Major Trends and Issues in Forests and Forestry: Globally and in Russia

JimJim Ford,Ford, AlexanderAlexander SheingauzSheingauz ForestForest Trends,Trends, EconomicEconomic ResearchResearch InstituteInstitute YuzhnoYuzhno-Sakhalinsk,-Sakhalinsk, Russia 20012001 ConferenceConference Major Conflicts and Debates Underway: Globally

Canada: Negotiating tenure and reducing logging in natural forests

USA: Banning new roads Cameroon: Recognizing illegal logging and logging in public forests and reforming concession policy South America: Recognizing indigenous rights PNG: Logging moratorium

Bolivia, Peru: Reforming forest policies Forests and forestry in transition Organization of this Presentation:

What’s driving these conflicts and debates?

What are the major global trends in the forest sector?

What are the major trends and issues in the Russian Far East? What’s Driving the Conflicts and Debates? DeforestationDeforestation andand ForestForest DegradationDegradation

Net decline of 180 million ha worldwide from 1980 - 1995: huge environmental, social and economic costs

Frontier forest 8,000 years ago Frontier forest today Over-harvesting:Over-harvesting: BoomBoom andand BustBust CycleCycle ofof DevelopmentDevelopment ,, USUS ExampleExample

Southeastern States 30,000

25,000

20,000

15,000 Pacific Northwest

10,000

5,000 Lake States Timber harvest (million board feet) board (million Timber harvest

- 1850 1900 1950 2000

Source: Thomas Power SocialSocial Consequences:Consequences: LossLoss ofof JobsJobs inin IndustryIndustry

US Pacific

Northwest s

n States

o 6

i

l

l i

M 5

4

3

2 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95

Year

Source: Thomas Power CorruptionCorruption andand IllegalIllegal LoggingLogging inin PublicPublic ForestsForests

• Cambodia: Over 70% of export volume of “unreported” logs in 1997.

• Cameroon: Only 50% of companies have documented logging rights.

• Russia: Estimated 25% of all logging is illegal.

• Indonesia: Estimated 75% of all logging and exports are illegal.

• Burma: Widespread and rampant illegal logging.

US $ 10 - 15 Billions of lost government income; public forests devastated, reduced incentive to invest in sustainable forestry Increasing Power of Civil Society and Communities

• Exposing illegal logging and corruption

• Boycotts, market campaigns

• Monitoring forest cover, forest practice, trade

• Participating in forest policy and planning

• Claiming recognition of traditional rights

Advancing transparence and accountability, requiring a “social license” to operate Looking Forward:

Global Trends in The Forest Sector ContinuedContinued GrowthGrowth inin RoundwoodRoundwood DemandDemand

3.5 High

3 Average

2.5

2 Low 1.5 billion cubic meters

1

0.5

0 1970 1980 1990 2000 2010 2020 2030 2040 2050

Source:Source: WeinerWeiner andand Victor,Victor, 20002000 DecliningDeclining CommodityCommodity PricesPrices

TheThe EconomistEconomist industrialindustrial commodity-pricecommodity-price index,index, inin realreal** $$ termsterms

160

140

120

100

80

60

40 Since 1997, average return on capital 20 in the forest product industry is 4.1%

0 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

**AdjustedAdjusted byby USUS GDPGDP deflatordeflator ChangingChanging ForestForest IndustryIndustry

••Pulp Pulp andand paper:paper: •• consolidationconsolidation •• increasinglyincreasingly efficientefficient andand competitivecompetitive •• increasingincreasing investmentinvestment inin plantations,plantations, fromfrom “North”“North” toto “South”“South” •• increasingincreasing useuse ofof smaller,smaller, lowerlower qualityquality wood.wood.

• Timber/ Lumber: •Decreasing resources •some experimentation with sustainable natural forest management.

Growing distinction between socially responsible

and bad actors Increase in protected areas (1900 - 1990)

1400

1200

1000

800

600

400 Million hectares 200

1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990

Cumulative growth of the world’s protected areas

Source: IUCN ( 1998) Shift Towards Community Ownership and Reserves

•Public: 79 %

•Communities and indigenous groups: 11 %

•Private: 10% 900 800 ? 700 600 Community ownership and 500 400 access more than doubled in 300 last 15 years, and can be 200 100 expected to do the same in 0 next 15 years. 1985 2000 2015 PayingPaying forfor EnvironmentalEnvironmental ServicesServices

NN WatershedWatershed protection:protection:

NN NewNew YorkYork City:City: improvedimproved waterwater qualityquality

NN Quito,Quito, Ecuador:Ecuador: improvedimproved qualityquality andand quantityquantity

NN CostaCosta RicaRica andand Colombia:Colombia: reducereduce sedimentationsedimentation inin hydroelectrichydroelectric reservoirsreservoirs

NN BiodiversityBiodiversity protectionprotection

NN CostaCosta Rica:Rica: gasgas taxtax toto paypay foforr naturalnatural forestforest conservationconservation

NN Brazil:Brazil: value-addedvalue-added taxtax toto paypay forfor naturalnatural forestforest conservationconservation Investing in Certified Production

Growth of certified forest area

• A growing, global phenomenon 30

• Driven by retailers: supply 25 about 50% of US market. 20

million ha million 15

•Buyers groups in 17 10 countries; producer groups in 5 4 countries. - 1994 1995 1996 1997 1998 1999 2000 ?

