RAP PUBLICATION 2004/22

PROCEEDINGS OF THE WORKSHOP FORESTS FOR POVERTY REDUCTION: Opportunities with Clean Development Mechanism, Environmental Services and Biodiversity

27–29 August 2003 Seoul, Korea

RAP PUBLICATION 2004/22

PROCEEDINGS OF THE WORKSHOP FORESTS FOR POVERTY REDUCTION: Opportunities with Clean Development Mechanism, Environmental Services and Biodiversity

27–29 August 2003 Seoul, Korea

Editors H.C. Sim, S. Appanah and Y.C. Youn

Jointly organized by

Seoul National University Asia Pacific Association of Forestry Research Institutions Forestry Research Support Programme for Asia and the Pacific Korea Forest Economics Society Northeast Asia Forest Forum

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS REGIONAL OFFICE FOR ASIA AND THE PACIFIC Bangkok, 2004 The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the permission of the copyright owner. Applications for such permission, with a statement of the purpose and extent of the reproduction, should be addressed to the Senior Forestry Officer, Food and Agriculture Organization of the United Nations, Regional Office for Asia and the Pacific, 39 Phra Atit Road, Bangkok, Thailand.

@ FAO 2004

ISBN No: 974-7946-57-2

For copies of the report, write to:

Patrick B. Durst Senior Forestry Officer FAO Regional Office for Asia and the Pacific 39 Phra Atit Road Bangkok 10200 Thailand Tel: (66-2) 697 4000 Fax: (66-2) 697 4445 Email: [email protected] FOREWORD

One of the Millennium Development Goals aims at cutting extreme poverty and hunger worldwide in half by 2015. This declaration has transformed the way development assistance is conducted. In this context, the role of forests and forestry in poverty reduction and food security is gaining currency. In earlier studies and discussions, community forestry or social forestry was proclaimed to have great potential for reducing poverty and food insecurity. Promising as they may be, these apparently have their limits too. So, how can foresters increase the wealth of the forests, and enhance the livelihoods of the communities living in and near them, without compromising the forests’ integrity and ecological services? The “Forests for Poverty Reduction: Opportunities with CDM, Biodiversity and Other Environmental Services” workshop, the second in the series on the theme of forestry and poverty alleviation, looks beyond community forestry.

A number of new and interesting initiatives are examined in this volume. The Clean Development Mechanism established under the Kyoto Protocol of the U.N. Framework Convention on Climate Change is beginning to attract global attention. However, most of the opportunities to tap this source are still confined to the better- organized and bigger organizations. It remains an uphill task to bring about the required organization and procedures for the poor to capture this source of funding. Perhaps new and simpler approaches are needed, and should be tested out in the field to make a convincing case in the region.

Likewise, biodiversity wealth still remains largely unconvertible currency. It is indeed a shame that the poor, who are in possession of the greatest storehouse of biodiversity and the knowledge of its utility, are unable to convert these resources into monetary wealth. Fortunately, there is a ray of hope already visible in the case of ecological services. It does not take much convincing to convert provision of drinking water, flood mitigation, and other tangible services into financial payments. Albeit, there are still disputes about the formulae Ð who should be the recipients and how the payments should be spread.

The “Forests for Poverty Reduction: Opportunities with CDM, Biodiversity and Other Environmental Services” workshop, which brought together 47 experts from the Asia-Pacific region, focused on improving the contribution of forests to poverty reduction strategies. The theme is highly relevant both to forest sector policy-makers and practitioners in developed and developing countries. A summary of the recommendations of the plenary session are included in these proceedings. We would like to thank the organizers, FAO-FORSPA, APAFRI, Seoul National University, Korea Forest Economics Society and the Northeast Asia Forest Forum for organizing this critical meeting Ð it will certainly make an impact, and provide the basis for further collaboration on forestry initiatives for poverty reduction in the region.

