PROFIT WITHOUT PLUNDER:
REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM
NIGEL SIZER
WORLD RESOURCES INSTITU PROFIT WITHOUT PLUNDER:
REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM
NIGEL SIZER
WORLD RESOURCES INSTITUTE SEPTEMBER 1996 KATHLEEN COURRIER PUBLICATIONS DIRECTOR
BROOKS BELFORD MARKETING MANAGER
HYACINTH BILLINGS PRODUCTION MANAGER
NIGEL SIZER COVER PHOTO
Each World Resources Report represents a timely, scholarly treatment of a and responds to the guidance of advisory panels and expert reviewers. Unless subject of public concern. WRI takes responsibility for choosing the study topics otherwise stated, however, all the interpretation and findings set forth in WRI and guaranteeing its authors and researchers freedom of inquiry. It also solicits publications are those of the authors.
Copyright © 1996 World Resources Institute. All rights reserved.
ISBN 1-56973-103-9
Library of Congress Catalog Card No. 96-061230
Printed in the United States of America on Recycled Paper.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM CONTENTS
Acknowledgments IV 2.2 The Moratorium on New Concessions
Foreword and Other Major Donor Initiatives 34
2.3 Guyana's Forest Law 35 Summary and Recommendations for Policy-makers, Civil Society, and the 2.4 Barama's Experience in Guyana 37 International Community 2.5 Other Foreign Holders of I.I Policy Overview: Logging Concessions 43 Forests and Guyana's National Interest 2.6 Recent Requests for New
Logging Concessions 44 1.2 A Proposed Policy Framework. 2.7 Revenues from Logging in Guyana 46 1.3 Challenges to and Opportunities for Profit without Plunder 5 2.8 Lessons from Commercial Log Production by Amerindians in Guyana 50 1.4 Recommendations for Action: Realizing the Potential of Guyana's Forests 15 2.9 Lessons in Tourism Development from Belize and Costa Rica and Community-led 1.4.1 Overview of Recommendations 15 Tourism in Ecuador 53 1.4.2 Reform of Land Allocation and Land Use Planning 15 2.10 The Value of Non-timber Forest Products ... 54 1.4.3 Reduce the Damage and Increase the Revenues from Logging 18 2.11 Lessons from Community 1.4.4 Build Sustainable Communities, Development Based on Forest Especially around Non-Timber Values 22 Resources in Mexico and Brazil 55 1.4.5 Institutional Restructuring, Training, and Education 27 2.12 Guyana's International Commitments to 1.4.6 Make Foreign Assistance More Effective 29 Forest Development and Conservation 58
Background and Analysis. 33 About the Author. 61
2.1 Timber Production Trends in Guyana 33 Notes. 63
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM ACKNOWLEDGMENTS
rior to giving the many acknowledgments Mohamed, Doorga Persaud, Clive Thomas, Joshua due we must stress that those listed below do Ramsammy, Charles Greenwood, Debbie Pnot necessarily, by their inclusion here, Davenport, and Gordon Streeb. endorse the findings presented in the report which are the sole responsibility of World Resources Internationally, valuable review comments and Institute and the author. criticism came from Helena Landazuri at the Inter-American Development Bank; David Cassells, Many people in Guyana and elsewhere helped to Lorene Flaming, and Phillip Hazelton of the World make this research possible. At the Guyana Forestry Bank; Roberto Samanez of the United Nations Food Commission, the Acting Commissioner Clayton and Agriculture Organization; John Palmer; Hall provided considerable input, valuable Conservation International's Richard Rice; Thomas comment, insight, and constructive criticism Lovejoy at the Smithsonian Institution; Rachel throughout. Of the Forestry Commission staff, Crossley; and Vicente Molinos. Natasha Landell-Mills and Sophie Higman (now with the Overseas Development Administration - At World Resources Institute, Marta Miranda ODA) collected background statistics and reviewed provided much input as the leading research the analysis. The ODA also provided useful input assistant for the report. Kenton Miller, Walt Reid, through Chris Turnbull and Ian Stuart. In Guyana's Robert Repetto, Jonathan Lash, Paige Brown, Trish Office of the President, Navin Chandarpal, Adviser White, William Visser, Nels Johnson, Bruce to the President on Science, Technology, and Cabarle, Owen Lynch, Donna Wise, Chip Barber, Environment, and Andrew Bishop, the Land-Use Laura Lee Dooley, Shirley Geer, Marsha Mogowski, Coordinator, were of great help. Dina Sperling, and Nina Tanner Robbins all gave much needed support during different parts of the Others in Guyana who provided useful information process. Kathleen Courrier, as usual, did a and criticism were Henry Tschinkel, Director of the wonderful job of editing. Hyacinth Billings Iwokrama International Rain Forest Program; Toni managed the production supported by Samantha Williams, John Willems, and David Persaud of the Fields, and Maggie Powell desktopped expertly on a Forest Producers Association (all active in the local tight deadline. logging industry); Ivan Welch, former Coordinator of the National Forestry Action Program; S.K. Finally, we would like to thank Guyana's Head of Loong, S.K. Chan, and K.T. Chung of The Barama State, Dr. Cheddi Jagan for asking the difficult Company; and Janette Forte of the Amerindian questions that inspired us to prepare this report for Research Unit at the University of Guyana. Others use in the policy reform process that he is leading. who gave information and ideas were George
Walcott, Jocelyn Dow, Frank Alphonso, Rayman N.S.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM
IV FOREWORD
overnments in Suriname, Guyana, and negotiate more secure contracts, and prevent many other tropical countries are under massive environmental damage. G intense pressure to make quick cash by selling their forest resources to foreign firms. Just to the west of Suriname is Guyana, a nation with about 14 million hectares of potentially In 1993, Suriname, its economy near collapse, loggable forests covering some three fourths of the took the desperate step of inviting foreign nation's total area. All told, these forests could investors to explore possibilities for establishing generate perhaps US$10-20 billion in raw log sales multi-million hectare logging concessions in the for a country with a per capita income of US$800. country's interior. By mid-1994, at least five After reading Backs to the Wall in Suriname, proposals were on the table and in negotiation Guyana's President, Dr. Cheddi Jagan, invited for forest resources that had barely been WRI to help him find ways to reform forest inventoried or evaluated. policy in Guyana. President Jagan was particularly interested in how Guyana could reap If those contracts had gone through, some 25 to revenue from its forests without destroying 40 percent of Suriname's land area could have them. In Profit without Plunder, Nigel Sizer tries been logged under conditions that would have to answer that question. been an economic and environmental disaster Dr. Sizer identifies seven key actions that could both for Suriname and for the world. Fortunately, help Guyana sustainably manage its forests: the crisis was averted, thanks in part to a WRI report—Backs to the Wall in Suriname: Forest • Define the permanent forest estate. This should Policy in a Country in Crisis—by WRI Senior include production forest for timber harvesting, Associate Nigel Sizer and Richard Rice, director biodiversity hotspots in need of protection, of economic policy at Conservation International. forests for community management, and The report laid out pragmatic ways for Suriname protection forests on steep slopes and other to put teeth in its forest-concession policy, fragile environments.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM
V • Maintain and extend the scope of the moratorium with marketing, basic finance, and administra- on major forest land-use decisions. In early 1995, tion could all help. Guyana's government effectively declared a three-year moratorium on new foreign and local • Ensure that forest sustainability issues are designed large-scale logging concessions to allow time for into structural adjustment programs. Components foreign assistance to strengthen the Forestry promoting foreign investment and tax reform Commission and for policy and legal reform. may need special emphasis. The moratorium should be extended in scope An important twist in this story is that the pending designation of new national parks and foreign loggers may not be making money in the resolution of outstanding Amerindian land Guyana. To date, one company's financial results claims. have been far below expectations, according to company executives. They claim that high • Better monitor the negative impacts of timber harvesting costs, a poorly trained workforce, and harvesting. Timber harvesting is increasing low timber stocks in the forest make operating rapidly, but there is little data on how it affects costs in Guyana high. Guyana's forests or people. Policy-makers need If such operations are unprofitable Guyana must such information if they are to make well-infor- look elsewhere for revenues. Promising options med decisions. include the development of tourism, non-timber forest products, and community and small • Standardize procedures for awarding concessions business development in the interior. and revise the forestry tax structure. Key needs are for public announcements of new forest areas Guyana deserves great credit for its steadfast available for logging, open competition through commitment to implementing such international auctions, performance bonds, increased area accords as Agenda 21 and the Convention on fees, the scrapping of royalties, and thorough Biological Diversity. Landmark laws creating the background checks on all investors. Iwokrama International Rain Forest Program and a new Environmental Protection Agency • Increase the contribution ofchainsaw loggers and were passed in early 1996. The government has small producers to the economy and reduce their also stood firmly by its commitment not to negative impacts. Chainsaws should be extend the area under large-scale timber registered and licensed like firearms, small harvesting concessions until key policy reforms producers should be forced to pay the taxes they and institutional changes have been made. owe, and areas set aside for chainsaw opera- tions should be clearly demarcated and activities Nor is Guyana alone in its struggle to resist the confined to those areas. pressure to cash in forest resources for one-time short-term gains. A number of countries—such • Strengthen community initiatives to make forest as Cambodia, Laos, Cameroon, Congo, Gabon, use sustainable. Local credit schemes, advice and Suriname—are rich in timber but poor in
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM
VI the government and civil machinery needed to continue to study development options. The assess and carefully manage foreign participation forthcoming Forest Concession Policy in Latin in their economies. In the face of compelling America and the Caribbean, for instance, will human needs, solutions that offer no returns are expand on the Suriname and Guyana reports not acceptable. with additional case studies from Venezuela, Guatemala, Honduras, and Nicaragua. Modest foreign-donor interventions can buy time for alternative forest-based development. Donor We deeply appreciate the support for this efforts should be fortified and better coordinated research and the publication of the report that to equip and staff Guyana's finance and forestry the Wallace Genetic Foundation, the departments to negotiate better deals. Outside Inter-American Development Bank, and the support would help local people get a say in German Federal Ministry for Economic decisions that affect them, and find alternative Cooperation and Development provided. For "green" routes to profiting from the forests. general support for WRI's program on Eco-tourism, gene hunting, and low-impact biodiversity, we wish to thank the Netherlands logging all hold promise. Ministry of Foreign Affairs and the Royal Danish Ministry of Foreign Affairs. We hope this study can help Guyana and other nations facing similar challenges find alternatives to ill-planned and poorly monitored JONATHAN LASH timber harvesting. In the meantime, WRI will PRESIDENT WORLD RESOURCES INSTITUTE
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM
VII SUMMARY AND RECOMMENDATIONS FOR POLICY-MAKERS, CIVIL SOCIETY, AND THE INTERNATIONAL COMMUNITY
I.I POLICY OVERVIEW: Yet Guyana's government and business FORESTS AND GUYANA'S community is far from achieving even a small NATIONAL INTEREST fraction of this potential revenue. Government income from logging activities in 1995 totalled uyana's forests appear to be extremely less than US$i million, and the forests' vast valuable. But appearances may be non-timber potential has scarcely been developed G deceptive. Back-of-the-envelope at all. Local entrepreneurs estimate that fewer calculations show that its 14 million potentially than 5,000 foreign "nature tourists" visited loggable hectares could generate US$1020 Guyana's forests in 1995. Total revenue from all billion worth of raw logs that would be worth up non-timber forest products came to less than to US$50 billion after processing. Community US$i million. Although one company alone activities, local development, non-timber forest exported over US$30 million of timber products products, environmental services, forest-based last year, the company claims that several factors tourism, and scientific research could also made this move unprofitable; immensely high generate income. harvesting costs stemmed from transport
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM MAP i i LOGGING CONCESSIONS, FOREST COVER, AND I AMERINDIAN AREAS IN GUYANA
N
VENEZUELA
Legend _ . Georgetown-Lethem !<•• KI
__ State Forest Boundar-
f^\| Iwokrama Forest Prov-1
fmrra Recognized Amerind • • r •
ISJUU Areas
1111 Logging Concessions
Bl Forest Cover
I I Other Vegetation Source: Organization of American States, 1996. Note: Logging concessions refer to Timber Sales Agreements (TSAs) and Woodcutting Leases (WCLs). State Forest Permissions (SFPs) are not included here.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 2 difficulties, low worker productivity, and low the Berjaya Group and Solid Timber Sendirian timber density accentuated by management from Malaysia, and The Buchanan Group from errors. Canada—companies with questionable environmental and social track records—have Forest covers 16 million of Guyana's 19 million tried to acquire logging rights in Guyana. In the hectares, making it one of the most forested case of Berjaya this has been achieved quietly lands in the world. (See Map 1.) The mangroves, through Guyanese fronts (Case Timbers and marsh forests, dry evergreen forests, seasonal UNAMCO). Over the past few years, at least five forests, lowland rainforests, and montane other substantial requests from foreign investors rainforests are home to over 1,000 tree species, for major concessions (each over 500,000 thousands of other plant species, and hectares) have attracted attention. In each case, 1 innumerable animal species. The geographic the supplicants have promised huge investments heart of the Guiana Shield, Guyana has over in processing installations. To date, President 8,000 species of plants, half of which are found Jagan's administration has stood firmly against nowhere else, and more than 1,000 species of these requests. This appears to be a wise move as terrestrial vertebrates live in the forests. The our analysis suggests that the promise of large Guiana Shield is contiguous with the Amazon future earnings from investments in logging may Basin and represents one of the best conserved be little more than fantasy. parts of the region.
Realizing the potential value of Guyana's forests is The promise of large future a challenging task. Twenty years of severe earnings from investments in economic decline and an accompanying brain logging may be little more than drain ended with the election of President Jagan in fantasy. 1992, but most government agencies are poorly equipped and are only now figuring out which reforms are needed and how to carry them out. Policy, legal, and institutional reforms now afoot could help Guyana more fully realize economic Recognizing the need for long-term sustainable growth, jobs, and government revenue from development of Guyana's forest resources, the forest resources while maintaining such critical national government has been considering fundamental ecological functions as watershed granting exploratory logging permits to Asian protection and conservation of its rich flora and and North American companies and has been fauna. President Cheddi Jagan has made clear putting in place the safeguards and commitments to sustainable development by infrastructure needed to make sure that such ratifying the Convention on Biological Diversity investment generates fair economic returns for and the Convention on International Trade in Guyana without major environmental and social Endangered Species, and by adopting the impacts. A number of foreign investors such as International Tropical Timber Organization's
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 3 BOX i A POLICY FRAMEWORK FOR DEVELOPMENT AND CONSERVATION OF GUYANA'S FORESTS
i. Make span1 available, and in some cases assign il 4. Clearly dc-lim-.'ili1 rights and responsibilities to bud lo a wick- variety ufuses—iiif luclif IL» (.ommunily and resource-; lo make- the distribution of benefits (oresln. national parks. industrial logging, and from forest tenure and use more equitable. Iraditional subsistence—balanced to kee.p future options lor alternative uses open. V Make '.he administration of lores: ';irK' al1^ lesoimes more efficient and more open to public, scrutiny. 2.. Maintain tin1 ecoio^kal ideality of lorest lands, in d. I hrouuh an open (low ol'information, encourage p.irt by conser\ii\L; biological diversity, water. and nurture informed civic engagement in Ihe i:arl)on. and nutrient iwlt'S. forest polity debate.
Maximize (ores; revenues lo the extent that •;. Allrac: and cnioiirayi- ivsponsiljle local and •»o is compatible \\ ilii tf r and !IJ. above. foreign investors.
objective of achieving sustainable production of commitment not to extend the area under timber in all member producer countries by the large-scale concessions until key policy reforms year 2000. But more action is needed and and institutional changes have been made. needed soon. In late 1995, President Jagan invited the World Despite slow progress in some areas, the Resources Institute to help him identify options government has made impressive advances. for reforming forest policy in Guyana. How can Landmark laws creating the Iwokrama Guyana reap revenue from its forests without International Rain Forest Program and a new destroying them, the President asked. This report Environmental Protection Agency were passed in addresses this urgent challenge. The analyses early 1996 after a country-wide land use spring from information provided by the consultation and broad public review of these Government of Guyana and others. The and other proposals. Together with the Carter suggestions and conclusions should spur positive Center, the government has prepared an and constructive debate and help policy-makers impressive National Development Strategy. More make well-informed decisions. In particular, we than 200 national experts in 23 sectoral working hope that the report will contribute to Guyana's groups participated in this strategy which is now National Development Strategy and related forest being reviewed by the public prior to publication. policy reform efforts. The study looks at Great restraint has also been shown in dealing timber-based forest products and also considers with foreign investors, including those tourism, earnings from ecological services, requesting large timber harvesting concessions. genetic resource harvesting, the building of The government has stood firmly by its sustainable communities based on forest use,
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 4 FIGURE i I RECENT ECONOMIC TRENDS IN GUYANA, 1989-1995
Annual Inflation Rate Gross Domestic Product Per Capita (Consumer Price Index) 120 1000
100
2 80 800
60 be O3
600 40
20
400 1 l I I 1 I I I I I I I 1989 1990 1991 1992 1993 1994 1995 1989 1990 1991 1992 1993 1994 1995
Source: Guyana Statistical Profile, Inter-American Development Bank, Washington, D.C, 1996. and the economic significance of national parks. 1.3 CHALLENGES TO AND Part I summarizes the findings and presents OPPORTUNITIES FOR PROFIT recommendations to Guyana's decision-makers, WITHOUT PLUNDER civil society, and the international community. Part II provides more detailed background and Economic Development analysis. Under the closed repressive regimes of former governments, Guyana's economy shrank by as much as 6 percent per year in the latter 1980s. In 1.2 A PROPOSED POLICY FRAMEWORK the 1990s, with broad economic reforms in To make the most of Guyana's forests over the place, the economy has grown at an average of long term, a new seven-part policy framework is about 7 percent per year, gross domestic product proposed. (See Box 1.) per capita has risen to over US$800, up from
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM around US$500 in the late 1980s, and inflation has been brought under control. (See Figure 1.) FIGURE 2 PRINCIPAL This is still very low compared to that for most of EXPORTS FROM South America, though, and continued growth GUYANA, 1994 remains a fundamental policy goal. The country's natural resources, especially timber and minerals, are seen as a major potential source of Wildlife Timber future growth, and pressure on decision-makers <1% Shrimp to sell access to the forest resources for quick 3% increases in short-term revenue is enormous.
