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Creating jobs to boost the economy and build a green future

C.T.S. Nair and R. Rutt

Targeted public investment in tarting from early 2008, the world by governments and central banks, there forestry could generate about has been witnessing one of the are considerable uncertainties about sus- 10 million new jobs around the worst economic crises since the tained recovery. Under the most optimis- world. SGreat Depression of the 1930s. Losses in tic scenario an upturn in many countries financial markets worth trillions of United may start in 2010 or 2011, but the pos- States dollars have spread through econo- sibility of further economic decline and mies worldwide, leading to reductions in a prolonged, anaemic recovery cannot production, employment, incomes and be completely ruled out. consumer demand. Growth rates of all Major consequences of the economic economies have been revised downwards decline include factory closures on an (UN, 2009). Although as of summer 2009 unprecedented scale, consequent job cuts the decline has slowed and some of the and a rapid increase in unemployment emerging economies are showing signs (Figure 1). Global unemployment, esti- of recovery thanks to measures adopted mated at about 180 million in 2007, is

1 World unemployment trends (in millions)

250 Near East

Latin America and 200 the Caribbean Central and southeastern Europe (non-EU) and Commonwealth of 150 Independent States Developed economies

100 Africa Asia and the Pacific (excluding Japan) 50

0 2007 2008 2009 2009 2009 Scenario 1 Scenario 2 Scenario 3

Scenario 1 was generated using the historical relationship between economic growth and C.T.S. Nair is Chief Economist and Rebecca vulnerable employment at the country level between 1991 and 2008, together with the International Rutt is Consultant in the Economics and Monetary Fund (IMF) gross domestic product (GDP) growth projections for 2009. Policy Division, Forestry Department, FAO, Scenario 2 was generated based on the relationship between economic growth and vulnerable Rome. employment during the worst observed economic downturn in each country, applied to the 2009 IMF GDP growth projections. Scenario 3 was generated by taking the worst observed year-on-year increase in each country’s This article was developed from a background vulnerable employment rate and assuming the same increase would occur simultaneously in all paper prepared for the special event “Impacts economies in 2009. of Global Economic Turbulence on the Forest Sector” at the nineteenth session of the FAO Source: ILO, 2009. Committee on Forestry, Rome, 20 March 2009.

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projected to increase to nearly 210 mil- (including for migrant workers), its change. Forestry could have a positive lion in 2009, or even as high as 239 decline has contributed substantially to role in the economic stabilization efforts, million in the worst-case scenario (ILO, increased unemployment. Growing rural particularly through job creation and the 2009). Job losses among migrant work- unemployment could increase pressure rebuilding of the natural capital base. ers from developing countries, who are on and woodlands, leading to particularly vulnerable, lead to reverse and degradation. Declining FORESTRY IN THE ECONOMIC migration to their home countries (often demand for and wood products STIMULUS PACKAGE to rural areas), reduced remittances, loss could also reduce investments in sustain- Employment generation of livelihood and increasing poverty and able by governments, Job creation remains the foremost con- food insecurity. At the national level, an industries and smallholders, adversely cern for most countries as economies exodus of unemployed urban workers affecting future wood supplies and envi- contract and joblessness increases. As back to their villages is aggravating rural ronmental services. the credit squeeze reduces fund avail- unemployment and underemployment in In response to the economic crisis, a ability, much of the focus will be on job many countries. number of governments have initiated creation in sectors with high labour– In the forest sector, the economic down- economic stimulus packages to bail out capital ratios. Forestry’s potential for turn presents particular challenges (FAO, financial institutions and to stimulate employment generation stems from 2009). The slump in the construction sec- production and consumption. By early several factors: tor, especially in many developed coun- 2009, the total value of the various stimu- • Low capital requirements. With the tries (for example in the United States lus packages amounted to over US$3 exception of some forest industries of America, where annual housing starts trillion (Gallagher, 2009). Employment such as pulp and paper and panel declined by about 80 percent between generation through public works is an products, forestry is labour intensive January 2006 and January 2009), led important thrust of many of the stimulus with relatively low capital invest- to a drastic reduction in demand for packages. An increase in jobs is expected ment. Labour and land are the key wood products. Production, trade and to enhance income, increase consump- inputs in the production of wood and employment have been scaled down in tion and thus stimulate production and non-wood forest products, and envi- response to the low demand. Since the further employment, helping to break ronmental services and investments construction sector is a major employer the downward spiral. in upstream (primary) forestry activi- The strategies of a number of countries ties are able to generate more jobs With declining demand for wood emphasize movement towards a green than most other sectors. An annual and wood products, there is a danger that governments, industries future, with the aim of stimulating sec- outlay of US$1 million in forest man- and smallholders could reduce tors that will create real assets, improve agement (including ) investments in sustainable forest energy efficiency, increase the use of could generate from 500 to 1 000 management, putting future wood supplies and environmental services renewable resources and combat climate jobs in many developing countries, at risk (log barge, Indonesia) FAO/FO-5709/P. D urst FAO/FO-5709/P.

