,someconcessionownershavetenureoverforestsinexcessof1millionhainasingleconcession57(Danzer-IFO,RepublicofCongo).Animpressionofthescaleofthisconcessionmaybeobtainedbycomparingitinsizetosomesovereigncountries.ItisalittlesmallerthanJamaicaandLebanonbutlargerthanCyprus(theentireIsland)andTheGambiaandtwiceasbigasBruneiorTrinidadandTobago.Althoughthisconcessionisunusuallylarge,theaverageconcessionsizeintheRepublicofCongois240,000ha58oralmostasbigasLuxemburg.
Itisunderstoodthatinmanycasestheseconcessionsareremote,theirhumanpopulationdensityisverylow(0.5/km2)59andthatthereisverylittleinfrastructure.However,theallocationofsuchlargetenuresbygovernmentscanleadtoawiderangeofproblems.Wherevertherearepeople,particularlyindigenousandtraditionalcommunities,theallocationoftenurerightsbycentralgovernmentislikelytobeaninfringementofthecustomaryrightsofthosecommunitiesandevenwhereforestsappeartobeunoccupiedorunusedtheyoftenprovidecriticalresourcesforcommunities.Forexample,invillagesaroundthetownofNzarainSouthSudanthehunterswouldmakeanannualtwo-weekexcursiontoremoteforestsabout70kmnorthofthetowntohuntandobtainmeat,akeyissueinthisareawhereanimalproteinisveryexpensive.AlthoughthereisunlikelytobeimmediatecompetitionforresourcessuchasbuildingandservicetimberandNTFPs,theremaybelongertermimpacts.
Largeconcessionsmayleadtoaninefficientuseoftheforestarealeadingtolossesinpotentialincome.Thisisparticularlylikelywhenarea-basedfeesareverylowornon-existent60.
56LaganP.,S.MannanandH.Matsubayashi.2007.Sustainableuseoftropicalforestsbyreduced-impactlogginginDeramakotForestReserve,Sabah,Malaysia.EcolRes.57KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?58GlobalForestWatchData.Accessed26/01/2016.http://data.globalforestwatch.org/datasets/557bfc901c584b7a8884aa455cfa6de2_5?uiTab=table59WWF.2015b.LargestforestconcessionintheCongoBasinreceivesFSCcertification.60GrayJ.2002.ForestConcessionPoliciesandRevenueSystems:CountryExperienceandPolicyChangesforSustainableTropicalForestry.
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Wherethecostofholdingaconcessionarelow,concession-holdersarelikelytoseeklargerareassimplytoholdtheirresourcesasaspeculationtowardsfuturevalues61.Whenthisisaccompaniedbyloweffectivetimberpricesitnotonlyaffectstherevenuesreceivedbygovernmentsbutalsothebehaviouroftherights-holders.Lowpricingfalselysignalsaresourceinoverabundancewhichresultsinwastefuluseoftheresources.Thiswastefuluseofresourcesisreflectedinallpartsofthevalue-chain,logsforgottenintheforest,logsabandonedatloglandings,logslefttorotinsawmilllog-yards,logssawnwithequipmentthatwastes20%ofthevolumeduetoexcessivekerfandinaccuracy,boardslostduetobaddryingprocessesetc.
Wherethemajorityofthetimberstockinacountryisheldinfewhandsthenthisleadstoaneffectivemonopolysituationwherethereisinsufficientmotivationforcompaniestointroduceefficiencieswhichwouldleadtogreatervaluebeingretainedinthecountryorregionofproduction.
Althoughoverlylargeconcessionsmaybeseenasnegativeforthesereasons,concessionsthataretoosmallarealsolikelytohaveproblemsforotherreasons.
Smallconcessionswillproducesmallvolumesandhavesmallincomes.Asaresultthemanagersoftheseconcessionswillhaveinsufficientcapacitytoengageintheinternationalmarketfortropicaltimberonfairtermsalthoughtheymaybebetterplacedtoserviceinternalmarkets.
Theinternationalmarketintimberislargelytradedintwoways:withround-logsloadedinbulkorwithboardscuttostandarddimensionsandloadedintocontainers.Smallconcessionownersareunlikelytohaveaccesstotheheavyequipmentthatisrequiredtoextractlonglogsfromtheforestandwillberestrictedtothemarketinprocessedboards.Iftheydoselllogstheywillbeforcedtoselltolocaltraderswhowilltakeadisproportionateshareofthetimbervalue.
Ifsellingprocessedboards,theywillberequiredtosatisfythemarketdemandforstandarddimensionsandlongboardlengthsandwillnotbeinapositiontodrytimberbeforeshippingsothattheywillberestrictedtothelowerendofthevaluespectrum.However,moreimportantly,theshippingunitisastandardcontainerwhichhasaloadedcapacityofapproximately30m3ofsawn-timber.Thisistheminimumshippingvolumethatmakeseconomicsensesincethetimbermustbecontainerisedtopreventsaltwaterdamageandexcessivedryingandforfumigationtomeetphytosanitaryregulations.Inmostcasestheproductionof30m3ofsawntimberwillrequiretheharvestingof150m3oflogs.Ifallofthelogswereofonespeciesthenthismightrequirethefullyieldfrom30ha(5m3/ha62)toproduceonecontainer.
Inrealitytherewillbesixorsevenspeciesofinterestsothattherewouldprobablybearequirementforaminimumannualharvestareaof200haifallspecieswereuniformlydistributed.Theyarenotuniformlydistributed,sothatinordertosatisfyanestablisheddemanditwouldbenecessarytohavealargerareaforanannualcoupe,possibly500ha.Ifthisisthenmanagedona40yearreturncyclethentheminimumviablemanagementunitwouldbeaproductionareaof20,000ha63.Thiscouldbemanagedtoproducefrom2,000-4,000m3oflogsperyearproducingperhaps500–1500m3ofexportboards.Thisassumesthatstandardpracticesaremaintainedandthatthereislittleornosilviculture.
Theremaybeotheradvantagesofhavingsmallerconcessionsthatproduceadditionalbenefits.Smallerareasmaybeeasiertoprotectfromillegalactivities,butperhapsmoreimportantlyitislikely
61Grut,M.,J.A.GrayandN.Egli.1991.Forestpricingandconcessionpolicies:ManagingthehighforestsofWestandCentralAfrica.62KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?63Itwouldnotbeunusualfor30%ofthetotalconcessionareatobeunsuitableforproductionforavarietyofreasons.
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thatasmallerareawillbemuchbetterknownbythemanagers.Thisknowledgecouldbeusedtorefineharvestingandsilvicultureplanstomakemuchbetteruseoftheexistingstockandtoprovidesignificantlyincreasedregenerationrates.
AEuropeanforestmanagerwithanestateof1000hawillhaveknowledgeofeverystand(andeveryimportanthighvaluetree)ontheestateandwillusethisknowledgetodirecthisactivitiestoproducetimberinresponsetothechangingmarketdemand:whendemandislowandpricesaredownthemanagerwillcutless,reservinghisstockforthefuturewhenpricesarehigh.Specifictreesareretainedforspecificfuturecustomerssuchastoprovidemastsfortallships.Thisisonlypossiblewhenthemanagerretainsflexibilitywithintheframeworkofthemanagementplantovaryhisharvestpattern.Thisflexibilityisdeniedtoconcessionmanagersinthetropics.However,itmaybethatcommunitieshavethesameknowledgeoftheirownlandswhichcouldgivethemacompetitiveadvantageandenablethemtomanagesmallerconcessionareassuccessfully.
Afinalconsiderationrelatingtothesizeofconcessionsrelatestotheimpactsofcorruptiononconcessionsandtheimpactsofconcessions.Thepresenceofcorruptioncaninducepolicymakerstoallocatelargerconcessions64while,ontheotherhand,manysmallerconcessionsmaybemoresusceptibletobeingcorrupted65leadingtomorerapidforestdegradation.
Arecommunityheldconcessionsmoresuccessfulthanothers?
ArecentFAOpaper66hasreviewedcommunityforestryingeneralandfoundoutthatparticularlyinthesouththatcommunityforestryisbasedon‘collaborative’modelsinwhichgovernmentandcommunitiessharerightsandresponsibilitieswhicharegraduallydevolvedtocommunities.Inmostcasesthisdevolutionofpowerhasbeensloworineffectiveandthenumberofcaseswithwelldocumentedbenefitsissmall.
IntheMayaBiosphereReserveitisclearthatthesuccessfulcommunityconcessionshavebeenthosewherethecommunitiesinvolvedhaveatraditionofforestryandwheretheyareworkingonlandsknowntothem.Theconcessionsthathavefailedarethosewheretheconcession-holdersincludedahighproportionofrecentarrivalsfromotherpartsofGuatemala.Thisfailureisattributedbothtouncertaintyoftenureandlandspeculationaccompaniedbypressurefrompowerfulexternalactorsandorganised-crimesyndicatestocarryoutdeforestationforthepurposeofcattleranching67.
Thereissomeevidencethattransferringforestrightstolocalstakeholdersleadstoimprovementsinforestmanagementanddecreaseddeforestationrates68,69.InMexicoandinGuatemala,communitymanagedforestareashavelowerdeforestationratesthanprotectedareascloseby70.However,
64AmacherG.S.,M.OllikainenandE.Koskela.2012.Corruptionandforestconcessions.JournalofEnvironmentalEconomicsandManagement63,92–104.65Delacote,P.2010.Howconcessions'sizemayinfluencesystemiccorruptioninforestharvesting:atheoreticalassessment.WorkingDocumentINRA.66GilmourD.(2016)Fortyyearsofcommunity-basedforestryAreviewofitsextentandeffectiveness.FAOForestryPaper176.FAO,Rome67Radachowsky,J.,V.H.Ramos,R.McNab,E.H.BaurandN.Kazakov.2011.ForestconcessionsintheMayaBiosphereReserve,Guatemala:Adecadelater.ForestEcol.Manage.68Porter-Bolland,L.,E.A.Ellis,M.R.Guariguata,I.Ruiz-Mallén,S.Negrete-Yankelevich,V.Reyes-García.2011.Communitymanagedforestsandforestprotectedareas:Anassessmentoftheirconservationeffectivenessacrossthetropics.ForestEcol.Manag.69Bray,D.B.,E.Duran,V.H.Ramos,J.-F.Mas,A.Velazquez,R.B.McNab,D.Barry,andJ.Radachowsky.2008.Tropicaldeforestation,communityforests,andprotectedareasintheMayaForest.EcologyandSociety13(2):56.70Bray,D.B.,E.Duran,V.H.Ramos,J.-F.Mas,A.Velazquez,R.B.McNab,D.Barry,andJ.Radachowsky.2008.Tropicaldeforestation,communityforests,andprotectedareasintheMayaForest.EcologyandSociety13(2):56.
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thereisconsiderablevariationbetweencommunities,partofwhichcanbeattributedtodeforestationpressures.Thus,inareasofhighpopulationdensityandhighdeforestationratescommunitymanagedforestsarenobetterthanformallyprotectedareasinpreventingdeforestation.
InTanzania,communitieshavebeenabletoachievetenurerightsovertheirforestsunderrevisedlegislationandwherethishashappenedthesecommunitieshaveprovedmoreeffectivethancentralauthoritiesatencouragingforestregeneration71aswellasprotectingforestfromfiresresultinginanimprovedforeststructure72.Inaddition,thetransferofforestownershipfromcentralcontroltocommunitiesinTanzaniahasinatleastonecaseresultedinatenfoldincreaseintheincomefromtimberderivedbythesecommunities73.However,suchcommunitiesfacesignificantchallengesinsecuringthefullpotentialvalueduetotheirlackofcapitalandtheknowledgeandskillstoprocesstimberandtoaccessmarkets.
InCameroon74ontheotherhand,community-ownedforestsappeartohavehigherratesofdegradationthanforestsformallyallocatedtoproduction.WhereCamerooniancommunitieshaveachievedrightstomanagetheirownforests,therehavebeensignificantproblemsforavarietyofreasons.Inmanycasestheforestsaretoosmallandtheforestmanagementplansaretoorudimentarytoallowforlongtermharvestplanning.Asaresult,communitiesareunabletoprovideareliablesupplyoftimbertothemarketandareunabletorespondproperlytoordersreceivedfrominternationalbuyers75.Regulatoryauthoritiesareveryslowintheissuingofannualcuttingpermitsleavingcommunitieswithjustafewweeksattheendoftheseasoninwhichtoharvesttheirallowance.Managementplansareproducedbyoutsiderssothatthecommunitieshavelittleknowledgeofthetruesituationoftheirresourcesandlittleinputintodecisionmakingaboutresourcemanagement.Inthefaceofthissituationitissaidthatmanyvillagesaresimplysellingtheirharvestallocationtolaundertimberharvestedelsewhere.
Inordertobesuccessfulanywhere,communitiesintropicalforestsrequiresignificantassistancetodevelopthenecessaryskills.Thisincludesskillstocompeteintheentirevaluechainincludingforestmanagement,governance,harvesting,processing,marketingandbusinessmanagement.Community-basedconcessionscertainlyhaveapotentialtodeliversocial,environmentalandeconomicbenefitsandwilloftenensurethatthesebenefitsarebetterdistributedamongststakeholdersbutcapitalandhumanresourcerequirementsmeanthatitisunlikelythatawholesaletransferofconcessionsfrombusinessestocommunitiesprovepossibleintheshortterm.
Howcanforestcertificationhelp?Forestcertificationsystemshavearisensincethe1990sandarebasedontwoquitedistinctbutcomplimentarypillars.Thefirstofthesepillarshasbeenthedevelopmentbyvariousmeansofstandardsfor‘responsible/sustainable’forestmanagementcapableofbeingappliedattheleveloftheforestmanagementunit.Thesecondpillarisasystemofcertificationbymeansofthirdpartyinspectionwhichofferscertificatestoorganizationsabletodemonstratecompliancewiththe
71MayLianaN.2013.EffectsofforestmanagementandlanduseonregenerationinREDD+villages,southeasternTanzania.MSCThesis.UniversityofMichigan.72KalongaS.K.,F.MidtgaardandT.Eid.2015.DoesForestCertificationEnhanceForestStructure?EmpiricalEvidencefromCertifiedCommunity-BasedForestManagementinKilwaDistrict,Tanzania.InternationalForestryReview,17(2):182-194.73SeverinK.K.,K.A.KulindwaandB.I.Mshale.2014.EquityinDistributionofProceedsfromForestProductsfromCertifiedCommunity-BasedForestManagementinKilwaDistrict,Tanzania.Small-scaleForestry.74Bruggeman,D.,Meyfroidt,P.andLambin,E.F.2015.Productionforestsasaconservationtool:EffectivenessofCameroon’slandusezoningpolicy.LandUsePolicy42:151-164.75Persobs.