How Environmentally Sound Logging and Timber Processing Can Boost the National Economy Timber is Guyana's most important forest product, but logging currently adds little to the national economy. (See Figure 2.) By official statistics, the forest sector contributed only 1.7 percent of Gross Domestic Product in 1992, though if unrecorded production, minor forest products, and secondary processing are included the estimated contribution was closer to 5 percent.2 The minimal royalties and fees in the forestry sector further reduce the contribution to Source: Government of Guyana, 1995. the national economy. l
as access, capital, and orders allow, with little Extraction as currently performed, planning for later harvests. Recent research by with little or no long-term Tropenbos in Guyana suggests that very long planning, is more akin to mining cutting cycles of at least 75 to 100 years would be than forestry. required for sustained yield management of greenheart. Extraction as currently performed, with little or no long-term planning, is therefore The logging industry has depended largely on more akin to mining than forestry, and the greenheart (Chlorocardium rodiei), which industry may be stanching its own lifeblood. accounted for 40 to 50 percent of the total Already lease-holders have to travel ever farther volume harvested. This and such other valuable to find the resource and greenheart is clearly in species as purpleheart have been cut as quickly decline. New investors, such as The Barama
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 6 unregistered. With very low overhead these FIGURE 3 SAWMILL AND producers handily outcompete the more CHAINSAW established mill operators in supplying the less LUMBER than discerning local market with construction PRODUCTION, materials, but the environmental impact of their 1989-1994 harvesting is barely monitored at all.
In early 1995, the Government of Guyana 80 effectively declared a three-year moratorium on = Sawmill Production new foreign and local large-scale logging = Chainsaw Lumber 70 concessions (Woodcutting Leases and Timber Sales Agreements) to allow time for foreign OJ 60 assistance to strengthen the Forestry Commission and for policy and legal reform. The i 50 agreement reached with the British Overseas Development Administration called for reforms 40 regarding policy, the royalty system and Forestry Commission structure, and the Commission's I 30 own administrative, management, and monitoring functions. | 20 Fees charged to companies extracting timber 10 from Guyana's State Forests are extremely low—no more than 1 to 2 percent of total 1 I I production and export costs.3 In January 1996, 1989 1990 1991 1992 1993 1994 the Government proposed dramatic fee increases that would at least double annual revenue to the Source: Guyana Forestry Commission, 1996. Forestry Commission bringing the total to over US$2 million. But compared to those of other Company, are developing markets for other countries even the new rates are low. Current species and products—in their case, area fees equal only 0.01 percent of export value plywood—which has become by far the largest of sawn greenheart and only 0.001 percent of single export product from Guyana's forests. export value for greenheart logs. Royalty rates initially set by the Forest Act have been revised Independent chainsaw users account for a only four times during the last quarter century 4 growing segment of production. (See Figure}.) despite high rates of inflation. Contracts Three to four hundred are fully legal and stipulate minimum royalties in Guyana dollars in registered with the Guyana Forestry Commis- nominal terms, which, due to devaluation and sion, around two thousand more are inflation, are minimal in real terms.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 7 FIGURE PRODUCTION OF BALATA AND MANGROVE BARK, 1950-1995
Balata Mangrove Bark
1000000 r 800000
700000 800000 600000
£ 500000 600000
;§> 400000
400000 "* 300000
200000 200000 100000
0 0 1950 1960 1970 1980 1990 1950 1960 1970 1980 1990
Note: Dotted lines indicate missing data. Source: Guyana Forestry Commission, 1996.
To date, little long-term systematic research has and create further potential for increasing been done on the impacts of logging on Guyana's government revenues. forests. But important studies are under way by the Dutch-based Tropenbos group, and new ones The Forest Producers Association claims that have been proposed as part of the Iwokrama members' enterprises are not making even International Rain Forest Program.5 normal profits though they were highly profitable in the past. Recent studies show a high potential Local loggers could work more efficiently for profits, though only from exports since according to a recent study by a leading forest competition in the domestic market from industries expert tapped to help Guyana's low-cost independent chainsaw operators is stiff. national development planning team. Improvements in mill design, logging methods, Emerging markets for "good wood" could boost and especially in marketing and business forest revenues. Increasingly, consumers are administration would undoubtedly boost profits willing to pay a premium for logs and wood
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 8 products from well-managed forests where Pharmaceutical companies have been collecting environmental and social impacts are reduced to plant and animal material in tropical countries a minimum or on balance are positive, where for many years. In the past, countries where laws are respected, and where employment samples originated received no economic conditions are fair. Taking the hint, some compensation, partly because they played little producers are now considering product role in conserving indigenous biodiversity or certification so that importers and end users can developing final products and partly because the differentiate them from those that are not from pharmaceutical companies were not obliged to responsibly managed operations. Certification share the benefits of their research. Although it can increase a producer's market share, and it typically takes ten years to develop a product has helped some to sell directly to retail outlets, from biogenetic material, the benefits to be which is more lucrative than working through reaped from one product are equivalent to those intermediaries. of a major cash crop.9 Using new chemical screening techniques, researchers can test large numbers of samples of plants and other How Non-Timber Forest Products Can Contribute More to Development organisms against AIDS, cancers, and a wide range of other diseases at lower cost than before. The long-term potential value of such non-timber Interest has also grown in capitalizing on the forest products as fibers, fruits, wild animal traditional knowledge of indigenous societies, meat, latex, oils, fish, and live animals, as well as especially in tropical regions, where individual prospecting for plant and animal products of communities may use hundreds of folk remedies pharmaceutical value, and developing made from forest finds. forest-based tourism, could outstrip that of the timber itself. Even as balata (the latex of Manilkara spp.) and mangrove bark have lost In Costa Rica, the National Biodiversity Institute economic importance (See Figure 4), other forest (INBio) oversees contracts with pharmaceutical products have become more significant. companies to link biodiversity conservation Extraction of manicole heart of palm (Euterpe sustainably with the harvesting and marketing of oleraceae) had risen from an initial 160,000 biogenetic material. It channels the royalties stems in 1990 to 2.7 million stems by 1993 businesses pay under these agreements directly though there are serious questions about the to the maintenance of the National System of ecological impact of this activity.7 A new industry Conservation Areas and to INBio's budget.10 is also growing up around the manufacture and export of high-quality furniture from Clusia spp. Locally, revenue to support forest conservation and Heteropsis spp. lianas collectively employing and sustainable use can be generated through hundreds of people. Such local companies as user fees charged to those who benefit from Liana Cane Interiors Ltd. market products based well-maintained forest cover. For instance, on "traditional Amerindian extraction methods" hydroelectric power generation projects depend 8 to North America and the Caribbean. on forest cover in the drainage areas that supply the reservoirs, to moderate streamflow when concession fees for lodges, restaurants, and retail rains are particularly heavy or light. stores, royalties from the sale of such tourist-related items as maps, guidebooks, or Globally, changes in tropical land use, especially T-shirts can all bring in money. Licenses and deforestation, produce an estimated 23 percent of permits can be collected from researchers, global anthropogenic carbon-dioxide emissions.11 wildlife collectors, tour operators, divers, This amount can be reduced both by planting overnight campers, or river rafters. By definition, trees and by reducing emissions due to forest-based ecotourism provides an economic deforestation or logging-related damage to forests incentive to conserve sites of ecological as well as by reducing expansion of agriculture importance while contributing to a nation's and other non-forest land uses. Under the economy. Forest-based tourism is also more Framework Convention on Climate Change, a likely than more conventional tourism to create "joint implementation" mechanism has been local jobs for guides, guards, rangers, handicraft developed to facilitate transfers of funds to artisans, and workers at local tourist lodges. countries such as Guyana in exchange for reducing carbon emissions due to deforestation Finally, non-timber forest products and services or logging damage. should be viewed as ways to help Guyana diversify the forest-based portion of the national Some 112,000 people visit Guyana each year. economy. Product and market development, Most return to visit family members or come on training, and investment in this sector will take business. Only about 5,000 are true tourists who several years to bear fruit on a scale comparable come to visit the sights and sample the culture. to logging, but the pay-off will be commensurate. Guyana's nine "jungle lodges" each cater to small groups of up to a few dozen visitors at a time. Hinterland Development as a Threat to Kaieteur Falls, the most important tourist Guyana's Biological Diversity attraction can be reached only by small plane, According to United Nations analyses, and facilities for visitors are very limited. Fewer deforestation rates in Guyana are less than 0.1 than a thousand tourists visit these spectacular percent of total forest cover per year.12 Until now, falls each year. Tourism's potential is clear, but no investment in infrastructure to provide access to national plan or strategy to tap it exists and the the hinterland much beyond the soil-rich coastal government spends only a few tens of thousands agricultural zone has been miniscule, and over of dollars each year on tourism development. The half of the 2,600 kilometers of roads are in poor Organization of American States is working with condition.13 But infrastructure improvements are the government to prepare a national tourism under way, and new foreign-owned logging and development strategy. mining enterprises are planning more.
Government can boost revenues from nature Basic measures to ensure that Guyana's rich and tourism in many ways. Park entrance charges, valuable flora and fauna are conserved for future
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 10 generations of Guyanese don't exist. The country On the benefits side, protected areas preserve currently has only one protected area, the opportunities for harvesting such forest products 11,655-hectare Kaieteur National Park. This lack as fish, wildlife, and herbs, and for protection of of a basic network of special places protected ecological processes and genetic resources. from development activities has been recognized Employment opportunities in these areas range by President Jagan's administration, and the from park rangers and guards or tourist guides to government is seeking funding from the Global the establishment of enterprises Environment Facility (GEF) to establish a commercializing forest products. On the debit national protected areas system (NPAS). It is side, direct costs for infrastructure development, expected that a proposal will be presented for the operation and maintenance of parks, and the approval by the GEF Council in October 1996. In enforcement of park regulations must be addition, GEF, the United Nations Development calculated. Indirect costs also arise. Local Programme, and the Commonwealth Secretariat populations must be compensated if their crops are establishing the Iwokrama International Rain are destroyed by wildlife, and the opportunity Forest Program, which covers 366,000 hectares. costs of not developing an area for another use should be considered. Often though, National parks can incubate non-timber product conservation turns out to have a surprisingly ventures, tourism, and environmental services. high value. They also serve as an insurance policy, maintaining forest cover and natural habitat and Conflicts over Amerindian Lands thus preserving both obvious and surprise and Rights options for future economic development. Some 40,000 to 45,000 Amerindians live in Guyana.15 Amerindian lands comprise about 16 percent of the country, including 10 to 15 percent National parks can incubate of the State Forest. Some Amerindians continue non-timber product ventures, to live in traditional, forest-dependent tourism, and environmental communities while others are highly integrated services. into Guyana's national economy and express the clear desire to adopt modern techniques, technologies, and products. Some work in Guyana's proposed protected areas system would logging in communities concentrated along the maintain these assets, complementing and Brazilian and Venezuelan borders and in the offsetting the impacts of other more intrusive northern section of the country between the land uses.14 Protected areas incorporate many Cuyuni river and the Atlantic Ocean. systems and management uses ranging from strict scientific reserves to multiple-use areas that Guyana's Amerindians can be divided into nine provide for a variety of extractive activities, as the ethnic groups: the Arawak, Akawaio, Arekuna, Iwokrama site in Guyana is expected to do. Carib, Makushi, Patamona, Wapisiana, Warau,
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 11 and Waiwai. Research during the 1980s life—alcoholism, prostitution, the pollution of identified more than 115 different Amerindian waterways, and more. villages, but since individuals and entire villages often relocate, this figure can be used only as an An overwhelming problem in much of Guyana's estimate.16 Hinterland Guyanese are not all hinterland, such as Region 1 in the northwest, is Amerindians so separating Amerindian land a lack of basic education. Another is the general issues from hinterland Guyanese issues is a malaise of the population due to malaria and complex task. tuberculosis. As Janette Forte argues:
Like many countries, Guyana has yet to resolve "The economic potential of their forest to certain Amerindian land issues. Some indigenous peoples will not he realized if the indigenous people live in logging and mining families involved are simply not able to concessions or in areas where these activities make use of it. But use of their forest by have been proposed and rely on threatened forest outsiders will, on current trends, only unfit resources for subsistence. The 1951 Amerindian the indigenous peoples yet further, not Act (amended in 1961 and 1976) legally merely for participation in resource-based recognized 63 Amerindian villages and two development, but for their very survival. In a Amerindian districts. The Act specifies who is nation which needs all the resource use it allowed to live in and use Amerindian areas, how can mobilize, it is a paralyzing dilemma. "* the areas are to be governed, and, most important, the land rights of those Amerindians The basic integrity of these communities is being in villages and districts. The law clearly states disrupted as the younger more employable men that concessions for mining and logging cannot and women seek jobs in the towns and cities or overlap with officially recognized Amerindian far off in the mines and logging camps. This lands. In practice, according to Amerindian drain of cheap labor deprives the communities of rights activists and studies by the University of the hands needed to plant next year's crops, Guyana's Amerindian Research Unit, hunt, fish, and build, as well as to carry on concessionaires and Amerindians frequently cultural traditions that have held the groups clash because some traditional communities together for generations. remain without title to their land or because as traditionally nomadic peoples they make use of Since community leaders are poorly informed, areas larger than those titled. As many as 41 forest policy is unclear, and forest service Amerindian communities (home to more than extension into the communities is weak, 8,000 Amerindians) have not have been officially relationships between the communities and 17 recognized. Two other problems are the lack of commercial interests seeking access to clear demarcation (or the inaccurate surveying) community-owned forest resources are often of Amerindian land boundaries, and the lack of fleeting and unfavorable to community assistance in addressing the dark side of mining development.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 12 Lack of Government Capacity, national parks. The Forestry Commission, Conflicting Institutional Iwokrama, and the proposed Environmental Mandates, and Outdated Laws Protection Agency are all responsible for Guyana has no comprehensive laws on land-use studying and managing biological diversity in the planning, monitoring, and enforcement. Instead, State Forests. The Ministry of Health is charged much sectoral law and many institutions have with providing health services in the State evolved, creating conflicts and overlaps in Forests, as is the Forestry Commission. The jurisdiction. As a result, the administration and Guyana Natural Resources Agency and the use of the State Forests are encumbered.19 For Guyana Forestry Commission are both example, the Forestry Commission has power, authorized to plan and develop the use of the under the Act that created it, over the country's forest resources. The Forestry "occupation" of State Forests—that is, over Commission, Geology and Mines Commission, mining, agriculture, and tourism. But mining Ministry of Trade, and the Lands and Surveys and agriculture are both governed by other Department can all grant and provide access to institutions and laws too. The State Lands Act forest areas. does not apply to State Forests but the Department of Lands and Surveys, working The Environmental Protection Bill recently under the Act, issues leases for agricultural passed by Parliament will lead to the creation of activities within the State Forests. State Forest the Guyana Environmental Protection Agency and Mining Districts overlay one another, and yet (EPA), which should plan for the mitigation of the Mining Act and the Forests Act each grant environmental impacts, as well as natural exclusive land rights to licensees. Sub-surface resource conservation across all sectors, mineral rights and surface timber rights are including mining, forestry, agriculture, and superimposed, sometimes with little urban growth. Clearly, the possible overlaps and communication among the responsible conflicts with existing sectoral legislation will institutions (Geology and Mines Commission have to be addressed if the EPA is to be effective. and the Forestry Commission). Small- and medium-scale mining permits are processed The Guyana Forestry Commission Act (Act 20) of entirely within the Geology and Mines 1979 establishes the Commission and charges it Commission, bodies responsible for other land with formulating and implementing forest policy, uses are often not consulted. The Ministry of regulating the production and marketing of forest Trade issues permits to investors to build products from State Forests or other Forest Lands, eco-lodges in State Forest areas, causing conflict granting permits, issuing and collecting fees and with the Forestry Commission. Recognizing fines, and establishing national parks, wildlife, these issues, institutional reform and coordinat- and nature reserves. But with few professionally ing mechanisms are being implemented. trained staff and far too few resources, the Commission must monitor registered cutting The Forestry Commission and the National Parks practices on some 6.3 million hectares of forest, Commission are both mandated to manage as well as unregistered activities.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 13 Seven years ago, the National Forestry Action welfare programs cut back, the government Plan estimated that 74 additional trained workforce reduced, and tax collection foresters would be needed to effectively monitor increased—all to reduce the public deficit, pay off both old and proposed concessions, and the need public debt, and, ultimately, balance the nation's can only grow. Since the NFAP report was books. Higher unemployment and lower wages written, sawn lumber production has quad- tend to force more people into previously rupled. Exports in 1994 were 150 percent of the unattractive marginal or "informal" economic 1989 levels and slated to rise even further in activities that may further forest degradation. In 1995-96 as Barama and Primegroup increase Guyana, independent chainsaw logging has production.20 increased so dramatically that it now meets much of the domestic rough sawnwood demand. Improving International Assistance in Developing and Conserving Guyana's To help ameliorate the potential negative impacts Forests of structural adjustment, numerous donor programs are being planned or implemented by Multilateral, bilateral, and private international the World Bank, Inter-American Development assistance for Guyana has increased since Bank, German (GTZ) and British (ODA) IMF-approved macroeconomic reforms Governments, Global Environment Facility, and (structural adjustment) began in the late 1980s the private Carter Center to directly address and democratic reforms and free elections were issues of forest conservation and use. By far the held in 1992. While economic reform in Guyana most significant aspect of recent support for was desperately needed, some components of forests was the negotiation by the donor structural adjustment can have major impacts on community, led by ODA, of a moratorium on forest use.21 As import and export restrictions are new Woodcutting Leases and Timber Sales reduced or removed entirely, exchange rates Agreements until the ODA's Guyana Forestry liberalized, and obstacles to foreign investment Commission Support Project reaches its reduced, prices rise for exported products, three-year objectives. including timber, relative to those of goods produced and sold locally. At the same time, the government is under pressure to meet economic The Carter Center has engaged the government growth targets. Combined, these factors can in a major multi-sectoral planning exercise to increase short-term pressure on natural produce a National Development Strategy. The resources and speed their depletion. goal is to help create a national plan for sustainable development through an exercise Other changes also accompany economy-wide coordinated by the Ministry of Finance. The reforms of the type mandated in Guyana. Short- discussion of forest policy limited itself mostly to to medium-term increases in unemployment are timber issues and mainly involved common. So is an increase in poverty as representatives of timber interests. The groups subsidies are removed, social support and working on tourism, on land-use policy, and
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 14 •jMIHPMHIHIHMElp
mining also considered forest issues. The final 3. Build sustainable communities, especially report has yet to be published pending further around non-timber forest values. public review. 4. Restructure institutions and improve training and education. Despite hard work by some donors to promote coordination and communication among the 5. Make foreign assistance more effective. various agencies, both are still lacking. This gap is by no means unique to Guyana, but rather For each, we present short, mid- and long-term reflects the lack of coordination mechanisms recommendations aimed at priority and strategic among international donors generally.22 Limits in needs. From those described below, seven are of Guyana on public administrative and technical the highest priority. (See Box 2.) capacity further complicate efforts though, so some important needs get overlooked while 1.4.2 Reform of Land Allocation and others are duplicated. Land Use Planning Arguably the highest priority for the government 1.4 RECOMMENDATIONS FOR ACTION: as it seeks economic benefits from forest REALIZING THE POTENTIAL OF resources is the need to clarify national land-use GUYANA'S FORESTS planning. As noted by Guyana's National Coordinator of Land Use Planning, Andrew 1.4.1 Overview of Recommendations Bishop, institutionalization of coordination Five major challenges face Guyana: among agencies, legal authority, procedures or criteria for resolving conflicts among land users 1. Reform resource allocation and land use (such as loggers and miners) are all lacking and planning. other problems stem from institutional overlaps 2. Reduce the damage and increase the revenues and from redundancy and conflict among the 23 from logging. various sectoral laws. Skilled personnel and
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 15 basic data, as well as data-storage and retrieval Where the case for demarcating Amerindian systems for planning, are also lacking. lands has been clearly made, Guyana's Nonetheless, there is regular Department of Lands and Surveys could consider information-sharing and informal dialogue delegating mapping and demarcation to the between key agencies such as the Forestry communities themselves using simple Commission, the Geology and Mines geographic positioning system (GPS) technology Commission, and the Department of Lands and and basic mapping expertise from either the Surveys. Department or foreign donors and NGOs. This community-based mapping approach can speed Short-term Priorities up demarcation, reduce its costs, and ensure full Define the permanent forest estate local support for the boundaries. The Pilot to include production forest for Program to Conserve the Brazilian Rain Forest timber harvesting, biodiversity has made great progress in applying such hotspots for protection, protection methods. forest on steep slopes and other fragile environments, and Beyond these steps, Guyana's government clearly community forests. must urgently define the permanent forest estate Through the GEF National System of Protected that includes the key sites for biodiversity Areas project, a picture of the priority areas for conservation and community forestry, as well as biodiversity conservation in Guyana is now sites critical for watershed protection and erosion emerging. Some such areas may be under threat control, including some of the hillier regions in right now from new logging agreements or other the south, and other fragile environments. development proposals and should therefore be high priorities for demarcation as protected areas Maintain and extend the scope of for low-impact sustainable use. This approach is the moratorium on major forest being pioneered in Guyana through the land-use decisions 24 Iwokrama initiative. Guyana's State Forests are already almost entirely allocated to loggers, and the government has Immediate action should also be taken to reduce every reason to fully investigate the development tension and frustration among Amerindians over options described in this report and others before still-undemarcated lands that they claim. Many further locking up more lands in large long-term sound recommendations from previous studies logging concessions. Other options hold great have yet to be implemented. If these basic local promise for generating sustainable benefits for demands aren't resolved, further conflicts will local communities and the country. The arise and more attention will be devoted to crisis moratorium on large-scale logging agreements management than to the design and should be extended until the design of the implementation of long-term development National Protected Areas System has been programs with communities and investors. completed so that areas identified as the highest
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 16 priorities for national parks and other forms of allocation are widely understood reserve are not allocated for logging. The and replicated. moratorium should also cover land subject to The people of Guyana and foreign development outstanding Amerindian land claims until the assistance agencies both need a clear under- claims are settled. This move would create standing of what the government proposes and considerable international goodwill and support the opportunity to suggest revisions. The for further forest development programs in following suggested goals are based on those Guyana. developed by Guyana's National Land-Use Coordinator, Andrew Bishop.26 (These are not Create a "Presidential Committee restricted to forest lands.) for Sustainable Development of Forest Lands, " • Economic goals: manage land use to foster This Committee should tap the most senior economically healthy communities and government officials responsible for forests, promote the efficient use of the land, resources, mining, lands and surveys, finance, tourism, and infrastructure and to assure the efficient health, education, and other relevant sectors and timely construction of capital facilities for together with community and NGO leaders, water, sewer, roads, drainage and irrigation. environmental, social development, and human rights advocates, and leaders from the mining, • Environmental goals: protect the quality and logging, and agriculture industries. The integrity of ecosystems and encourage the President should give the Committee a fixed conservation of natural resources, including period, say six months, to form consensus energy. recommendations, priority policies, and both the legal and institutional reforms needed to • Social goals: promote equitable access to the improve forest lands administration. If there is benefits of land use, favoring primarily the consensus, President Jagan should commit poorest groups in society by improving Guyana to implementing the proposed reforms. long-term employment opportunities and the The starting point for assessing reform priorities community's sustainability. should be the National Development Strategy and the results of the Collaboration and Specific measurable objectives, developed in Consultation on Land Use in Guyana.25 close consultation with Guyana's people should flow from each of these three sets of goals. Clear and widely publicized methods and criteria for Mid-term Priorities assigning priority land uses to specific parts of Guyana will help spawn political discussion and Establish clear goals and specific open the debate to more objective analysis of the objectives for land-use planning so options that best serve the general populace, as the criteria and methods for land opposed to only vested interests.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 17 Long-term Priorities Standardize procedures for awarding concessions and revise Build institutional capacity and the forestry tax structure to create a public-private Forum for include public announcements, Sustainable Land Use. open competition through auctions, performance bonds, To integrate and coordinate land-use planning, increased area fees, scrapping of Guyana should create a Forum for Sustainable royalties, and background checks Land Use to advise the President, propose on all investors. revisions of laws, develop a holistic vision for Guyana's complex structure of forest sector fees, Guyana's hinterland, continue wide public royalties, taxes, and fines includes area fees, consultations, and establish a central information export commissions, volume-base royalties, and clearinghouse and data base in coordination with corporate taxes. The government should consider the University of Guyana and local NGOs. The restructuring this system to make it simpler and Forum could monitor the implementation of fairer and to make tax evasion harder.27 Restruc- reforms proposed by the Presidential turing should favor those companies with Commission for Sustainable Development of efficient operations that best comply with envi- Forest Lands and conduct discussions and ronmental and social standards. negotiations involving the public and private sectors and NGOs. A number of options are open to the government. The best of these is a combination of 1.4.3 Reduce the Damage and Increase the Revenues from Logging area-fee based auctions, performance bonds, selective levies, and strict penalties. Bids would be evaluated Short-term Priorities along with information about the bidders past environmental, social, and financial performance.
