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C O M TECHNICAL SERIES M U N COMMUNITY-BASED FOREST ENTERPRISES I T Y - B A 28 Their status and potential in tropical countries S E D F O R E S T E N T E R P OCTOBER 2007 R I S E S I T T O T E C H N I C INTERNATIONAL TROPICAL TIMBER ORGANIZATION A L International Organizations Center, 5th Floor, Pacifico-Yokohama, 1-1-1, Minato-Mirai, Nishi-ku, Yokohama, 220-0012, Japan S E Tel 81-45-223-1110 Fax 81-45-223-1111 Email [email protected] Web www.itto.or.jp R I © ITTO 2007 E S 2 8 INTERNATIONAL TROPICAL TIMBER ORGANIZATION INTERNATIONAL TROPICAL TIMBER ORGANIZATION TECHNICAL SERIES COMMUNITY-BASED FOREST ENTERPRISES THEIR STATUS AND POTENTIAL IN TROPICAL COUNTRIES ITTO Technical Series #28 INTERNATIONAL TROPICAL TIMBER ORGANIZATION RIGHTS AND RESOURCES INITIATIVE FOREST TRENDS INTERNATIONAL TROPICAL TIMBER ORGANIZATION Community-based forest enterprises Their status and potential in tropical countries ITTO Technical Series #28 By: Augusta Molnar, Megan Liddle, Carina Bracer, Arvind Khare, Andy White and Justin Bull. With contributions from: FAO, RECOFTC, IUCN, ITTO, FPCD, EMPA, CCMSS, IBENS, CATIE, Forest Action-Aid Nepal, Christopher H. Aldridge, Kenneth Angu Angu, Camille Antinori, Peter Branney, Salvador Anta Fonseca, Bazakie Baput, Charlotte Benneker, Thomas Blomley, Kanimang Camara, Filippo del Gatto, Robert Kozak, Claudio Garibay Orozco, Alejandra Martin, Michael Nurse, Andrea Pires, Dinesh Paudel, Juan Puhlin, Mark Anthony Ramirez, Carmenza Robledo, Aldo Rodas, Cecilia Scurrah-Ehrhart, Sara Scherr, Dietmar Stoian, Netra Prasad Timsina, Wolfgang Thoma, R. Anders West and Peter Wilshusen. The International Tropical Timber Organization (ITTO) is an intergovernmental organization promoting the conservation and sustainable management, use and trade of tropical forest resources. Its 60 members represent over 80% of the world’s tropical forests and 90% of the global tropical timber trade. ITTO develops internationally agreed policy documents to promote sustainable forest management and forest conservation and assists tropical member countries to adapt such policies to local circumstances and to implement them in the field through projects. In addition, ITTO collects, analyses and disseminates data on the production and trade of tropical timber and funds projects and other actions aimed at developing industries at both community and industrial scales. All projects are funded by voluntary contributions, mostly from consumer member countries. Since it became operational in 1987, ITTO has funded more than 750 projects, pre-projects and activities valued at more than US$300 million. The major donors are the governments of Japan, Switzerland and the USA. ITTO contact details are given on the back cover. The Rights and Resources Initiative (RRI) is a global coalition to advance forest tenure, policy and market reforms. Formed by international institutions and community organizations, the activities of RRI aim to reduce rural poverty, strengthen forest governance, conserve and restore forest ecosystems, and achieve sustainable forest-based economic growth. The coalition encourages reform by engaging with governments and civil society to disseminate strategic information and examples of threats, opportunities, and models for reform. More information is available at www.rightsandresources.org Forest Trends is a non-profit organization that advances sustainable forestry and forestry’s contribution to community livelihoods worldwide. It aims to expand the focus of forestry beyond timber and promotes markets for ecosystem services provided by forests such as watershed protection, biodiversity and carbon storage. Forest Trends analyzes strategic market and policy issues, catalyzes connections between forward-looking producers, communities and investors, and develops new financial tools to help markets work for conservation and people. It was created in 1999 by an international group of leaders from forest industry, environmental NGOs and investment institutions. More information is available at www.forest-trends.org Cover photos: IBENS ©ITTO, RRI and Forest Trends 2007 INTERNATIONAL TROPICAL TIMBER ORGANIZATION Foreword Like the tropical forests themselves, community-based This report was commissioned by the International forest enterprises (CFEs) are highly diverse. They are Tropical Timber Organization (ITTO) to help emerging across the tropics: dynamic, small-scale illuminate barriers to the growth of CFEs and to businesses that tap the huge wealth of entrepreneurial identify potential solutions; it involved a wide-ranging talent that exists in Indigenous and local communities. study undertaken by a team from Forest Trends and CFEs not only can turn a profit; they can also improve the Rights and