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standards.Thesecertificatescanthenbeusedtodemonstratecompliancewithmarketswiththeobjectiveofincreasingmarketshareand/ormarketprices.
Thequestionoftenaskedabouttheimpactsofforestcertificationwouldbebetterframedintermsoftheimpactsofcompliancewithinternationallyacceptedforestmanagementstandards.
Therehavebeennumerousattemptstodemonstratethepositivesocial,environmentalandeconomicimpactsofforestcertificationsystems;however,veryfewofthemhavebeenabletodemonstrateunequivocalproofofimpacts.Thisismostcommonlyduetoconfoundingexplanationsforobservedchanges76duetosuchthingsascertificationbeingpackagedwiththetransferofforesttenurerights77orcertificationcomingaspartofadevelopmentaidsupportpackage,bothofwhichwouldbeexpectedtohaveapositiveimpactirrespectiveofcertification.
Forestmanagersdonotoperateinisolationsothatpracticesintroducedincertifiedoperationsarelikelytobeadoptedinuncertifiedonesiftheyareseentohavebenefits.Similarly,governmenttechnicalsupportprogrammesthatareavailabletoallforestmanagersarelikelytoadoptstandardsthatareinlinewithcertificationstandardssothatimprovedpracticeswillbecomemuchmorewidespread.
Inanycase,certificationstandardshavechangedtheplayingfieldsignificantlyintermsofwhatisconsideredacceptableforestrypractice.ThusalocaladaptationofRILisnowarequirementofmostnewconcessioncontracts.
Althoughdifficulttodemonstrateunequivocallyitseemscertainthatpracticesassociatedwiththestandardsforforestcertificationhavebecomewidespreadinconcessionsandaremoredeeplyembeddedinorganizationsthathavechosentoengageinactualcertificationregardlessofthecertificationsystemused.
Themostunequivocalevidenceforimpactscomesfromthecorrectiveactionrequestsofauditors.Ananalysisofthistypeofrequestinnaturaltropicalforests,includingconcessionsandprivateownership,isshowninTable8.Fromthisitispossibletoseethattherehavebeensignificantimprovementsasaresultofcertificationinparticularinrelationtoworkersafety,managementplanningandtheuseofRILaswellasbiodiversityprotection.Itisofinteresttonotethatthelong-termeconomicviabilityofforestcompanieswasregularlyraisedbyauditors78andthisconcurswiththeview79thatforestconcessionsinthetropicsmaynotbeasprofitableasisoftenpresumed.
76vanHensbergenH.J.BengtssonK.MirandaM.&DumasI.2011.PovertyandForestCertification.77SeverinK.Kalonga•KassimA.KulindwaBaruaniI.Mshale(2014)EquityinDistributionofProceedsfromForestProductsfromCertifiedCommunity-BasedForestManagementinKilwaDistrict,Tanzania.Small-scaleForestry.78Peña-ClarosM,S.BlommerdeandF.BongersF.2009.Assessingtheprogressmade:anevaluationofforestmanagementcertificationinthetropics.TropicalResourceManagementPapers,Wageningen.79KarsentyA.2015ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?
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Table8CorrectiveactionrequestsrequiringimprovedmanagementintropicalforestscertifiedbyFSC80.
InAfricanconcessionscertificationhashadsignificantpositivesocialandenvironmentalimpactsonthewayinwhichcertifiedcompaniescarryouttheirbusiness81andcomparedwithuncertifiedcompaniesthesocialenvironmentissignificantlybetter82.ThereistodayamuchgreaterdegreeofengagementwithlocalpeopleandindigenouscommunitiesincertifiedoperationsandthishasledtoattemptsbycertifiedcompaniestocarryoutFPICprocesseswithcommunitiesandtobettercompensatecustomaryrightsholders.
Thereishoweverevidencethatcertificationcanhelptoreducedeforestationandthatthiseffectisstrongerintropicalregions83,whereFSCcertificationismuchmoreprevalentthanPEFCcertification.Itshouldbenotedthatthisisbasedonacorrelationalstudyusinginformationforwholecountriesanditmaybethatcountrieshavingagreaterpolicysuccessincombatingdeforestationarealsothosewhereforestrybusinessesaremorelikelytoseekcertification.
Oneaspectofforestcertificationthathasbeenlittlediscussedisthefactthattheprocessofcertificationrequiresamuchhigherdegreeoftransparencythaniscommoninthetropicalforestrybusiness.Itisexpectedthatthistransparencywillleadtoagreaterlevelofaccountability84frombothforestmanagersandassociatedparties.Thisgreateraccountabilityisexpectedtoleadto
80Peña-ClarosM,S.BlommerdeandF.Bongers.2009,Assessingtheprogressmade:anevaluationofforestmanagementcertificationinthetropics.TropicalResourceManagementPapers,Wageningen.81KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?82CeruttiP.O,LescuyerG,TsangaR,KassaS.N,MapangouP.R,Mendoula,E.E,Missamba-Lola,A.P,NasiR,EckebilP.P.TandYembeR.Y.2014.SocialimpactsoftheForestStewardshipCouncilcertification:AnassessmentintheCongobasin.OccasionalPaper103.CIFOR,Bogor,Indonesia83Damette,O.andP.Delacote.2011.Unsustainabletimberharvesting,deforestationandtheroleofcertification.EcologicalEconomics70(6):1211-1219.84Fox,J.2007.Theuncertainrelationshipbetweentransparencyandaccountability.DevelopmentinPractice,17:4,663–671.
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positivesocialandenvironmentalimpacts.Onesupposedstrengthofcertificationsystemsisthepublicavailabilityofthecertificationauditreportswhichrevealthecompliancesandnon-complianceswiththedefinedstandardnorms.Itishopedthatforestcertificationcanbeusedasatooltoreduceforestassociatedcorruptionintropicalcountries;however,thereislittleevidencethatthishassucceededanditisunlikelythatforestcertificationonitsowncanfulfilthisrole85.
IntactForestLandscapes
Intactforestlandscapes(IFL)aredefinedasforestareaslargelyfreefromhumaninfluencewithanareaofatleast50,000haandaminimumwidthof10km86.SuchareasarethetargetofprotectionactionsfromenvironmentalNGOssuchasGreenpeaceandWWF.AttheFSCgeneralassemblyof2014themembershipvotedtoacceptmotion6587whichseekstoprotectsignificantareasofIFLfromcommercialharvesting.Underthismotion,FSCcertificate-holderswillberequiredtosetasidelargeareas(adefaultlevelof80%)oftheIFLcontainedwiththeirFMUsandprotectthemfromharvestingorotherformsofdegradation.
ThisdevelopmentislikelytohavesignificantimpactsonconcessionsinseveralpartsoftheworldwherelargeextentsofIFL(Figure1)andconcessionsystemscoexist.ThisincludeslargeareasoftheCongoBasinandAmazoniaaswellasareasoftheislandsofBorneoandtheNewGuineainthetropicalzoneandRussiaandCanadaintheborealzone.
Figure1ExtentofIFLin201388
ThisdecisionbytheFSCmembershipwillposearangeofchallengesforcertifiedconcession-holdersintheseareaswhoarefacedwithlosingasignificantproportionoftheirharvestpotential.ThedelineationofIFLatthelocallevelmayleadFSC-certifiedorganizationstoseekmuchlargerforestconcessionsinordertoremainviablewhilecomplyingwithcertificationdemands.Italsorisksthatexistingcertificate-holderswillabandontheiroperationsorsellthemtouncertifiedoperators.Itis
85SøreideT.andA.Williams.2013.Certifiedintegrity?Forestcertificationandanti-corruption.U4IssueJanuary2013No1.86http://www.intactforests.org/concept.html87http://ga2014.fsc.org/motion-updates-205.motion-65-high-conservation-value-2-hcv2-intact-forest-landscapes-ifl-protection.88http://www.intactforests.org/world.map.html
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alsolikelythatcertifiedorganizationswillbeunabletocompeteeffectivelywithuncertifiedcompanieswhentenderingforconcessions.
ItisthereforeimportantthatgovernmentsdeveloptheirownpoliciesinrelationtoIFLandconcessionsinordertoachievealevelplayingfieldiftheyaretoattractresponsibleconcession-holders.
Whathavetropicalforestconcessionsachieved?If,assuggestedin0,theobjectiveoftropicalforestconcessionshasbeentoemploythecapitaloftheforestforsocietalbenefit,thenthehistoryhasatleastduringtheperiodbetween1945and2000,beenasadone.Duringthisperiod,forestconcessionshavebeenoperatinginmanyoftheworld’spoorestnationsandthereislittleevidencethatconcessionshavecontributedmuchtodevelopment.Inmostcases,forest-dependentpeopleremainamongstthepoorestofthepoor89.
Thisfailuretosignificantlyimprovelivelihoodshasinmanycasesbeenaccompaniedbysignificantlossofordegradationoftropicalforests.Itisnotsuggestedthatconcessionshavebeensolelyordirectlyresponsiblefortheselosses;however,itisclearthattheirfailuretoprotecttheforestresourcehaspermittedthelossestooccur.Inaddition,therepeatedcreamingoftheforestundervariouspretextshasledtolargeareasofforestwithverylittletimberthatistodayconsideredofcommercialinterest.
Towardstheendofthelastcenturytherehasbeenasignificantchangeintheobjectivesofforestconcessionsingeneral,fromconcessionswhichwerealmostsolelyforthepurposeofgeneratinggovernmentrevenuebyharvestingexistingtreestoconcessionswheretheresponsibilityforsomeorallaspectsofforestmanagementweretransferredtotheconcession-holders.Itistobeexpectedthatiftheseresponsibilitiesaretakenseriouslyandthenecessaryforestmanagementactivitiestakeplace,therewillinthefuturebesomeimprovementintheforestresourceincludingitssocialenvironmentalandeconomicvalue.
Itissuggestedthatthefailureofconcession-holderstogeneratesignificantlocalvalueisthattropicalforestry(particularlyinAfrica)isnotthatprofitable90sothatthereislittlevaluetosharewithlocalstakeholdersandgovernments.Atthesametimethereisevidencethatinformalpaymentsforregulatorypermissionsaccountforalargeportionofthein-countryvalueandthattransferpricingisusedtohidetrueexportvaluesoftimberproducts(section0).
Thereisevidencethatsomeconcessionshavebenefittedlocalcommunitiesinanumberofways91includingdevelopmentofskills,developmentoflocalsmallentrepreneursandsuppliers,assistingcommunitiesinobtainingforesttenuresandbuildinghigherlevelcapacitiesrequiredfornegotiationwithcustomersandregulatoryauthorities.
Inaddition,inatleastsomecountriestherehavebeensignificantimprovementsinthequalityaswellasthequantityofemploymentandinparticularimprovementsinhealthandsafetyandtheprovisionofadequatepersonalprotectiveequipment.Theseimprovementsarelikelytobeassociatedwiththerequirementsofallcertificationschemesforminimumstandardsofhealthandsafetyperformance.Inareaswheresignificantvalueaddingactivitieshavebeenimplementedthishasincreasedtheemploymentandvaluecaptureincountry.
89ScherrS.J.,A.WhiteandD.Kaimowitz.2003.Anewagendaforforestconservationandpovertyreduction:Makingmarketsworkforlow-incomeproducers:ForestTrends,Washington.90KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?91GretzingerS.2015.LatinAmericanexperiencesinforestconcessions.
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4 Whyistropicalforestrysodifficult??Tropicaltimberreachingmarketsindevelopedcountriesisingeneralsignificantlymoreexpensivethansimilartimbersfromtemperateforests.Thisoccursinspiteofthefactthattimberisgenerallyseenasafreegoodandlargevolumesaretakenthatarenever‘officially’paidforinthesourcecountries.Inordertojustifythesepricepremiumsontropicaltimberinacompetitivemarket,theremustbesignificant‘difficulties’involvedintropicalforestrythatleadtoincreasedcostsalongthevaluechain.
Thediversitydilemma?Tropicalforestsaresignificantlymorediversethantemperateforests(Figure2)92.AsinglehectareinaMalaysianforestcontainsmorethan250differenttreespecies93whereasahectareofaproductionforestinatemperatezoneisunlikelytocontainmorethan20treespecies.Thenumberofindividualsperspeciesinahectareoftropicalforestisalsolikelytobelow(1-2)94,sothatiftherearerelativelyfewspeciesinmarketdemandthenumberoftreesofinterestperhectarewillbesmall.
92BarthlottW.,J.Mutke,D.Rafiqpoor,G.KierandH.Kreft.2005.GlobalCentersofVascularPlantDiversity.NovaActaLeopoldinaNF92,Nr.342,61–83.93Suratman,M.N.2012.TreeSpeciesDiversityandForestStandStructureofPahangNationalPark,Malaysia.In:Lameed,G.A.,Ed.,BiodiversityEnrichmentinaDiverseWorld,473-492.94Suratman,M.N.2012.TreeSpeciesDiversityandForestStandStructureofPahangNationalPark,Malaysia.In:Lameed,G.A.,Ed.,BiodiversityEnrichmentinaDiverseWorld,473-492.
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Figure2Diversityoftreespeciesbycountry95.
Inpracticetherearedifferencesinthevolumesoftimberofinterestindifferentpartsoftheworld.InSoutheastAsia,dipterocarpforestshavehighstandingvolumesofcommercialtimberthataresufficienttoencouragealucrativebusinessinclear-fellingforestonthepretextoffutureagriculturaldevelopment96.InBorneo,firstentryharvestvolumesinconcessionsmaybeashighas80m3/haundertraditionalmethodsand50m3/haisnormal97.InBrazil,yieldsofcommercialtimberareabout13m3/ha98duringeachharvestcyclewhileinAfricavolumesof4-5m3/haareusual99.Innoneofthesecasescanthecurrentharvestratebesustainedundercurrentmanagementpractices(seebelow).