Better monitor the negative As current forest leases expire or new areas impacts of timber harvesting. become available through other means this A major difficulty encountered in the preparation should be widely advertised both in Guyana and of this report was the stark lack of information internationally. These areas should then be on the impacts of timber harvesting on Guyana's auctioned. Well-publicized auctions are likely to forests and people, even though harvesting is garner more than one application for the area, increasing dramatically as Barama, DTL, Case thus promoting bidding. Qualification for Timbers/UNAMCO, and other companies application and the right to bid should be based expand their production, in addition to the upon the company's financial track record, its thousands of independent chainsaw operators. compliance with national law, its experience in This issue deserves urgent attention from the forestry, and its membership in relevant national Guyana Forestry Commission, and it has been forestry industry federations in other countries anticipated in the ODA support program. where they operate.28 Auction of access to natural
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 18 resources in Guyana is not without precedent. prospective investor were to pay an application Under the State Lands Act, licenses can be fee, Government could use the funds to contract advertised with costs paid by the bidder, and an independent firm of corporate intelligence minimum floor prices set. The Mining Act calls experts to provide unbiased information about a for invited bids for areas of land, as well as proof company's business capacity, marketing skills of adequate financial resources and technical and connections, respect for host-country laws, competence. environmental clean-up records, and compliance with tax codes, as well as its financial status. Auctions can't work if substantial information on Large local investors with operations, the area isn't made available to potential bidders. investments, and financial relationships with Both basic inventory data and information on foreign banks and partners may need to be access and transport costs from the area to points checked in-depth too. A smaller fee could be of export are needed. Many current logging charged to cover the costs of reviewing track leases will expire over the next four to five years records and current financial standing. giving time for the Forestry Commission to consolidate existing inventory data and conduct If these background reviews reveal that the more surveys where needed prior to reissuing company has not always been a good corporate the leases through auction. citizen, especially during the past five years, then it should be excluded from further consideration The efficacy of such methods in the mining and a clear public explanation offered, or the sector have been investigated far more performance bonds for that particular company thoroughly. One indication of the difference in raised due to the greater risk that they will not income secured is seen in Great Britain, where respect the regulations. auctioning 15 blocks of seascape for oil extraction in the North Sea generated US$53 million in How can government provide an incentive for initial payments versus only US$4 million from a responsible forest management and compliance further 267 blocks of roughly equal value with the law and codes? It should require awarded on a discretionary basis.29 An open applicants to put up a performance bond that is public process of resource allocation keeps paid up front, or secured by a third party, and corruption at bay. Without it, the opportunities returned to the concessionaire once the contract are rampant. It is well documented that in many ends only if it has complied with basic social and countries, senior government officials have environmental standards. If at any time during received bribes for helping specific companies contract implementation compliance is breached, acquire specific areas for logging. as much of the performance bond as is needed to pay full damages would be forfeited. Also essential is careful screening of foreign investors who, unlike their local counterparts, do Area fees for current lease holders should be not have a well-known track record. If the based on estimates of revenue and production
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 19 costs from information collected in the field, needed to modernize their forest management from market intelligence reports, and other and milling operations and improve marketing; publicly available data, taking into account and implementing policy reforms that favor transport, labor, and other costs. A more industrial development. Removing controls and sophisticated approach would be to differentiate restrictions on log exports, renegotiating tax among species, and among various parts of the holidays to create a level playing field, and country since differences in soils, forest types, holding government-sponsored auctions for and infrastructure may significantly alter costs. concessionaires unhappy about reform should The rate would be set at such a level as to provide satisfy most concession holders. a well-run company with "normal profits." Once calculated, fees should be indexed with inflation. To provide the final "carrot," a private sector When existing leases expire, the areas should be support program funded by foreign donors to auctioned. assist local companies make the transition to more competitive, environmentally and socially A shift from royalties to area fees would release responsible operations should be designed and substantial amounts of Forestry Commission implemented. Filling an important gap in the staff time thereby allowing them to become more planned and ongoing aid for Guyana's forests, active in monitoring the impacts of timber this program should feature training in harvesting, promoting better forest management, marketing and financial management, in forest and so on. Area fees are easy to collect and policy and policy reforms, and technical training provide a strong incentive to producers to in mill design and alternative equipment, waste increase efficiency. They also provide the reduction, and low-impact logging. To its credit, opportunity through area fee waivers for parts the Guyana Forestry Commission has been of concessions to encourage establishment of carrying on some such activities, though in an ad- protected areas within concessions. hoc way since it lacks fully trained staff and resources. Employ a "carrot-and-stick" approach to increase revenues. Remove controls on log exports. Locally owned logging operations are highly While there are no overt restrictions on log inefficient in many ways, but they may have exports from Guyana, the Forestry Commission enough political clout to resist higher taxes, does exercise discretionary authority over log costing the government millions of dollars each exports based upon pricing guidelines mandated year in lost revenues. This impasse could be by the Guyana Timber Export Board (Transfer of surmounted with a three-part "carrot-and-stick" Function) Act of 1981. These controls allow the approach: gradually increasing the rate of Commission to collect a small tax on exports and taxation on logging operations; forcing logging exert some control over transfer pricing (the operators to improve efficiency, but also offering practice of under-declaring export prices to them the technical and financial assistance reduce declared profits and thereby evade taxes).
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 20 The tax structure recommended above would conserved forest estate. Such measures are provide a far more effective, standardized, and contemplated in the draft Code of Practice that open-to-scrutiny means of collecting revenue and the Forestry Commission is in the process of stopping transfer pricing. Experience in other introducing to the industry. Those countries suggests that restricting or banning log concessionaires who do this well should get exports hurts both the economy and the some form of public recognition—perhaps environment. Restricting log exports lowers annual awards or even a tax break proportional to domestic log prices and thus invites inefficient the size of the set-aside. A simple formula now local processing. The economic returns from being tested in Bolivia is to forgive the area tax on inefficient local processing are often less than the zone set aside as a permanent protected area.31 those from direct export of raw logs. "The economic consequences of imposing log-export Mid-Term Priorities restrictions have been negative, both from the perspective of the forestry sector and the country as a whole," says a recent World Bank study of Increase the contribution of several countries and "No analysis exists that chainsaw loggers and small 30 producers to the economy and demonstrates any positive impacts." reduce their negative impacts. Environmental results have been disappointing so far too. Log-export restrictions depress local Chainsaw loggers, working alone or in small prices for logs, and low prices can invite groups, have been harshly criticized. They cut overharvesting and waste. Removing current de timber in situ and carry it to the road or river facto restrictions would also create goodwill in the bank by hand. Most are unregistered illegal logging industry in Guyana—important if other operators who steal from the government or taxes are to be increased. from concessionaires. In these cases, basic law enforcement is lacking and investing in personnel and the strategic interception of unregistered Reward concessionaires who set up timber in transit can make all the difference. To protected areas within their its credit, the Forestry Commission has in recent concessions. years confiscated significantly more illegally cut Usually, large parts of concessions are off limits timber by large and small producers alike. to logging since they are swampy, too hilly, otherwise inaccessible, or poorly stocked with In contrast, registered legal logging by chainsaw commercial timber species. Concession owners operators has much to recommend it. It can should be encouraged to formally map out these create employment because it is so areas and set them aside as permanent labor-intensive. It may also damage trees and soil conservation zones, effectively managing them as less as fewer roads are needed and skidders are private parks. In addition, around 5 percent of not used. Some simple measures could make the operable area should be set aside to ensure chainsaw logging less destructive: that all forest types are well represented in the
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 21 • Treat chainsaws as firearms and insist that they be social management is rapidly gaining ground in registered and licensed to legal users only. A license forest-policy debates. The strictest principles and code should be applied to each saw. those most widely accepted among the • Participation by loggers in obligatory training environmental advocacy groups leading the courses organized by the Forestry Commission as a charge to reduce consumption of tropical and condition of getting licenses. These courses would temperate timbers that don't come from teach best felling and cutting practice, chainsaw well-managed forests were developed by the maintenance, and the law and codes of practice, Forest Stewardship Council (FSC). Based in as well as simple accounting for tax collection. Mexico, this group has begun accrediting Loggers could even be required to pass a simple independent certifiers of timber that meet FSC test before being awarded their licenses. Since standards. many of the practices taught would be in the immediate interest of the loggers to apply, Companies that go through certification benefit better practice should follow quickly. in a number of ways. They may increase their • Registration and taxation of small producers market share by appealing to buyers seeking (through the licensing by the Forestry Commission) "green" timber, find partners in importing with the Inland Revenue Department and countries looking for opportunities to invest in enforcement of basic tax laws covering small "green" forestry, cut out intermediaries by selling producers. (Currently, most pay no tax.) directly to wholesalers and retailers in the • Intensification of local zoning and surveying to importing countries, and through competition ensure that small-scale logging is confined to with companies on the forefront of forestry learn prescribed areas with adequate swaths of quickly about new developments in technology conserved forest between the logged areas. and markets.32 • Closure of logged areas to further exploitation to allow for forest regeneration and conservation. 1.4.4 Build Sustainable Communities, Forest fees for chainsaw operators should be Especially around Non-Timber Values similar in structure to other concessionaires, Short-term Priorities with auctions, area fees, performance bonds and so on. Area fees could be higher to cover the Strengthen community greater cost to the Forestry Commission of sustainahility initiatives. policing smaller operations. A Community Forest Conservation and Development program should be initiated to Long-term Priorities provide basic technical assistance to Encourage third-party certification of communities interested in developing corporate compliance to gain global forest-based enterprises, such as the extraction competitive advantage. and processing of non-timber forest products, Third-party certification of a company's fauna management, and "green" forestry. The compliance with standards of environmental and program could include the following elements:
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 22 • Advice in community association travel companies), the extent to which local strengthening, basic administration and communities will benefit, and so on.33 Such a finance, marketing, and contract negotiation. study should be an integral part of the programs currently being implemented by the Organi- • Incentives to communities to participate could zation of American States and under the include access to low-interest, small loans (of Amazon Cooperation Treaty. say, US$100 to US$5,000) to help build community enterprises. The fund could be Enforce regulation of the live capitalized with a small percentage of revenues animal trade. from the logging and mining activities that have Guyana's wildlife trade, especially in primates, taken a toll on traditional communities in parrots, and macaws is poorly monitored and Guyana's hinterland. regulated. Anecdotal reports of highly predatory collection and trade in live animals are common. • A simple knowledge bank where communal This inherently unsustainable activity may provide experiences in development and forest resource significant short-term employment for Amerindian management could be deposited and shared. collectors, and it certainly generates large profits for • For larger, well-organized community a handful of traders and exporters, as well as development proposals, help preparing funding importers and retailers abroad, but it does lasting requests for foreign donors. damage to the forest environment as local populations of species that disperse seeds decline. • Marketing assistance. Unless this trade can be adequately regulated and monitored, with quotas based on scientific • Training in the preparation and oversight of research, then it should be again prohibited, as it basic biodiversity-prospecting benefit-sharing was in Guyana earlier in this decade. contracts.
• Promotion of partnerships between Mid-term Priorities communities and outside private investors. Develop non-wood forest products.