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and 20 to 100 in most developed and middle-income countries. Public investments for employment generation in forestry • Multiplier effect. Since a major share of a worker’s income goes to Employment generation through forestry activities has played an important role in the purchase of goods and services, addressing recession in several instances. mainly at the local level, every one The Civilian Conservation Corps (CCC), established in the United States of America job created in forestry generates in 1933, was one of the most popular programmes of the New Deal providing relief and an additional 1.5 to 2.5 jobs in the recovery from the Great Depression. The CCC reforested timberlands, fought forest fires, economy. built public roads and maintained public parks. The assets built during that time have • Flexibility and adaptability in provided a solid base for conservation and management in the United States. Several diverse situations. The variety of other countries (for example New Zealand) took up and work the tasks required and the levels of as a strategy for addressing the high level of unemployment during the same period. technology available offer various Most of the forests in Japan were established as part of the reconstruction programme FAO/FO-6178/G. A llard employment options. For example, after the Second World War. During the war these forests were logged heavily. The post- planting could be undertaken as an war investments in helped to improve the country’s forest cover and at the extremely labour-intensive opera- same time provided substantial employment to local communities. tion if there are no labour constraints, In India, forestry employment is one focus of the National Rural Employment Guarantee or it could be partially mechanized Act (see article by Matta in this issue), launched in 2005. The act guarantees 100 days of depending on the relative costs of employment for all unemployed adult members of a family. Afforestation and drought labour and other inputs. proofing are integral components. During the period 2006 to 2008, this legislation provided There is a long history of job generation 2.3 billion person-days of work to rural households in a variety of rural asset creating through public investments in forestry activities, at a cost of US$6 billion. Recognizing its positive impact, the government has (see Box). Although the current situation increased the outlay for 2009–2010 to about US$8 billion. differs from past economic downturns, a number of countries have included job creation in forestry as an integral part extent illegal ), yet there was no tation. by newly of their economic recovery plans – for concomitant increase in investments in planted on farms and in forests example Canada, Chile, China (see arti- forest management, especially in devel- would help to compensate the emissions cle by Ma, Liu and Du in this issue), India oping countries. from deforestation and degradation. Pro- (see article by Matta), the Republic of As industry contracts and demand viding employment in forestry activities Korea and the United States (see article for wood remains subdued, increased would have the double advantage of: by Kimbell and Brown). investment in rebuilding the forest asset • slowing down deforestation and deg- base starts to make better sense. While radation that would have taken place Rebuilding natural assets forest owners (governments, private in the absence of employment; Even before the economic crisis, owners, enterprises and communities) • augmenting carbon sequestration increased reliance on industrial and ser- are likely to scale down their investments through increased planting and vices sectors for income and employment in response to declining wood demand, improved management of forests. had to some extent reduced investments it becomes critical to enhance invest- Better fuel management would reduce in primary sectors, including forestry. ments in forest management, especially the frequency and intensity of forest Within forestry, and log- to ensure that the future supply of pro- fires and consequent carbon emissions. ging have received the most investments ducts and services is sustained. Rebuilding the natural resource base is in view of their high returns and short a major step in moving towards a “green payback periods, while management of Climate change mitigation and economy”. forests has received much less atten- adaptation tion; this is particularly true for tropical Employment generation through MORE JOBS IN FORESTRY forests and especially where more profit- upstream forestry activities – affores- Currently the total employment in the able land-use options are available. An tation, reforestation, improved manage- formal forestry sector (the officially economic boom in the past few years ment of natural forests, conservation, reported figures for wood production, had increased the demand for wood and watershed protection, agroforestry, wood processing, the pulp and paper wood products, resulting in the expan- , etc. – directly contributes industry and furniture production) is sion of wood processing (and to some to climate change mitigation and adap- estimated at about 18.2 million (full-

