MYANMAR Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized MYANMAR COUNTRY ENVIRONMENTAL ANALYSIS Sustainability, Peace, and Prosperity: Forests, Fisheries, and Environmental Management Public Disclosure Authorized FOREST RESOURCES SECTOR REPORT © 2019 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Cover photo: ©RECOFTC MYANMAR COUNTRY ENVIRONMENTAL ANALYSIS Sustainability, Peace, and Prosperity: Forests, Fisheries, and Environmental Management FOREST RESOURCES SECTOR REPORT Support by i CONTENTS ACKNOWLEDGEMENTS iv ABBREVIATIONS AND ACRONYMS v EXECUTIVE SUMMARY vi 1. WHY ARE FORESTS IMPORTANT? 1 Economic significance 2 Social importance 8 Rural poverty 8 Forest poverty links 9 Livelihoods 10 Non-Timber Forest Products 13 Gender 14 Ecosystem services 15 Overall value of forest ecosystem services 15 Watershed protection 16 Mangroves coastal protection and storm mitigation 17 Comparing costs of forest degradation and forest conservation 17 Conflict 18 2. STRUCTURE AND MANAGEMENT OF THE SECTOR 21 Forest cover 22 Forest stock and distribution 24 Forest classification 26 Policy and legal framework and national programs 27 Policy and legal framework 27 Forests and land tenure 30 Institutional arrangements 31 Working Circles (WCs) 33 3. ISSUES AND DRIVERS OF DEGRADATION 35 Forest loss 36 Mangroves 37 Biomass and carbon loss 38 Timber growing stocks 39 ii Drivers of Deforestation 40 Land-use conversion 40 Mining 41 Development of roads and other infrastructure 41 Overarching and conflicting priorities 42 Drivers of forest degradation 42 Unsustainable extraction of timber 43 Fuelwood production 44 4. FOREST MANAGEMENT 47 Timber production system 48 Timber management system 48 Enforcement 49 Plantation 51 Forest products and value chain issues 54 Community forestry 56 CF framework 56 CF establishment process 57 CF challenges 58 CF and land classifications 60 Community Forest Enterprises 61 Protection 63 Protected Areas 63 Mangroves 66 Capacity - Staffing and budget 68 Field management and new skill development 68 5. CURRENT CONTEXT FOR ACTION 71 6. RECOMMENDATIONS 75 BIBLIOGRAPHY 85 iii ACKNOWLEDGEMENTS This Country Environmental Analysis Forestry Resources Sector Report was prepared by a team composed of Aye Marlar Win, Lesya Verheijen, Nina Doetinchem, Martin Fodor, Oliver Springate-Baginski, Stephen Ling, Rory Hunter, Thiri Aung, and Werner Kornexl. The extended team included Aung Kyaw Naing, David Gritten, Kyaw Htun, Lucy Emerton, Lwin Aung, Martin Greijmans, Robert Obendorf, Ronnakorn Triraganon, and Tun Tun Thein. The team would also like to acknowledge the generous support provided for preparation of the report by the Program on Forests (PROFOR). iv ABBREVIATIONS AND ACRONYMS AAC Annual Allowable Cut MEITI Myanmar Extractive Industries ADB Asian Development Bank Transparency Initiative BEWG Burma Environmental Working Group MFF Mangroves for the Future CBFM Community-Based Forest MOALI Ministry of Agriculture, Livestock and Management Irrigation CBT Community-Based Tourism MoEA Ministry for Ethnic Affairs CCA Community Conserved Area MOECAF Ministry of Environmental CFE Community Forestry Enterprises Conservation and Forestry CFI Community Forest Instruction MONREC Ministry of Natural Resources and CFUG Community Forest User Group Environmental Conservation CPA Community Protected Area MoPF Ministry of Planning and Finance CSO Civil Society Organization MRRP Myanmar Reforestation and DALMS Department of Agricultural Land Rehabilitation Program Management and Statistics MSS Myanmar Selection System DFMP District Forest Management Plans MTE Myanmar Timber Enterprise DOF Department of Fisheries MTLAS Myanmar Timber Legality Assurance DZGD Dry Zone Greening Department System EAG Ethnic Armed Group NBSAP National Biodiversity Strategy and ECD Environmental Conservation Action Plan Department NCB National Coordinating Body EIA Environmental Impact Assessment NCFWG National Community Forestry Working EITI Extractive Industries Transparency Group Initiative NCRMC National Coastal Resources EU European Union Management Committee FAO Food and Agriculture Organization NDC National Determined Contribution