He Changchui M.A. Abdul Razak Assistant Director-General and Regional Representative Director-General, for Asia and the Pacific Forest Research Institute Malaysia Food and Agriculture Organization Chairman, Asia Pacific Association of of the United Nations Forestry Research Institutions

iii ACKNOWLEDGEMENTS

This proceedings is based on papers presented at the regional workshop on “Forests for Poverty Reduction: Opportunities with CDM, Environmental Services and Biodiversity” held at Seoul National University, Seoul, Korea, 27 to 29 August 2003. The editors would like to express their gratitude to the APAFRI Secretariat for the compilation and proofreading of the manuscripts. We are thankful to the organizing committee for the tremendous amount of effort and time spent in organizing this successful workshop. The financial and in-kind contributions of the various organizations, FORSPAÐFAO, Seoul National University, Korea Forest Economics Society, the Northeast Asia Forest Forum, Korea Forest Service and Yuhan-Kimberly, have made this workshop possible and are gratefully acknowledged. We owe our most sincere thanks to the various invited speakers and participants for their active participation and invaluable contributions during this workshop. Many of them have edited their presentations to meet our editing requirements for the publishing of this proceedings.

iv CONTENTS

FOREWORD iii

ACKNOWLEDGEMENTS iv

1 Welcome address 1 Don-Koo Lee

2 Introduction — beyond community forestry 3 S. Appanah

3 Poverty reduction by tropical forests: rhetoric or a viable option? 7 Matti Palo

4 Making markets for forest communities: linking communities, markets and conservation in the Asia-Pacific region—The RUPES project 25 F.J.C. Chandler

5 How forest producers and rural farmers can benefit from the Clean Development Mechanism 35 M. Satyanarayana

6 Policy support for enhancing economic returns from smallholder tree plantations using carbon credits and other forest values 41 Promode Kant

7 Market mechanisms and assessment methods for environmental services from private forests in Australia 49 Rodney J. Keenan, Stuart Davey, Alistair Grieve, Brendan Moran and Jim Donaldson

8 Carbon budgets of tropical forest ecosystems in Southeast Asia: implications for climate change 61 Rodel D. Lasco and Florencia B. Pulhin

9 Forests for poverty reduction in Nepal: policies, programmes and research 77 Ramesh Shakya

10 Strategy for the implementation of CDM and carbon trade in Indonesia 89 Y.S. Hadi and M.B. Saleh

11 What is biodiversity worth to developing countries? 99 T. Ravishankar

12 Economic value of biodiversity: a rural perspective for sustainable realization 107 P. Seema

13 Market-based instruments for watershed protection—what do we know? 113 Shin Nagata

14 Inter-regional partnership for watershed conservation in Korea 117 Yeo-Chang Youn and Jaekyong Chun

15 Biodiversity resources, economic values and conservation in China 121 Shi Zuomin

16 The role of forestry in poverty reduction, biodiversity conservation and Clean Development Mechanism in Viet Nam 127 Trieu Van Hung

v 17 A policy review on watershed protection and poverty alleviation by the Grain for Green Programme in China 133 Li Zhiyong

18 Forest resources of Bangladesh with reference to conservation of biodiversity and wildlife in particular for poverty alleviation 139 M.M. Rahman