Assess costs and benefits of The University of Guyana should strengthen its tourism development. work on non-wood products in collaboration with Before embarking on any ambitious and the Iwokrama initiative (which addresses this potentially costly national eco-tourism issue), Tropenbos, local entrepreneurs, and such development program, the government should outside groups as the Center for International first carefully evaluate the costs and benefits of Forestry Research and Conservation such a strategy. Such factors as the attractiveness International. Specific measures could include: of Guyana to eco-tourists, the degree to which benefits will stay within the country and not be • Identification of a small number of non-wood exported (in, say, payments to foreign-based products that are already in the marketplace and
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 23 therefore already have potential for further The Tourism Advisory Board should be commercial development (e.g. Heteropsis and strengthened so it can lead implementation of Clusia liana's and others used in furniture the national plans. With representatives of the making, Brazil nuts, and Manilkara latex or various government departments, as well as the balata). private sector, the Board should be expanded to include community representatives. Only • Research on the population, biology, ecology, dialogue among these various interest groups and management potential of these species to will ensure that the obstacles ecotourism now reduce any negative environmental effects of faces are understood and addressed and that local harvesting. community needs are adequately integrated into • Preliminary investigation of the potential for the development plans. increasing supply and developing markets for these products. The Board should also establish strong information-acquisition links with such overseas • The diversification of markets for these institutions as the Amazonian Special Commis- products to reduce risk of commercial failure. sion for Tourism of the Amazon Cooperation Treaty (CETURA),35 the U.S. Ecotourism Society, • Development of an information and data base the World Wildlife Fund, the University of accessible to communities and entrepreneurs or California Research Expeditions Program, and would-be investors. Conservation International, as well as continuing • The formation of associations of producers of close ties with such agencies as the Organization the various products to market more effectively of American States and the European Commis- and realize economies of scale.34 sion. The Board could prepare a Code of Practice for ecotourism in Guyana drawing upon the concerns of community leaders and the Strengthen coordination and experience of the country's more responsible private-public partnership through the Tourism Advisory Board. investors. Compliance with the Code should be a prerequisite for getting and renewing tourism If, as it seems, Guyana has eco-tourism-develop- licenses. ment potential, then the Ministry of Trade and Tourism, the Forestry Commission, Ministry of Another priority is streamlining the review and Finance, the Office of the President, and perhaps approval process and setting clear criteria for other government departments must agree on its allocating land to eco-tourism development. priority within national development planning. Investors who want to build lodges in the forest Once that is decided, resources should be must get permission and a land concession from allocated from each participating ministry and the Forestry Commission if the land is part of the requests for further support to foreign donors State Forest. should be quickly completed so that the strategy can be further developed and implemented.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 24 Carefully assess finance and Long-term Priorities pricing options for nature tourism development to ensure revenue Address infrastructure and capture. training needs. Among the most costly activities required for Numerous financing mechanisms, both grants ecotourism development are private and public and concessional credits, are available to investments in infrastructure and workforce government and the private sector for developing training. The dramatic lack of infrastructure in nature tourism. These include support from the Guyana's hinterland is both a tourist draw and an International Finance Corporation of the World impediment. At a minimum, the rough airstrips Bank and the Inter-American Development must be in good repair and certain sections of Bank, debt-for-nature swaps, and the Overseas road may need further government investment. Private Investment Corporation's (OPIC) The burden on private investors is also International Environmental Investment Fund, substantial: they must start from nothing to build as well as direct investment by conservation- accommodation and provide other basic facilities, oriented NGOs.3<5 Guyana's Ministry of Trade and such as interpretive trails. Early in planning, Tourism should develop and regularly update an these costs must be carefully weighed against the information base on such programs and potential projected benefits. encourage local entrepreneurs to seize the opportunities. The Tourism Advisory Board should institute a training and licensing program for all Tourists visiting eco-lodges and national parks entrepreneurs seeking permission to develop are often given too few opportunities to spend tourism in the hinterland. Key elements of the money. Accordingly, the Government of Guyana training program should be environmental should establish well-thought-out pricing policies awareness and sensitivity to local communities, for protected areas and other special tourist sites. methods for involving local people in tourist Park-entry fees, development of lodges and management, and so on. Training costs should shopping opportunities all help. Fees set high be covered by a license fee paid by private enough generate revenue, help create political investors. support for further expansion of protected areas and eco-tourism development, reduce crowding Establish a tourism-development in tourist hot spots, provide an opportunity for fund. the public agency to educate and inform visitors Tourism is a highly specialized business. Thus at the point of fee collection, and engender top-quality expertise is needed to help develop 37 greater respect for natural sights. Some portion the sector and to encourage local entrepreneurs of the higher fees can also be pumped back into to follow suit. Many business questions need to local communities. be addressed: What advertising strategy to use? Where to advertise? Which segment of the
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 25 market to target? How to market Guyana itself? Promote development of And, more specifically, how to integrate tourist biodiversity prospecting. itineraries to the Caribbean islands with visits to Small-scale biodiversity prospecting is already Guyana's rainforest, and how to improve under way in Guyana, even though the country Guyana's direct air connections to such key cities 3 lacks an adequate policy, regulatory, and as Miami? A Tourism Development Fund could institutional framework. On the other hand, as be set up with a part of the revenues generated bioprospecting increases, so will opportunities from tourism in Guyana. Under the manage- for sharing royalties from any commercial ment of the proposed Tourism Advisory Board, it applications that spring from ongoing research. could allocate resources for hiring marketing As it stands, both the local communities that are professionals and taking other steps to answer helping collect specimens and Guyana as a whole these and related questions. lose out. Worse, irresponsible overcollecting could locally extinguish valuable species. Monitor the impacts and economics of tourism. Recognizing the importance of these issues, Initially, environmental and social impacts from neighboring Suriname has already established a ecotourism in Guyana may be tiny since the pilot scheme with a U.S. pharmaceutical number of visits is so few. As numbers grow, company (Bristol Myers Squibb) and however, impacts on wildlife, through littering Conservation International. Traditional Maroon and through conflicts with local communities, communities help collect the plant material that could show up. Careful long-term monitoring of is sold to the company for testing. Funds are the sector by government from the beginning deposited in the "Forest Peoples' Fund," which is will help establish a baseline and identify partially controlled by the leaders of Suriname's problems before they become overly difficult to traditional peoples and used by their communi- solve. Collection of basic visitation data ties to promote sustainable forest use and (focussing on earnings from the visits and not conservation. Sales-based royalty payments for simply number of visits) and regular surveying of any discoveries stemming from the research go visitors to identify problems and improve tourist into the fund. satisfaction should also be part of the monitoring program. To make biodiversity prospecting work and pay, Guyana's government should help Iwokrama to Any revenue drawn from ecotourism should also create a three-way partnership with Amerindian be monitored as a first step to maximizing the leaders, local conservation groups, and tourist earnings of the country. Imports of government to design and implement a program, consumables and material for construction or share benefits and the administration of transport equipment, repatriation of earnings generated funds, and seek international partners and profits of foreigners, interest paid on foreign to embark on adequately regulated contractual loans, and overseas marketing all bear watching.39 biodiversity prospecting. At the same time,
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 26 government should consider suspending Promote payment for prospecting activities that do not satisfy basic environmental services. contractual agreements, if these exist, pending While deforestation, soil erosion, and biodiversity preparation of new contracts and other necessary loss are not major problems in Guyana today, mechanisms. Iwokrama could play a pivotal role they could soon become serious as development in expansion of bioprospecting activities as it is spreads across the landscape. As the global already developing draft contracts and establish- benefits of reducing these impacts are ing the necessary partnerships. recognized, Guyana should position itself to be a Over the medium term, Guyana's government prime candidate to receive assistance. should start establishing a policy framework to More specifically, Guyana should develop basic encourage prospecting. The goal is to ensure that expertise so it can better gain access to financial the country and its traditional peoples, who may resources. Expertise in designing carbon offset possess valuable knowledge about medicinal projects, preparing proposals for the Global plants and other substances, receive their fair Environment Facility, and making local tax and share of the proceeds. Local capacity for basic royalty payments reflect the local user costs of screening of samples and storage of information watershed services could also help in the energy about each sample could increase the revenue sector, where Guyana is likely to be a strong retained in Guyana from i to 6 percent of net candidate for energy conservation and efficiency 40 sale value to 10 to 15 percent. The capacity to measures. locate, identify, and store representative samples of wild biodiversity should also be increased, together with basic information about ecology, 1.4.5 Institutional Restructuring, uses, and habitat. This effort could build upon Training, and Education the work of the Biodiversity Center at the University of Guyana and the Smithsonian Short-term Priorities Institution's Flora of the Guianas project. Establish formal partnerships with Regional cooperation on all these projects would international research institutions. keep each country's costs down and help Far from new, the policy, technical, legal, neighboring nations come to an agreement on institutional, and other issues that Guyana is access to genetic resources. Many of the species struggling with now have been studied intensely found in Guyana abound in Suriname, by many institutions around the world. The Venezuela, and Brazil, or even further afield. Government of Guyana should encourage such Restricting access and requiring prospectors to national institutions as the University of Guyana negotiate contracts in Guyana could simply and Iwokrama to invite experienced foreign encourage some to shift operations to less groups to Guyana to do similar research and to restrictive countries. help develop strategies, laws, and institutions. Some of them may already have their own
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 27 funding to do this, or could raise it, so it would • Law enforcement and rapid punishment for cost the country little or nothing. The first step companies that break contracts. would be to stengthen links with the Dutch group, Tropenbos, that is already doing world • An open dialogue with the private sector and class research on the ecology and forestry local communities to detect any approaching potential of Guyana's forests. conflicts and opportunities for improving Commission operations. In the future, stronger links should also be • Contribution to development of alternative forged with the Center for International Forest policies, legislation, and institutional reforms to Research (CIFOR); the International Tropical make the forestry sector more efficient and to Timber Organization (ITTO); some of the major integrate it better with other forest-based U.S. universities (such as University of Florida activities. and Harvard) that have strong programs in forest ecology, economics, and development; and such • Encouragement of partnership activities with major international NGOs as the World international institutions and other countries. Conservation Union (IUCN), World Wildlife Fund, and Conservation International, some of • Adding to Guyana's participation in which already run small programs in Guyana international forest policy debate. that could be expanded. Long-term Priorities Some of Guyana's neighbors have also amassed significant expertise, but contact between the Institutionalize sustainable Forestry Commission and groups in Brazil and development capacity with help elsewhere have been only sporadic. Steady from logging revenues. contact should be maintained with EMBRAPA/ We propose the formation of a private CPATU, Museo Goeldi, and the National Sustainable Forest Use and Conservation Institute of Amazon Studies (INPA) in the Institute for the Guianas based in Georgetown or Brazilian Amazon, the University of Sao Paulo, at Iwokrama. This institute would run training various Colombian institutions, and CATIE and programs ranging from simple community INBio in Costa Rica. development and forest ranger exercises to more advanced training and seminars on such issues Medium-term Priorities as carbon offsets and other innovative policy proposals. Its staff would also carry out applied Revisit the role of the Guyana research. Funding could come from a small Forestry Commission. surcharge on timber production, from donor The Commission should shift from a focus on agencies, and private sources. The program of royalties collection to promotion of responsible research and training could be guided by a mixed forest management practices. Priorities include: international and local board.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 28 More traditional academic courses, such as the the mandate to lead donor coordination in University of Guyana's Diploma in Forestry, should Guyana, and holds regular meetings, but on be made a high priority for receiving scarce forest-related issues it could be more effective. education resources budgets since graduates go to Meanwhile, the moratorium on new Timber work in the private or public sectors and thus Sales Agreements and Wood Cutting Leases, and directly stimulate economic development. guidelines for maximizing the effectiveness of Innovative financing mechanisms could be the planned Environmental Protection Agency, proposed here too, perhaps also using a small and other basic conditions of assistance should proportion of the funds collected in forestry be rigorously upheld. It is far from clear that the revenues and investing them in improved course ODA's forest sector work, the German GTZ materials, funding for field trips, and costs for land-use program, GEF activity at Iwokrama and seminars by non-faculty members. on national protected areas planning, as well as development of the Environmental Protection Agency by the Inter-American Development 1.4.6 Make Foreign Assistance More Bank and the World Bank are working in a Effective coordinated and mutually informed way toward their highly complementary goals. A very poor country, Guyana has extremely limited human and financial resources to use to stimulate economic growth. The international community is thus indispensable to Guyana's Barama pays the equivalent of less future. The country's recent return to democracy than 1 percent of the value of the augurs well for further economic growth, goods exported in taxes. increased employment, and policy reform. Several donors already fund priority forest pro- grams. These should continue, even if progress is slow, while new initiatives take hold. Ensure that forest-sustainability issues are adequately considered in the design of the structural Short-term Priorities adjustment program.
Improve donor coordination to The multilateral finance institutions should ensure high quality assistance. collaboratively review the current and the proposed With only scarce resources at its command the structural adjustment programs to make sure that Government itself is poorly equipped to demand none of its components promote degradation of the and monitor coordination among donors. Thus, a forest resource base or have undue negative multi-donor coordination committee comprising impacts on local communities. Especially worthy of all major donors should be established. The attention are the promotion of foreign investment United Nations Development Programme has and tax administration reform.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 29 Donors should vigorously support would probably extend the favor to Guyana. the Iwokrama International Rain Belize has great expertise on ecotourism, Forest Program. Suriname has developed innovative biodiversity Guyana has shown great leadership by offering prospecting arrangements, and Brazil has almost 400,000 ha of lowland rain forest to launched ground-breaking economic incentives demonstrate sustainable forest use. The initiative in private lending programs to stimulate is at risk of collapse due to lack of donor interest. sustainability. These types of exchange activities Iwokrama represents a unique resource for are usually covered in a disjointed manner by promoting basic and applied research in various bilateral programs. Setting up a central Guyana's forests, and it should attract foreign fund would simplify procedures. scientists and funds. It can help to develop new technologies, markets, and revenue-generating 2. To help transform the private sector. forest-based industries that would be of benefit to Guyana and the region. A program to help the private sector make forest-based industry environmentally and How much Iwokrama ultimately contributes to socially responsible, as well as more efficient, is our knowledge about tropical rain forests as a greatly needed. It plays no part in the existing aid resource for development will also depend upon program, which should be revamped so that the how effectively it forms partnerships and works private sector becomes a direct recipient of loans, with the private sector to get the innovations grants, and technical assistance. The emphasis, developed, tested, and demonstrated at Iwokrama however, should be on helping the industry adopted by others. For starters, the program establish credit-worthiness so that it can access needs to conduct research and demonstration competitive, long-term foreign credit at rates far activities outside of the Iwokrama area on lower than are currently available in Guyana. commercial logging concessions and with Amerindian villages. 3. To provide small grants and loans for sustainable community initiatives.
Mid-term Priorities A rapid response fund is needed to help communities implement ideas for non-timber Set up three small funds: based development and for sustainable 1. To cover the costs of information exchange and agriculture (for instance, using agroforestry and study tours between the countries in the region. integrated pest management systems), and to cover costs of basic training in financial Guyana should strengthen links with other management, accounting and administration, countries in the region experienced in contract negotiation, and technical support. This reformulating forestry and related policies to could be administered through the Amerindian promote sustainable development. Costa Rica Purposes Fund that was established under the recently offered assistance to Suriname and Amerindian Act.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 30 Identify and implement more policy, laws, and institutions begins to translate focussed priorities for capacity into more requests for aid. building. These sorely needed capabilities should be the Furthermore, Guyana is not alone in its struggle focus for donor-funded institution building: to resist the the short-term temptation to award more large logging concessions. Many small • Improving inter-ministry coordination of countries are rich in timber but poor in the donor-financed programs. government and civil machinery needed to withstand predatory foreigners as their • Strengthening the participation of hinterland economies rapidly open up. Others in the club peoples in land-use decision-making. include Cambodia, Laos, Cameroon, Congo, • Monitoring forest resource use and enforcing Gabon, and Suriname. the law. • Vetting and negotiating with new foreign investors. If the wealthy countries cannot • Addressing property rights disputes, especially collectively redirect assistance to those involving Amerindians. emerging tropical economies in • Developing the analytical skills needed to do trouble, then all countries can say national planning and make sustainability policy. goodbye to the world's last great • Encouraging creativity and alternatives to the wildernesses — and it will be a traditional timber-and minerals-based models quick, painful parting. of development.
Long-term Priorities Donors such as USAID, the World Bank, the European Union, and the U.N. agencies should Be responsive to political commit- focus their programs on the challenge that Guyana ment for reform in Guyana and so dearly illustrates. The boost of foreign support other countries facing similar could help President Jagan continue to resist offers challenges. from foreign investors with doubtful track records. Guyana will continue to face challenging And why not do the same in the other half a dozen trade-offs between short-term needs for cash to nations with the same problem? It would cost no address pressing social needs or achieve political more than $100 million a year, or the equivalent of goals and the long-term imperative to achieve less than i percent of U.S. overseas aid. If the sustainable development. Donors prepared to wealthy countries cannot collectively redirect help this relatively small economy plan and assistance to emerging tropical economies in implement conservation and sustainable forestry trouble, then all countries can say goodbye to the initiatives should be ready to increase assistance world's last great wildernesses—and it will be a to Guyana as the political commitment to reform quick, painful parting.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 31 BACKGROUND AND ANALYSIS
2.1 TIMBER PRODUCTION TRENDS IN timber, piles and posts, and hewn timber GUYANA have fallen since the colonial period, while log exports and total timber exports are ver the past 45 years numerous trends in similar to those in the pre-independence the production and export of Guyanese period. (See Figure 7.) forest products emerge from Guyana O 41 5. Production and exports of balata, and Forestry Commission data: mangrove bark have all steadily declined. 1. Production has increased dramatically in the (See Figure 4.) past three years since Barama's operations began. (See Figure 5.) Prior to Barama's operations, 90 percent of all 2. Greenheart production has declined over the wood was cut for the domestic market. In the past 50 years. (See Figure 5.J past, much of the other 10 percent was exported as logs, but in the last few years more sawn and 3. Production of splitwood, posts, beams, and processed timber has been shipped out. By 1994, spars has varied by a factor of five—from plywood from Barama's operations had come to 1,000 and 5,000 cubic meters per year. dominate exports. (See Figure 8.) Excluding (Figure 6.) Barama, roughly half of all Guyanese exports are 4. Exports have been erratic, probably because to Latin American or Caribbean countries, 20 order size has varied and an occasional order percent to North America, and 20 to 25 percent is very large. Exports of undressed sawn to the United Kingdom.42
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 33 Independent chainsaw users account for a By end of second year: Policy, royalty system, and growing segment of production. (See Figure-}.) salary structure Costs are low for these producers who pay no recommendations fees or taxes and, often, pay nothing for the trees implemented. themselves. The only investment in machinery is Key Acts revised and inUS$i,ooo chainsaws, though the roughsawn amended.44 lumber does have to be transported to urban markets. On these terms, the independent By end of third year: The Guyana Forestry producers handily outcompete the more Commission's basic established mill operators in supplying the less administrative, discerning local market with construction management and materials and other high-volume basics. monitoring capabilities strengthened.
2.2 THE MORATORIUM ON NEW During negotiation of the moratorium, the CONCESSIONS AND OTHER MAJOR Government of Guyana and ODA also agreed DONOR INITIATIVES that before any new concessions are granted, In early 1995, Guyana's government declared a the government reserves the right to give three-year moratorium on new concessions 'Exploratory Permits' to would-be investors in (Woodcutting Leases and Timber Sales the forestry sector. Such permits are to be issued Agreements) to allow time for foreign assistance only under strict conditions agreed to by the to be invested in strengthening the Forestry Government of Guyana and the Overseas Commission and both policy and legal reform. Development Administration. New legislation is The British ODA's Guyana Forestry Commission being drafted to accommodate the exploratory 43 Support Project set these implementation permit proposal. targets: The German Agency for Technical Cooperation By end of first year: All forestry and related (GTZ) is implementing the Natural Resources legislation reviewed. Management Project. Although work is far Revised national forestry behind schedule, GTZ will spend US$10 million policy submitted to Cabinet. over two years to establish a national database and geographic information system for natural New royalty rates resources, strengthen coordination of natural implemented. resources management, implement land-use New organizational, planning methods, draft natural resources law staffing, and salary and policy guidelines, and build up the Guyana structures devised and Natural Resources Agency and the Department submitted for approval. of Lands and Surveys.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 34 FIGURE LOG PRODUCTION FIGURE 6 I PRODUCTION OF IN GUYANA, POSTS,SPARS,BEAMS, 1950-1995 AND SPLITWOOD, 1950-1995
6000 r 500000
5000 400000
4000
g 300000 3 S 3000
200000 I 2000
100000 1000
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995
Total Posts, spars and beams Greenheart Splitwood (shingles and staves)
Note: Dotted lines indicate missing data. Note: Dotted lines indicate missing data Source: Guyana Forestry Commission, 1996 Source: Guyana Forestry Commission, 1996
Meanwhile, the Inter-American Development those over a certain size, and how quickly Bank is working to support establishment of the applications will be approved or denied. new Environmental Protection Agency. Recently The World Bank, through the Global provided for by the Environmental Protection Environment Facility (GEF), is helping design a Bill, this new agency will establish requirements protected areas system in Guyana. Candidate for environmental impact assessments (ElAs) protected areas have been identified, but no final and pollution controls. Timber harvesting selections have been made. operations will be required to perform EIAs to gain environmental permits before the Forestry Commission can award new licenses. It is 2.3 GUYANA'S FOREST LAW unclear how this will work in practice, whether it In 1953, the Government of Guyana passed the will apply to all logging operations, or only to Forests Act. Along with revisions made in 1972,
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 35 1979' and 1982, this Act is the most important are payable as soon as forest produce is cut. If for regulating the use of state-owned forest royalties or fees go unpaid, the forest produce resources.45 Somewhat out-of-date, the law does remains property of the State and can be sold. not recognize the Government of Guyana's more recent commitment to conservation and sustain- • The transfer of a timber sales agreement is not able development. Rather, it is an instrument for allowed without the President's permission and the regulation of production, access, and fee any person may oppose such a transfer if he or collection. It does, however, call upon those she can claim a right, title, or interest in the removing forest products to "take all necessary lease. Such claims are then reviewed by a court precaution to prevent damage to other produce." of law. Other provisions include: Forest regulations for implementing the law • The Minister (currently the President holds this apply to various types of leases, royalties, felling portfolio) can designate any State Land as State limits, protected species, and so on. Girth limits Forest and can also remove such designation. reduce over-cutting, and balata is still protected from felling since its latex was a valued • The Guyana Forestry Commission authorizes non-timber forest product. Royalties must be and regulates the occupation of State Forests for paid by all except Amerindians harvesting for the extraction of forest products, the sale of personal or domestic use. Royalties are also forest products, conveyance of produce, and the payable on commercially harvested non-timber operations of saw millers and timber dealers. forest products.