• 9 Chain of Custody Annual Cumulative certifications in China, 6 additional underway. Annual and cumulative FSC certified area InvestingInvesting inin NaturalNatural ForestsForests

RealReal valuevalue ofof stumpagestumpage increasingincreasing byby 2.15%2.15% perper annumannum

$700 Douglas-Fir Ponderosa Pine $600 Hemlock Trend $500

$400

$300

$200

$100

$0

59 63 67 69 71 73 75 79 81 83 85 87 91 95 97 9 9 9 9 19 1961 19 1965 19 1 19 19 19 1977 19 1 19 1 19 1989 19 1993 19 1

Timberland: 9% return since 1960 Source:Source: USDAUSDA ForestForest ServiceService WhichWhich WayWay ForwardForward withwith NaturalNatural Forests?Forests?

To meet future demand of 3.0 billion m3, 2 options:

1. Mining: double extent of industrial logging, shift to plantations, collapse of local, regional economies

2. Sustainable Management:

• 40% protected

• 40% community/indigenous

• 17% secondary forest

• 3% plantations But: achieving management requires: policy and property reform, new investment, and new ways of managing the forest Source: John Spears, 2000 Major Trends and Issues in the Russian Far East In contrast with world deforestation: Russian Far East reported increasing forest area.

Age Structure of Density Forests in the RFE 160 140 120 100 Yo u ng 80 Middle aged 60 Premature 40 Mature & overmature mi llion hectares 20 0 1983 1988 1998 2010 fo rec as t However: forest quality is decreasing, a result of overharvesting and high-grading. * There is big gap between AAC and harvesting. AAC Utilizatio n in RFE, 2000 Us e d Non-us ed AAC 89% 11%

* However there is "hidden over-cutting" as result of selective high-grade cutting. * Implementation of such methods makes all harvesting illegal. One of the main conflicts: •Separation of population and forest managing after the October Revolution in 1917; • as a result - indifference of the most people to forest problems especially forest conservation. In contrast to world trends, local wood processing is declining.

Degree of wood processing

100 RFE total 80 Primorskiy 60 Khabarovskiy 40 percent Amurskaya 20 Sakhalinskaya 0 1970 1985 2000

This decline is main driver of high grading. No incentive to use forest resources sparingly because they are very cheap

Average stumpage fee, example of Khabarovskiy krai

3,00

2,00 2,50

2,03 1,00 1,43 0,91 0,78 USD/cu. m USD/cu. 0,00 1995 1996 1997 1998 1999 In the RFE and other heavy forested Russian regions there are many other conflicts: • Big forest fire area versus limited possibility for their control; • State centralization of forest ownership and management versus lack of rights of local authorities and private owners shapes forest use; • Domination of export markets versus decline of domestic market; • High degree of corruption; • Lack of information openness; • Retention of old (Soviet) mentality and managing behavior; etc.

All of these makes forest use improper, depletable DoesDoes itit meansmeans thatthat therethere areare onlyonly badbad trends?trends? No, there is some good news. 1. Continually increasing share of protected area (1st group forests and reserves) reflecting appreciation of the the ecological role of forests

Share of the protected area in the forest land use

40

30 Primorskiy Kabarovskiy + Jewish 20 Amurskaya

percent Sakhalinskaya 10 RFE South

0 1966 1973 1978 1983 1988 1993 1998 2.2. VoluntaryVoluntary certificationcertification isis beginningbeginning inin thethe AsiaticAsiatic partpart ofof RussiaRussia includingincluding RFERFE

TakingTaking intointo accountaccount closeclose linkagelinkage withwith internationalinternational market,market, voluntaryvoluntary certificationcertification cancan playplay crucialcrucial rolerole toto shiftshift toto sustainablesustainable forestforest managementmanagement But this is insufficient. A shift to sustainable management requires: * Strong political will and effective implementation of a proper forest policy; * Improvement of common economic situation including attracting new investment; * Catalyzing civil society: increasing social awareness and popular participation in forest management.

TheseThese conditionsconditions don’tdon’t currentlycurrently existexist andand achievingachieving themthem requiresrequires ourour jointjoint effort.effort.