Forestmanagementplanning
AllforestmanagementplansseenbytheauthorforforestsintropicalconcessionsinAfricaandLatinAmericaaremissingacriticalaspectofthemanagementcyclewhichisthelackoflongtermobjectivesforthetreeresource.Themostcomprehensiveplansseenincludedetailedplansforproperaccessandharvesting,reducedimpactlogging,goodbiodiversitymanagementplanningbasedoncomprehensiveidentificationofHighConservationValuesandsetasideareas,
95FAO.2005.Globalforestresourcesassessment2005.MainReport.FAOTechnicalPaper147.96ChanB.2015.StatusofForestconcessionsinSoutheastAsiaconcessionsinSoutheastAsia.97vanGardingenP.R,M.J.McLeish,P.D.Phillips,DadangFadilah,G.TyrieandI.Yasman.2003.Financialandecologicalanalysisofmanagementoptionsforlogged-overDipterocarpforestsinIndonesianBorneo.ForestEcologyandManagement183(2003)1–29.98GretzingerS.2015.LatinAmericanexperiencesinforestconcessions.99KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?
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identificationofsocialimpactsanddetailedmitigationfornegativesocialandenvironmentalimpacts,amongstothers.
However,noneoftheseplansincludeplansforrenewaloftheresourcebasedonsomevisionofthefuturetimberandotherresourcerequirementsfromtheforest100.Followingthecommercialharvest,forestsaresimplyleftto‘recover’eventhoughitiswellunderstoodthatthisrecoverywillresultinaforestthatisquitedifferentintermsofthedistributionofeconomicallyinterestingspecies101.Ineffect,thehistoryoftropicalforestmanagementbasedonminimumfellingdiametersisahistoryofsequentialeconomicextinctionofthedesirablespecies102.Partofthisisduetoillegaloverharvestingbutthesystemitselfwouldleadtothesameresultsinceharvestedtreesarelesslikelytobereplacedinthecanopybyconspecificsduetointraspecificcompetition103.
Althoughtherehasbeensignificantimprovementinunderstandingoftheecologyofsometropicalforestspecies,forexamplemahogany(Swieteniamacropylla)104,thishasonlyrarelybeentranslatedintomanagementrecommendations.Inanycaseitoftenfailstotakeintoaccountregionalecologicaldifferencesintreelifehistoryprocesses105.
ItisnotablethatformahoganyharvestingintheBrazilianAmazontobecomesustainableoverthenextcentury,therewouldneedtobebothanincreaseinthenumberoftreesofharvestablesizeretainedinthestandcombinedwithasignificantincreaseintheinvestmentinsilviculturetopromotemahoganyregeneration.
Thischangeinmanagementwillhaveasignificantimpactonthefinancialviabilityofmahoganyharvestingbyreducingtheincomeandincreasingthecosts.ThesituationintheAmazonissimilarforforestsinAsia106andAfrica107,wheresignificantchangesinmanagementandsilviculturalinvestmentsarerequiredtobecomesustainable.However,itshouldbenotedthatharvestefficiencyinmosttropicaltimberoperationsislow(Figure3),withpoorlog-buckingpracticesleadingtoabandonmentinthefieldofsignificantvolumesoffelledtimber108,sothatthereispotentialforasignificantincreaseinvolumesrecoveredandhenceincreasedincomes.
100vonGadowK,M.Kurttila,P.Leskinen,L.Leskinen,T.NuutinenandT.Pukkala.2007.Designingforestedlandscapestoprovidemultipleservices.CABReviews:PerspectivesinAgriculture,VeterinaryScience,NutritionandNaturalResources2,No.038.101Karsenty,A.andS.Gourlet-Fleury.2006.AssessingsustainabilityofloggingpracticesintheCongoBasin’smanagedforests:theissueofcommercialspeciesrecovery.EcologyandSociety11(1):26.102Kometter,R.F.,M.Martinez,A.G.Blundell,R.E.Gullison,M.K.SteiningerandR.E.Rice.2004.ImpactsofunsustainablemahoganylogginginBoliviaandPeru.EcologyandSociety9(1):12.103FibichP.,J.Lepš,V.Novotný,P.Klimeš,J.Těšitel,K.MolemKipiroDamasandG.D.Weiblen.2016.SpatialpatternsoftreespeciesdistributioninNewGuineaprimaryandsecondarylowlandrainforest.JournalofVegetationScience.104GroganJ.,R.M.Landis,C.M.Free,M.D.Schulze,M.LentiniandM.S.Ashton.2014.Big-leafmahoganySwieteniamacrophyllapopulationdynamicsandimplicationsforsustainablemanagement.JournalofAppliedEcology.51(3)664-674.105GroganJ.,R.M.Landis,C.M.Free,M.D.Schulze,M.LentiniandM.S.Ashton.2014.Big-leafmahoganySwieteniamacrophyllapopulationdynamicsandimplicationsforsustainablemanagement.JournalofAppliedEcology.51(3)664-674.106vanGardingenP.R,M.J.McLeish,P.D.Phillips,DadangFadilah,G.TyrieandI.Yasman.2003.Financialandecologicalanalysisofmanagementoptionsforlogged-overDipterocarpforestsinIndonesianBorneo.ForestEcologyandManagement183(2003)1–29.107Karsenty,A.andS.Gourlet-Fleury.2006.AssessingsustainabilityofloggingpracticesintheCongoBasin’smanagedforests:theissueofcommercialspeciesrecovery.EcologyandSociety11(1):26.108Gerwing,J.J.,J.S.Johns,andE.Vidal.1996.ReducingWasteDuringLoggingandLogProcessing:ForestConservationinEasternAmazonia.Unasylva(FAO):17-25.
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Figure3LogabandonedinaconcessioninCameroonforbeingtooshort(<3m)
TropicalForestSilviculture
Insection0attentionwasdrawntothefactthatsilviculturaltechniquesarerarelyappliedintropicalnaturalforestmanagement.Thisisduebothtotheperceivedhighcostsandpoorreturnsthatarethoughttobeachievedaswellasalackofknowledgeoftheimpactsofspecificactivities.
Silviculturalinterventionscanbeaimedatincreasingboththequantityandthequalityofthetimberproducedandthereisincreasingevidencethatbothofthesefactorscanbeofimportanceinensuringthatsilvicultureisbotheconomicallyviableandenvironmentallyacceptable109.
Arangeofsilviculturalinterventionshavebeencarriedoutintropicalforestsincludingenrichmentplantingundercanopyoringaps,soilscarification,earlyweeding,competitorremoval,selectivethinningandcreepercuttingamongstothers.
Aswouldbeexpected,competitorremovalandthinningcanenhancegrowthrateincreasingannualdiameterincrementbymorethan30%110inBoliviantropicalforests.Therehavebeenanumberofstudiesthatdemonstratetheeffectivenessofenrichmentplantingwithdesirablespeciesinthecanopygapsgeneratedbyharvesting111,112inbothLatinAmericanandAfricanforests.Thesehavealsodemonstratedthehighergrowthandsurvivalratesachievedbyplantingnurserypreparedmaterialincanopygaps.
Thesuccessintheuseofacombinationofmethodsisdemonstratedfromafinancialanalysisthatshowsthatevenwitha60yearreturnperiodtoharvestinvestmentsinthistypeofsilviculturearefinanciallypositiveforarangeofsituations113outperformingundermostcircumstancessituationsinwhichRILwasusedbutnotfollowedupwithanysilviculturalintervention.Theadditionalbenefits
109GünterS,WeberM,StimmB,andMosandlR.(2011)FiveRecommendationstoImproveTropicalSilviculture.InS.Günteretal.(eds.),SilvicultureintheTropics,TropicalForestry8,,Springer-VerlagBerlinHeidelberg,DOI10.1007/978-3-642-19986-8_34.110Mostacedo,B.,Z.Villegas,J.C.Licona,A.Alarcón,D.Villarroel,M.Peña-ClarosyT.S.Fredericksen.2009.EcologíaySilviculturadelosPrincipalesBosquesTropicalesdeBolivia.InstitutoBolivianodeInvestigaciónForestal.SantaCruz,Bolivia.111Doucet,J.-L.,etal.,Enrichmentoflogginggapswithmoabi(BaillonellatoxispermaPierre)inaCentralAfricanrainforest.ForestEcol.Manage.(2009),doi:10.1016/j.foreco.2009.08.018.112LopesJ.doC.A,S.B.Jennings,N.M.Matni(2008)Plantingmahoganyincanopygapscreatedbycommercialharvesting.ForestEcologyandManagement255300–307.113SchwartzG,,ALSBais,MPeña-Claros,MAHoogstra-Klein,GMJMohren&BJMArts(2016)ProfitabilityofsilviculturaltreatmentsinlogginggapsintheBrazilianAmazon.JournalofTropicalForestScience28(1):68–78.
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fromthistypeofinterventionincludethepositivebiodiversityimpactofreplacingtreespecieswhosenumbershavebeensignificantlyreducedbyharvesting.
Silviculturalactivitiessuchasenrichmentplanting,siteclearing,weedingetc.,whentheyarerequiredbycontractorlaworbycompanyCSRpolicies,arerarelygiventheattentiontheyrequire.Asaresulttheyareoftenpoorlydoneandarenotsubjectedtothesametypeofefficiencychecksastheotherpartsofthebusiness.Ifinsteadthesewereseenasanintegralpartofthebusinessinvestment,itislikelythattheywouldbemanagedmuchmoreintensivelyandthatthiswouldleadtoreducedcostsof,forexample,seedlingproductionandthatthiswouldleadtohigherprofitability.Ontheotherhand,longterminvestmentrequireslongtermsecurityoftenure114.
EconomicsoftropicalforestmanagementInsection0aboveithasbeenalreadyhighlightedthefactthattropicalforestsingeneralhaveamuchlowerdensityofdesirabletreesthantemperateforestssothatinmanycasesonlyoneortwotreesareharvestedineachhectare115.Thisisassociatedwithincreasedcostsofaccessperunitofvolumeextracted.Therearemanyotherreasonswhythecostsofproductionmightbehigherintropicalforeststhanintemperateones,forexample116:
• difficultyofaccessduetoterrain,soilsandmoisture• poortransportinfrastructureleadingtohightransportcosts• highcostsofinformalpayments• longerdistancestoprocessingfacilitiesandports• lowworkerproductivity• largeandheavytreesmoreexpensivetoextract
Asaresult,itmaybeconsideredthatroundwoodfromtropicalforestsshouldbesignificantlymoreexpensivethanroundwoodfromtemperateforests.InLiberia,forexample,thecostsofextractionofUS$60/m3,transporttoportofUS$40/m3andamanagementoverheadofUS$15leadstoalogcostinexportharbourofUS$115beforeanyroyaltiesarepaid.Thegovernmentisalsoseekingtoextractarentinexcessof50%ofthelogprice.LogpricesofUS$170/m3meanthattheoperationisnotcommerciallyviable117.
Transportisakeylimitingfactorinthetimberindustryindevelopingcountrieswithhighpricesandlowqualityoftransportbeingamajorissue.CostsaremuchhigherinCentralAfricathaninFrancewithcostsin2007ofUS$0.12/tonne/kmandUS$0.05/tonne/km,respectively.Thusa100kmdistancefromforesttoportwouldaddUS$12pertonnetothecosts118.
ItisnotablethatvariablecostsareamuchhigherproportionoftransportcostsinAfricandevelopingcountriesthaninEurope119.Thisispartlyduetothelowercostofthesecond-handtrucksthatformthebulkoftheAfricanfleetbutalsoduetothehigheroperationalcostsduetothepoorroadconditionleadingtoslowermovementandhigherrepaircosts.Thus,improvementofinfrastructuremayservetoreducecostsandincreasethenumberofspeciesthatareeconomicallyviable.114SchwartzG,,ALSBais,MPeña-Claros,MAHoogstra-Klein,GMJMohren&BJMArts(2016)ProfitabilityofsilviculturaltreatmentsinlogginggapsintheBrazilianAmazon.JournalofTropicalForestScience28(1):68–78.115MoreinAsiandipterocarpforestthanothertropicalforests.116Particularlywhencomparingtimberconcessions.117IBIConsultants.2013.Forestconcessions—commercialforestrevenueprojectionmodelfinalreport:June2013.USAID.118Teravaninthorn,S.andG.Raballand.2008.TransportPricesandCostsinAfrica:AReviewoftheMainInternationalCorridors.WorldBank.119Teravaninthorn,S.andG.Raballand.2008.TransportPricesandCostsinAfrica:AReviewoftheMainInternationalCorridors.WorldBank.
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Localprocessingoftimbershouldsignificantlyreducethetransportcostsasaproportionofthefinalproductcosts.Forexample,US$12/tonnewouldbe6%ofthevalueofalogpricedatUS$200/tonnebutonly2%ofaloadofsawn-boardsatUS$600/tonne.
Inmanycases,forestoperationsareonlyeconomicallyviablewhenthehighestvaluedspeciesareextractedsothatevenpermittedspecieswithacommercialdemandbutalowerpricearenotcollected120.
Itisoftenconsideredthatoperatorsintropicalforestsmakeexcessiveprofitsthroughavarietyofmechanismsincludingtransferpricing.Ifthisweregenerallytruethenthisshouldbereflectedinapricedifferentialbetweentemperatelogsandtropicalones.
Informationonthepricingoftimberandoflogsisdifficulttoobtainduetothesecrecysurroundingsuppliersandcustomersintimbervalue-chainsgenerally121.InTable9informationhasbeencollectedonarangeofbothtemperateandtropicalspeciesfromawiderangeofsources.Inaddition,withinaspeciesthereisanenormousrangeofpricingdifferenceaccordingtothe‘quality’ofthetimberproduct.AnattempttoovercomethisproblemhasbeenmadebyselectingpricesforlogsthatareofsawloggradeAandnotveneergradeandforselectingaboardproductascloseto25mmx150mmx2.4maspossibleandofFASquality.Theboardpricesareretailpriceswithlargevolumediscountsandapplytovolumesofapproximately1m3.Thefiguresshownaretheaverageofanumberofpricesobtainedandthesecouldbeveryvariable.Forexample,forteakboardsofplantationthepricerangeinEuropewasfromaboutUS$6000/m3toUS$18000/m3.ItshouldbenotedthatthelogpriceforashisstronglybiasedupwardsbyasinglepriceofferoverUS$1800/m3foraparceloflogsintheUK.ThiswasmuchhigherthanashlogpricesinFranceorSweden.