• The Minister, after consultation with the Forestry There are three types of leases for harvesting Commissioner, "may make regulations defining timber from Guyana's forests. The law does not the rights and privileges of Amerindians and distinguish among these explicitly in terms of regulating the exercise of such rights in State area, though in practice the three types have Forests." agreed limits.
• The Minister responsible for forests can grant 1. State Forest Permissions (SFPs) exclusive leases or timber sales agreements to These are usually for areas up to 8,000 hectares those wanting to extract forest produce from (20,000 acres). SFPs facilitate small business State Forests. development and are valid for one year only, but • The Minister can suspend a lease or timber are often renewed for the same operator for sales agreement if any regulation is not many years in succession. Permits may cover observed or condition not fulfilled. only a few hundred hectares. Smaller SFPs are worked by teams of chainsaw operators who • The State owns any forest produce until the extract timber from inaccessible areas, sawing it appropriate fees and royalties are paid. Royalties up rough at the felling site and carrying it out by
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 36 hand to the nearest road or river. Applicants must with the Forestry Commission. In most other fill out a form and pay a small fee. Applications respects, they follow the same procedure as wood are reviewed by a committee made up of Forestry cutting leases do. Commission staff, and the permit approved and issued by the Commissioner of Forests. State The Guyana Forestry Commission has also forest permits have also been granted for much developed a draft Code of Practice for Forest larger areas, but these are now being converted to Operations.46 This Code serves as a set of the other two forms of permit. guidelines and requirements covering all aspects of timber harvesting. It will later be expanded to cover non-timber forest products and 2. Wood Cutting Leases (WCLs) management of forest resources for other These are valid for three to ten years and cover services such as watershed protection. The up to 24,000 hectares (60,000 acres). objectives of the Code are: Applications for WCLs are submitted to the Commissioner of Forests together with an • To promote efficient forest harvesting practices, investment plan that contains details of corporate wise utilization of Guyana's forest resource, and registration, a financial statement, and a record minimal environmental damage. of previous forestry activities. The investment plan must include proposals for capital • To provide operational guidelines of good forest investments, environmental safeguards, and practices for forestry operators. market information. These proposals are reviewed by the Forestry Commission and its • To provide a framework for monitoring forestry board, which then make a recommendation to operations. the President of the Republic, who must give the final approval. WCLs are accompanied by The draft is now being tested by a number of schedules dealing with boundary demarcation, producers in Guyana to assess its commercial relaxation of girth limits, road and bridge layout, feasibility. After further modification it is creek clearance, and so on. expected to become mandatory.
3. Timber Sales Agreements (TSAs) 2.4 BARAMA'S EXPERIENCE IN GUYANA TSAs, introduced in 1982, have no upper size In October 1991, under Guyana's previous limits and they are valid for up to 25 years. They government, the Barama Company Limited won also include schedules for the conservation of an investment contract that gave the company areas and environmental protection. A binding logging rights to 1,690,000 hectares (almost 8 three-year operational plan is required, and it percent of the national territory) in the north- must include specifications for roads, and annual west, near the Venezuelan border.47 Barama is a volumes and species to be cut, with exploitation wholly owned joint venture incorporated in on a block-by-block basis or otherwise, as agreed Guyana between Samling Strategic Corporation
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 37 FIGURE 7 EXPORT OF FOREST PRODUCTS, 1950-1995
Total Timber Log Exports 100000 r 1000000
80000 800000
60000 — 600000 a, 'o 40000 ,3 400000 \. 20000 200000
0 19501955 19601965 1970 1975 1980 1985 1990 1995 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995
Undressed Sawn Timber Hewn Timber 40000 25000 r
35000 20000 30000
'g 25000 £, 15000
> 10000 £ 15000
10000 5000 5000
0 0 1950 1955 1960 1965 1970 1975 19801985 1990 1995 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995
Note: Dotted lines indicate missing data. Source: Guyana Forestry Commission, 1996
1
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 38 of Malaysia (80 percent ownership) and Company in appropriate forest management. Sunkyong Limited of Korea (20 percent). ECTF also monitors the operations and makes recommendations for reduction of The agreement grants Barama a 25-year timber environmental and social impacts. Social impacts sale agreement, automatically renewable for are not systematically monitored though an another 25 years with a 5-year tax holiday Environmental and Social Impact Assessment automatically renewable for another 5 was performed at the start of operations. years—without limitation exemption from income tax, corporation tax, withholding tax, 48 Since high rainfall, clay soils, and, in the past, consumption tax and property tax. All company labor disputes have sometimes severely limited employees do, however, pay income tax and some log extraction from the concession, Barama has local taxes are paid voluntarily by the company. purchased logs from other producers to meet The contract also allows log exports and orders on time and to keep the plywood mill stipulates that any modifications to these running. In addition, scarcity of some lighter provisions will not minimize the benefits enjoyed colored species needed for the external surfaces of by Barama Company. The total proposed the plywood has prompted purchases from other investment, according to the company, was local loggers including Amerindians at Orealla and US$154 million. As of mid-1996, the company Siparita. These actions are legal but neither Barama states that about US$88 million has been nor ECTF monitors environmental and social invested in the plywood mill, logging operations, impacts of the suppliers. However well Barama related infrastructure, and start-up activities. practices forest management within its concession, it may be purchasing from companies or Barama states that it is committed to extracting communities that are less responsible. Total timber from their concession using sustainable purchases from other producers amount to 12-15 forestry practices. Their management plan percent of the company's supplies, or over 2,400 follows what foresters call "sustained yield cubic meters per month on average (much more in forestry," whereby the forest is divided into wet months). Barama's executives state that such blocks that are harvested on a cutting rotation. purchases are only interim measures since the Barama cuts blocks that will not be revisited for Company plans to improve its own log harvesting 25 years, and it has employed directional felling to meet not only the immediate shortfall but also with minimum diameter limits, but has not been other projected downstream activities. able to achieve this throughout the operation because it has been difficult to train the With little site-specific data, Barama invested and workforce to be consistent. On contract to began harvests under the assumption that an Barama, The Edinburgh Center for Tropical average extraction rate of 25 cubic meters per Forests (ECTF) is doing research at the site into hectare and a cutting cycle of 25 years will result growth rates and yield to enable refinement of in sustained timber harvests. Barama's average allowable cut estimates that will guide the extraction rates have been only 12 to 14 cubic
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 39 to assess the viability of expansion of its plywood FIGURE 8 SUMMARY OF mill from its current four production lines. WOOD PRODUCT EXPORTS FROM According to ECTF, current logging removes 26 GUYANA, 1994 percent of the basal area, an average of 4.75 large trees per hectare. Deforestation due to road building is quite low at 2 percent of total cover or Value (USS) 6 meters of road per hectare harvested. ECTF Sawnwood 10.9% notes that the quality of the logging is high 51 ed Lumber 6.8% considering the labor force's inexperience. Hewn Lumber 0.6% Piles 1.5% Poles 0.8% At least five Amerindian communities live within Posts 0.3% Shingles 0.7% or on the periphery of the concession. Four (Chinese Landing, Koriabo, Kurutuku and
Logs Kokerite) are recognized as Amerindian villages 10.4% under the Amerindian Act. The population of these communities totals 697 individuals.52 Under Guyana's law, their village lands are excluded from the concession area. A fifth Total = $24,835,052 community located within the concession (the townships along the Port Kaituma-Arakaka- Source: Guyana Forest Commission Matthews Ridge road) is not recognized by the Amerindian Act, but includes at least 500 Amerindians.53 Several smaller communities and meters per hectare, and Demerara Timbers families are scattered along the Barama River Limited's estimated sustainable yield extraction and other rivers. A Carib area recommended for rates are 15 cubic meters per hectare, both much demarcation by the government's 1969 lower than the initial 25 cubic meters per hectare Amerindian Lands Commission Report also lies Barama estimate. In its environmental within the concession, though this area has never assessment of the Barama concession, the ECTF been officially recognized nor demarcated by the 54 reported that "timber harvesting may not be government. biologically sustainable at planned extraction levels" and noted that this was a major potential Barama has generated employment for local 49 risk. The project manager for ECTF reported Amerindians—a plus since this part of the that there are not enough large-diameter trees in country has been very depressed and lacks basic the concession to support healthy plywood services. On the other hand, as some observers 50 production. The company is now conducting its note, in the long term the communities could first in-depth inventory of the entire concession find themselves worse off as traditional
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 40 community-support structures are broken down • An area tax of G$o.i85 per hectare per year by the migration of men to work on the (US$0.0013 per hectare per year or US$2,211 concession. These complex transitions are not per year for the entire concession). being monitored closely, though the company has employed an Amerindian liaison officer. In • A small royalty (US$0.30 to US$0.96 per cubic addition, its contract clearly states that "the meter for the first four years depending on the Government shall assist the Company in the species, US$0.46 to US$1.45 per cubic meter in establishment, development and continuation of years five to eight, US$0.69 to US$ 2.16 in years good relations between the Company and the nine to twelve, and so on in increments up to year indigenous peoples living and working in the 20, when it reaches US$4.88 for the most Concession Area. The Company will honor and valuable logs) to be paid on each log with a respect all rights of indigenous people as minimum of G$8,43i,O35/year (US$58,855/ 57 required by the laws of Guyana."55 According to year). These royalties are fixed for 20 years. Barama's executives, every effort is made to keep All of these taxes, fees, and royalties are set in the logging operations far from Amerindian areas. Barama contract in Guyanese dollars with no This attempt is hampered though since the provisions for adjustment as inflation devalues government has made little or no contribution to the currency. Over time, the real revenues will demarcation of these areas on the ground. diminish. Estimates based on data provided by the Guyana Forestry Commission and by the The Government of Guyana collects very little company itself show that Barama pays the direct revenue from the operations of the Barama equivalent of less than 1 percent of the value of Company. The three sources of direct revenue are: the goods exported in taxes. (See Table 1.) As • An export tax (2-percent of the export value) noted above, however, Barama's workers do all payable only on greenheart logs.'6 pay income tax, and the Company incurs
TABLE 1 BARAMA'S BASIC PRODUCTION AND EXPORT DATA AND TAXE S PAID
Year 1993 1994 I99S Log extraction (m3) 38,400 167,000 192,600 Log exports (m3) 5,000 22,300 12,600 Plywood production (m3) 9,000 53,500 96,300 3 Plywood exports (m ) 5,900 46,500 91,100 Value of log exports (USS) 496,000 2,199,000 1,044,600 Value of plywood exports (USS) 2,515,500 16,185,800 30,690,200 Total value of exports (USS) 3,011,500 18,384,800 31,734,700 Total taxes paid (USS)* 69,900 80,900 99,200 Taxes as percent of export value (%) 2.32 0.44 0.31 * Royalties and area fees. The company is exempted from other taxes. Source: The Barama Company Limited.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 41 significant social costs of roughly an additional • Infrastructure and transport costs are very $200,000 annually maintaining a hospital, high compared to those of similar operations school, and so on. Barama's target production for elsewhere. In heavy clay soils on the export in 1996 is about 120,000 cubic meters of concession, almost no logs are harvested during plywood, which would have an estimated export periods of heavy rain, when bottlenecks form value of at least US$42 million, in addition to around the trucking from the log landings to some raw log and sawnwood exports. the log pond. Logs must be transported a further 300 miles by barge from the concession At first glance, it appears that Barama may be at Port Kaituma to the mill near Georgetown, getting an unusually good deal—a large concession often amid delays. acquired at a very low cost and significant tax breaks. To date, however, financial results have • The company has had to train the workforce of been far below initial expectations according to around 1,500 from scratch. Even after three information provided to WRI by the company, years of training and the selection of more corroborated by other credible sources. Total productive employees, worker productivity, production of plywood and, especially, of logs has according to the company, is still lower than been below expectations while unit production that of comparable workers in Malaysia, and costs have been higher. The company states that it rates of waste are higher. Efficiency is, however, has yet to achieve net positive cash flow (annual improving. cash income minus costs, excluding the cost of the initial investment), let alone realize normal • Equipment maintenance for the logging operating profits (defined here for Guyana as a 30- operation (skidders, trucks, bulldozers, and so percent rate of return on investment per year). The on) has been poor due to a lack of good current cost of plywood production, according to mechanics and poorly trained operators. On company records, is dose to the market price (on average, around 40 percent of the high-cost the ship in Georgetown [FOB]) of US$350 per equipment is therefore idle at any one time. In cubic meter versus a target cost of about US$255 addition spare parts are not available in Guyana, per cubic meter. Such a loss is clearly unsustainable so 10,000 lines of spares must be kept on the from a purely financial perspective. Key reasons for concession. the claimed shortfall include:
• Lower extraction rates of commercial timber • Labor disputes have also been costly and on the concession than expected. Barama had sometimes lengthy in the past, though recent planned to extract about 25 cubic meters of changes in management style are expected to baromalli (the principal plywood species) per reduce this. hectare, but only removes around 14 cubic meters per hectare. Furthermore, around 30 to On the other hand, Guyana offers certain 40 percent of the vast concession is unsuitable comparative advantages over other places. for harvesting timber. Taxation of forest industries is very low,
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 42 preferential trading agreements are in force Corporation, which tried to buy the company under CARICOM and the Lome Convention, and with capital from the World Bank's private sector distances to major markets in the Caribbean, arm, the International Finance Corporation. This North and South America are short so freight deal fell through after the receiver obtained a costs from US$30 to US$40 less per cubic meter better offer from another quarter. compared with shipping from Asia. In late July 1995, the government approved the 2.5 OTHER FOREIGN HOLDERS OF sale of the company to Primegroup Investments LOGGING CONCESSIONS Limited registered in the British Virgin Islands and controlled from Singapore. The government Demerara Timbers Limited approved the transfer because of fears that DTL In 1991, the Government of Guyana privatized would default on its debts (US$3.1 million to the the publicly owned timber company, Demerara Government of Guyana and other liabilities Woods Limited. The company was sold, without totaling US$11 million) and close operations, open bidding, to the British investor, Lord firing 400 workers. Beaverbrook. The new company, renamed Demerara Timbers Limited (DTL), was awarded Primegroup had earlier been awarded a three 25-year timber sales agreements, wood-cutting lease (number 3/93 registered with automatically renewable for a further 25 years, on the Guyana Forestry Commission) in Guyana land totaling 552,000 hectares.58 The purchase under the name Mazaruni Forest Industries price was US$16.5 million, to be paid to the Limited (MFIL). As part of the negotiation for Government of Guyana in installments. Within a DTL, Primegroup agreed to relinquish this other year, however, Lord Beaverbrook had sold the contract and to capitalize the new acquisition with timber company and the timber sales US$16 million during the first year of operations. agreements to United Dutch Group for a small The tax holiday granted earlier to DTL was also amount of cash and a controlling interest in the shortened to cover only the first year of operations group.59 Soon after the sale, private forestry of the new enterprise, following which, Guyana's consultants from the United States estimated the national tax laws will apply. timber resources at DTL's disposal to be worth an estimated/160-206 million.60 Lord In December 1992, DTL estimated that by 1995, Beaverbrook's paper profits were estimated at production at the company's Mabura sawmill /50 million. Lord Beaverbrook has since declared would reach 200,000 cubic meters per year and bankruptcy and United Dutch Group has been could rise to as high as 500,000 cubic meters per 62 taken over by receivers, largely because its year by 2000. By May 1994, the sawmill was investments in real estate and other sectors processing 80,000 cubic meters of timber per outside Guyana were overextended.61 year with a maximum capacity of 240,000 cubic meters per year.63 DTL's goal was to log the entire Bids were solicited for DTL, and among those concession in twenty years—approximately interested was the Commonwealth Development 27,600 hectares per year—even though a much
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 43 longer cutting cycle is probably needed for even other sources confirm that Berjaya is the investor basic sustained yield management. DTL took through a company called Tenagu Khemsas, steps to demonstrate its advertised "green" whose representative, Mr. V. Kanagalingan approach to harvesting tropical timber by widely confirms that he is associated with Berjaya and publicizing its Green Charter (which stressed has bought shares in UNAMCO.66 Berjaya environmentally sound logging practices) and recently tried to acquire a huge concession in contracting with SGS Silviconsult Ltd. to inspect Suriname and failed to win the contract due to a representative sample of the concession. concerns over their highly criticized environ- Silviconsult issued a preliminary certificate valid mental and financial track record. for one year starting in June 1994 stating that the timber was cut in an environmentally sound 2.6 RECENT REQUESTS FOR NEW manner. LOGGING CONCESSIONS At least five substantial requests from foreign Primegroup is now replacing the milling investors for major concessions (each over equipment at the Mabura sawmill. Kilns and 500,000 hectares) have attracted attention over molders will be added to promote use of a wider the past couple of years. The companies making range of species. The new sawmill would have a the requests also promised huge investments in log input capacity of 10,000 cubic meters per processing installations. month. A plywood factory may also be built.64 The Buchanan Group UNAMCO and Case Timbers Buchanan, a private Canadian company, has It is reported that Malaysia's Berjaya Group specialized in cutting timber in marginal forests Berhad has been aggressively seeking a in Ontario, Canada, and began to expand into the concession in Guyana's forests. The company sawmill industry only in the late 1970s. Ontario's has sought to invest through Guyanese biggest lumber producer by the late 1980s, companies and is said to have formed Buchanan initially sought a 1,400,000 hectare partnerships with UNAMCO and Case which concession that crossed the Rupununi region.6-7 have leases for 237,000 acres in the Upper Berbice and 308,000 acres in the northwest. After several failed applications, Buchanan Case/UNAMCO recently announced that with recently reapplied for the area vacated by MFIL US$20 million of new Malaysian capital they will when MFIL's owner Primegroup acquired DTL. build a sawmill with a capacity to produce 4,500 Buchanan plans to concentrate on producing cubic meters of sawnwood each month and railway ties for the Canadian market. According employ 550 people.65 to Canadian labor unions, Buchanan has a long track record of doing all that it can to avoid The Guyanese partner in Case/UNAMCO denies forestry, environmental, and labor legislation. any connection between his company and The Group has grown by purchasing troubled Berjaya, but numerous newspaper reports and mills, reducing costs, and securing new wood
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 44 supplies.69 Reportedly, Buchanan's efforts have not be exported, and total log exports would be been supported vigorously by the Canadian High gradually reduced over the first four years of the Commissioner to Guyana—ironic considering concession's life to no more than 25 percent of the millions of dollars that the Canadian the total MFIL production.73 MFIL's parent government invested in Guyana up to 1995 to company, Primegroup, agreed to give up their promote forest conservation and sustainable somewhat contentious lease as part of the development. negotiation to buy DTL. The Buchanan Group has had an application pending for the area since Solid Timber Sendirian Bhd. December 1995. Solid Timber Sendirian, a little known Malaysian company, is reported to have a 500,000-hectare Berjaya Group Berhad concession in Malaysia, operations in Papua New The Berjaya Group is a Malaysian conglomerate Guinea, a sawmill in China, and investments in that has only recently gotten into timber hotels in Malaysia and New Zealand. The firm extraction and timber processing. It owns has applied for a 350,000-hectare exploratory concessions in the Solomon Islands and the lease after initially requesting 720,000 hectares. Philippines and recently purchased a North The company reportedly has plans to invest American building-products distributor. It has US$250 million, including US$2O-3O million in aggressively pursued a contract covering over one a sawmill to be built during the feasibility study million hectares in Suriname amid allegations in period. It has also offered to pay the Forestry the press of bribing of senior officials.74 Commission US$860,000 in fees during the 70 exploratory period. The Berjaya Group submitted a letter of intent to the Government of Guyana, requesting a Mazaruni Forest Industries Limited 700,000-hectare concession in the New In October 1993, Mazaruni Forest Industries River-Upper Berbice area with a proposed Limited (MFIL) received a three-year license to investment of US$112 million. Berjaya sought inspect and study a 650,000-hectare potential an exemption from withholding tax on dividends concession.71 The lease was never fully approved paid to non-resident shareholders, exemption by Guyana's President due to undisclosed from withholding tax on interest payments paid irregularities. The purpose of the license was to to offshore lenders, exemption from export examine the area's potential to support duties on all processed wood products, commercial logging and the production of exemption from import duties on all materials lumber, veneer, plywood, and dimension stock used by the company, a fixed ceiling on corporate for furniture. Almost immediately, MFIL stated tax rates, fixed royalty rates for the entire life of that it was pleased with the area and applied for a the contract, deductibility of all interest concession by formally submitting an investment payments, an accelerated depreciation allowance, proposal for US$50,000,000 that would, in part, unlimited use of foreign labor when needed, and build a plywood factory.72 Greenheart logs would investment protection guarantees.