19 Poverty reduction and forestry sector: towards the sustainable management of natural resources 149 Lic Vuthy

20 Biodiversity for poverty alleviation in Indonesia 157 Suhardi

21 Nature conservation and biodiversity for poverty reduction — case of Bhutan 163 Lungten Norbu

22 Opportunities in using the conservation of biodiversity to alleviate poverty in Thailand 167 Suchitra Changtragoon

23 Outputs and recommendations of group discussions 173 24 List of participants 175

vi 1 Welcome address

Don-Koo Lee*

Dato’ Dr Abdul Razak, Director-General of the Forest Research Institute of Malaysia (FRIM) as well as President of the Asia Pacific Association of Forestry Research Institutions (APAFRI), Dr Appanah from FAO, Professor Nagata Shin from the University of Tokyo, Ms Fiona Chandler from ICRAF, Dr Rebugio from the University of Philippines at Laos Banõs, Dr Suhardi from the Gajah Mada University, Professor Youn Yeo Chang from the Seoul National University, distinguished and honorable participants, ladies and gentlemen, I bid you all a warm welcome to Korea and this Workshop. I am so pleased that the Seoul National University and the Northeast Asian Forest Forum are hosting the International Workshop on “Forests for Poverty Reduction: Opportunities with Clean Development Mechanism (CDM), Environmental Services and Biodiversity,” and I would like to extend my sincere appreciation to all the participants for taking their time to attend this meeting, especially speakers and moderators for their valuable inputs and contributions to today’s Workshop. It is forests that give us fresh water and clean air as well as fertilize the soil to produce food, energy and biomass. Forests are also a major carbon sink that mitigates climate change. In other words, forests are the source of life and play an important role in the preservation of our fragile environment. In the past, we have been working mainly on the rehabilitation of degraded forest land, but it has often been ignored by the poor rural communities. It is realized that the rural poor can also play a more effective role in forest protection and conservation of biodiversity while they benefit from the forest resources which they have protected. There have been a series of discussions on how to use forests in reducing rural poverty. In this sense, international communities are looking into how new global initiatives such as CDM and carbon credits can be directed to benefit rural populations as well as ecological services and biodiversity conservation. Without improving the living standard of the forest communities, it will be nearly impossible to stop the deterioration of forests and deforestation in this Asian region. For this reason, it is specially meaningful to hold this Workshop to identify valuable opportunities in CDM, carbon markets and related forest services that can be converted to benefit rural populations. I sincerely hope that today’s Workshop will provide a forum for countries to identify the approaches and strategies for reducing rural poverty as well as to understand the current knowledge and developments of CDM, carbon markets and the economic value of ecological services and biodiversity conservation. I wish you all a fruitful Workshop and an enjoyable and healthy stay in Korea. Finally, I would like to thank FAO, APAFRI, the Seoul National University, and the Korea Forest Economics Society for organizing this timely Workshop. I am also grateful to the Korea Forest Service and Yuhan-Kimberly for sponsoring this Workshop and to all others who have contributed to make this Workshop possible and successful.

* Professor, Seoul National University; Co-President, Northeast Asian Forest Forum; Seoul, Korea.

1

Introduction — beyond 2 community forestry

S. Appanah*

Our tragedy with forestry began the day we started using market forces to make management decisions. The arguments then looked straightforward. Which will bring more wealthÐselling the timber and saving the money in a bank, or leaving the timber stand to grow some more? Such a procedure, generally in practice among owners of private forest lots in temperate countries, was thoughtlessly transplanted into the tropics. Although the conditions in tropical countries differed substantially, forests being mostly state-owned, and their values going considerably beyond that of timber, it nevertheless captured the minds of the policy-makers who readily promoted cashing in the timber in a market that was generally underpriced and unpredictable. Of course with hindsight, some of us now concede that we did go off the mark. We now recognize that while forests are a source of timber with market value, their values go far beyond, into influencing local and regional climate, protecting soil, providing potable water and mitigating floods to mention a few. Over and above, forests remain a significant source of livelihood for people living inside or in neighboring villages. All these functions were not taken into account or given a fiscal value, remained outside the production boundary, and distorted our decision-making when it came to logging or converting forests. Not that there was no enthusiasm to do soÐwe would have done the same even if we had all the information on the true values of forests as well as all the cautionary notes. What single predominant factor propelled us along this direction? Before the colonization of many tropical countries, forests were mainly “owned” by the local villages or forest communities. Colonial governments transferred the forestlands from the communities to national control, under the jurisdiction of government agencies. Starting in the mid-1960s, when tropical timbers began to enter the international timber trade in a big way, the newly independent countries began to harvest forests for generating foreign exchange. This was argued as a means to underwrite economic growth. Did that really take place? For example, Indonesia’s natural forests declined from 150 million ha in the 1950s to 90 million ha in 1990 with aggressive logging policies. However, government income from timber tariffs and royalties never exceeded 0.1 percent of the government’s annual budget over the same period (World Bank Report on Indonesia 1993). What happened? Under heavy political pressure, forestry agencies had to give timber contracts to politically well-connected individuals at highly subsidized rates. Short-term leases, inappropriate technologies, and undervaluation of resources led to forest mining practices. The losses go beyond failure to collect the true value of the timber. Bad harvesting practices also include environmental and social costs. Reduced vegetation cover has heightened the extent of erosion, flooding, poorer agriculture and unprecedented forest fires. But perhaps the most serious consequence of bad forest management is the loss that forest-dependent communities have begun to face. So, we are finally confronted with the reality. The forests have gone, mostly, the governments are not richer, the environment has deteriorated, and people impoverished. So is there a way out of these problems. Sustainable development is the mantra that the international community is currently pushing. Concerns are no more puritanical, mainly revolving around environmental issues. The focus is becoming more balanced, and increasing attention is given to poverty issues along with environmental problems. In this respect, foresters are also looking askance into forestry-poverty linkages and how the resource can used for ameliorating poverty. One clear proposition is to transfer more of the forest resources to be managed by the communities themselves. The shift has begun, and community forestry is beginning to show more promiseÐit is far less expensive to