Resources Initiative and included an the conservation of the forest and perform valuable in-depth examination of 20 CFEs in 14 countries. social services. The report was used to set the scene for a major international conference on CFEs held in Rio Branco, CFEs have become a force to be reckoned with Brazil, in July 2007 attended by 300 community largely because of recent changes in land-use policies leaders, their supporters, and government policy- in many tropical countries that have granted land makers. The declaration issued by the conference is tenure and resource-use rights to Indigenous and included at the back of this report and the conference local communities. Such communities now own proceedings are available in a separate document. or administer at least 378 million hectares of forest, or 22% of forests in developing countries and 19% There is no doubt that CFEs will help shape the of forests in tropical countries, a figure that is likely tropical forests of the future. It is clear that, when their to at least double in the next decade. rights are respected and their enterprises are allowed to compete, Indigenous and local communities in But CFEs also face many obstacles, including tropical forests worldwide are boosting local incomes the often incomplete nature of land tenure reform, and protecting the forests they depend on for a living. a lack of business and technical skills, remoteness, If the policies are right, they will be an enormous force the lack of infrastructure, and lack of financial for good. Governments, ITTO and other international infrastructure and credit. Access to markets in institutions, and regional and community associations particular is both a significant obstacle and an can work to create the conditions in which CFEs can emerging opportunity for community enterprises. flourish. This report and the conference that followed Market barriers and poor access to diverse markets are contributions towards that goal. constitute some of the most critical constraints on CFE expansion and success. Yet this is also changing – in many places, community forest enterprises are discovering new opportunities and new markets in the traditional wood sector and especially for non-wood forest products and ecosystem services. Manoel Sobral Filho CFEs and other small and medium-scale enterprises Executive Director, ITTO have a growing share of the forest sector market. They constitute the majority of enterprises and are a major employer in developed forest-rich countries and in countries with rapidly expanding domestic markets like India, China and Brazil. CFEs have a unique ability to market a diverse mix of timber and non- Andy White timber products to culturally differentiated niches Coordinator, Rights and Resources Initiative and are transferring their entrepreneurial skills to new, complementary income streams from individual smallholdings or conservation, ecosystem or ecotourism services. Michael Jenkins President, Forest Trends INTERNATIONAL TROPICAL TIMBER ORGANIZATION Acknowledgements Many people contributed to this study. The authors would like to thank all reviewers for their careful, thoughtful feedback on early drafts of the report, especially Duncan Macqueen, Mike Nurse, Camille Antinori and Sophie Grouwels. Thanks to the Food and Agriculture Organization of the United Nations (FAO) for sharing the Gambia case with us. Deborah McKay, Matt Zimmerman and Beth Clark cheerfully helped coordinate administrative work associated with the case-study authors. The authors send warm thanks to all the host community-based forest enterprises who shared their experiences with us and special thanks to Alastair Sarre for editing the final document. The authors, Forest Trends and the Rights and Resources Initiative gratefully acknowledge ITTO for commissioning and supporting the study. We also thank RECOFTC, FAO, the United Kingdom Department of International Development and the Ford Foundation for contributing additional funds. INTERNATIONAL TROPICAL TIMBER ORGANIZATION Contents Foreword . 3 Acknowledgements . 4 Acronyms . 8 Executive summary . 9 General findings . 9 Specific findings . 10 Key recommendations for producer countries: . 11 Key recommendations for the International Tropical Timber Council . 11 1 Introduction . 13 Small and medium-sized enterprises . 13 Definition of CFEs . 14 Changing context for CFEs . 15 Objectives and scope of the review . 15 Organization of the report . 17 2 Market and socio-political context . 18 Changes in the wood trade and industry . 18 Changes in the social and political context . 20 Increasing company-community agreements in the marketplace . 22 Non-wood forest products . 23 Emerging markets for ecosystem services . 25 3 Overview of the studies . 28 Selection of case studies . 28 Origin