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specific conditions at the national and cific local conditions, knowledge and 3.9 million 21% 5.5 million local levels, a wide array of job creation skills, could be important sources of 30% projects and programmes could help alle- employment. Most countries have sub- viate the current unemployment problem stantial experience in afforestation and Wood production Wood and at the same time improve the man- reforestation and could scale up these processing agement of land and forest resources, activities. Annual establish- including the creation of new assets ment (excluding assisted regeneration (Table). Because most of these activi- in semi-natural forests) is about 2.5 mil- Paper ties are seasonal and undertaken over lion hectares (FAO, 2006). Taking into industry Furniture short periods, full-time employment account the availability of suitable land industry requires a combination of activities. and the institutional capacity, the rate Landowners often have a diverse array of establishment of productive and pro- 4.4 million 4.5 million of income sources, and forestry could tective plantations could be doubled or 24% 25% augment income from other sources, tripled annually. Source: FAO, 2008. especially when these are affected by 2 the economic downturn. For some rural Maintenance and improvement of Employment in the formal households, even a few days of forestry existing planted forests forestry sector work could help to increase income and The total extent of planted forests in 2006 alleviate poverty. was estimated as 271 million hectares time equivalent) (Figure 2). Although a (more or less equally divided between significant share of the jobs in forestry, Afforestation and reforestation plantations and semi-natural forests especially in developing countries, is Afforestation and reforestation, includ- established through assisted natural in the informal sector, no reliable esti- ing reclamation of degraded or deserti- regeneration). In many countries vast mates are available on the extent of such fied lands, offer the greatest scope for tracts of planted forests have not been employment. The International Labour job creation, particularly where rural maintained properly and investment in Organization (ILO, 2001) has “guess- unemployment or underemployment is their maintenance has been declining. timated” that about 63 percent of total high and vast tracts of degraded land Even routine maintenance operations – forestry employment is in the “invisible are available. Land preparation, produc- weeding, cleaning, thinning and prun- sector”, including woodfuel production, tion of planting material and planting ing – are often neglected, with negative for which disaggregated data on formal and maintenance, adapted to the spe- consequences for productivity. Although and informal production are not avail- able, as well as the numerous forestry enterprises in the informal arena. On Potential new jobs in sustainable management of forests and level of investment this basis, total employment in the forest required (annual targets for an initial five-year period) sector could be as high as about 49 mil- Activity New jobs Annual target area Approximate (million, full-time (million ha) annual outlay lion (FAO, 2008). equivalent) (billion US$) No disaggregated data on employment Afforestation, reforestation and in forest management are available. Of desertification control 4–5 5 8 the estimated 3.9 million jobs in wood Improvement of productivity of production, most are in logging, i.e. existing planted forests 0.5–1.0 10 1 production of industrial roundwood Watershed improvement 1–3 1 6 and fuelwood removal, through formal Indigenous forest management 1–2 4 5 arrangements. Probably not more than one-fourth to one-half of production jobs Forest conservation 2–3 20 7 involve planting and management of Agroforestry 0.5–0.75 2 1 forests and woodlands. Fire management 1.0–1.25 10 5 Although this employment estimate is not precise, it does indicate the low Urban and peri-urban forestry 0.1–0.5 0.1 2 Skill improvement of forestry and level of effort given to managing forests workers 0.05 1 sustainably, suggesting substantial scope to scale up activities. Depending on the Total 10.1–16.5 36

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low productivity is often partly due to poor quality of planting stock, regular maintenance operations can improve productivity (or at least prevent further decline) and hold enormous potential for job creation. Increased productivity will also decrease the pressure to expand the plantation area to meet future growth in wood demand.

Watershed improvement In view of the highly degraded condition of many watersheds and growing con- cern about declining supply and quality FAO/FO-5186/L. F erouki of water, watershed improvement will be a major area of job generation invest- ment in most countries, using techniques appropriate to the specific ecological, social and economic conditions. In addi- Afforestation and tion to afforestation, watershed improve- the use of traditional knowledge of local reforestation offer the ment may involve construction of water communities and the adoption of techno- greatest scope for job creation, particularly where and soil conservation structures such as logies appropriate to local conditions. rural unemployment is check dams, contour trenches and ter- high and vast tracts of races, which is highly labour intensive. Forest conservation degraded land are available (watering nursery plants Again, these activities will help improve Despite the increasing demand for for desertification control, the natural asset base while generating environmental services, investment in Senegal) employment. forest conservation has been limited (see Box, page 8). Conservation activities Management of natural forests that could be scaled up include demar- While demand for wood remains subdued, Natural forests are important for environ- cating boundaries of protected areas, attention can be turned mental services – e.g. watershed protec- maintaining paths and trails, devel- to maintenance and tion, conservation of biodiversity, carbon oping recreation sites and establish- improvement of existing planted forests (weed sequestration – and for wood production ing nature education and information control in a forest (especially in the tropics), although their centres. Employing local community plantation, Chile) role in the latter is declining in view of members in such activities could ensure expanding wood supplies from planted the effective protection of conserva- forests. Investment in the management tion areas. Considering that the world’s of natural forests, however, has been protected areas extend over about 1.9 negligible. Vast tracts of logged-over billion hectares, even a modest effort to secondary forests remain unmanaged improve accessible areas could provide and are becoming degraded, especially employment to many thousands of peo- in the context of mounting human pres- ple. As economies recover and income sures. In many countries the condition of increases, the demand for recreation these forests and their environmental ser- will increase and the investments in vices could be improved through assisted improving the infrastructure and other regeneration and “close-to-nature” forest facilities will be quickly recouped.