* FAO Regional Office for Asia and the Pacific, Bangkok, Thailand; E-mail: [email protected]

3 empower local communities to protect and benefit from the forests they have traditionally depended on. This was the subject of a workshop in Beijing (FAO RAP Publication 2004/04). This brings us into the next step in the move to making rural communities increase their earnings from forestry. Besides community forestry, what else is there or can be done? Perhaps the best lead into the discussions is to start with the penetrating analysis by M. Palo (Chapter 3) in his evocatively titled essay “Poverty reduction by tropical forests: rhetoric or a viable option?” His main question is why forest industries have succeeded in creating economic growth in countries such as Finland, while they failed miserably in most tropical countries. His analysis clearly shows that in many tropical countries, there is a good correlation between high poverty and low relative forest area. A vicious cycle may be present here Ð the higher population density at low-income levels can become overdependent on forest goods and services, thereby accelerating deforestation and degradation. Poorer forest environment can increase poverty. But the real problem is why the industrial model based on forestry could take off in countries like Finland, but have stuttered and sent countries in the tropics backwards. In the past, there was the tendency to explain away these problems with explanations such as the “horizontal expansion of the different forms of agriculture, since it is responsible for 85 percent of deforestation.” But these days, many experts are much more prepared to admit the truth for the lack of development and the causes of deforestation. It is squarely blamed on the countries’ “policy, economic, institutional, distributional, and demographic factors.” In reality, we have to look at the relationship of the forest and the rich or the elite. In plainer words, it is corruption Ð the factor behind the continued decline of tropical forests and impoverishment of its people. So much so, it is easy to become cynical about attempts to use forestry as a means to alleviate poverty, and dismiss all discussions on the subject as rhetoric. But many involved in sustainable development are not prepared to give up on forestry, and are continuously seeking for solutions. They believe the process is an aggregate of several changes, including good governance, democratization, decentralization and greater participation in the decision-making activities. They are convinced that there are many approaches possible and deserve investigation. What approaches are available? A number of cases were presented for Clean Development Mechanism and carbon credits (e.g. M. Satyanarayana, Chapter 5; P. Kant, Chapter 6). Payments for afforestation and reforestation activities to mitigate climate change offer a potential. Many NGOs have begun to persuade industries from developed countries to subsidize tree-planting activities of poor communities. While the potential is huge, it has yet to yield the anticipated benefits. There are still many problems holding back the process; these include the problems of administration and policy that need to be cleared for the projects to have a bigger impact. Contributing to the field are studies such as the one by R. Lasco and F.B. Pulhin (Chapter 8) who examined how much carbon is found in various tropical forest ecosystems. These studies would form the foundation upon which to calculate the payments, and so the methodologies developed to measure carbon would prove valuable. But researchers usually like tests and trialsÐthese give deeper insights into what works and why. Just that is being tested out by F.J.C. Chandler (Chapter 4) with a RUPES (Rewarding Upland Poor for Environmental Services) project. The argument is that upland communities have to forgo opportunities if prevented from cutting trees and keeping the ecosystem as pristine as possible. The beneficiaries are mostly downstream. So, why not pass on the environmental benefits in terms of cash to upland communities. The idea is simple and appealing, but when converted to a field situation, it can be nightmarish. Who in the upland communities should benefit, and how much? Don’t be surprised if here too the beneficiaries are large landowners and concessionaires with the muscle and the organization. The RUPES project will be looking into the contractual arrangements, who should be rewarded, and by how much. For once, we will have scientifically credible information to approach the beneficiaries downstream and make a case for paying the deprived. Although the interest in environmental services and transfer of environmental payments is gaining currency, one big obstacle remains. That is how to assess the environmental services, what kind of market mechanisms is available, and how can all these be organized and accessed by the private forest owners. R.J. Keenan and colleagues (Chapter 7) describe a systematic approach that has been developed in Australia. In this nascent area, experience is critical, and would provide valuable guidance for other environmental payment schemes. Environmental services are generally easier to perceive, and therefore making payments for them usually more convincing. But how can one pay communities that are playing a role in biodiversity conservation. That takes a stretch. Nevertheless, T. Ravishankar (Chapter 11) bravely explores the difficult question, “What is biodiversity worth to developing countries?” He uses the “productive-use value, consumptive-use value, and indirect or intrinsic value” approach. Admittedly, there is no uniform currency for biodiversity valuation, and it is highly location-specific, and some aspects will remain outside the economic frontier. Nevertheless, the approaches are beginning to provide a basis to handle the field. Others like Z.M. Shi (Chapter 15) go beyond to actually give value to biodiversity conservation in China. The values cited are stupendous. But why shouldn’t