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 45 78 Berjaya also requested that any new incentives operation starting in February 1995. Most of this offered to any other company would also apply to money would be used to build a facility that would Berjaya. It planned to invest not only in timber produce high quality veneer and furniture for and timber processing, but also in a luxury hotel export. Easy access to North American and and the local lottery, activities much more closely European markets were cited as a significant factor related to the conglomerate's traditional prompting Leeling to seek a concession in Guyana. strengths in Asia.75 Some of these ventures have been controversial. A major development at Leeling Timber is a joint venture between Leeling Redang Island in Malaysia has been heavily Timber Group of Malaysia and Hyundai Wood criticized for causing widespread ecological Company Limited of Korea. The Malaysian firm damage, and Berjaya was forced to pull out of the would cut and process the timber while the Penang Hill development in Malaysia due to Korean firm would market it. In addition, environmental concerns.7 In September 1994, Leeling's representative also mentioned the the managing director of Berjaya's timber possibility of a joint venture with Chinese subsidiary in the Solomon Islands was expelled investors. While very little is known about from the country after reportedly attempting to Leeling, Hyundai Corporation has a troubled bribe a cabinet official who was reviewing history of operations and environmental 79 Berjaya Group's purchase of a local logging degradation in the Solomon Islands and Siberia. 77 company. Leeling's proposal did not advance significantly Berjaya's original proposal (like Leeling's—see because the area they were seeking, like below) did not get very far since the land that the Berjaya's, does not fall within the State Forest company sought is outside of the State Forests. boundaries. The Government of Guyana had no plans at that time to extend the area of State Forest, and some 2.7 REVENUES FROM LOGGING IN of the remaining large blocks of forest outside GUYANA the area seem likely to become protected areas Fees charged to companies extracting timber under the new Global Environment Facility from Guyana's state forests total only 1 to 2 project being implemented with the World Bank. percent of the production and export costs. ° In Berjaya has subsequently entered the sector January 1996, dramatic fee increases were more surreptitiously as silent partners in the proposed by the government. (See Table 2.) The Guyanese companies UNAMCO and Case increases would at least double revenue to the Timbers. (See above.) Forestry Commission, with total annual collections reaching more than US$2 million. In Leeling Timber comparison with other places, however, even According to Leeling's representative in these new rates are low. (See Table 3.J So far, the Georgetown, the company was seeking to invest new rates have not been implemented due to US$60,000,000 in a 1,200,000-hectare opposition from the logging and saw-milling
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 46 industry in Guyana, though the government still use of official marks draws a fine of only intends to implement the changes. G$i,ooo (US$6.98).82 Any person unnecessarily damaging other forest produce will be fined just Area fees for timber sales agreements in Guyana G$ioo.oo (US$0.70). Unauthorized cutting, are flexible, they can be negotiated in concession damaging, or removal of forest products from contracts, and they are by any standard very low. State Forests or knowledgeable receipt or A timber sales agreement that covered the whole possession of illegally cut forest products draws a of Guyana's State Forest land would generate less G$2oo.oo (US$1.40) fine. Attempts to bribe than US$18,000 per year from area fees. officers to ignore or compromise official Royalties, a tax on the extraction of timber, responsibilities are to be fined only G$i,ooo depend upon the species and the product (e.g. (US$6.98). Under the government's newly logs, sawnwood, firewood or posts). Such proposed fees, rates are set in U.S. dollars, royalties accounted for 74 to 97 percent of dramatically reducing the potential for inflation Guyana Forestry Commission revenue from to erode their value. Even in U.S. dollars, timber extraction between 1974 and 1994. however, value could fall by 2 to 5 percent per Minimum royalties have been established so that year, declines that the Forestry Commission the government receives revenues from cannot afford. concession holders even if production decreases significantly. An export sales commission of 2 Members of the Forest Producers Association percent of the export ("free on board" or "FOB") claim that their enterprises are not making even value is charged on all forest products exported normal profits because Guyana's forests pose from Guyana. Historically, this fee reflected the expensive difficulties. A recent study used two cost of state-run marketing by the Guyana indicators that suggest that while, for some Forestry Commission Marketing Unit and has producers operations are only marginally been as high as 6 percent in the past. Customs profitable, the overall picture is moderately duties are also applied on greenheart exports; positive.83 First, the total number of new or they equal a negligible 0.01 percent of FOB on annually renewed state forest permissions sawn greenheart and only 0.001 percent of FOB covering small logging operations was fairly on greenheart logs. Royalty rates initially set by constant between 1989 and 1994. Second, the Forest Act have been revised only four times aggregate log production has remained during the last 25 years despite high rates of approximately constant over the same period, : inflation. Contracts stipulate taxes and fees to varying between 126 and 144 thousand cubic be paid in Guyanese dollars and are not indexed meters. Yet, these averages mask a 22-percent to inflation. decline in sawmill production that coincided with a currency devaluation between 1989 and 1991, Fines and penalties are also minimal. For as well as subsequent increases starting in 1993 example, any improperly marked forest produce due to Barama's operations. The longer-term is considered owned by the State, but fraudulent data (going back to 1950) also show that current
WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 47 TABLE 2 CURRENT AND PROPOSED FEES AND ROYALTIES FOR LOGGING IN GUYANA
Present Proposed Percent Rate Rate Increase
A |) |) I i c .1 I i o ii s (SI S )
State Forest Woodcutting Permission 0.35 25.00 7,100
Woodcutting Lease 0.35 100.00 28,600
Timber Sales Agreement 0.35 250.00 71,400
Issue fees (S U S)
State Forest Woodcutting Permission 0.71 50.00 7,000
Woodcutting Lease 10.71 750.00 7,000
Timber Sales Agreement 21.51 1,000.00 4,600
Acre age fee (SUS/acre)
State Forest Woodcutting Permit, free free State Forest Woodcutting Permit, 0.0002-0.0 on 0.08 7,200-40,000 1,000-20,000 hectares Woodcutting Lease, 20,000-60,000 acres 0.0014 7,150 Timber Sales Agreement, <3oo,ooo acres 0.0014 8,570 Timber Sales Agreement, >JOO,OOO acres 0.0014 0.15 10,700 Royalties (SUS/in') Special Category 0.77 2.70 35° Class I 0.52 J-54 296 Class II 0.39 0.97 249 Class III 0.24 0.58 242 Source: Guyana Forestry Commission, 1996. WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 48 TABLE 3 COMPARISON BETWEEN BASIC FOREST FEES IN GUYANA AND ELSEWHERE Royalty and related fees (per cubic meter) Area fee (per hectare) Guyana Current: USS0.24-0.77 Current: US$0.0004 (maximum) Proposed: US$o.58-2.7o Proposed: US$0.15 (maximum) Ghana Approx US$2 US$0.22 Indonesia US$16 Cambodia Approx US$35 Honduras US$25 Nicaragua US$i.38-2.08 (tree marking fee) plus US$i.39-2.50 production rates are similar overall, even though World Bank researcher Lorene Flaming showed the mix of products and species has changed. that during these six months 17,600 cubic meters of logs (64 percent sawmill logs, 36 The aggressive interest shown by foreign percent peeler logs,87 and 0.2 percent hewn investors such as Barama, Primegroup, Berjaya, squares) were felled and transported. A further Buchanan, and Leeling also strongly indicates 1,180 cubic meters of peeler logs were purchased that they believe profits are to be made in the from local suppliers. About half of the logs were forests. Some investors have even offered to pay processed into rough lumber (sawnwood), half of fees 100 to 200 times as much as those normally which was further processed into dressed lumber. levied. MFIL proposed to pay an area fee over 150 times the current rate, C$30.89 (US$0.22) per Sales data for the whole of 1994 indicate that hectare per year, equivalent toG$2o,i8o,ooo per about 13,000 cubic meters of timber were year (US$140,872), as well as a minimum royalty exported for a total of US$2.8 million. (See Table tax of the same amount per year, regardless of 4-) number of trees cut in the concession.84 MFIL also offered average royalties on the most Flaming's analysis suggests: expensive logs over the first ten years of around G$i,62o.oo per cubic meter (US$11.31 per cubic • There is high potential for profits, but only from 85 meter). exports since competition from low-cost independent chainsaw operators is great in the Further light is shed on the potential for increas- domestic market. ing revenues from current logging operations through analysis of DTL's operations prior to • Processing into rough and dressed lumber in their takeover by Primegroup. Data for July to Guyana currently adds little or no value because December 1994 provided by the company to added revenues are wholly offset by the costs of WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 49 converting the logs and by the reduction in the • Wood products are sold in many dimensions volume of final product that is sold due to instead of standardized (another result of poor unavoidable waste in processing. marketing). • Log yards and log sorting operations are lacking The profit potential from exports, which could or poorly organized. almost certainly be increased if efficiency were improved, suggests fee increases would be Improvements in mill design, logging methods, possible, augmenting government income and and especially in marketing and business reducing the need to expand the total area under administration would undoubtedly raise profits, concessions, leaving more space for alternative creating further potential for increasing development and conservation options. government revenues. As such, partnership between government and the private sector to According to a recent study by a leading forest improve efficiency, offers large, long-term industries expert prepared as a contribution to returns and should be a high priority. Guyana's national development planning process, Guyana's local logging companies are A current analysis by the Guyana Forestry inefficient in several important ways: Commission's economist based on detailed data collection for six large local logging companies • Timber is harvested to satisfy individual foreign strongly suggests that most are not enjoying orders—with repeated entries into the same normal operating profits, though they do block of forest—instead of in planned, low-unit- generally enjoy positive cash flows. Local cost continuous operations. investors have extremely unsophisticated accounting systems, many, apparently, literally • Poor cooperation among producers makes operating out of the owner's pocket. Decisions winning and filling large orders at good prices simply aren't based on sound assessments of difficult. profits. This finding further reinforces the • Marketing operations are weak and market conclusion of the previous section that non- information poor; contact with major importers' timber alternatives may be critical to reaping a federations overseas, such as the U.S. long-term income from Guyana's forests. International Hardwood Products Association (IHPA), is lacking. 2.8 LESSONS FROM COMMERCIAL LOG • Quality control in the processing plants is PRODUCTION BY AMERINDIANS IN poor, leading to waste and inferior products. GUYANA • The workforce is poorly trained, and super- Orealla community on the Corentyne vision in the mills insufficient. River &9 • Transport of material within the mills between In late 1994, the Orealla community negotiated operations is poorly designed. contracts with a Guyanese businessman and with WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 50 TABLE 4 ESTIMATED SALES AND COST DATA FOR A LARGE FOREIGN-OWNED CONCESSION Average export price Average cost (US$ Product Volume (m3) (US$ per cubic meter) per cubic meter) Peeler logs (98-percent mixed hardwood) 7.778 106 73 FOB Linden 67 at sawmill 2 X Rough sawnwood (98-percent green and .95 318 242-300* purpleheart) Dressed sawnwood (95-percent green and 1,426 412 321-380* purpleheart) Hewn greenheart lumber, piles, poles and 980 shingles *The range of costs for rough and dressed sawnwood reflects different conversion rates ranging from 40-61 percent due to uncertainty in conversion rate estimates by the company. Source: Lorene Flaming, 1995 (September). "An Economic Analysis of the Timber Industry in Guyana: Prospects for strengthening state capacity and private incentives for sustainable forest management." Kennedy School of Government, Harvard University. the Barama Company to supply it with logs for dependents (women and children) suffered. plywood manufacture at prices three times more Families whose menfolk supplied new large than those offered by local log traders. The buyers suffered greater economic instability and community started shipping almost 1,000 cubic greater per capita income reductions than those meters of logs each month from its reservation. in which the men continued more independent, The apparently good deal turned sour as the smaller-scale, lower-paid logging for local buyers community realized that it was incurring and thus had more time to fish, farm, hunt, and significantly higher costs than expected. Higher gather forest products—a diverse and thus stable transport costs took up half of the increased mixture of activities—and maintain strong family revenues, buyers kept changing shipment dates based networks. so the workers had to waste time waiting for the right day to load logs, and long delays in getting Even more fundamental problems are foreseen paid led to high interest charges on the credit over two or three years of rapid depletion of the extended by local food and supplies retailers. timber species demanded by the new large (Normally, the men involved would not need to buyers, especially Barama. After only one year of purchase basic foodstuffs but their work in the larger-scale production, researchers report that a forests took time away from family agricultural quarter to a third of the reservation's resource activities.) stock was depleted, with smaller trees also being sold to local buyers at lower prices. With no real Even in the short-term families had less cash. increase in capital accumulation by the The quality of diet was reduced, and family community, exhaustion of a valuable resource, WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 51 FIGURE 9 TOURIST ARRIVALS AND RECEIPTS IN BELIZE, COSTA RICA, GUYANA, AND SURINAME Arrivals Receipts 1000 r 800 r 700 800 _ 600 s o O 600 ?3 500 o S ^ 400 t 400 •4; 300 u CD 200 200 100 0 1985 1990 1995 1985 1990 1995 —— Suriname — Belize Costa Rica Guyana I Source: World Tourism Organization, 1995 I Kwabanna Village and no investment or planning for other The Amerindian Village of Kwabanna negotiated activities, the whole structure of the community an agreement with A. Mazaharally & Sons was threatened as assets were sold off and between 1983 and 1984. From 1988 through poverty increased. Tensions in the community 1990, the company began extracting logs and also rose as members, especially women, built a sawmill at the site. It promised to provide complained that basic community maintenance jobs, upgrade roads, construct a new school, and improvement activities and farming were hospital, airstrip, and to provide free transport to being neglected due to "logging fever." Georgetown when needed. The community WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 52 complains that these promises have only partially States), it has several natural and cultural been fulfilled and the current village captain and attractions (including barrier reefs and atolls, other community leaders have no written Mayan archeological sites, and rare or contract documenting the agreement. According endangered wildlife) and it has enjoyed a to the company, however, about 200 relatively stable political climate amid its more Amerindians are now employed in the operation, volatile Central American neighbors. and the wages are now US$2.25 to US$4.25 per Recognizing the potential for nature tourism, the day. The company also states that it has provided country's government established a national credit facilities and agricultural implements with tourism policy in the mid-1980s. As a result, the understanding that they would buy all crops tourist arrivals grew by almost 70 percent produced at market rates. between 1989 and 1993, and tourism receipts increased from US$44 million in 1989 to US$73 2.9 LESSONS IN TOURISM million in 1993.90 Surveys show that over half of DEVELOPMENT FROM BELIZE AND the tourists participate in nature-based activities COSTA RICA AND COMMUNITY-LED and 36 percent indicate that nature tourism was a TOURISM IN ECUADOR very important reason for visiting Belize.91 Guyana has no beautiful beaches to attract visitors and there is no good direct access by air. Guyana could also take a page from Costa Rica, Tourist arrival and spending data show that the one of the world's most developed nature country is far behind some of its near neighbors tourism markets. Partly because of the country's in capitalizing on the regional tourism boom. long history of democracy, peace, and high (See Figure 9.) Yet, Guyana is the most politically education standards, Costa Rica's tourist industry stable of the Guiana Shield countries and the has become the primary foreign exchange earner, only one where English is the national language. surpassing even such traditional exports as coffee More to the point, its scenery is spectacular and and bananas. The country's many natural its cultures fascinating. How easily these assets attractions range from beaches to dry deciduous translate into tourism potential should be clearer forests and tropical cloud forests. A national park once the Organization of American States com- system was created in 1970, and almost all of the pletes its study on Guyana's tourism potential, country's habitats are now represented in 92 and experience in Belize and Costa Rica should protected areas—the nuclei for tourism growth. be encouraging. Economic benefits to Costa Rica from tourism In Belize, a number of comparative advantages have been impressive. In 1993, Costa Rica have helped spawn a tourism industry. reported 684,000 overnight visitors who spent Fortunately, Guyana enjoys some of the same US$577 million.93 In 1991, the largest tourism advantages. Belize caters to English-speaking agency in Costa Rica brought in 20,000 tourists tourists. It is close to other large English- who each spent on average US$148 per day.94 speaking countries (Canada and the United Some popular national parks, such as Monteverde WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 53 Cloud Forest Reserve, have generated valuable bamboo-style structures and a lodge. The tourist income for nearby communities. Science program developed included nature walks led by tourism has also boosted nature tourism in Costa community guides, demonstrations of such Rica. The Organization for Tropical Studies resource use as basket making, and visitor (OTS) provided an estimated US$2.9 million to participation in a communal work project. The US$10.2 million in revenues, equivalent to 2 to 3 emphasis was on cultural exchange between percent of all tourism receipts in Costa Rica. visitors and community members. Tourists were Furthermore, 69 percent of scientists and charged between $2O-$4O per day each, students who traveled to Costa Rica under OTS depending on the size of the group and the auspices claimed to have influenced others to number of days stayed. The community grossed visit Costa Rica as well.95 Indeed, science tourism about $7,000 in the first season. All members in La Selva Biological Station in the early 1970s share the profits in proportion to the amount of was a precursor for nature tourism in the area. In work contributed. 