Table9CostsoflogsincountriesoforiginandsellingpricesofboardsintheUKofarangeofhardwoodspecies122.
BoardinEurope
US$/m3LogsinSourceRegion
US$/m3 Roundwood/Board%Ash 3689 682 18%Beech 3482 170 5%OakEuropean 4582 235 5%OakAmericanWhite 3547 296 8%Iroko 4356 325 7%Padouk 4519 319 7%Sapele 5259 342 7%Wenge 9692 473 5%Mahogany 6988 253 4%Meranti 2933 188 6%Teak 12973 500 4%InTable9wecanseethatinspiteofthelargerangeofpricesfordifferentspeciesandthedifferentoriginofthetemperateandtropicalspecies,thereisaremarkablecongruenceintermsoftherelationshipbetweenthelogpriceandtheboardpriceasapercentage.Inallcasesthisfallsintherangeof4–8%andthereisnoobviousdifferenceintermsoftheoriginofthetimber(itshouldbe120IBIConsultants.2013.Forestconcessions—commercialforestrevenueprojectionmodelfinalreport:June2013.USAID.121PoyntonS.2015.BeyondCertification.DoSustainability.Oxford.122Thisinformationisderivedfromanextensivesearchofpricesandreferstopublishedpricesfordatesfrom2013to2016.Asfaraspossible.theboardinformationisbasedonboardsofFASqualityofdimensions25mmx150mmx2.4m.Valuesareaverageofallvaluesobtained.
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notedthatalthoughtheoriginofthetimberisknownitisnotknownifthepricingsinthetablerefertotimberprocessedinthecountryoforiginorelsewhere).
Thisresultsuggeststhatthereisnosystematicmarketfailureinthetropicaltimbermarketintermsofpricingwhenitiscomparedwiththemarketoftemperatetimber,atleastforthesewell-knownspecies.However,itisalsoknownthatthereisalargeamountofillegalharvestinginvolvingthenon-paymentofroyaltieswhichreducesthecostsofatleastsomeoperators.
Therearesomeinterestingvariationsforsomespecies.AlthoughteaksellsforaminimumofUS$6000/m3inEurope,plantationteakboardsareavailableinIndiaandChinaforUS$2397/m3andUS$4588/m3,respectively.ItmaywellbethatthemarketspecificationinthesemarketsisdifferentfromthemarketinEurope,particularlyintermsofallowingacertainamountofsapwoodintheboards.
Whatisclearfromarangeofsources123,124isthatharvestingnaturalforestsisnotasprofitableasmightbeimagined,particularlyiftheoperatorworksinfullcompliancewiththelaw.Thisisconfirmedbytheverylargenumberofconcessionsthatlieunworkedandabandoned.
However,itislikelythatinanumberofcasesthislackofprofitabilityisduetotransferpricing.AgoodevidenceofthispracticeisfoundatleastinPapuaNewGuinea,whereaverageFOBlogpricesaresignificantlybelowtheworldaveragesandcompaniessystematicallymakelosses125.
Whatisquiteclearisthatunmanagedtropicalforestswithgrowthratesofcommerciallyinterestingspeciesof0.1m3/ha/yrresultinginalogvalueincrementofUS$20-40/ha/yr,cannotcompetewithtemperateforestsinwhichthecommercialincrementofarangeofspeciesinmixedspeciesstandscanexceed5m3/ha/yr-andinsinglespeciesstandsofbeechforexample,canexceed10m3/ha/yr-givingannuallogvalueincrementsofUS$1000/ha/yr.TheyalsocannotcompetewithothertropicallandusessuchasoilpalmwithannualreturnsofUS$1000–3000/ha.
Paymentforenvironmentalservicescouldmakeasignificantdifferencetotheprofitabilityoftropicalforestoperations;however,atleastinBoliviaandBraziltherightstocarboncreditsisnotparcelledoutwiththeconcessionbutisretainedbythegovernment126.Itisalsopossiblethatrestrictionsplacedonforestmanagementinordertoachievecompliancewithcarbonschemesreducestheprofitability.
Althoughthereisnoevidenceofsystematicmarketfailureitisnecessarytorecognisethatthereisconsiderableopportunitytoimprovetheefficiencyofthemarketbyimprovingmarketcommunicationtherebyensuringthatthesmallsupplyoftimberisoptimallyused.Currentlymiddlemeninthemarketmaketheirprofitsbyarbitrageontimberprices,addinglittlevalue.Bymatchingcustomers’needstosuppliers’capacitiestheyshouldbeabletomakemuchhigherrevenueonthebasisofcustomersavingsandsuppliersrevenueincreases.
TheroleofmarketsThestructureofthemarketfortropicaltimbersplaysanenormousroleindetermininghowtropicalforestsareharvestedandmanaged.Thereisahugevariationinthedemandfordifferentspeciesindifferentmarkets.
123KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?124GretzingerS.2015.LatinAmericanexperiencesinforestconcessions.125MousseauF.&LauP.(2016)Thegreattimberheist:theloggingindustryinPapuaNewGuinea.TheOaklandInstitute.126GretzingerS.2015.LatinAmericanexperiencesinforestconcessions.
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Somespeciesaresovaluablethattheirdemandineventhesmallestquantitiesensuresthattheywillbeharvested,oftenillegally.Forinstance,thedemandforrosewoodsinChinaformanufactureofextremelyhigh-pricedfurnitureisinthiscategory127.
Thebulkofthespeciescanbeconsideredascommoditytimberswhicharesuppliedtothemarkettosatisfydifferenttypesofdemand.Thesevaryfrommarkettomarketaccordingtofashion,availabilityandproximitysothatthemajorityoftropicalhardwoodsfromWestAfricaareexportedtoEurope128whileSoutheastAsianhardwoodsareexportedtoChina,JapanandUSA129.(Figure4).
Figure4Majortradeflowsoftropicaltimber130
Therequiredvolumesforcommoditytimbersdependontheirenduseandcanrangefromaslittleas1m3/yrtoasmuchas3000m3/yrforalargevolumemanufacturerofkitchencabinetdoors(Table10).
Table10Quantitiesoftimberrequiredforarangeofproducts
Typeofuser Unitvolumeconversion Typicalannualdemand(m3)Specialistfurnituremanufacturer
20–50chairs/m3,10tables/m3,3dressers/m3
1-10m3/yr
Largermassmarketfurnituremanufacturer
20–50chairs/m3,10tables/m3,3dressers/m3
50-1,000m3/yr
Highendwindowsanddoors 10-20doors/m3,50–100window 50-200m3/yr
127Wenbin,H.andS.Xiufang.2015.TropicalHardwoodFlowsinChina:CaseStudiesofRosewoodandOkoumé.ForestTrends.128Blackett,H.andE.Gardette.2008.Cross-borderflowsoftimberandwoodproductsinwestAfrica:finalreportEuropeanCommissionContractReference:2007/146818.129ForestTrends.2011.TimberTradeFlowMapsofChinaandtheMekongRegion.130ITTO.2012.AnnualReviewandAssessmentoftheWorldTimberSituation2012.DivisionofEconomicInformationandMarketIntelligence,InternationalTropicalTimberOrganization,Yokohama,Japan.196pp.
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Typeofuser Unitvolumeconversion Typicalannualdemand(m3)frames/m3
Yachtdecking 0.5–1m3/yacht 50-100m3/yr
Engineeredwoodflooring 150m2flooring/m3:typicalhouse(0.5–1m3),hotel(10–20m3)
300-700m3/yr
LowvolumekitchencabinetdoorrangeforlargeDIYchain
50-70doors/m3 300m3/yr
Smallscaleguitarmaker 200-300guitars/m3 Lessthan1m3/yrLargescaleguitarmaker 200-300guitars/m3 1-100m3/yrBearinginmindthediscussioninsection0aboutareaproductivitywecanseethatasinglelargecustomerwillexhaustthesupplyofaparticularspeciesfromanAfricanconcessionof50,000haormore.Anyfurthervolumewouldhavetobeofanotherspecies.
Thereisaproblemwithintroducingnewspeciesontothemarketwhichrelatestothemarketdevelopmentcost.Thereareoftenmanyspecieswithappropriatetechnicalpropertiesforaparticularusebutonlysomeofthesewillalsobevisuallyattractive.Evenwhenaspeciesmeetsallofthedemandsforapurposeitwillbeunknownonthemarketanditwillbedifficulttopersuademanufacturerstouseitintheirprocessesaslongasthealternativeremainsingoodsupply.TheinvestmentrequiredtolaunchanewtimberontothemarketincompetitionwithothersislikelytobeseveralmilliondollarsandthiswouldrequireanassuredmarketandanassuredsupplyforperhapsUS$20millionworthoflogs.IflogsaresellingatalowerpriceforanewtimberinordertoattractcustomerswemaybeabletosellthematapriceofUS$200/m3.Thusweneedtosell100,000m3tomakeitworththecostofbringingthenewspeciestomarket.Inorderforasinglecommercialentitytoachievethesevolumesinathree-yearperiod(rememberingwewouldliketoseeareturnonthemarketinginvestmentof30%)werequireaconcessionofalmost1millionhaharvestedona30yearrotation.
Thus,althoughtheforestmaycontain30to40speciesthatwouldbeofcommercialvalue,atanyonetimeonlyamaximumofsixorsevenofthesewillbeinuse.Itisonlywhenthesupplyofaparticularspeciesapproacheseconomicextinctionthatcustomerswillstarttosearchforalternatives.Thesearchfornewspeciesisdemand-ledandnotproducer-led.
Domesticandregionalmarketsfortimberarealsoimportantconsumers.Inmostcasesthesemarketsaresatisfiedbytheinformal/illegalsupplyoftimberasdiscussedbelowinsection0.Inmanycountriesthesevolumesexceedthevolumestraded(Figure3)ontheexportmarkets131.Theillegalnatureofthesemarketshastheeffectofdepressinglocaltimberpricessincetheactorsrarelypayanyofthechargesortaxesrequired.Thismakesitdifficultforlegaloperatorstocompetesuccessfullyonthedomesticmarket.DuetotheirsizetheseinformalmarketsareofcriticalimportanceforthefutureofforestmanagementinAfricawheretheyareasignificantsourceofemploymentthathasbeenlargelyignoredbypolicymakers132.
131KishorN&LescuyerG.(2012)Controllingillegalloggingindomesticandinternationalmarketsbyharnessingmulti-levelgovernanceopportunities.InternationalJournaloftheCommonsVol.6,no2August2012,pp.255–270. 132CeruttiP.NasiR.BaxterJ(2015)Once‘invisible,’Africa’sdomesticloggerscomeintothelightTheEuropeanUnionisdrivinggreateremphasisonAfrica'sartisanalsector.http://blog.cifor.org/26637/africa-artisanal-domestic-logging-timber-vpa-flegt?fnl=en
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Figure3Volumesoftropicaltimberforexportandforlegalandillegalconsumptiononthelocalmarket133
Whyhavegovernmentsfailedtokeepthevalueinthecountry?Forestryandassociatedprocessingactivitiesarehighlycapitalintensive,requiringequipmentthatisnotmanufacturedindevelopingcountries.Thereisthereforealargecapitaloutflowassociatedwithforestryinvestmentswhichareonlyrecoveredafterseveralyears.Wherethesecostsaremetbyexpatriateinvestorstheyarebalancedbycapitalinflows.
Inthepast,theindustrywascharacterisedbythelarge-scaleexportoflowvalueroundwoodtoothermarketswherethesecouldbeprocessed.Inanattempttoretainmoreofthepotentialvalueincountry,anumberofgovernmentshaveinstitutedlogexportbansrequiringatleastaminimumamountofprocessing.Inmanycases,businesseshaveattemptedtocircumventtheserestrictionsbyminimalprocessingina‘redqueen’gameinwhichgovernmentsimposeevermorestringentrestrictionstooffsettheattemptstoavoidrestrictions.
Ghanahashadalogexportbansince1994andatleastsomeprocessershavebeenabletoengageinhighaddedvalueactivitiessuchastheproductionofveneersandhighvaluemoldings.Mozambiqueestablishedselectivelogexportbansinthe1990sandasaresulthadsomesuccessindevelopingmarketsforspeciesnotcoveredbytheban.However,itsearlyexperiencewasofvaluesubtractedprocessing134ofthekindthathasoccurredinGabonrecently135underwhichtheexportedsawn-timberissoldatalowerpricethansawlogs136.
Countrieswherethelogexportbanhasbeeninforcehavealsobeensubjecttoleakyborderswithlarge-scaleexportsofroundwoodsuchasisoccurringinLaos137,Cambodia138andZambia139.Illegal
133KishorN&LescuyerG.(2012)Controllingillegalloggingindomesticandinternationalmarketsbyharnessingmulti-levelgovernanceopportunities.InternationalJournaloftheCommonsVol.6,no2August2012,pp.255–270.134AlimahIssufo,Pers.Comm.135KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?136MackenzieC.(2006)ForestgovernanceinZambézia,Mozambique:Chinesetakeaway!FinalreportforFONGZA.137ChanB.2015.StatusofForestconcessionsinSoutheastAsiaconcessionsinSoutheastAsia.
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loggersinCambodiadevelopedtheirownroadnetworktocrosstheborderwithoutpassingcustomscontrolsandthesameoccursontheborderbetweenZambiaandTanzania.
InGabon,theimpactofthislogexportbanhasbeentoreducethevolumeandvalueoftimberexportsandtoreducegovernmentdirectrevenuesincethiswasleviedonlogsforexport.Aprocessofrestructuringhasbeenongoingsincethebanandinstalledprocessingcapacityisonlynowreachinglevelsequivalenttopreviouslogexportvolumes140.Therehavethereforebeensignificantshorttermlossesbothofrevenueandforeignexchange.