4 Introduction — beyond community forestry they be? With our concentration on timber, we never really appreciated the value of the daffodil hidden in the woods. There again, much of what has been discussed may seem to be mere rhetoric but for the actual demonstrated cases for environmental services. The day was saved with the cases from Japan (S. Nagata, Chapter 13) and Korea (Y.C. Youn and J.K. Chun, Chapter 14) for watershed protection. One would think that giving value to watershed protection role would be elementary. But the situation, as described by Nagata, and Youn and Chun is apparently not so straightforward. Mere market mechanism cannot deal with environmental functions and long-term elements of resource management. Special arrangements such as government intervention are needed. Finally, it must be said that the day we began to use market mechanisms to make decisions about forest management will remain a cursed one. The question now is how to manage the situation and live with economics. We cannot deny the need to use the valuation system, and should make good use of it as much as possible. We, however, cannot allow it to overpower every decision we make. There are decisions that require moral and ethical judgments over monetary ones. As we have learned all along, bureaucrats will resist transfer of assets to the village communities. But the process is beginning to gain momentum. If we are into poverty alleviation, that would indeed be the first rule Ð give people access to some of the state’s resources. We are seeing community forestry is not the cure-all solution. There are other opportunities that can be explored as well, and need to be pursued. This has been the subject of the workshop. But as always, we will have to return to the issue of corruption that was raised at the start. All our efforts will not work without good institutions, supporting policies and legislation that can be enforced to ensure people are protected and not denied access to resources that are rightfully theirs. More mechanisms have to be found to return the forests to those who own it. Community forestry and harnessing other opportunities that go with forestry offer a good starting point.

S. Appanah 5

Poverty reduction by tropical forests: 3 rhetoric or a viable option?

