Ukraine Forestry Sector Note Status and Opportunities for Development
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Ukraine Forestry Sector Note Status and Opportunities for Development March 2006 PREFACE This note was prepared by a combined team of World Bank staff and Ukrainian and international consultants, working in close collaboration with the State Forestry Committee of Ukraine. The team is grateful for contributions and support provided by the Swiss Development Corporation and PROFOR1. The findings and opinion presented are based on an assessment of the available information and consultations with a broad range of forestry sector stakeholders, including officials of the Ministry of Agricultural Policy; the Ministry of Industrial Policy; the Ministry of Environmental Protection; the State Forestry Committee, Oblast level forestry departments, State forest enterprises, private sector investors in primary and secondary wood processing industries, NGOs, and the academic community. The objective of the note is to draw attention to a tentative agenda of key issues, and to inform discussion among forestry sector stakeholders regarding the needs, opportunities and options available to maintain and manage Ukraine’s forests for the benefit of all. 1 PROFOR is a multi-donor partnership formed to pursue a shared goal of enhancing forests' contribution to poverty reduction, sustainable development and protection of environmental services, through improved knowledge and approaches for sustainable forest management. PROFOR is funded by the Department for International Development (DFID) of the United Kingdom, the Finnish Department for International Development Cooperation, the Japanese International Forestry Cooperation Office, Swiss Development Cooperation (SDC). The German Government is an in-kind contributor. i Table of Contents Preface ..............................................................................................................................................i Acronyms ...........................................................................................................................................v Executive Summary..........................................................................................................................vi A. Status and values of Ukrainian forests.....................................................................................1 A.1 The Forest resource......................................................................................................................... 1 A.2 Employment in the forestry sector.................................................................................................... 4 A.3 Forest resource growth, age, production and value.......................................................................... 5 A.4 Forest industry ................................................................................................................................. 8 B. Potential for sustainable development of the forestry sector ................................................9 B.1 Increasing the harvest of timber and forest products could be achieved, in line with modern sustainable forest management practice........................................................................... 10 B.2 Increasing the economic and social benefits derived from wood industries.................................... 10 B.3 Maintaining and enhancing environmental benefits........................................................................ 11 B.4 Increasing revenues from forest based tourism.............................................................................. 12 B.5 Capturing carbon trade financing. .................................................................................................. 12 C. Institutional responsibility and the costs of forest management.........................................13 C.1 Forest Ownership........................................................................................................................... 13 C.2 Forest Institutions........................................................................................................................... 14 C.2.1 The State Forestry Committee ............................................................................................. 14 C.2.2 Ministry of Agrarian Policy (MoAP)....................................................................................... 18 D. Current management practices – key issues and opportunities for improvement ............23 D.1 Overly conservative harvesting levels and inappropriate classification of forest use areas is impacting negatively on good forest management............................................................ 23 D.2 Forest production levels could be significantly increased following review and revision of the classification of forest types and management objectives. ................................................... 27 D.3 Investing in thinning would yield dividends in the future in terms of timber quality and sustainability of supply. .................................................................................................................. 28 D.4 Improving the forest road network would reduce negative environmental impacts while increasing economic returns from forest management................................................................... 29 D.5 Potential new forests, and the Kyoto Protocol ................................................................................ 31 E. Forest Based Industries – Opportunities to Encourage Private Investment and Development ....................................................................................................................31 E.1 Opportunities for the development of wood processing and furniture industries............................. 31 E.2 Opportunities to capture additional economic returns from Ukraine’s forests, through sustainable harvest of non timber forest products, the development of tourism, and wood energy................................................................................................................................... 32 ii E.2.1 Non-timber forest products:.................................................................................................. 32 E.2.2 Tourism................................................................................................................................ 33 E.2.3 Wood energy........................................................................................................................ 33 F. Forestry sector stakeholder opinion.......................................................................................33 G. Ukrainian vision for the future and strategy for development..............................................34 G.1 Forest Policy – European Context.................................................................................................. 34 G.2 Forest Policy- Ukraine.................................................................................................................... 35 G.3 Forest Legislation........................................................................................................................... 37 H. Potential Role for the World Bank and Partners....................................................................37 Annex 1 Protected Area types and management ........................................................................42 Annex 2 Stumpage Fees ................................................................................................................44 Annex 3 International Nature Conservation Conventions and Agreements Ratified by Ukraine by Corresponding National Laws ...............................................................45 List of Tables Table 1 Current institutional responsibilities for forest management functions in Ukraine ................................. xi Table 2 Financial, Environmental, and Social Benchmarks for Forest Organizational Performance .................xii Table 3 Summary of Current Situation and Generic Recommendations ........................................................ xviii Table 4 Forest Areas and Standing Volume ...................................................................................................... 2 Table 5 Average Standing Volume and Increment by Species Group................................................................ 5 Table 6 Age Class Distribution – SFC Forests.................................................................................................. 5 Table 7 Wood Production by Year and Forest Manager .................................................................................... 6 Table 8 Non Timber Forest Products in 2004 .................................................................................................... 7 Table 9 Hunting Areas by Managing Organisation............................................................................................. 7 Table 10 Number of Cloven Hoofed Animals Legally Harvested by Year .......................................................... 8 Table 11 Value Exports and Imports of Wood Products in 2000 and 2004 ........................................................ 9 Table 12 Area of Forest by Managing Institution.............................................................................................. 14 Table 13 SFC Income and Expenditure Statement for 2004............................................................................ 18 Table 14 Current institutional responsibilities