Governmentrevenuesarebasedontherangeofdifferentchargesleviedandthesedifferfromcountrytocountry.Regardlessofthetypesofchargesimposed,themajorfactorinlimitinggovernmentrevenuehasbeentheinabilitytocollecttherevenues.InCambodia,withitsverycomplexsystemofcharges,only10%ofexpectedrevenueswascollected141.InLiberia,whereasignificantportionofthechargewasarea-based,companiessoughttorenegotiatethesechargesafterconcessioncontractshadbeensignedandwithheldpaymentsamountingtomorethan95%oftheamountsdue,whilecontinuingtooperate142.
Theinabilitytoenforcecontract-basedchargesiscloselyalliedtotheinabilitytoenforcecontract-basedrequirementsforforestmanagementandtheinabilitytoapplyfinesandpenaltiesassociatedwithillegallogging.Poorgovernanceandlackoftransparency,coupledwithlackofcapacityaremajorissues143.Issuesrelatedtolegalityandcorruptionaredealtwithingreaterdetailin0.
Insomecasestransferpricing144hasbeenusedtotransferthevalueoutofthecountry,whilecompaniesmayalsotransferprofitstootherjurisdictionsbyoverchargingforimportedequipmentsuppliedbyrelatedcompanies.
Poorindustrialperformance
Manysawmillsintropicalcountriesareequippedwitholdfashionedandoftenwornoutequipmentwhichisincapableofsawingaccurately.Asaresult,thereisaverypoorconversionefficiencyfromroundwoodtosawntimber.Inaddition,duetosawinginaccuracythedemandforovermeasurefromcustomersinordertosecureminimumdimensionsaremuchhigherthanfortimberthatisaccuratelysawn.Sawbladesareoftenmuchthickerthantheyneedtobesothatsignificantvolumesarelostassawdustduringsawing.Similarlydryingisoftenimproperlycontrolled,bothinopenairseasoningandinkilndryingsothatfurtherlossesoccurduetodeformationandcracking.
Itisrarefortheconversionefficiencyfromroundwoodtosawnproductstoexceed30%.Thissituationisexacerbatedbyamarketthatdemandsstandarddimensionsofdefectfreetimber.Thesestandarddimensionsareinmanycasesmuchlargerandlongerthanrequiredbyendusersbutasaresultlargevolumesofusefultimberarerejected.
138ZhangY.,J.BamptonandB.vanHensbergen.2015.GlobalWitnessvVietnamRubberGroup.PublicSummaryofComplaintsPanelReport.FSC.139vanHensbergenH.J.andF.Njovu.2015.Theroleandfutureofguidelines,codesofpracticeandcertificationsystemsintheforestsectortosupportthegreeningofthebuildingandconstructionsectorinZambia.140KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?141SophanarithK.T.,N.KimPhat,M.KoikeandH.Hayashi.2006.EstimatingactualandpotentialgovernmentrevenuesfromtimberharvestinginCambodia.ForestPolicyandEconomics8(2006)625–635.142DorborJallahJ.,etal.2012.ReportontheIssuanceofPublicUsePermits(PUPs).ReportoftheSpecialIndependentInvestigatingBody(SIIB)presentedtothePresidentofTheRepublicofLiberia,H.E.EllenJohnsonSirleaf.19December2012.143REM.2009.IM-FLEG:ProgressintacklingillegallogginginCameroon.144Contreras-Hermosilla,Arnoldo.2002.LawComplianceintheForestrySector.
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Old,poorlymaintainedandinefficientequipmentisalsoasignificantconsumerofelectricityoftenconsumingfivetimesmorethanmodern,wellmaintainedequipmentperformingthesamejob.Incountrieswithhighenergycosts(e.g.Ghana)thispoorenergyefficiencycanmeanthedifferencebetweenprofitableandlossmakingbusiness145.
Afewbusinesseshavesucceededindevelopingmarketsforsmalldimensionedtimberandforvalueaddedproductssuchasmoldingsorveneeredboardsandthiscanincreasetheconversionefficiencyfromroundwoodtofinalproductstoinexcessof60%.Thesebusinessesarelargeandsecureemployers,contributingsignificantlytolocaleconomicdevelopment.
Giventhepotentialcompetitiveadvantagesthatarepossibleasaresultofimprovedefficiencybothintheforestandinthesawmill,thisraisesthequestionofwhytherearenotmorecuttingedgeinvestorspreparedtotakeoutconcessions.
Tropicalforestryandselfregulation?Intemperateareas,privatelyowned-,andinmanycasesState-ownedforestryisregulatedbythevisionofalongtermreturn(intergenerationalforestry).Whyisthisdifficulttoachieveinthetropics?
Itiscommonlyarguedthatthemajorityofconcession-holdersintropicalforestsfailtocarryouttheiractivitiesinsuchawayastobesustainable.Thisrelatesbothtooverharvestinginsuchawayastodestroythefuturevalueoftheforestandinfailingtoapplysilviculturethatwouldensureforestregenerationofharvestedspecies.Ithasalsobeenarguedthatexcessiveareafeesinduceconcession-holderstoreducethelengthoftherotation146bysystematicallyoverharvesting.
Itisbelievedbymanythatthemajorproblemrelatestothesecurityoftenureandthat,ifconcession-holdersweregivengreatersecurity,theywouldbepreparedtomakethenecessaryinvestment.Therearetwoaspectsofthissecuritywhichareofimportance.Inthefirstinstance,governmentsmayissuetenureswhichareforfixedperiodswithoutanyguaranteeofrenewalandinsuchcasesitisarguedthatthereislittleincentivetoinvestorincurcostsonbehalfofsomeotherfuturebeneficiary.Inthesecondinstance,manycountrieshavelackedpoliticalstabilitysothattheriskofwarorarbitraryremovaloftenureisseenassignificant.
Thefirstriskleadsdecisionmakerstoreducetheirrateofinvestmentand/orcompliancewithcontractrequirementstowardstheendofacontractifthereisasignificantperceivedriskwhilethesecondtypeofriskcausesinvestorstoseekveryhighratesofreturnoncapital.Ratesof30%perannumarecommonindevelopingcountries.
Whileitmaybethatgreatercontractualsecurityoftenurewillincreasethepropensityofinvestorstomanagetheforestforfuturebenefits,theexistenceofthesecondclassofriskmeansthatinvestorswillcontinuetoseekforveryhighratesofreturn.
Inanycase,thereturnontheinvestmentisrelatedtotherateofincreaseinvalueoftheresourceandwhenthisratefallsbelowtheopportunitycostoftheinvestmenttherationalinvestorwill
145Asinglesawlineconsumedmorethan70kwtodoajobthatcouldbedonewithasawconsuming9kw.CostsofUS$35/hrasopposedtoUS$4.5/hr.146BoscoloM.andJ.R.Vincent.2007.Areafeesandloggingintropicaltimberconcessions.EnvironmentandDevelopmentEconomics12(4):505–20.
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liquidatetheresourceandseekotherinvestments147.Thiswouldoccureveniftheresourcewasprivatelyownedbytheinvestorwithperfecttenuresecurity.
Theonlywayinwhichthistypeofbehaviourcanbecounteredisbyexternalregulation.However,thereislittlereasontobelievethatgovernmentswouldbemoresuccessfulatenforcingsuchregulationsforwhichtheygetnorewardthantheyareatcollectingforestrevenuesforwhichthereissignificantreward.Investmentincollectionofforestrevenuesisoneofthehighestreturninvestmentsthatagovernmentcanmake148.
IllegalityInmanytropicalforestcountriesthemajorityoftimberishandledthroughtheinformal(illegal)sector149,150.Mostofthistimberisdestinedfortheinternalmarket151orforexporttoneighbouringcountries.Forexample,mosttropicalhardwoodtimberinthemarketinKigali,RwandaissourcedillegallyinDRCwhilstalmostalltimberonsaleintheBusekoMarketinLusaka,Zambia(Figure4below)isinformally/illegallysourcedinsidethecountry152.
Figure4Informally/illegallyharvestedrosewoodandotherhardwoodlogsinBusekoMarket,LusakaZambia(HJVH,2015).
Itisimportanttounderstandthedifferencebetweenillegalityandcorruption.Anillegalactinforestryisanyactthatcontravenesthelawsandregulationsgoverningforestryortheprocessingofforestproductsorthetradeinforestproducts.Corruption,ontheotherhand,involvestheuseof
147Grut,M.,J.A.GrayandN.Egli.1991.Forestpricingandconcessionpolicies:ManagingthehighforestsofWestandCentralAfrica.148Grut,M.,J.A.GrayandN.Egli.1991.Forestpricingandconcessionpolicies:ManagingthehighforestsofWestandCentralAfrica.149KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?150AmacherG.S.2006.Corruption:AchallengeforeconomistsinterestedinforestpolicydesignJournalofForestEconomics1285–89.151KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?152vanHensbergenH.J.&NjovuF.(2015)Theroleandfutureofguidelines,codesofpracticeandcertificationsystemsintheforestsectortosupportthegreeningofthebuildingandconstructionsectorinZambia.ZambiaGreenJobsProgramme.
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publicofficeforprivategain153.Corruptionitselfisinmostjurisdictionsanillegalactandisalsointheforestrysectorassociatedwithotherillegalactivities.However,muchcorruptionalsooccursincaseswhereallotheraspectsofforestoperationsarelegalbutwhereregulatoryauthoritieshavethelegallyauthorisedcapacitytodelaytemporarilyorindefinitelysuchlegalactivities.Inthesecases,corruptpaymentsareusedtoexpeditepermissions.
Illegalityassociatedwithforestrytakesmanyforms154,155whichmaybelooselygroupedinto:
• Illegallyharvestingtimbero Harvestingoutsideanareaforwhichavalidpermitisheldo Harvestingwithoutapermito Harvestingspeciestowhichthereisnoentitlemento Harvestingtreesnotincludedintheallocatedyieldo Harvestingdimensionsforwhichthereisnoentitlemento Harvestingforapurposeforwhichthereisnoentitlementi.e.communities
harvestingunderalegalexemptionfor‘ownuse’andthensellingcommercially
• Misrepresentationo Underdeclarationofharvestedvolumeo Misdeclarationofspeciesharvestedo Misdeclarationoftimbervaluesorundergradingo Useorreuseofpermitsandpermissionsforanalternativepurpose
• Illegaltransportandtradeo Transportwithoutpermitsorpaymentoffeeso Illegalexportoftimberoroflogso Transferpricing
• Illegalacquisitionofforestorforestlandtenureo Landinvasiono Misrepresentationinacquisitionofforesttenureo Failuretocomplywithlegalobligationsassociatedwithforesttenure
• Corruptiono Pettycorruptionassociatedwithregulatoryandbureaucraticrequirementso Pettycorruptionassociatedwithanyotherillegalitieso Grandcorruptionassociatedwithallocationofforesttenureso Grandcorruptionassociatedwithtradeintimberproducts
Causesofi l legality
Someillegalityassociatedwithforestrycanbeascribedtotheprohibitionoftraditionalactivitiesonvariouspretexts156,oftenbasedontheappropriationbycentralgovernmentsofcustomarytenures
153SmithJ.,K.Obidzinski,A.Subarudi,I.Suramenggala.2003.Illegallogging,collusivecorruptionandfragmentedGovernmentsinKalimantan,Indonesia.InternationalForestryReview5(3),293–302.154AmacherG.S.2006.Corruption:AchallengeforeconomistsinterestedinforestpolicydesignJournalofForestEconomics1285–89.155Contreras-Hermosilla,A.2002.LawComplianceintheForestrySector.47pages.StockNo.37205WorldBankInstitute.156FairheadJ.andM.Leach.1996.MisreadingtheAfricanLandscape:SocietyandEcologyinaForest-savannaMosaic.,CambridgeUniversityPress,Cambridge.ISBN0-521-56499-9.
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andoftenwithahistoricalorigininthecolonialperiod.Thus,inGuineaforsometimethesettingoffiresinthesavannahs,atraditionalagriculturalactivity,carriedthedeathpenalty157.
Inothercases,illegalityisassociatedwithextremepovertysothatillegalactivitiesarecarriedoutsimplyinordertosurvive.Thisisthecaseinmanycountrieswheretimberisillegallyharvestedforartisanalproductionofcharcoalforsaleinurbancentres.
Inmanytropicalcountries,productionforestsareremoteanddifficulttoaccess,andasaresultthereisanalmostcompletelackoflawenforcementcapacity.
Inmanycases,illegalactivitiesaresoingrainedinforestrypracticesthattheonlycausetodaycanbeascribedtotradition.InGhana,forexample,itisstandardpracticetounder-measurelogsby20%inordertodecreasestumpagepayments.Thisillegalbehaviourisnotconsideredtobeinanywayquestionablebythoseinvolved.
Incaseswherethesalaryofforestofficersisfarbelowtheminimumrequiredforsubsistenceitisnotsurprisingthatpettycorruption,involvingpaymentforignoringillegalactivities,iswidespread.Acultureofthistypeofcorruptionisdifficulttobreaksincetheentiresystembecomesinvolvedandevenofficerswhoarenotdirectlyinvolvedbecomeguiltyoffailingtoreportitandarethenmadevulnerabletobecomingcorrupt.Itmustbeaddedthatsimplyincreasingforestofficersalariesisunlikelytobeaquickcureforthistypeofcorruption158.
Attheotherendofthescaleliethecasesoflargescaleillegalityinvolvedinallocationofforesttenures,transferpricing,falseaccountingetc.Thesecasesarealmostalwaystiedintosomeformofillegalityandmayalsoinvolvecollusion159betweenseniorofficialsandbusinesses.Inmanycases,itissimplynotpossibletoobtainaforesttenurewithoutresortingtocorruption.Oftenthistypeofcorruptionisassociatedwithperceptionsofentitlement160amongsthighgovernmentofficials.
Impactsofi l legality
Illegalactionsdenytherightfulbeneficiaries-betheycentralgovernmentsorlocalcommunities-thebenefitsfromtheforesttowhichtheyareentitled.Therehavebeenanumberofestimatesoftheimpactofillegalityintermsoflossestogovernmentrevenuebothnationallyandgloballyandtheamountsaresubstantial,ascendingtobillionsofdollarsinsomecountries161.