Matti Palo*

ABSTRACT

This paper is aimed to respond to the most essential issue raised in its title. Both income (GDP/capita) and Human Development Index as national poverty measures are regressed with relative forest area as a dependant variable, and with population density, Corruption Perception Index and some other independent variables in 35Ð83 tropical countries covering 70Ð95 percent of the total tropical forest area. It was found that the two poverty variables were strongly correlated with the relative forest area. It was deduced that high population density at low income levels advances forest degradation, deforestation and desertification. The deteriorated forest environment increases poverty, which in turn increases population pressure on the remaining forest, and so on in a vicious cycle. The prevailing practice of administrative pricing of the standing timber undervalues the tropical forest. Therefore, the opportunity cost of sustainable forestry remains artificially too high and is expanding deforestation with corruption and some other causes underlying the local visible agents of deforestation. The widely prevailing corruption in the tropics is blocking the effectiveness of both the government policies and the market means, which are the only ways to control the allocation, production and distribution of forest products and services. Finland never had any wide scale corruption and it has therefore had less government and market failures than the tropical countries. In Finland increasing exports of forest products have made forestry more profitable and agricultural fields more productive and they have in this way reduced poverty on a national scale. In the tropics increasing exports have advanced deforestation with minimal impacts in poverty reduction. Finland, Costa Rica, Republic of Korea, Sweden and Japan all have transited into sustainable forestry practices. They all share prevailing private forest ownership and advanced political, social, human, financial, natural and physical capitals, while most of the tropical countries are lacking such endowments as a balanced mix. Therefore, poverty reduction on a national scale by the tropical forests will remain as rhetoric for the time being. It may become a viable option only in a couple of decades with reducing corruption and a major devolution of the prevailing socialistic forestry.

INTRODUCTION

“Members of the human species are children of the forest. The evolution of civilization is intertwined with forests; at the center of our history lies the story of their use” (Druska & Konttinen 1997, p. 15). The Millennium Declaration of September 2000 has been adopted by 189 countries. The United Nations (UN) declared to halve the number of the extreme poor and of the people suffering from hunger by 2015 as the first of the eight goals in its Declaration. The UN Secretary-General announced to the UN General Assembly the making of a road map for achieving the eight Millennium Goals via 18 targets and 48 indicators. The Goals have been regarded unique in their ambition, concreteness and scope. It is also being recognized that the halving of poverty and the attainment of the other related goals can be achieved only through stronger partnership among all development actors and especially through increased action by rich countries (UNDP 2003, p. 27).

* Seoul National University, Seoul, Korea; E-mail: [email protected]

7 Therefore, it is no wonder, that attacking poverty has lately become a popular rhetoric among the inter- governmental organizations (IGOs) and the non-governmental organizations (NGOs) as well as the national development agencies. UNDP (2003) has contributed on the follow-up and instruments on how to end human poverty since 1990 by publishing its Human Development Index annually. The latest report introduces a penetrating analysis of how the countries are related in achieving the eight Millennium Goals and how to launch improvements. The World Bank (2001, 1990) launched its poverty report lately as a follow-up of its poverty report eleven years earlier. The concept of poverty has been expanded since 1990 in an interesting way (see below). The new forest strategy of the Bank sets poverty reduction as one of the three main pillars (World Bank 2003). The Asian Development Bank (2001) joined the effort with its poverty reduction agenda. Also FAO has adopted an agenda (FAO/DFID 2001), how forests can reduce poverty, with some later ramifications (FAO 2003). “Forests in poverty reduction strategies: capturing the potential” (Oksanen et al. 2003) is just one title of a number of seminars and workshops (e.g. SNU 2003) in this field lately. I come from Finland, which lies in northern Europe between the 60th and 70th parallels of the northern latitude. Finland has an area of 338 000 km2 (of which 10 percent is of inland waters) and a population of 5 million; thus the population density is 17 persons km-2. Only Iceland as a whole country has such a northern location. Sweden lies next westwards from Finland, but 83 percent of the population lives more south of the 60th latitude. In those peripheral locations there traditionally were not available so many options to survive than on the more southern latitudes. Therefore, the Icelanders have been fishing and processing fish, while the Finns have primarily, in the past, been growing and processing timber. With those means the two nations have successfully participated in international trade and created some of the highest levels of living standard among the nations in the world (UNDP 2003). Most of the tropical countries have had traditionally, by their location and endowment of natural resources, more viable options available for survival and livelihoods. Finland has 0.5 percent of the world total forest area and 15 percent of the value of total global forest products exports. Finland has clearly the highest value of forest products exports per capita and the highest share of the value of the total commodity exports among the eight major exporters of forest products in the world (Figure 1). Forestry and forest products industry have played a key role in reducing poverty in Finland since the latter half of the 19th century. Traditionally, farm forestry has played a dominating role in timber supply in Finland. Therefore, timber stumpage markets have been more competitive than in most other countries and consequently, both the stumpage and wage incomes have had more equal geographic and functional distributions than in the other sectors (Palo and Uusivuori 1999, Palo 2003).