1989,13,000 nature tourists visited La Selva, 9 spending $291,000. 2.10 THE VALUE OF NON-TIMBER FOREST PRODUCTS Nature tourism can also be developed at the The median value for non-timber forest products community level. Capirona's community of 24 is roughly US$50 per hectare per year (based on Quichua Indian families located in the Napo "forest gate" prices) according to a recent study Province of the Ecuadorian Amazon traditionally by scientists at Harvard University's Institute for survived on subsistence agriculture and International Development based upon data production for local markets, but the community from 24 field studies, most in Central and South began to suffer when the price of seeds and the American lowland tropical forests. (See Tables 5 97 costs of transporting goods began to rise. and 6). Exploring alternatives to agricultural production, community members decided to invest in a Data on non-timber forest products from Guyana tourism project. The expectation was that are scarce. Officially reported wildlife exports tourism would be less intrusive than logging, from Guyana's forests totaled US$1.87 million in would provide substantial income, and would 1992, mostly from the sale of parrots and allow the community to control the number and macaws. (Guyana is the world's fifth largest wild types of visitors. bird exporter.) But collection isn't based on any management plans, and the harvesting of live The Capirona tourism project was initiated in animals for international trade from Guyana has 1991 with funds generated almost entirely from ignited international concern. It is estimated that community sales of maize, supplemented by a thousands of the interior's poorest people earn or small grant from the regional indigenous supplement their livelihoods by trapping, federation. All community members helped transporting, and making cages and export boxes build the tourism facilities—traditional for the wildlife. In 1992, revenues to the WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 54 government in the form of a 20-percent levy on resources were dwindling and environmental wildlife and ornamental fish exports, a 1.5-percent degradation deepening. In 1958, some 21 states export tax, and an additional 5-percent export tax for representing 32 percent of the country's forests ornamental fish totaled US$411,645. (See Table y.) were affected by forest product bans. Those who However, these receipts are undoubtedly lower suffered most were ejidos members, who lost than they could be since collecting and export are access to precious forest resources. To earn scarcely monitored and since smuggling is income, many communities illegally extracted thought to be common.98 forest products exacerbating deforestation. 2.11 LESSONS FROM COMMUNITY In the 1950s and 1960s, the government created DEVELOPMENT BASED ON FOREST large parastatal companies to manage forest RESOURCES IN MEXICO AND BRAZIL resources for ejido communities. Concessions awarded to parastatal companies reflected the Communal forestry in the Mexican ejidos paternalistic perception that communities could Mexico's experience with land tenure and not manage forest resources productively. But the community development dates back to practice of awarding concessions to private independence when large landholdings were companies and parastatals was environmentally parceled out to peasants in traditional commu- and socially destructive, driven mainly by access nity holdings called ejidos. This development to the resource and the capacity of equipment provided the basis for the nation's successes in and not by concern about resource conservation. community forestry. Currently, up to 80 percent Concessions were unfavorable for ejidos. of Mexico's forests are held by ejidos or by Communities received below-market prices for indigenous communities." timber and the parastatals responsible for providing education, training and social services Despite the relatively secure land-tenure system, to communities reneged on their commitment. the Mexican government virtually controlled forest production throughout the 1940s and 1950s by In the 1970s and 1980s, communities began to alternating concession-granting periods with bans organize and protest the activities of private on forest-product extraction. A1943 forestry law companies and parastatals. In the state of established that communities could sell wood Oaxaca, an ejido community protested the products only to government-established Forest renewal of a parastatal concession, eventually Exploitation Industrial Units, which kept the winning control of the local forest. In 1986, the prices paid to communities for timber down. federal government passed a forestry law ending During this period, the national government private concessions and parastatals. It also ended captured little of the potential revenue from the requirement that communities pay govern- logging so private companies received windfall ment staff high fees for technical services. profits and deforestation accelerated. Gradually, communities began to realize At the same time, the government banned the increased benefits from managing their own extraction of forest products because forest forests. Approximately 40 percent of one WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 55 TABLE 5 NON-TIMBER FOREST PRODUCT VALUES IN TROPICAL FORESTS Location Value (USS) Comments Global $50/hectare Median of 24 studies. Based on forest gate prices. Honduras $.o8-$.3i/turtle egg Based on survey of harvesters in one area. Harvesters collectively earn $10,000 per harvest year. Eggs account for about 4.3% of household earnings. Chiapas, Mexico $3o/skin Average of 11 dominant species. Much hunting occurs for subsistence and meat, not just skins. (Values are for retail only). Catamarca, Argentina $64/animal Study of economic worth of vicunas. Authors estimate potential of additional $5oo/yr per family if vicunas harvested. Latin America $45/ bird (Argentina) Based on reported export values in Latin American countries for parrots. Argentina was single most important exporter of birds from 1982-86. Southeastern Peru $5oo,ooo/jaguar Ecotourism study evaluating potential value. Jaguar figure based on figure for a lion in East Africa. Latin America $3.5o/kg of Capybara meat Prices based on market values of capybara in 1987. Mexico $400-$3,ooo/ scarlet Difference in value reflects difference in Mexican macaw market and US market. Bird trapper gets $19 for same scarlet macaw. Figures also affected by legal status of birds sold (illegally traded birds fetch large sums). Argentina, Chile $42/chulengo skin From 1976-79, $25/skin (total $5.6 million). A pilot study in Torres del Piene (Chile) exposed difficulties in harvesting Guanacos, including parasites in meat and high cost of tanning skins ($26/skin) as well as lack of ready market. Sources: Ricardo A. Godoy, Ruben Lubowski, and Anil Markandaya, "A Method for the Economic Valuation of Non-Timber Forest Products," 1993, Economic Botany, Vol. 47(3), pp. 220-233, I993- John G. Robinson and Kent H. Redford, Neotropical Wildlife Use and Conservation, The University of Chicago Press, 1991. intercommunity organization's members in The Xikrin mahogany and non-timber Oaxaca worked in forest activities, taking jobs as forest products in the Brazilian Amazon managers and technicians, compared to only a To integrate the Amazon region with the rest of handful previously employed by private the country, the Brazilian government has built companies and parastatals. extensive road networks, encouraging large-scale extractive activity and colonization. This full-scale WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 56 TABLE 6 SURVEY OF STUDIES OF NON-TIMBER PLANT VALUES IN LATIN AMERICA Net Value Location ($/ha/yr) Comments Venezuela 0.75 Experimental caiman harvest Amazon, Brazil 4.8 Estimate is gross return/ha/yr; only value flora Western Amazonia 5-16 Gross value varies by the size of the extraction area (150-300 hectares) Iquitos, Peru 16-22 Based in part on villagers' diaries Iquitos, Peru 20 Potential value of about six species of latex and fruits Belize 36-166 Medicinal plants Amazon, Brazil 59 Includes kernel, charcoal, and feed meal of babassu palm. Unclear whether returns are net or gross Combu Island, Guama 79 $3i7i/yr/family; average of 5 families in 1984-1988. Estimate River, Brazil is gross value and only includes semi-wild cacao, acai and rubber. Assume one family worked 40 hectares of forest Brazil 97 Value of Brazil nuts only ($/hectare): Collector's price= 97; Exporter's price= 176; Retail price= 1059 Para, Brazil no Value after selective thinning of competitors and pruning of acai palm Veracruz, Mexico 116 Estimate leaves out lumber and coffee Amazon, Ecuador 120 Values wildlife over 50a square kilometers Jenaro Herrera, Peru 167 Values only harvest of wild camu camu; unclear if estimate is gross or net Iquitos, Peru 420 Value of inventory in one hectare; only includes plants Source: Ricardo A. Godoy, Ruben Lubowski, and Anil Markandaya, "A Method for the Economic Valuation of Non-Timber Forest Products," 1993, Economic Botany, Vol. 47(3), pp. 220-233. resource development has accelerated T^e development cycle initiated by road deforestation. In the 1980s alone, Brazil lost over construction also hurts indigenous groups. The 3 6 million hectares of forest to deforestation, Xikrin of Catete live in the state of Para, where some 6.5 percent of its total forest cover.100 mining and timber companies have been active WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 57 since the 1960s and 1970s. The Xikrin remained commercialize, and administer local natural relatively isolated until the mid-1970s when a resources. Its forest management plan, state road leading to the edge of their reserve was developed in partnership with national NGOs built. In 1976, timber companies began to invade included proposals for such forest products as the area, meeting violent opposition from the mahogany, Brazil nuts, heart-of-palm, and fruits. Xikrin.101 Under the plan, timber would be exploited on a 40-year cycle on 2,000 hectares (10 percent of Under pressure by timber companies, however, the Xikrin forested area). Timber is not to be sold and hard-pressed for economic alternatives, the to the region's traditional private companies, but Xikrin began to sign contracts with private instead will fetch much higher prices through companies for the extraction of mahogany. direct marketing with help from the Tropical Under some contracts they received as little as Forest Foundation. US$3 Per cubic meter for one of the world's most valuable tropical hardwoods. In February 1990, The management project, supported in part by indigenous leaders met with members of two key Brazil's non-profit Socio-Environmental Insitute non-governmental organizations, the Ecumenical (ISA), has three primary objectives. The Center for Documentation and Information immediate goal is to weaken the chances of (CEDI) and the Nucleus of Indigenous Rights returning to exploitative contracts between (NDI), to discuss legal action against exploitative timber companies and the Xikrin. The timber companies and alternative means of medium-term aim is to provide a dependable producing income for the community. flow of income to the community, while the long-term objective is to provide a model of By 1994, the Xikrin had halted timber exploitation sustainable resource use that other indigenous on their reserve and banned two exploitative communities can adapt to their needs. timber companies from their land. At the same time, studies by NDI, CEDI and the community 2.12 GUYANA'S INTERNATIONAL on economic alternatives for sustainable resource COMMITMENTS TO FOREST exploitation were started. In 1993, the NGOs used DEVELOPMENT AND CONSERVATION financial support from the World Bank to complete a study of the Xikrin territory's Guyana is already committed internationally to vegetation, hydrology, topology, and potential for strong policies on forest management, timber and non-timber forest product extraction. biodiversity protection, respect for the rights of By 1994, the first detailed inventory of forest Amerindians, and fair employment. These resources on 816 hectares was completed for use include agreements signed at the United Nations in a resource management plan. Conference on Environment and Development in June 1992, including the Convention on In 1995, the Xikrin established the Bep-N6i Biological Diversity, Agenda 21, and the Forest Association for the Defense of the Rights of the Principles. Guyana has signed (and ratified Xikrin of Catete. The association would manage, where appropriate) the following accords: WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 58 TABLE 7 GOVERNMENT OF GUYANA REVENUE FROM WILDLIFE , EXPORTS, 1992 (US$) Species Reported Export Export Total Government Group Revenue Levy Tax Revenue Birds 1,317,403 263,4 81 19,761 283,242 2 Mammals 139,633 27,9 7 2,094 30,021 Reptiles 155,706 42 2,336 33-477 Amphibians 1,206 2 4 1 18 259 Arthropods 6,877 1-3 75 103 i,47 9 Ornamental Fish 251,002 50,2 0 0 12,967 63,167 Total 1,871,828 374,3 66 36,862 411,645 Source: The World Bank. Technical Report: Guyana Environmental Management Project Preparation Mission. Sustainable Financingy Options for the Environmental Protection Agency (EPA). Washington, DC: Environmental Resources Management, 1995. Convention on International Amazon Cooperation Treaty (TCA) Trade in Endangered Species of Signed in 1978 by all eight Amazonian countries, Wild Fauna and Flora (CITES) this agreement promotes integration of socio- Signed in March 1973 and adopted by 114 economic development and ecological conservation countries, this agreement regulates international in the Amazon Basin. It also recognizes the impor- trade of mammals, birds, and plants, especially of tance of improving the welfare of Amazonian endangered and threatened species. This binding populations while encouraging the sustainable use international treaty began impinging on forest of natural resources. Guyana is an active member management and conservation in the early of the treaty. 1990s, when some signatories moved to include major timber species in CITES' two appendices. International Tropical Timber (Appendix I lists species threatened with Agreement (ITTA) extinction, and Appendix II lists species on the The International Tropical Timber Agreement verge of becoming so if exploitation and trade are (ITTA), a binding commodity agreement between not regulated. Species listed in Appendix I are consumers and producers of tropical timber, was banned from international trade [except for signed in 1983 and recently renegotiated. It was scientific conservation]. Trade in species listed in the first commodity agreement to include a Appendix II is permitted insofar as it does not conservation mandate. Initiatives coordinated by threaten their continued survival.) A small ITTO include the development of the first number of timber species are already listed in the internationally adopted guidelines for sustainable 102 appendices. management of natural tropical forests, guidelines for plantation management, and guidelines for conserving biodiversity in tropical WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 59 production forests. ITTO also supports pilot national policy and call for additional technical projects in producer countries. (Approximately and financial support for developing countries to 70 percent of these projects focus on forest promote sustainable forest use. management.) In 1993-4, the ITTA was renegotiated for another ten years. It now Agenda 21 explicitly includes the Year 2000 Objective. This This 1992 UNCED action plan presents 115 non-binding objective commits all signatories to program areas and specific objectives. Several produce timber from sustainable sources by the chapters of Agenda 21 are related to forestry year 2000. issues.104 Most important is Chapter 11, "Combating Deforestation." Rio Declaration The non-binding Rio Declaration was signed Convention on Biological Diversity during the United Nations Conference on Environment and Development (UNCED) in This binding agreement, signed in 1992 at June 1992. Its seven principles establish a global UNCED, has been ratified by Guyana. partnership among nations, people, and Signatories commit themselves to conservation non-governmental organizations. The declaration and the sustainable use of biological acknowledges the importance of integrating diversity—specifically, to establishing national environmental conservation and sustainable biodiversity strategies and integrating the economic development, of eradicating poverty to sustainable use of biodiversity into other national make development sustainable, of taking sectoral policies, such as those on infrastructure inclusive participatory approaches to conser- development, health care planning, and 105 vation, and of honoring the rights of indigenous agriculture through a participatory process to peoples and their communities vis-a-vis achieve conservation and biodiversity objectives. environmental management and development. Under the convention, a National Biodiversity Strategy should identify areas for action, address Forest Principles potential obstacles to biodiversity plans, identify This is the first global consensus on forest policy, cost-effective solutions, and identify stakeholders. also signed at UNCED in 1992.103 This non- Signatories must also identify the species most binding accord recognizes the importance of all critical for conservation, monitor and identify types of forests for the conservation of all forms uses of critical species, and maintain an of life, as well as the multiple and organized database on identified species and complementary functions and uses of forests. It their uses. Parties to the convention are also also emphasizes the need for national action and obliged to establish in situ conservation through recognizes countries' sovereign rights over their systems of protected areas, private reserves, and forest resources. The principles stress national parks. The Global Environment Facility international cooperation in implementing has been established to help poorer countries WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 60 implement the Biodiversity Convention and deforestation. The Convention includes a other international environmental agreements. component known as Joint Implementation (JI), a mechanism for cooperation between industrialized countries and developing The Framework Convention on countries. JI allows the former to partially meet Climate Change commitments to greenhouse gas reduction This UNCED accord bears on forest issues targets with measures outside their territories. because forests "lock up" carbon that can be Possible measures include promoting reforesta- released to the atmosphere through tion activities and preventing deforestation. ABOUT THE AUTHOR | NIGEL SIZER Nigel Sizer is the Team Leader of WRI's Forests Frontiers Initiative. He also cordinates work in the Amazon countries and on global forest policy. Prior to joining WRI, Dr. Sizer was affiliated with the National Institute of Amazon Studies (INPA) in Brazil and with King's College, University of Cambridge. WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 61 Notes 1. Guyana Forestry Commission and Canadian 10. Ana Sittenfeld and Rodrigo Gamez, "Biodiversity International Development Agency, National Forestry Prospecting at INBio," in Biodiversity Prospecting: Using Action Plan 1990-2000,1989, p. 2. genetic resources for sustainable development, edited by Walter V. Reid, (Washington, D.C.: World Resources 2. Bank of Guyana Statistical Bulletin for 1993 and the Institute, 1993) pp. 69-98. National Forestry Action Plan, both cited in Mike Thompson, "An Economic Analysis of Forest Resources 11. This figure is for the period 1980-1989; Radiative Charges in Guyana," Guyana Forestry Commission, Forcing of Climate Change: The 1994 Report of the Georgetown, 1994. Scientific Assessment Working Group of the Intergovernmental Panel on Climate Change. World 3. Mike Thompson, "An Economic Analysis of Forest Meteorological Organization and United Nations Resources Charges in Guyana," Guyana Forestry Environment Programme, Geneva, Switzerland. Commission, Georgetown, 1994. 