Illegalityalsocriminalisesthosethatparticipateinillegalactivitiesandalthoughthismightbeseenasadesiredoutcomeitmustbeconsideredifthisisalwaysthecase.AlargeportionoftheruralpopulationofZambia,Kenya,Tanzaniaetc.isdependentonillegalcharcoalproductionasameansofsurvival.Tocriminaliseentirepopulationsshouldnotbeadesiredoutcomeofalaw.Lawsarebasedonthe‘socialcontract’betweenthegovernorsandthegoverned,wherelawsaresowidelydisobeyedastobemeaninglessthereisclearlynosuchsocialcontract.
Whereillegalityiscombinedwithcorruptiontheimpactsbecomecatastrophicfordevelopmentandforforests,asdiscussedbelow.
157FairheadJ.andM.Leach.1996.MisreadingtheAfricanLandscape:SocietyandEcologyinaForest-savannaMosaic.,CambridgeUniversityPress,Cambridge.ISBN0-521-56499-9.158AmacherG.S.,M.OllikainenandE.Koskela.2012.Corruptionandforestconcessions.JournalofEnvironmentalEconomicsandManagement63,92–104.159AmacherG.S.2006.Corruption:AchallengeforeconomistsinterestedinforestpolicydesignJournalofForestEconomics1285–89.160MessnerE1981.Reactiveentitlementinelectivepublicoffice:apossibleprecursortopoliticalcorruption.AmJPsychother:35(3):426-35.161Contreras-Hermosilla,A.2002.LawComplianceintheForestrySector.47pages.StockNo.37205WorldBankInstitute.
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Thereis,however,anotherimportantaspectofinformal/illegalproductionthatmustbehighlighted.Informalproducersdonotusuallypayfortheirwoodinanyway,simplyextractingitfromtheforestaccordingtotheirneedsandcapacities.Theyalsoavoidalloftheregulatoryandpersonaltaxesbyoperatinginacasheconomyonly.Forthisreason,theyareoftenabletoproducetimberatafarlowerpricethanformalproducersandconcession-holders.Thishastheeffectofbringingdownthemarketpriceoftimberinsidethecountryandmakesitdifficultorimpossibleforformalproducerstocompete.
Impactsofcorruption
Corruptionhasarangeofnegativeimpactsassociatedwithit.Inrelationtoconcessions,firstandforemostitmeansthatgovernmentsdonotachieveanoptimalrentfromtheconcession-holderssincelargeportionsofthe‘rent’arecollectedelsewhereinthevaluechain.Suchrent-collectingbehaviourisunlikelytobeeconomicallyefficientsincemuchtimeisspentinitscollectionandincoveringitup,timewhichotherwisecouldhavebeenspentonproductiveactivities.
Moreimportantly,however,theexistenceofcorruptionmeansthatalmostallotherpolicyinstrumentsbecomeineffectivesincethereisnomechanismforenforcingthem.Onceacorruptactionhastakenplacebothpartiesbecomeguiltyofinvolvementinit,bothinsituationsofcollusionandnon-collusion.Thismeansthatthreatsaimedatensuringenforcementofsomeaspectsofthepolicyrequirementsbecomelargelyineffective.Thus,whenoperatinginacorruptenvironmentitbecomesmuchmoredifficulttodesignandenforcepoliciesthatensureeconomicdevelopmentandforestconservation162.
Thecounterargumentthat,inthefaceofimpossibleregulatorydemandscorruptionisthe‘greasethatlubricatesthewheelsofdevelopment’,hasbeendiscredited163.
Eliminatingcorruptionanditsassociatedillegalitywillnotbeeasy.Policydevelopmentmusttakeintoaccounttheexistenceofillegalityandinthelongtermdevelopstrategieswhereillegalityandcorruptionceasestobetheoptimalstrategyforgovernmentofficials.
5 Thefutureofconcessions
Itisnotpossibletodiscussafutureinwhichforestconcessionsplayasignificantroleineconomicdevelopmentwithoutdiscussingthefutureoftropicalforestmanagement.Concessionsaresimplyonecommonwaybywhichgovernmentsseektoachievetheirgoalsfortheforestestate.Manyoftheproblemswithconcessionshighlightedbydiverseactorsareproblemsofforestmanagementandnotproblemswiththeconcessionsystemitself.Anysystemthatseekstocorrectthesituationwithconcessionsmustfirstaddresstheproblemswithtropicalforestmanagement.Itshouldberecognisedthatexternalconditions,includingthegovernanceofthelocalconcessionsystem,alsoaffecttheviabilityofgoodforestmanagement.
ScenariosforthefutureoftropicalforestmanagementThecurrentsituationfortropicalforestsisnotahappyoneastropicalforestscontinuetodeclineinareaandintegrityinlargepartsoftheworldforavarietyofreasons164.Ofthe11majordeforestationfrontsidentifiedbyWWFin2015onlyoneliespartiallyoutsidethetropicalzone165.162AmacherG.S.,M.OllikainenandE.Koskela.2012.Corruptionandforestconcessions.JournalofEnvironmentalEconomicsandManagement63,92–104.163Contreras-Hermosilla,A.2002.LawComplianceintheForestrySector.47pages.StockNo.37205WorldBankInstitute.
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Inmanycases,theultimatereasonwhyforestsarenotprotectedisthattheyarenotperceivedasofferingsufficientvalueinthefaceoflandusealternatives;inafewcasestheyareperceivedashavingsuchhightimbervaluethatitisbettertocutthem(legallyorillegally)beforesomeoneelsedoes.
Thelargestcauseofdeforestationisforconversionoflandtoagriculturaluse,bothsmall-scaleinformalandlarge-scaleindustrial.Forforeststosurvivetheymustbeabletocompetewithalternativelandusesbydemonstratingvaluestreamsthatmakethemcompetitiveintheeyesoflocalstakeholderswhomaintainadefactocontrolovertheresources.
Forconcessionstobecomesuccessfultheymustbebasedonasuccessfulbusinessmodelfortropicalforestmanagement.Insuchabusinessmodel,forestsarewellmanagedandabletoprovideanassuredflowofallresources,thetenurerightstotheseresourcesareallocatedwithinaframeworkofgoodgovernancethatallowsbusinessestooperatewiththeminimumpossibleinterferenceandwithoutcorruption,andtheproductsfromtheforestareprocessedefficientlyintohighvaluegoodsthatreturnsignificantvaluetotheforest.
Atpresent,thisbusinessmodelisnotfullyimplementedanywhere.Tropicalforestsarenotmanaged,theyusuallyexistinanenvironmentofdeficientgovernanceandthebusinessmodelisgenerallysuboptimalandoftenunsustainable.
Forthistohappenitissuggestedthatthereneedtobesignificantimprovementsinthreefieldsofforestry:governance,forestmanagementandthetimberbusinessmodel.Onlyiftheseareallimplementedwillconcessionsbeabletohavethepositiveimpactsexpectedofthem.TheoutcomesofdifferentscenariosdependingonwhichtypesofimprovementsareimplementedaregiveninTable2whilethedetailsoftherequiredimprovementsaredescribedbelow.Itshouldbenotedthatthesearerequirementsforalltropicalforestmanagementsituationsandnotonlyforconcessions.
164WWF.2015.WWFlivingforestsreport:chapter5savingforestsatrisk.WWF.165WWF.2015.WWFlivingforestsreport:chapter5savingforestsatrisk.WWF.
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Table2Scenariosfortropicalforestmanagement
Timberbusinessstatusquo
GovernanceForestmanagementStatusquo Improvedforestmanagement
Statusquo Forestlossforacorruptelite
Forestmanagementwithoutdevelopment'TheForestPoverty
Trap'
Improvedgovernance Forestlosswithnegligiblebenefit
Lowvalueforestry'TheEternalForest
Poor'
Improvedtimberbusiness
GovernanceForestManagementStatusquo Improvedforestmanagement
Statusquo
Commercialextinctionofforestsforthebenefitofthe
few
Sustainableforestryforthebenefitofthefew
ImprovedgovernanceShorttermbenefitsforallleadingtoloss
offorestcapital
Sustainableforestrywithlocaldevelopment
andvaluedforests'TheNewForestRich'
Improvedforestmanagement
Inordertomaintainandincreaseforestproductivityandforestvaluesitisnecessarytoinstituteproperforestmanagement.Insomepartsoftheforestthiswillrequiresignificantsilviculturalactivitywhilstinotherareascriticalhabitatsshouldbesetasidefornaturalresourceconservationpurposes.Thecomponentsofimprovedforestmanagementwillbe:
• Managementplanning• Appropriateharvestingconsideringtheregenerationofdesiredspecies• Assistedregenerationofdesiredspecies• Silviculturalthinning• Othersilviculturalactivities??• Reducedimpactlogging
Suchactivitiesassilviculturalthinningmayberequiredintheentireforestestateinadvanceoffutureharvestsandnotonlyinareaswherepastharvesthavetakenplace.Forexample,itmaybebeneficialtocarryoutreleasethinningoftargettreessomeyearspriortoenteringacompartmentforharvest.Itisunderstoodthatinmanytropicalforeststhesetypesofactivityarecurrentlyprohibitedandalsothatinmanycasesforestaccessroadsmustbedestroyedafteraharvesthastakenplaceinorderto‘protect’theforestfromincursion.Underaproperandequitablegovernancesystem,theseincursionswouldbepreventedbythelocalstakeholderswhoderivevaluefromtheforest.
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Silviculturalthinningsarelikelytogeneratelargevolumesofsmalldiametertimberofawiderangeofspecies,soitshouldbefeasibletodevelopboththeprocessingcapacityandamarketforthistypeofmaterial.Wastetimbercanalsobeusedforbiomass.
Improvedgovernance
Itisrecognisedthattherehavebeensignificantmovesinrecentyearstowardsthedecentralisationoftheforestadministrationandrevenueallocation.However,thesemoveshavebeenfullyimplementedinonlyafewcases.Itmustalsoberecognisedthatthehistoricalfallinvalueofaforestofficercompensationhasbeenakeydriverinpermittingforestcorruption.InUganda,forexample,theForestOfficerSalaryin1988hadfallentoamere0.4%ofits1962valueinrealterms166.Thecomponentsofanimprovedforestgovernancesystemwillinclude:
• ForestAdministrationofficersadequatelypaid• Transparencyinallocationofforesttenures• Recognitionofcustomarytenures• Allocationofappropriaterevenuestocustomaryrights-holders• Simplificationofregulatoryrequirements• Eliminationofinefficientcharges• Revisionofforestlaws/regulationstomakeforestmanagementpossible• Eliminationofinappropriaterent-seekingbehaviourbygovernmentagenciesand
governmentofficials
Inmostcasestheportionofthetimbervaluethatreacheslocalrightsholdersisminimal,intherangeof1-2%ofthetimbervalue,andinsomecasestheamountreachingtheserightsholdersisactuallyzero167.Itislikelythatthesinglelargestincentivetosupportresponsibleforestmanagementandforestconservationistoensurethatlocalrightsholdersreceiveafairshareoftheforestderivedvalue.
Inmanycountries,thehighestsinglecostsofforestrybusinessesrelatetoinformalpaymentswhichareoftenintherangeofUS$60–100/m3168.Inmanycases,itcanbearguedthatthecomplexityofforestregulationsisintentionalsinceitfacilitatescorruptrent-seekingpracticesbyofficials169.
Lackoftransparencyintheallocationofforesttenuresisakeyissueinpreventingtheproperfunctioningofanefficientmarketforforestrights.Inextremecases,eventheresponsibleauthoritieslackknowledgeabouttheforesttenures170.
Improvedforestbusiness
Forestbusinessesinthetropicssufferfromawiderangeofproblemsthatleadtoinefficienciesbothintermsoftheirperformanceasbusinessesandintermsoftheireconomicperformanceinrelationtothecountry.Thecausesoftheseproblemsaremanifold,rangingfrominadequatehumanresourcestoriskminimisation,extremecapitalreturnratedemands,towastefulfieldandprocessingpractices.Itshouldbenotedthatmuchofthebehaviourofbusinessinvestorsappears
166WebsterG.andH.A.Osmaston.2003.AHistoryoftheUgandaForestDepartment1951–1965TheCommonwealthSecretariat.DOI:10.14217/9781848598171-en167Arumadri,J.2002.TheforestrevenuesystemandgovernmentexpenditureonforestryinUganda,FAO.168Contreras-Hermosilla,A.2002.LawComplianceintheForestrySector.StockNo.37205WorldBankInstitute.169Contreras-Hermosilla,A.2002.LawComplianceintheForestrySector.StockNo.37205WorldBankInstitute.170InCambodia,theForestDepartmenthadnoofficialmapsoftherubberconcessionsissuedfortheSeimaProtectionForest.(Pers.Comm).Theirexistenceonlybecamepublicafter8yearswhenmapswereobtainedandpublishedbyLicadho.
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perfectlyrationalsuchastherequirementforveryhighcapitalreturnratesinsituationswheregovernmentsareunstable.
Oneadditionalaspectofimportanceisrelatedtothehistoryofthetropicalforestrybusiness,forthevastmajorityofitslifethebusinesshasbeenfocussedonharvestingofoldgrowthtrees.Asaresult,theexpertisethathasbeenbuiltupintheorganizationscarryingoutthebusinessisfocussedonthedifficulttaskofoptimisingtheharvest.Itisonlyrecentlythatmanagingtheforesthasbecomearequirementandasaresultthereislittlein-housecapacitytodoso.Infact,incomparisonwithtemperateforestry,wheretherearehundredsofyearsofexperienceandanaccompanyingandrapidlygrowingscientificliterature,thesilvicultureliteraturefortropicalnaturalforestsistiny.
Themarketfortropicaltimberisalsohighlyinefficientwhencomparedwiththemarketfortemperatetimber.Thetimbermarketremainsopaqueintermsofpricinginformationandthelackofdirectcommunicationbetweenend-usersandsuppliersmeansthatthereisenormouswasteofmaterialatallpartsofthevaluechainduetothedemandforstandarddimensionsbytraders.
Thestructureofthecommoditymarketforsawntimberwithitsdependencyonstandarddimensionsandgradesisahangoverfromapastwherecommunicationbetweentheend-userandsellerwasimpossibleduetothelongshippingperiodandpoortelecommunications.Thisresultedinasituationwheretheend-usersknewwhattheywouldgetintermsofsizeandpropertiesbutwhichdidnotnecessarilymeettheirneeds.