FD Forest Department NGO Nongovernmental Organization FLEGT Forest Law Enforcement, Governance NLUP National Land-Use Policy and Trade NTFP Non-Timber Forest Product GDP Gross Domestic Product PA Protected Area GoM Government of Myanmar PES Payment for Ecosystem Services GZDZ Greening of Central Dry Zone PFE Permanent Forest Estate ICCA Indigenous and Community Conserved PPF Protected Public Forest Area PROFOR Program on Forest IFC International Finance Corporation REDD+ Reducing Emissions from INBAR International Network for Bamboo and Deforestation and Degradation Rattan SEA Strategic Environmental Assessment JICA Japan International Cooperation SMEs Small and Medium Enterprises Agency TNI TransNational Institute KBA Key Biodiversity Area UNDP United Nations Development KNU Karen National Union Programme LSMS Living Standards Measurement Survey VFV Vacant, Fallow, and Virgin MCCSAP Myanmar Climate Change Strategy VPA Voluntary Partnership Agreement and Action Plan WC Working Circle v EXECUTIVE SUMMARY Myanmar’s forest and timber sector has been central to the country’s economy and society, particularly over the last century. Myanmar’s forests contain some of the most valued species in the world—particularly rosewood, ironwood, and teak. Myanmar also has one of the most longstanding forest management systems in the tropics. Today, despite reduced timber extraction revenues, wood industry still generates over 8 percent of formal government revenues. Beyond timber, rural society largely depends on non-timber forest products (NTFPs) and agroforestry for food, medicine, and wood fuel, which is by far the most important energy source in rural Myanmar, with between 60 percent and 80 percent of communities relying on this source. Some of Myanmar’s forests also form some of the world’s most critically important biodiversity ‘hotspots’. The importance of Myanmar’s forests is not limited to their wood products alone: • Forest governance and the peace process are directly intertwined: Two-thirds of Myanmar’s remaining forested areas are managed by ethnic groups, in many cases through customary tenure systems, with much of this forest located in conflict areas. It is evident that inclusive forest governance and natural resource management and empowering local agents will contribute to the national peace-building process and reduce conflict. • Community forestry (CF) and smallholder plantations are financially and socially viable and can meaningfully contribute to rural income generation, provided the appropriate institutions, rights, incentives, and technical support are in place. Community-based forestry programs represent international best practice, providing tenure to communities to stimulate investments and creating trust, income, and business opportunities. • Wood processing can enhance exports and rural jobs creation. Myanmar currently loses economic value from limited or wasteful low-quality timber processing of some of the world’s most valuable timber. Looking to other countries in the region, Vietnam invested heavily in high value-added processing and forest small and medium enterprises (SMEs) over the last 10 years, and today is the fifth largest exporter of wood products with revenue exceeding that of Myanmar more than twentyfold in value. The looming global supply gap for wood products will most likely boost this sector even more in the future. • At the same time, forests and mangroves provide significant ecosystem services for water catchment, habitat for flora and fauna, carbon storage, soil nutrient recovery, and increasingly important disaster risk protection. With accelerating climate change, forests’ role in both mitigation and, more crucially, adaptation will be increasingly essential (improving basin-level hydrological functions, especially maintaining moisture recycling and rainfall and reducing droughts and floods), especially for downstream/lowland populations. In the years before the democratic transition, forest areas were largely over-logged to maximize timber revenues with little consideration for sustainability, which resulted in widespread degradation of the Permanent Forest Estate