management based on better understand- FAO/FO-5109/S. B isoffi ing of ecosystem processes. Sustainably Agroforestry managed secondary forests could also Tree growing has been an integral part of produce high-quality timber for niche various farming systems providing a wide markets. Here again there is scope for array of products, including non-wood

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In view of growing concern about water quality and supply, watershed improvement will be a major area for investment in jobs (measuring soil erosion, Thailand)

qualified hands who would otherwise remain unemployed and be at risk of losing their skills. It could also help save resources and enhance worker safety and eventually income. Employment opportunities also exist in research and development, for example, FAO/FO-6417/M. K ashio FAO/FO-6417/M. in more energy- and material-efficient forest products. In many countries farm- ning, establishment and management of “green technologies” and organiza- grown trees have become the most impor- urban and peri-urban green spaces could tional management, which may lead to tant source of wood supply. With secure not only provide an antidote to growing improved forestry practices and compet- tenure and expanding local demand, urban employment, but also improve itive advantage. Investment in research agroforestry can be expanded and exist- urban living conditions. and development could alter the nature ing practices improved. Although this of forestry jobs in the future. may not generate full-time employment, Skill development of forest and forest it will help to reduce poverty of farm industry workers OVERVIEW OF ANNUAL COSTS households. In many countries forestry and forest Summing up, the annual outlay for industry workers have little or no for- rebuilding the forest asset base, focus- Fire management mal training and insufficient skill lev- ing on the activities indicated above, With the increased severity and fre- els. The lull in demand for products would be approximately US$36 billion, quency of forest fires, attributed partly could be an opportune time for upgrad- distributed among activities as shown in to climate change but also to failure to ing skills and introducing new techno- the Table on page 6. This could gene- implement appropriate fuel management logies. A systematic programme of skill rate about 10 to 16 million jobs, largely practices, forest fires have become an development would require instructors, depending on local conditions, espe- important source of carbon emissions. creating employment opportunities for cially costs of inputs. More jobs can be Fuel management to reduce the inci- dence and severity of fires could also increase employment, including for local Investment in protected area management communities. Activities would depend on the local conditions, but many are The annual expenditure on protected area management in the decade 2000–2010 is labour intensive. estimated as about US$6.5 billion globally, and most of this is in developed countries. In many countries the expenditure on protected area management has declined. In Urban and peri-urban green spaces eastern Africa the outlay on protected area management is less than US$3 per hectare. With growing urban populations, the According to one estimate of the financing needed for protected area management, demand for urban green space is increas- US$45 billion per year would be needed to secure an expanded network of terrestrial ing rapidly. Many city administrations and marine protected areas. According to another estimate, protected area management are developing parks and other green in developing countries alone will require about US$12 billion to $13 billion per year spaces to improve the urban environ- over the next decade. ment, yet these efforts could be expanded Source: IUCN, 2006. in many places. Job creation in plan-

