Russian Federation Forest Policy Review
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ReportNo. 16222-RU Russian Federation ForestPolicy Review PromotingSustainable Sector Development During Transition Public Disclosure Authorized December10, 1996 Agriculture, Industry and Finance Division Country Department IlIl Europeand Central Asia Region Public Disclosure Authorized I.4 1.. Public Disclosure Authorized XD, mn o h ordBn 1K Public Disclosure Authorized ii CURRENCYEQUIVALENTS Unit of Currency = Ruble (RB) Exchange Rate: Rubles per US Dollar Moscow Inter-Bank Foreign Currency Exchange/Foreign Exchange Auction Market (VEB) Rates Period E;ndof Period Average Period 1989 9 9 1990 19 23 1991 62 169 1992 228 415 1993 I Quarter 580 684 II Quarter 968 1,060 III Quarter 1,028 1,169 IV Quarter 1,206 1.247 1994 I Quarter 1,591 1,753 11 Quarter 1,877 1.989 III Quarter 2,166 2,633 IV Quarter 3,191 3,550 1995 I Quarter 4,311 4,899 11 Quarter 4,931 4,539 III Quarter 4.467 4,499 IV Quarter 4,554 4,640 1996 I Quarter 4,764 4,856 11 Quarter 4,980 5,105 III Quarter 5,271 5.407 IV Quarter' 5,463 5,525 As of December 10, 1996 Vice President: Johannes F. Lirn, ECAVP Director: Yukon Huang, EC3DR Division Chief: Michael A. Gould, EC3AI Task Manager: Mohinder S. Mudahar, EC3AI iii ACKNOWLEDGMENTS This project was managed by Mohinder S. Mudahar and Horst Wagner (joint Task Managers) and coordinatedby Hilmar Foelimi. They prepared the initial version of this report. Mohinder S. Mudahar led the discussions with the Russian Government and prepared the final version of this report, with contributions from the following Bank staff: Roger J. Batstone, Louis H. Carbonnier, David S. Cassells, Andrey V. Kushlin, William B. Magrath, Justin R. Mundy, Evgeny V. Polyakov; and international consultants: Kathy Abusow, Nicolaas Bech, Suzanne Gnaegy, Karl Kehr, Goetz Schuerholz, and William Turner. Significant input was provided by the Russian working group co-chaired by Alexander S. Isaev and Nikolai A. Burdin. The members of the working group were Georgy N. Korovin, Nikolai A. Moiseev, Dmitry V. Mozhaev, Anatoly P. Petrov, Anatoly 1. Ryzhenkov, Elena N. Samolyotova, Vladimir M. Shlykov, Pavel A. Sokolov, Valentin V. Strakhov, Vasily I. Sukhikh, Victor K. Teplyakov, Galina A. Verzhevikina, and Anatoly N. Yamskov. We want to thank the Russian Government for its support without which this project would not have been possible. This includes the participation and review by the Federal Forest Service, former Ministry of EnvironmentalProtection and Natural Resources, Russian Academy of Sciences, Ministry of Finance, Ministry of Economy, and the former Russian State Forest Industry Company. We gratefully acknowledge the contributions made by Anatoly I. Pisarenko (forestry) and Amirkhan M. Amirkhanov (enviromnent)who played leading roles, on behalf of the Russian Government. The support provided by the Khabarovsk and Krasnoyarsk RegionalAdministrations and Regional Institutes is also acknowledged with thanks. The report was reviewed by Bank staff members: Mary Canning (social services and employment), Shelton H. Davis (sociological and aboriginal issues), Philippe H. Le Houerou (macro-economic and fiscal issues), Dennis B. Whittle (macro-economicissues), and Lev Freinkman (fiscal issues). Luis F. Constantino, Kathleen S. Mackinnon, and Andrew H. Bond served as the peer reviewers. The report greatly benefitted from commentsby Michael A. Gould, Pradeep K. Mitra, Costas Michalopoulos, Marcelo Selowsky, and Laura Tuck. The report was edited by Meta de Coquereaumontand processed by Rathna Chiniah. Valuable comments were provided by Sten Nilsson, International Institute for Applied Systems Analysis (Russian forest resources); Gail Osherenko, Institute of Arctic Studies, Darmouth College (indigenouspeople and traditional economies); Doug Norlen, Pacific Environment and Resources Center (protection of forests in Siberia and the Far East); Pat Rasmussen, Taiga Forest Project of EarthKind, USA and EarthKind, Russia; Josh Newell, SiberianHotspot Project of Friends of the Earth - Japan; David Ostergren, Division of Forestry of West Virginia University; and D. Carl Freeman, Department of Biological Sciences of Wayne State University. Steven Johnson, InternationalTropical Timber Organization and Thomas Waggener, College of Forest Resources of University of Washingtonfacilitated the search for forest product prices. The report benefitted a great deal from the contributions made by Russian and international NGOs. Alexei Grigoriev, Socio-Ecological Union (Moscow), was NGO liaison throughout the preparation of this report. Cindy Buhl, The Bank Information Center (Washington,D.C.) provided valuable comments and also facilitated comments from the international community. Sergei Ponomarenko, World Wildlife Fund (WWF) - Russia; Sergei Tsyplenkov, Greenpeace - Russia; and Evgeny Simonov, Biodiversity Conservation Center - Russia participated in the final review of the report in Moscow. John Clark of the Bank's NGO Liaison Office facilitateddiscussions with NGOs. The staff of the World Bank Resident Mission in Moscow facilitated work on this project. The valuable contributions made by many other individuals in the Bank and in Russia as well as by international forestry experts are also gratefully acknowledged. Besides Bank funding, significant cofinancing for this project was providedby the Canadian and the Dutch Trust Funds. The project was carried out under the general direction of Michael Gould, Costas Michalopoulos and YukonHuang. iv Weights and Measures Metric System Fiscal Year January 1 - December 31 Abbreviations AAC: AnnualAllowable Cut IMF: InternationalMonetary Fund BOD: BiologicalOxygen Demand rITO: InternationalTropical Timber Organization CAS: CountryAssistance Strategy IUCN: InternationalUnion for Conservationof CEM: CountryEconomic Memorandum Nature - WorldConservation Union CIS: Commonwealthof IndependentStates MEPNR: Ministryof EnvironmentalProtection COD: ChemicalOxygen Demand and Natural Resources (Russia) CPI: ConsumerPrice Index MEWB: Massive Edge-gluedWood Boards EBRD: EuropeanBank for Reconstructionand NASA: NationalAeronautic and Space Development Administration(USA) ECE: EconomicCommission for Europe(United NGOs: Non-GovernmentalOrganizations Nations NIPF: Non-IndustrialPrivate Forest EIA: EnvironmentalImpact Assessment OECD: Organizationfor EconomicCooperation EMP: EnvironmentManagement Project and Development PAO: Foodand AgricultureOrganization of the PERC: PacificEnvironment and Resources UnitedNations Center (USA) FFS: FederalForest Service (Russia) RAAS: RussianAcademy of AgriculturalSciences FMP: ForestManagement Plan RAS: RussianAcademy of Sciences FPR: ForestPolicy Review RFE: RussianFar East FSA: ForestState Account RSFSR: RussianSoviet Federative Socialist FSU: Former SovietUnion Republic FTO: ForeignTrade Organization SEU: Socio-EcologicalUnion (Russia) GDP: Gross DomesticProduct SOEs: State Owned Enterprises GEF: GlobalEnviromnent Facility TACIS: TechnicalAssistance to the Commonwealth GIS: GeographicInformation System of IndependentStates GKI: State Committeefor the Managementof UNCED: UnitedNations Conference on State Property(Russia) Environmentand Development GNP: Gross NationalProduct UNEP: UnitedNations Environment Program IFC: InternationalFinance Corporation USAID: U.S. Agencyfor InternationalDevelopment IIASA: InternationalInstitute for AppliedSystems USSR: Unionof SovietSocialist Republics Analysis VAT: ValueAdded Tax ILO: InternationalLabor Organizationof the WTO: WorldTrade Organization UnitedNations WWF: WorldWildlife Fund v Glossary of Russian Terms Dallesprom: Far Eastern regionalforest industryholding company in Khabarovsk Krays; subsidiaryof the former Roslesprom Goskomlesprom: State Committeefor Timber, Pulp and Paper, and Woodworking Industry; a federal agency establishedin June 1996 by reorganizing Roslesprom Kray: Administrativeregion; a constituentpart of the RussianFederation Les: Forest or timber Leskhoz: A forest managementdistrict; the primary operational unit (forestry administrativeand managerialbody) of the Federal Forest Service Lesnichestvo: A forest range; subunitof a Leskhoz Lespromkhoz: A forest industry (logging)enterprise Lesprojekt: Former associationof forestinventory enterprise Oblast: Administrativeregion; a constituentpart of the Russian Federation Okrug: Formerlyan administrativesubdivision within an oblast or a kray; set up especiallyfor indigenouspeople; currently a constituentpart of the Russian Federation Prom: Russian abbreviationfor Industryor industrial Rayon: Administrativedistrict; a constituentpart of a kray, oblast, or republic Republic: Administrativeregion; a constituentpart of the Russian Federation, but with relativelymore autonomythan others Roskomzem: Russian State Committeefor Land Resourcesand Land Administration Rosleskhoz: Federal Forest Service of Russia Roslesprom: Russian State Forest Industry Company; a state holding establishedon the basis of the former Ministryof Forest Industry (Minlesprom)and recently reorganized into Goskomlesprom State Forest Fund: Government-ownedforest and non-forestlands that are managedby the authorized forest managementagencies, primarily by the Federal Forest Service,of Russia. Zakaznik: A nature reserve and wildliferefuge set aside for the preservationof small ecosystemsand particular anirnalor plant species Zapovednik: A nature reserve that is strictlyprotected vi RussIANFEDERATION FORESTPOLICY REVIEW Promoting Sustainable Sector Development During Transition CONTENTS Page No. Executive Summary.............. 1 I. Forest Resources and Sectoral