Thissituationislonggoneandend-userscannowcommunicatedirectlyandinrealtimewithsellers.Themarkethasnotyetadaptedtothisnewrealityinwhichasawmillcanprovidedimensionsthatexactlymeettheneedsofend-usersandinsodoingreducewastageatbothendsofthesupplychainresultinginverysignificantvaluerecoveryforbothparties.Anewtypeofagentisrequiredinorderforthismarkettofunctionefficiently.
ManyoftheseissueshavealreadybeendiscussedinChapter4.Correctingtheseproblemsrequiresarangeofimprovementsinbusinessessuchas:-
• Humancapacitydevelopmentforprocessing• Humancapacitydevelopmentforforestmanagement• Incentivestoensureafullutilisationoftheavailableyield(e.g.paymentforallocatedyield)• Incentivestoensureafulluseofthefelledmaterial(e.g.paymentforvolumefelledas
opposedtovolumeextracted)• Investmentinmoreefficientprocessingequipmenttoreducevolumelossesand
maintenanceandrunningcosts• Humancapacitydevelopmentfortimbermanufacture• Improvedmaintenanceregimesformachinerytopreventfailures• Bettermarketknowledge• Bettercommunicationwithendusers
Mosttropicalcountrieshavelittleornoresourceofskilledwoodworkersoutsideofthesectorthatmanufacturesmalleritemsforthetouristbusiness.Thus,arosewoodfurnituremanufacturerinZambianeedstoimport10mastercabinet-makersfromChinainordertomanufactureproductsthatwillsatisfythehighqualitydemandsofitsChinesemarket171.Thesecabinet-makerswilloveranumberofyearstraintheirZambiancounterparts.
171Pers.obs.2015.
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Inordertoreducecapitalrisksprocessersintropicalforestsofteninvestinoldsawsandothermachinerywhichiswastefulbothduetosawinginaccuraciesandlargesawkerfs,butalsoduetohighenergyinefficiency.InonecaseseeninGhana,alargesawwasconsuming54kWofelectricityforajobthatcouldhavebeendonebyasmallersawusing9kWwhichwouldhaveresultedinasavingofUS$15peroperatinghour.Thissavingalonewouldhavepaidforthesmallersawinlessthanoneyear.
ForestInvestment
Thelastdecadeshaveseensignificantchangesinthepatternofconcessionownershipinmanypartsoftheworld.Thischangeisbestexpressedasamoveawayfromoldex-colonialcapitalmainlyfromWesternEuropetoneweasterncapitalwithsourcesintherapidlygrowingeconomiesoftheFarEast.Forexample,Chinesecompanieshadacquiredconcessionrightstoapproximately10%ofthedenseforestareaofGabonby2010172.Malaysian-ownedcompaniescontrolledthemajorityofforestconcessionsinLiberiain2013andIndiancompaniesownedthelargestforestconcessionsinGuyana.ThistrendisassociatedwiththeincreasingdemandfortropicaltimbersintheFarEasternmarket.ItisalsopossiblethatpartofthistrendisrelatedtothemuchlowerlegalityrequirementsoftheFarEasternmarketswhencomparedwiththeEuropeanorU.S.markets173.
Ineithercasethecapitalemployedintropicalconcessionsismainlyfamily-basedcapitaltakenfromotherbusinesses,sinceitishardtoobtaincommercialcapitalfortropicalforestryactivityotherthanplantations174,particularlyincountrieswithaperceivedhighpoliticalrisk.Inaddition,fewcompaniesmeettheinvestmentrequirementsofinternationalinvestorsincludingtherecenttrendofrequiringforestcertification175.
Whatiswrongwiththeconcessionmodel?Althoughconcessionshavebeenmoderatelysuccessfulinsomecases,thefailuresappeartooutnumberthesuccesses,ifwebasetheevaluationonrevenuecollection176whereitisrareforgovernmentstocollectinexcessof20%oftherevenuesduefromthetimbertaken.
ThemodernconcessionisbasedonthegovernmentasPrincipalallocatingcertainrightsanddutiestotheconcessionaireactingasitsAgent177.Inthiscase,thegovernmentdoesnothavethecapitalortheskillstomanagetheforestandtoprovidealloftheotherservicesrequiredsuchaseducationandhealth.Theconcessionisbasedonfindinganagentwhohasalloftheseandthentoprovideacontractualinteresttotheagenttodothemanagement.
However,theagentsinthiscaseareforestrycompanieswhohavecomefromabackgroundintimberharvestingand/ortimberprocessingandusuallyhaveadequateskillsintheseactivities.Theseforestrycompanieshavenotneededtodevelopskillsintropicalsilvicultureortheothernew172Putzel,L.,Assembe-Mvondo,S.,BiNdong,L.B.,Banioguila,R.P.,Cerutti,P.,Tieguhong,J.C.,Djeukam,R.,Kabuyaya,N.,Lescuyer,G.andMala,W.2011ChinesetradeandinvestmentandtheforestsoftheCongoBasin:synthesisofscopingstudiesinCameroon,DemocraticRepublicofCongoandGabon.WorkingPaper67.CIFOR,Bogor,Indonesia.173MasieroM.PettenellaD.CeruttiP.(2015)LegalityConstraints:TheEmergenceofaDualMarketforTropicalTimberProducts?Forests,6,3452-3482;doi:10.3390/f6103452.174ClenaghanS,JacopoLeviMorenosandAlbertoThomas(2009)Ch3StimulatingprivatecapitalinvestmenttoachieveREDD+InForestInvestmentReview.ForumfortheFuture.London.175 BestC.&,MichaelJenkins(1999)CapitalMarketsandSustainableForestryOpportunitiesforInvestment-ThePacificForestTrust,ForestTrends. 176Grut,M.,J.A.GrayandN.Egli.1991.Forestpricingandconcessionpolicies:ManagingthehighforestsofWestandCentralAfrica.177GrayJ.2002.ForestConcessionPoliciesandRevenueSystems:CountryExperienceandPolicyChangesforSustainableTropicalForestry.
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requirementssincetheyhaveneverhadtoperformtheminthepast.Asaresult,theyhavelittleornoin-housecapacityintheseaspects.
Thissituationiscompoundedbythefactthatthescientificunderstandingoftropicalsilvicultureisgenerallyatamuchlowerlevel178thanisthecasefortemperatesilviculture.Thisislargelyduetothefactthattherevenuesgeneratedbyforestsintemperatesystemsareenormouscomparedwiththeirtropicalcounterpartssothatbothbusinessesandgovernmentshavebeenpreparedtoinvestheavilyinresearch.
Inaddition,theconcessionsystemassumesthatconcession-holderswillfollowthelawsofthecountryandthetermsofthecontract,araresituation.Inmostcases,concession-holdersseektominimisetheiradherencetodemandsforforestmanagementtominimisecostsandmaximisevolumesbyharvestingoutsidethescopeoftheirpermits.InGhana,forexample,detailedfollowupofstumpsrevealedthatfouroutofthefirstfivestumpsexaminedwerenotincludedintheallocatedyieldevenforacompanyconsideredtobelawabiding179.
Anysolutiontotheseproblemsmustbebasedonarealisticviewofforestmanagementcapacitiesandsupportneedscoupledwithincentivesystemsthatrewardgoodbehavioursufficientlytorenderillegalityandnon-compliancewithcontractsunattractive.
Whendevelopingsolutionspolicyanalystsshouldconsidercorruptionandillegalityasoneoftherulesofthegamesincefailuretodosoislikelytoresultinpoliciesandpracticesthatdonothavethedesiredeffect180.
Rights-basedapproachesThecurrentsystemofforesttenurerightsinmanydevelopingcountriesisahangoverfrompreviouscolonialadministrations.Underthesesystemstherightstoforestproductsandinparticulartotimberoftenbecameseparatedfromothertypesoflandandresourcerights.Thesesystemssupplantedpreviouscustomaryrightswhichwereheldunderawidevarietyofsocialorganizationsinwhichrightswereallocatedtoindividualsinasystematicbutundocumentedway.
Thesepreviousadministrationssetupthoserightsunderalegalframeworkwhichislargelyinplacetoday.Inpractice,awayfromcitiesandlargetownsthetraditionalsystemshavecontinuedtofunctionwithrelativelylittleinterferencefromthecentre.Peoplehavecontinuedtousetimberandnon-timberforestproductsinmuchthesamewayasbeforetheadventofthecolonialpowers.
Manycountriesrunparalleladministrativesystemsinwhichthecentralisedlegalsystemrunsalongsidethecustomarysystemmoreorlesscomfortably.Inthesetraditionalsystemsandpartlyasaresultofthelackoftransport,infrastructuretimberwasmostlyusedandtradedlocallyforbuildingandmanufactureofawidevarietyofitems.Itisonlyrecentlythatthesetimbershaveacquiredasignificantvaluethroughdemandfromanurbanisedpopulationandtheabilitytogetthesetothemandtoexportharbours.
Thusitcouldbearguedthat,sinceremotecommunitiesnevermadelarge-scaleuseofthosetimbers,theyhavenotestablishedacustomaryrighttousingthemcommercially.Suchargumentmaywellbevalid,butwhatcannotbecontestedisthatthesecommunitieshavemadeuseofthe
178SitoeA.,E.ChidumayoandM.Alberto.2010.Timberandwoodproducts.InChidumayoEG,andGumboD.(ed.),TheDryForestsandWoodlandsofAfrica:ManagingforProductsandServices.179Pers.obs.180AmacherG.S.,M.OllikainenandE.Koskela.2012.Corruptionandforestconcessions.JournalofEnvironmentalEconomicsandManagement63,92–104.
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landonwhichthesetimbersstandwithvaryingdegreesofintensity.Forestshavebeenusedforcollectionoftimber,NTFPs,forhuntingorasplacestohideintimesofwar181.Thereiseffectivelynoplaceinanydevelopingcountrythatisaccessibleonfootthathasnotbeenvisitedandimpactedbyhumanactivitysothatitisimpossibletofindareaswherethereisnopreviouslandtenureofsomesort.
Asaresult,althoughsovereignstateshaveappropriatedcentralisedformallandtenureovermuchoftheirterritory,bothcustomaryanddefactotenureresideswiththelandoccupants182.Theseoccupantsmaybelong-termresidentsormorerecentarrivalstoleratedwithinthecustomaryframework.Whengovernmentsattempttoallocateconcessionsoversuchlandthenthisoftenleadstoconflict.
Thissituationhasbeenincreasinglyrecognisedsincethe1980sandtherehavebeenavarietyofattemptstoaddressthesituation,including:
• requirementsthatlocalcommunitiesbeabletocontinuetraditionalactivitiesintheforest• requirementsthataportionoftheconcessionfeesisallocatedtocommunities• requirementsthatconcession-holdersnegotiatesocialresponsibilityagreementswith
communities• requirementsfor‘benefitsharing’overaffectedlands• requirementforFPICpriortoallocationofconcessions• allocationofconcessionstocommunities• transferoflandtitleorforesttenuretocommunities
Ontheotherhand,itisalsoclearthatwherecommunitieshavedefactotenureoverforestlandbutthislanddoesnotreturnbenefitstothemthentheforestisdegradedandappropriatedforotherlandusesthatgivegreaterreturns183.
Itislikelythatthefutureoftheforestinallcasesisdependentonthevaluethatthelocalcommunitiesderivefromthem,regardlessofthetypeofforesttenurearrangements,sinceitisthelocalcommunitieswhohavethebootsonthegroundandareabletodetermineifandhowconcession-holdersarekeepingtotheircontractualagreementsandarethusabletoinformthecompetentauthoritiesorindependentobservers.
Theinclusionoflocalcustomarytenure-holdersaswellasgovernmentandconcessionaireinatripartiteagreementnegotiatedunderFPICseemstobeaprerequisite.
Itmustbeaddedthatsimplytransferringallforestrightstolocalcommunitiesisunlikelytobesuccessfulinallcircumstances.Whengovernmentsdon’thavethecapacitytomanageforestsforbusinesspurposesthenitisevenlesslikelythatcommunitiesinremoteareaswillhavethesecapacities.Thisisparticularlythecaseforcommunitieswhowishtoaccessthehighervalueexportmarketswithgoodqualityproductssincethisrequiresverylargeareas,significantinvestmentandhumancapacitydevelopmenttobesuccessful.
Suchcommunitieswillrequireenormoussupportintermsofcapacitybuilding,planning,inventoryaswellassupportforneededcapitalandtechnicaladviceforprocessingetc.Thedifficultyshould
181DuringtherecentcivilwarinSudanfamiliesfromvillagesaroundNzarainWestEquatorialProvincefledintotheforestandlivedtherefordecadesbeforereturningtotheiroriginalvillageswhenhostilitiesceasedin2007.182Itisrecognisedthatwithpoliticalinstabilityandlargescalepopulationmovementsuchtenuremayhavebeeninplaceforonlyarelativelyshortperiod.183KarsentyA.2015.ThecontemporaryforestconcessionsinWestandCentralAfrica:chronicleofaforetolddecline?
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notbeunderestimatedandwhereithasbeensuccessfulthishasusuallybeenonthebasisofsignificantverylongtermsupportoverseveraldecades.
Analternativeapproachwouldbetopartnersuchcommunitieswithentrepreneurs184,185inanapproachthathasbecomeknownasILCF(InvestinginLocallyControlledForestry).Inthismodelitisthecommunitythatobtainstheforesttenurerightsandseeksanentrepreneurwithcapitalandknow-howtohelpthemwithforestmanagementandprocessing.
ThistypeofapproachmayworkbestwhencommunitiesareabletobecomeorganisedinthemannerespousedbytheForestandFarmFacilityoftheFAO186.
Workersrights,treatmentofworkersandhealthandsafety
Thetreatmentofforestryworkersindevelopingcountrieshasinmanycasesbeenpoorbothintermsofemployment187andinhealthandsafetyissues.Ithastoberecognisedthatnotallemployersarefailinginthisrespectandthatinmanycasesthemoreformalemploymentofferedbytheformalbusinessesthatareabletotakeupconcessionsisofamuchbetterqualitythanthatofferedintheinformalsector188(Figure6).