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Fuel management work helps reduce the incidence and severity of forest , thus lessening carbon emissions (prescribed fire to establish a control line off of a firebreak, United States) B ugwood .O rg /0016350/J.H. M iller , US F orest

generated in developing countries where wages are relatively low. Tomaselli (2006) estimated annual investments in the forest sector to be about US$64 billion, of which about US$46 billion go to downstream forest S ervice industry and trade, while US$18 bil- lion go to upstream forest management, establishment of plantations and harvest- tiatives for reducing emissions from More importantly, such investments ing – with logging often accounting for deforestation and forest degradation in could help rebuild natural assets that a major share of the upstream invest- developing countries (REDD) could be have been severely depleted in the past. ment. No disaggregated information is expected to more than double this figure Unemployment and lack of income have available on the share invested in forest (see Box below). been major factors contributing to de- management, nor are there reliable esti- and forest degradation in mates of the costs of sustainable forest CONCLUSIONS most countries. Employment in sustain- management. Tomaselli estimated that Rapidly escalating unemployment and able forest management thus has a double sustainable forest management would its social and economic consequences are benefit: while it builds the natural asset require an investment of about US$31 a major concern as countries grapple with base, it also reduces the deforestation billion per year. Implementation of ini- the ongoing economic crisis. Sustainable and degradation that often occur when forest management could become an other income-earning opportunities are integral component of employment gen- absent. Based on the current costs of sus- Costs of reducing emissions eration efforts and offers some unique tainable forest management activities, from deforestation and forest advantages in fulfilling a number of 10 million jobs could help to establish, degradation in developing economic, social and environmental restore or improve about 8 to 10 mil- countries (REDD) objectives. lion hectares of forests and woodlands, Targeted public investments could gen- reversing deforestation and degradation. The estimated costs of implementing REDD erate about 10 million new jobs in affor- Such employment would also strengthen depend on the level of the emission reduc- estation, reforestation, management of the management of protected areas,

tion required and the unit cost of CO2. The natural forests, establishment and man- improve watersheds, create new urban annual cost of a 50 percent reduction of agement of urban and peri-urban green and peri-urban green spaces and reduce emissions from deforestation could be about spaces, improvement of watersheds, pro- the incidence of fire. US$17 billion to $33 billion for the period tection of forests from fire and building The establishment of new forests and 2005–2030. This estimate includes the up- roads, trails and recreation sites. woodlands and improved management front capacity-building costs, opportunity Such investments could absorb unem- of existing forests would directly con- costs and protection costs. The profitability ployed or recently dismissed workers, tribute to climate change mitigation and of alternative land uses will be a major factor increasing their income and consumption adaptation. Both the reduction in de- determining the rent that will have to be paid and contributing to arresting the down- forestation and the establishment of new to carbon credit suppliers under REDD. ward economic spiral. Most of these planted forests and farm woodlots would jobs would be in rural areas, where they improve carbon sequestration and stor- Source: Eliasch, 2008. would help raise living standards. age. Improved fuel management could

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reduce the incidence and severity of ILO. 2001. Globalization and sustainability: forest fires, further helping to reduce the forest and wood industries on the move. carbon emissions. Geneva, Switzerland, International Labour Employment in forestry activities can Bibliography Organization. provide a much-needed “quick-fix”. By ILO. 2009. Global employment trends rebuilding the natural resource base and Eliasch, J. 2008. Climate change: financing update, May 2009. Geneva, Switzerland. enhancing the supply of goods and ser- global forests – Eliasch Review. Kew, Available at: www.ilo.org/wcmsp5/groups/ vices, the initial investments will also UK, Government of the United Kingdom. public/---dgreports/---dcomm/documents/ pave the way for long-term employment. Available at: www.occ.gov.uk/activities/ publication/wcms_106504.pdf A number of countries have already eliasch.htm IUCN. 2006. Sustainable financing of protected included forestry as an important compo- FAO. 2006. Global planted forests thematic areas: a global review of challenges nent of their current economic stimulus study: results and analysis. Planted Forests and options. Gland, Switzerland, World packages, with particular focus on job and Trees Working Paper FP/38. Rome. Conservation Union (now International creation. Stepping up of such efforts FAO. 2008. Contribution of the forestry sector Union for the Conservation of Nature). by all countries could have positive to national economies, 1990–2006, by A. Available at: app.iucn.org/dbtw-wpd/ economic, social and environmental Lebedys. Forest Finance Working Paper edocs/PAG-013.pdf impacts. New jobs will be tailored to FSFM/ACC/08. Rome. Tomaselli, I. 2006. Brief study on funding the specific conditions in each country, FAO. 2009. State of the World’s Forests and finance for forestry and forest-based to make the most of local resources and 2009. Rome. sector – final report. Prepared for the institutional capacities. u Gallagher, K.P. 2009. A global survey of United Nations Forum on Forests (UNFF). stimulus plans. Post to online Global Curitiba, Brazil. Crisis Debate, Macroeconomics theme. UN. 2009. World economic situation and Available at: www.VoxEU.org/index. prospects 2009. New York, United php?q=node/3156 Nations. u

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