12. World Resources Institute in collaboration with the 4. Mike Thompson, "An Economic Analysis of Forest United Nations Environment Programme and the Resource Charges in Guyana," Guyana Forestry United Nations Development Programme, World Commission, Georgetown, June 1994, Table 1. Resources Report, 1994-1995, (New York: Oxford 5. Hans ter Steege et al., Ecology and logging in a tropical University Press, 1994). rainforest in Guyana. The Tropenbos Foundation, 13. Guyana: Public Sector Review, (A World Bank Country Wageningen, The Netherlands, Series Number 14, Study, 1993) Washington, D.C., p. 146. 1996. 14. Jeffrey A. McNeely, Economic and Biological Diversity- 6. Vicente Molinos, Considerations for the Development of Developing and using economic incentives to conserve Guyana's Wood Products Industry. Report submitted to biological resources, (Gland, Switzerland: IUCN, 1988). the Ministry of Finance, Georgetown, Guyana, August 1995. Jeffrey A. McNeely et al., Conserving the World's Biological Diversity, (Washington, D.C.: IUCN, WRI, CI, 7. "Report on the Palm Cabbage Industry in North West WWF-US, World Bank, 1990). Guyana," 62-68, in Situation Analysis Indigenous Use of the Forest with Emphasis on Region I, consultant's report Michael Wells and Katrina Brandon, People and Parks: edited by Janette Forte, (Amerindian Research Unit, Linking protected area management with local University of Guyana, Georgetown, June 1995). communities, (Washington, D.C.: World Bank, WWF, Prepared for British Development Division in the USAID, 1992). Caribbean, Overseas Development Administration, 15. There are differing estimates of Guyana's Amerindian London. population: National Environmental Action Plan 8. Liana Cane Interiors Ltd., Company profile, (43,000), Amerindians and Poverty by Janette Forte from Georgetown, Guyana. 1986 census (40,000), Populations of Guyanese Amerindian Settlements in the 1980s (43,000), 9. Ana Sittenfeld and Rodrigo Gamez, "Biodiversity Memorandum from the Guyanese Organization of Prospecting at INBio," in Biodiversity Prospecting: Using Indigenous Peoples (45,000). genetic resources for sustainable development, edited by Walter V. Reid, (Washington, D.C.: World Resources 16. Janette Forte, The Populations of Guyanese Amerindian Institute, 1993) pp. 69-98. Settlements in the 1980s, (Amerindian Research Unit, University of Guyana, Georgetown 1990). WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 63 vj. Janette Forte, The Populations of Guyanese Amerindian and the Caribbean. Published by United States Agency Settlements in the 1980s, (Amerindian Research Unit, for International Development, Washington D.C., 1995. University of Guyana, Georgetown 1990). 25. The Collaboration and Consultation on Land Use in 18. Janette Forte and Laureen Pierre, "Survey of Forest Use Guyana is a joint initiative of the Government of in Region I," pp. 12-22 in Situation Analysis Indigenous Guyana, University of Guyana, Guyana Environmental Use of the Forest with Emphasis on Region I, (Amerindian Monitoring and Conservation Organization, The Carter Research Unit, University of Guyana, Georgetown, Center and World Resources Institute. It has involved June 1995). extensive consultation with communities throughout Guyana's hinterland and at the national level. The 19. Andrew R. Bishop, Collaboration and Consultation on National Development Strategy is the result of a long Land Use in Guyana: Short Term Consultancy on Land process of consensus building led by the Ministry of Use in Guyana. (Georgetown, Government of Guyana, Finance with support from the Carter Center. University of Guyana, Guyana Environmental Monitoring and Conservation Organization, The Carter 26. Andrew R. Bishop, Collaboration and Consultation on Center and World Resources Institute. 1995.) Land Use in Guyana: Short Term Consultancy on Land Use in Guyana. (Georgetown, Government of Guyana, 20. Guyana Forestry Commission and Canadian University of Guyana, Guyana Environmental International Development Agency, National Forestry Monitoring and Conservation Organization, The Carter Action Plan iggo-2000,1989, p. 2. Center and World Resources Institute, 1995). 21. Wilfredo Cruz and Robert Repetto, Accounts Overdue: 27. Jack M. Mintz, Tax Reform Proposals for Guyana. Report Natural resource depreciation in Costa Rica, (Washington, prepared for IDA Preparation Mission for proposed D.C.: World Resources Institute, 1991), Wilfredo Cruz Private Sector Development Adjustment Credit, and Robert Repetto, The Environmental Effects of (Washington, D.C.: The World Bank, November 1993). Stabilization and Structural Adjustment Programs: The Philippines Case, (Washington, D.C.: World Resources 28. Nigel Sizer and Richard Rice, Backs to the Wall in Institute, 1992). Suriname: Forest Policy in a Country in Crisis, (Washington, D.C.: World Resources Institute, 1995). 22. Tapani Oksanen et al., A Study on Coordination in Sustainable Forestry Development, Report to the Tropical 29. Walter J. Mead, "Toward an optimal oil and gas leasing Forestry Action Program Advisers' Group (Finland, system." The Energy Journal, 1994, vol. 15(4): 1-18. June 1993). 30. Rachel A. Crossley, A Preliminary Examination of the 23. Andrew R. Bishop, Collaboration and Consultation on Economic and Environmental Effects of Log Export Bans. Land Use in Guyana: Short Term Consultancy on Land Draft report to be published by The World Bank, cited Use in Guyana. (Georgetown, Government of Guyana, with permission of the author, 1994. University of Guyana, Guyana Environmental 31. Richard Rice, Conservation International, Washington Monitoring and Conservation Organization, The Carter Center and World Resources Institute. 1995.) DC, personal communication. 32. At a recent conference on timber certification a 24. For more information about establishing priority areas representative of the Malaysian Timber Board stated for conservation of biodiversity see, Nels Johnson, that he believed that Malaysia has lost 45 percent of its Biodiversity in the Balance: Approaches to Setting European market due to environmental concerns. Geographic Conservation Priorities, (Washington, D.C.: Biodiversity Support Program, 1995). Also see, 33. For a more detailed description of the type of analysis Biodiversity Support Program, Conservation needed see, Paul B. Sherman and John A. Dixon, "The International, The Nature Conservancy, Wildlife Economics of Nature Tourism: Determining if it pays," Conservation Society, World Resources Institute, World pp. 89-131 in Nature Tourism: Managing for the Wildlife Fund. A Regional Analysis of Geographic Environment, edited by Tensie Whelan, (Washington, Priorities for Biodiversity Conservation in Latin America D.C.: Island Press, 1991). WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 64 34- Further suggestions for marketing to North America thereafter; Guyana Timber Export Board Act Chapter and Europe can be found in Jason Clay, "Some general 67, 03,1973, and all related amendments thereafter; principles and strategies for developing markets in Timber Marketing Act, Chapter 67, 04,1975; Guyana North America and Europe for Non-timber forest Natural Resources Agency Order of 1986 and related products," in Mark Plotkin and Lisa Famolare (eds.), acts. Sustainable Harvest and Marketing of Rain Forest 45. For a far more complete and authoritative analysis of Products, (Washington, D.C.: Island Press and Guyana's forestry law, see Christine Toppin-Allahar, A Conservation International, 1992) 302-309. Report on Forestry Law and Policy, prepared for the 35. CETURA has completed or proposed a number of Guyana Forestry Commission under assignment from projects on various aspects of tourism development in the Overseas Development Administration, November Amazonia including legal and capacity building 1995. studies, regional coordination and information sharing, 46. "Code of Practice for Forest Operations," Second Draft and sharing of experiences of Amerindian for Discussion, Guyana Forestry Commission, June, communities. 1996. 36. Organization of American States (OAS), "Sources of 47. Investment Contract Between Government of Guyana Concessionary Financing," in Compendium of Recent and Sunkyong Limited of Korea Samling Corporation Studies on Tourism Development, Washington D.C., 1993. Sdn. Bhd. of Malaysia and Barama Company Limited of 37. Jan G. Laarman, "Pricing policy in nature-based Guyana, p.i, October 16,1991. tourism," manuscript, forthcoming in Tourism 48. Investment Contract Between Government of Guyana Management. and Sunkyong Limited of Korea, Samling Corporation 38. Organization of American States (OAS), "Integration of Sdn. Bhd. of Malaysia and Barama Company Limited of Itineraries of Tourism Attractions in Bordering Guyana, p.4, October 16,1991. Countries, Islands, and Sub-Regions and the 49. Edinburgh Center for Tropical Research, "Barama Enhancement of Individual Tourism Attractions," in Company Limited: Environmental and Social Impact Compendium of Recent Studies on Tourism Development, Assessment," June 1993, PP. 36-37. Washington D.C., 1993. 50. Stabroek News (Georgetown, Guyana), July 1994. 39. World Tourism Organization. Aviation and Tourism Policies: Balancing the benefits, (London: Routledge, and 51. Second Annual Report by the Edinburgh Center for Madrid, World Tourism Organization) 41-43,1993- Tropical Forests of its Programme of Monitoring and Research for the Barama Company Ltd. Northwest Guyana 40. Walter V. Reid et al., "A New Lease on Life," in Sustainable Timber Production Programme Covering the Biodiversity Prospecting: Using genetic resources for Period 1.1.94 to 31.12.94. LTS International Ltd., sustainable development, (Washington, D.C.: World Edinburgh, Scotland. Resources Institute, 1993) 1-52. 52. Janette Forte, The Populations of Guyanese Amerindian 41. Production and Export Statistics, Guyana Forestry Settlements in the 1980s, (Amerindian Research Unit, Commission, Georgetown. University of Guyana, Georgetown, 1990) 5. 42. Exports of Lumber from Guyana 1989-1992, Guyana 53. Janette Forte, The Populations of Guyanese Amerindian Forestry Commission, Georgetown. Settlements in the 1980s, (Amerindian Research Unit, 43. Guyana Forestry Commission Support Project University of Guyana, Georgetown, 1990) 5. Memorandum, Overseas Development Administration, 54. Janette Forte and Laureen Pierre, "Survey of Forest Use London. in Region I," in Situation Analysis Indigenous Use of the 44. The specific acts to be revised and amended are: Forest with Emphasis on Region I, (Amerindian Research Guyana Forestry Commission Act No. 2,1979; Forest Unit, University of Guyana, Georgetown, June 1995) Act Chapter 67, 01,1953, and all related amendments 12-22. Prepared for British Development Division in WRl: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 65 the Caribbean, Overseas Development Administration, 67. John Geddes, "The Lumber Empire Ken Buchanan London. Built," Financial Post (Canada), 1/20/89; Stabroek News (Georgetown, Guyana), "Another Huge Forest Deal in 55. Investment Contract Between Government of Guyana the Works," October 24,1993. and Sunkyong Limited of Korea, Samling Corporation Sdn. Bhd. of Malaysia and Barama Company Limited of 68. David W. Frood and Larry Sanders, The Forest Labyrinth Guyana. Article e 14. October 16,1991. of Ken Buchanan, Canadian Paper Workers Union. 56. Investment Contract between the Government of 69. David W. Frood and Larry Sanders, The Forest Labyrinth Guyana and Sunkyong Limited of Korea, Samling of Ken Buchanan, Canadian Paper Workers Union. Corporation Sdn. Bhd. of Malaysia, and Barama Company Limited of Guyana. Article 8.2. October 16, 70. Gitanjali Persaud, "Malaysian Company Negotiating for 1991. Forest Concession: State forest may be extended," Stabroek News (Georgetown, Guyana), February 25, 57. The royalty on the most expensive logs will average less 1996, p.1. than C$270.00 per cubic meter over the first ten years. 71. Guyana Environmental Monitoring and Conservation The royalty for the least expensive logs will average less Organization (GEMCO). Press Release, October, 28, than G$8i.oo per cubic meter over the first ten years. 1993. Various numbers were presented: 685,000 An exchange rate of 143.25 was used in the conversion. hectares, Stabroek News (Georgetown, Guyana), 58. The concession is located in Central Guyana, on the 6/30/94; 600,000 hectares, Marcus Colchester in The watersheds of the Middle Essequibo and Upper Ecologist March/April 1994. Demerara rivers: Mabura (224,000 hectares), Mauri 72. Stabroek News (Georgetown, Guyana), 22/10/93, (155,440 hectares), and Siparuni (172,560 hectares). "Proposed MFIL Timber Deal... Terms Vastly 59. Paul Brown and Damien Lewis, "How Peer's Money Different." Grew on Trees," The Guardian (London), 11/1/91, p. 3. 73. Guyana Environmental Monitoring and Conservation 60. Stabroek News (Georgetown, Guyana), 11/10/94, Organization (GEMCO). Press Release, October, 28, Headline: "Beaverbrook Made Huge Profit in Guyana." 1993. 61. Craig Seton, "Insolvent Peer Vows to Recover His 74. Gary Lee, "Proposal to Log Suriname's Rain Forest Fortune," The London Times, 9/3/92, p. 3; Timber Trades Splits Needy Nation," The Washington Post, May 13, Journal, (London), May 21,1994. 1995, p.i. 62. Timber Trades Journal, (London) 19-26 Dec 1992. 75. iggj Annual Report, Berjaya Group Berhad, Kuala Lumpur, Malaysia. 63. Timber Trades Journal, May 21, 1994, p.17. 76. Utusan Konsumer, "Public Pays Heavy Price For 64. "Asian Group Takes Over DTL," Stabroek News, Berjaya's Destructive Project," Mid-May 1993, p. 4- (Georgetown, Guyana), July 28,1995, p.i. Friends of Pulau Redang. Press Release; Far Eastern 65. Michelle Nurse, "New Forestry Leases on the Cards," Economic Review, January 7,1993, p. 25; "Vincent Tan, Guyana Chronicle, November 6,1995. Malaysian millionaire", Stabroek News (Georgetown, Robert Persaud, "US$2oM Forestry Operation Ready to Guyana), 28 August 1994, p. 18; Doug Tsuruoka, Start: Investors praise right investment climate," "Vanishing Coral Reefs: Plundering Threatens Tioman Sunday Mirror, November 5,1995,1. and Other Asian Tourist Centers," Far Eastern Economic Review, January 7,1993, pp. 24-25. Patrick Denny, "Malaysian Joint Venture Forestry Deal," Stabroek News (Georgetown, Guyana), November 8, 77. Marcus Colchester, World Rainforest Movement 1995,1. 10/26/94; BBC Wildlife Magazine, 10/94; "Solomon Logging Project to Go Ahead Despite Bribery 66. Patrick Denny, "Malaysian Joint Forestry Deal: US$8 Allegations," Timber Trades Journal, 9/10/94; million equipment due," Stabroek News (Georgetown, Guyana), November 8,1995,1. WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 66 78. "Malayasians Seek Timber, Gold Investments," Catholic 89. Colin Henfrey, "Democracy and the Sustainability of Standard, (Georgetown, Guyana), August 22,1993; Livelihoods and Natural Resources: The issue currently "Malaysian Firm Keen on Large Forest Concession", underlying Amerindian development options," in Stabroek News, (Georgetown, Guyana), Dec 1993. Situation Analysis Indigenous Use of the Forest with Emphasis on Region I, (Amerindian Research Unit, 79. Russia: The Moscow Times 11/30/92; Greenpeace press University of Guyana, June 1995) 72-75. release 10/22/92; The Pacific Energy and Resources Center press release 9/92; Personal Letter from Philip 90. World Tourism Organization, Compendium of Tourism Guillery formally of the Peace Corps to Pavel Statistics 1989-93,18. Sullyandziga, a leader of the local people in the Bikin 91. Elizabeth Boo, Ecotourism: The Potentials and Pitfalls, watershed in Siberia. Solomon Islands. (Washington, D.C.: World Wildlife Fund-U.S., 1990). 80. Mike Thompson, "An Economic Analysis of Forest 92. Yanina Rovinski, "Private Reserves, Parks, and Tourism Resource Charges in Guyana," Guyana Forestry in Costa Rica," in Tensie Whelan, ed., Nature Tourism: Commission, Georgetown, June 1994. Managing for the Environment (Washington, D.C.: Island 81. Mike Thompson, "An Economic Analysis of Forest Press, 1991). Resource Charges in Guyana," Guyana Forestry 93. World Tourism Organization, Compendium of Tourism Commission, Georgetown, June 1994. Statistics 1989-93, (Madrid: 1995) 42. 82. Unless otherwise noted, all conversions from G$ to 94. Yanina Rovinski, "Private Reserves, Parks, and Tourism US$ use the Average Cambio Exchange Rate for in Costa Rica," in Tensie Whelan, ed., Nature Tourism: December 1994:143.25/118$, provided by the Bank of Managing for the Environment (Washington, D.C.: Island Guyana. Press, 1991). 83. Lorene Flaming, An Economic Analysis of the Timber 95. Jan Laarman and Richard Perdue, "Science Tourism in Industry in Guyana: Prospects for strengthening state Costa Rica," Tourism Management, March 1989: 35, 36. capacity and private incentives for sustainable forest management. (Cambridge, Mass.: Kennedy School of 96. Yanina Rovinski, "Private Reserves, Parks, and Tourism Government, Harvard University, September 1995.) in Costa Rica," in Tensie Whelan, ed., Nature Tourism: Managing for the Environment (Washington, D.C.: Island 84. Guyana Environmental Monitoring and Conservation Press, 1991). Organization (GEMCO). Press Release, 10/28/93. 97. Account based on Jean G. Colvin, Indigenous Tourism: A 85. Guyana Environmental Monitoring and Conservation New Trend? Unpublished manuscript. Organization (GEMCO). Press Release, 10/28/93. 98. World Bank Technical Report, Guyana Environmental 86. Based on Lorene Flaming, An Economic Analysis of the Management Project Preparation Mission: Sustainable Timber Industry in Guyana: Prospects for strengthening Financing Options for the Environmental Protection state capacity and private incentives for sustainable forest Agency, (Washington, D.C.: EPA, July 1995). management. (Cambridge, Mass.: Kennedy School of Government, Harvard University, September 1955.) 99. Information based on the following articles: 87. 'Peeler logs' is the technical term for logs that are used David Barton Bray, "The Struggle for the Forest: for making plywood sheets. They are attached to a Conservation and Development in the Sierra Juarez," machine with knife which 'peels' a continuous thin Grassroots Development, 1991, Vol 15, N0.3. layer of wood from the softened log. David Barton Bray, "Peasant Organizations and 'The 88. Vicente Molinos, Considerations for the Development of Permanent Reconstruction of Nature': Grassroots Guyana's Wood Products Industry. Report submitted to Sustainable Development in Rural Mexico," Journal of the Ministry of Finance, Georgetown, Guyana, August Environment and Development, Summer 1995, Vol. 4, 1995. No. 2:193. WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 67 David Barton Bray and Matthew B. Wexler, "Forest Caribbean mahogany (Swietenia mahogany) and the Policies in Mexico," in L. Randall, ed., Changing Pacific coastal mahogany (S. humilis). Structures of Mexico (New York: M.E. Sharpe Press, 103. Officially called "Non-Legally Binding Authoritative forthcoming). Statement of Principles for a Global Consensus on the 100. World Resources Institute in collaboration with the Management, Conservation, and Sustainable United Nations Environment Programme and the Development of all Types of Forests." United Nations Development Programme, World 104. These are: Chapter 9, "Protection of the Atmosphere"; Resources Report, 1994-1995, (New York: Oxford Chapter 10, "Integrated Approach to the Planning and University Press, 1994). Management of Land Resources"; Chapter 12, 101. Instituto Socio-Ambiental, Projeto de Manejo Florestal na "Managing Fragile Ecosystems: Combating Area Indigena Xikrin do Catete—Para, Brasil, draft Desertification and Drought"; Chapter 13, "Managing document and Isabelle Vidal Giannini, Instituto Fragile Ecosystems: Sustainable Mountain Socio-Ambiental, personal communication March 29, Development"; Chapter 14, "Promoting Sustainable 1996. Agriculture and Rural Development"; and Chapter 15, "Conservation of Biological Diversity." 102. Species on Appendix I include Chilean false larch (Fitzroya cupressoides), the monkey puzzle tree's 105. Lyle Glowka et al, A Guide to the Convention on Chilean population (Araucana araucana), and Brazilian Biological Diversity (Gland, Switzerland: IUCN, rosewood (Dalbergia nigra). Appendix II includes Environmental Policy and Law Paper, No. 30,1994). WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM 68 World Resources Institute 1709 New York Avenue, N.W. Washington, D.C. 20006, U.S.A. The World Resources Institute (WRI) is an independent center for policy research and technical assistance on global WRI's Board of Directors: Maurice F. Strong environmental and development issues. WRI's nission is to move Chairman John Firor human society to live in ways that protect Earth's environment Vice Chairman and its capacity to provide for the needs and aspirations of current John H. Adams Manuel Arango and future generations. Robert O. 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