Figure5WorkersfieldaccommodationinaconcessioninGuyanaconsistsofatarpaulin
Healthandsafetyissuesarecommonlyoverlookedbothintheforestandinprocessingfacilities.Partlythisisduetounsafeworkingpracticesandpartlyduetotheuseofoutdatedequipmentwhichdoesnothavemodernsafetyfeatures.Itisoftenalsoduetosafetyequipmentbeingpurposelydisabledinordertofacilitatemachineaccess.
184Elson,D.(2011).Investinginlocallycontrolledforestry:reviewingtheissuesfromafinancialinvestmentperspective.TheForestDialogue,NewHaven,USA.185Nhantumbo,I.,Macqueen,D.J.,Cruz,R.,Serra,A.(2013)InvestinginlocallycontrolledforestryinMozambique:PotentialforpromotingsustainableruraldevelopmentintheprovinceofNiassa.IIED,UK186FAO()ForestandFarmFacility.http://www.fao.org/3/a-i4848e.pdf187Asanzi,P.L.Putzel,D.GumboandM.Mupeta.2014.“RurallivelihoodsandtheChinesetimbertradeinZambia’sWesternProvince.”InternationalForestryReviewVol.16(4),16(4):447-459.188GretzingerS.(2015)LatinAmericanexperiencesinforestconcessions.
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Theroleofoutsideinspectionisanimportantfactorthatcanlimitthehazardsinforestryactivitiesbutthisisanotheraspectwherecorruptionoftenresultsingovernmentinspectorsissuingsafetycertificatesinsituationswherenocareistakenatall.
Wheregovernmentledsafetymonitoringsystemsarenoteffective,thirdpartysystemssuchasofferedbyOccupationalHealth&SafetyAdvisoryServices(OHSAS)orforestcertificationinspectionscanservetoidentifyissues.Insuchcasesitisalwaysuptotheforestbusinesstobeopenformakingthenecessarychangestoensuresuccess.
Inmanycountries,particularlyinSoutheastAsia,thereisextensiveuseofmigrantlabourintheforestsectorandparticularlyinthiscasetheriskofabuseisveryhigh.TherearecertainrisksofforcedlabouranddenialofthefundamentalrightsofworkersaslaiddownintheILOCoreConventions189.
TheroleofcertificationThepotentialroleofforestcertificationislargelymisunderstoodbystakeholders.Governmentsandbusinessesexpectforestcertificationtocurethewoesofbusinessesandtoimmediatelycauseailingbusinessestobecomesuccessful.Thisiswishfulthinkingandfarremovedfromreality.Therearesignificantbenefitstogetfromcertificationbuttheyliemoreinrelationtoachievinggoodforestmanagementthanintheissueofthecertificateitself.Wherebusinessesseektoachieveforestcertificationforcertificationssakeortomeetsomeregulatoryrequirementtheywillinvariablybedisappointed.
Forestmanagement
Certificationstandardsrequireforestmanagerstotakeamoresystematicapproachtothepreparationandexecutionoftheforestmanagementplan.Thisensuresthatallimportantaspectsaretakencareof.Aspartofthisplanningitisvitalthatallsignificantimpactsaretakencareof,andjustasimportant,thatwhereverimpactsrelatedtoanaspectarenotimportantnoresourcesareallocatedtosuchissues.Thisshouldhavetheresultofreducingwastageandconcentratingresourceswheretheyaremosteffective.Iftheplanningiswelldone,thenforestmanagementbecomesmoreefficientwithasignificantreductionincosts.
Thekeybenefitofforestcertificationisthatitimprovesthewaythebusinessisrunandimprovestherelationshipbetweentheforestmanagerandotherstakeholders.Thisalsoactstoreducetherisksposedbyillegalactivitiesornaturalcatastrophes.
Forestmarkets
Forestownersonachievingcertificationoftencomplainthatasaresulttheydonotachievehigherpricesfortheirproducts.Therearetwoaspectstosolvingthisproblem:productqualityandmarketing.Noamountofcertificationcanturnapoorqualityproductintoanattractiveone,inthelongtermawell-managedproductionforestwillstarttoproducetimberwithbetterpropertiessothatthequalityoftheproductsmanufacturedfromthetimberwillbebetterandthusachievehigherprices.Intheshortterm,improvedharvestingandtransportwillproducetimberwithlessdamageandwithagreatervolumerecoveryduetoreducedwastageandthiswillleadtoanincreasedvolumeandqualityofproducts.Inaddition,iftheimprovedmanagementstyleoftheforestisalsoimplementedatthesawmill,therewillbeimmediateimprovementsinthequalityofproductsandreductionsinwastageandcosts.
189ILO(1998)ILODeclarationonFundamentalPrinciplesandRightsatWork.
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Thisimprovementwillmeannothingtoestablishedcustomersusedtogettinglowqualityproductsatalowprice.Theywillsimplyrubtheirhandswithgleeandrefusetoofferasinglecentextra.However,theimprovementinqualitycombinedwiththecertificatewillenablemanagerstoseekalternativecustomerswhoarepreparedtopaymoreforthequalityandforthecertificate.Theinitialcustomer,nowbeingleftshortoftimber,islikelythentoincreasepriceoffers.
Thisdoeshoweverrequirethatforestmanagersengageinmarketingtheirproductsinnewmarketsandthisisanexpensiveactivitywhichislikelytorequiresupportfromgovernments,NGOsorforestsectororganizations.
Auditingandtransparency
Akeybenefitofcertificationusuallyoverlookedisthepresenceofexternalauditingandrequirementforamuchincreasedleveloftransparency.ThebenefitsofhavinganindependentexpertwithoutanyinternalconflictsofinterestreviewingthepracticesofanorganizationhaslongbeenrecognisedbybusinessesandhasledtothesuccessofthemanyISOperformancestandardsandtheirassociatedcertificationsystems.Forestmanagersseekingtolimitthecostsofcertificationusuallyselectthecertificationproviderwiththelowestcost.Thisisexactlythewrongapproach.Forestmanagersshouldseekoutthecertificationproviderwhoisabletoprovidethemwiththemostexperiencedandrespectedauditorswhowillbeabletoaddsignificantvaluetotheirbusinessbytheobservationstheymake.
Transparencyisakeyfactorinreducingundesirableoutcomesinforestmanagement.Transparencyenablesanorganizationtocommunicateitspracticestostakeholdersandengagewiththemopenlyforthebenefitofthebusiness.Transparencyallowsabusinesstodemonstratetoregulatoryauthoritiesandbusinessesthatitiscomplyingwithitsregulatoryrequirementsandthiscanbeapowerfultoolincombatingcorruption.
Transparencycanonlygosomeofthewayinconvincingoutsidersthatanorganizationismeetingitscommitments.Externalverificationisoftenrequiredandthisiswhereexternalauditorscansupplyanimportantservice.
Wherecompaniesareabletouseindependentauditingandtransparencytodemonstratetheircompliancewithallaspectsoftheircontractswithgovernmentitshouldnotbenecessaryforthegovernmenttoverifythisindependently.Itshouldthereforebepossiblefortheauthoritiestoreducetheregulatoryburdenoncompanieswhichcouldbeanimportantincentiveforcompaniestodotherightthing.
Towardsanewmodelfortropicalforestbusiness(Concessions2.0)Inmovingtowardsarevisedmodelfortropicalforestconcessionsitisnecessarytostatethatthereisno‘onesizefitsall’solutionsinceeverycountryhasitsownsocial,legalandforestsituation.ForestsinSoutheastAsiahaveamuchhighervolumeofcommercialtimberthanforestsinAfrica,communitybasedforestmanagementisfarbetterdevelopedinLatinAmericathaninSoutheastAsiaetc.
Therecommendationsbelowareaimedatallstakeholdersandareintheformofinterventionsthatmayberequiredfromgovernments,aidagencies,concession-holders,rightsholdersandotherstakeholders.Notalloftherecommendationsarerelevantforallsituations.
Recommendationsforanimprovedconcessionsystem
Revisedgovernance
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1) Muchmoretimeandeffortneedstobeinvestedintheproperplanningofconcessionsbygovernments.Governmentsshouldavoidrushingtoallocatelargeareasinthehopeofshorttermreturns.
2) ConcessionplanningmustinvolveFPICagreementswithstakeholderspriortotheallocationofaconcession.Recognitionofoverlappingtenurerightsisapre-requisiteforeffectiveconcessions.
3) Systemsfortheallocationofconcessionsshouldbewhollytransparentwithfullpublicdisclosureofallinformationrelatingtocompetitivebids.Mechanismsshouldbeputinplacethatallowpublicinputintotheallocationdecision.
4) Modelsforgovernanceofconcessionsshouldpresupposetheexistenceofcorruptionandtakethisintoaccountaspartofthepolicyanalysisinsystemdevelopment.
5) Thesystemforallocationofconcessionsshouldbesimplifiedsothatallcommunicationbetweenabidderandthegovernmentshouldbethroughasinglepointofaccess.Allocationmustavoidunduedelaysthatarecostlyforbusinesses.
6) Governmentsshouldfocusmuchmorestronglyonthecontrolofillegalandinformalactivitiesthathaveanimpactonthemarketanddepressthepriceoftimber.Formalisationofthecommercialpartsoftheinformalmarketcouldbeanimportantsourceofgovernmentrevenuethroughgeneraltaxation.
7) Localstakeholdersincludinglocalgovernmentsrequireextensivesupportandcapacitybuildinginordertobeabletofulfiltheirroleinconcessionmanagement.
8) Governmentsshouldaimatamixedconcessionsystemwithbothprivateconcessionsandcommunityconcessionsbeingavailableinamixedeconomy.
9) Governmentsshouldallocatesignificantlymoreresourcesonthemanagementoftheforestsector.Thismustincludegreaterinvestmentintheregulatorysystemthroughreformandcapacitybuilding.
10) Thirdpartyobserversofalltypesshouldbewelcomedascontributorstogoodgovernanceduetotheirindependenceandaccesstoinformation.
11) Governorsshouldgovern.Itisnotadequatetohavecomplexsystemsofregulationthatareneverenforced,farbettertohavefewerlawsproperlyenforced.
Facilitatingforestbusiness
1) Concessionfeesshouldbemadeassimpleaspossibletocollectandshouldbebasedonarealisticappraisaloftheexpectedvalueoftheconcessiontothebusiness.However,feesshouldbesetinsuchawayastoavoidinefficientuseoftheforestresources.Biddersshouldhaveaccesstotheforestbeforetheysubmittheirbidsinordertomakerealisticbidsbasedonaproperknowledgeofthelikelycostsofaccessandofthequalityandquantityoftheforestresourcesavailable.Feesshouldtakeintoaccountthemarketpricesoftimbers.
2) Thereshouldbecompletetransparencyrelatedtothecollectionofforestfees.
3) Concessiontenuresystemsmustbemademoresecurebasedongoodperformance.Rollingtenuresofrotationlength(25-40years)refreshedattheendofeveryshorttermplanningcycle(5-10years)maygiveconcession-holdersthenecessarysecuritytoinvestinbetterforestmanagementpractices.
4) Upfrontchargesandperformancebondsrequiringcashsecuritypresentasignificantcosttobusinessesandalternativesshouldbeconsidered.Forexample,anequitybondinaparent
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companywithdividendswithheldmaybeaneffectivewayforagovernmenttoobtainsecuritywithoutcapitalcoststocompanies.
5) Incentivesshouldbeavailabletoencouragecompaniestofulfilthetermsoftheircontractsandforsubjectingthemselvestoalternativesystemsofthirdpartyinspectionsuchasbycertification.
6) Small-scaleforestryrequiressignificantlong-termsupportinordertobeviableandtheyshouldhavesimpleregulatoryrequirementsinordertoreducetheregulatoryburden.Theregulatoryburdenisanimportantfactorinlimitingtheirattemptstoformalisetheirbusiness.Thereshouldbesignificantadvantagesandgovernmentsupportforinformaloperatorspreparedtoformalisetheirbusiness.
7) Small-scaleandcommunityforestownerscouldbesupportedbyentrepreneursinforestmanagementandprocessinginarealpartnership.
8) Therearelikelytobeadvantagesinsituationswheregovernmentsasownersoftheallocatedtimberrightsbecomepartnerswiththeconcession-holdersasopposedtoopponents.
Improvedforestmanagement
1) Forestmanagementplansshouldfocusontheessentials(e.g.realisingtheobjectivesfortheforestresource,mitigatingthemostsignificantenvironmentalandsocialimpacts.Forestmanagementplansshouldthereforebebasedonrealisticobjectivesandanassessmentofkeyimpacts.
2) Forestmanagementplansshouldbesupportedbydetailedtechnicalguidelinesthatensuretheywillbeexecutedproperly(e.g.instructionsonhowtocarryoutassistedregenerationofforestinaharvestinggap.)
3) Landscapelevelplanningshouldprecedeforestmanagementplanninginordertoidentifysuitableconcessions.Anintegratedlanduseplanningsysteminvolvingallpartiesabletoinfluencelandusedecisionsisvital.TheOneMapinitiativeofIndonesiaisanexampleofthisapproach.
4) Independenttechnicalexpertscanbeasignificantadvantageinprovidingimpartialadvicefreefromtheconstrictionsofgovernmentpolicyofinternalpoliticsofgovernmentorganizations.
5) Forestyieldplansshouldbebasedonrealisticexpectationsofgrowthunderthetypeofsilvicultureimplemented.Forexample,whereenrichmentplantingandtendingarecarriedoutincanopygapstheimprovedgrowthandtheselectionofspeciesshouldresultinhigheryieldswhichneedtoberecognisedbyincreasedharvestratesinthefuture.
6) Monitoringofperformanceisrequiredforkeyindicators.Itisrecognisedthatmonitoringiscostlyandshouldbelimitedtotheminimumnecessary.
Involvinglocalstakeholders
1) Socialimpactassessmentsmustbecompletedbeforetheallocationofconcessions.
2) Socialissuesandengagementmustbeincludedinforestpolicy.
3) AllcustomarytenuresshouldbeidentifiedandmappedpriortotheallocationoftenuresothatcustomaryrightsholderscanbeengagedinFPIC.
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4) Specificsolutionsarerequiredtoaddresstheproblemsfacedbytheinformalsector.Theseshouldincludemeasuresaimedatdecriminalisingthesectorbysimplificationofforestcodesandallocationoftimberrights.
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