Forest Industry Exports per Capita and the Share of Total Exports in 2001

Finland

Sweden

Canada

Austria

Norway

Germany

France

USA

2500 2000 1500 1000 500 0 5 10 15 20 25 30

Forest industry exports Forest industry exports/ EUR per caita total exports, % Figure 1. Forest industry exports per capita and the share of total exports in eight leading exporting countries (source: Paperinfo)

The forest conditions in the tropical world are different from those in Finland in many ways, but it may be worthwhile to contrast the evolution of the Finnish forest cluster and its impacts on reduction of poverty with those in the tropical countries. If surprising to some readers, this comparison follows the idea by John Stuart Mill, the 19th century British classical economist and philosopher: by comparing some phenomenon in its minimum and maximum we may improve our understanding of this phenomenon.

8 Poverty reduction by tropical forests: rhetoric or a viable option? The seminal paper on “The role of forest industries in the attack on economic underdevelopment” by Jack Westoby (1962) aimed to create welfare/eradicate poverty by developing forestry and forest industries as growth poles for entire economies via a number of linkage effects. This theoretical framework served as guidelines for FAO forestry development projects for about 15 to 20 years with weak success (Figure 2, Westoby 1978, Palo 1988). Westoby‘s theory worked well in Finland (Wardle et al. 2003) but not in the tropics. Why?

Figure 2. Declining natural forest area in the tropics 1960–2050. (Palo et al. 1999, Palo & Lehto 2000a)

This paper aims to respond to this question and the most essential question raised in the title. The first purpose is to describe the concept of poverty and its linkage with tropical forests. The second is to analyse the undervaluation and deforestation of tropical forests by corruption. The third is to analyse privatization and decentralization as relevant policy instruments to facilitate large-scale poverty reduction by tropical forests. Fourth, a description is given on how Finland has applied the five-capital approach in reducing poverty by forests. Finally, some discussion with some other country cases and conclusions are given. An underlying hypothesis of this paper is that reduction of poverty by tropical forests is perhaps, after all, a new rhetoric or slogan, rather than a viable option, to cover the failures by the IGOs, NGOs and the various national governments and development agencies in slowing down tropical deforestation (Figure 2). Poverty reduction may be also a viable instrument to facilitate more external funding for forestry development projects. The paper is restricted to study the linkages between poverty and all kinds of natural forests in 35Ð 83 tropical countries at the national level. The number of countries in each analysis depended on the availability of data. The aim was to cover as many countries and as large an area as possible. In fact, in this way we can capture most of the poor people (World Bank 2001) and 70Ð95 percent of the total tropical forest area in the world (FAO 2001, Palo and Lehto 2003a).

POVERTY CONCEPTS

Poverty can be defined and measured in different ways (Scott 1981). The term income poverty refers to people with low monetary incomes. About 1.2 billion people out of 6 billion live on less than US$1 a day. A half of all the six billion people on this earth live on less than US$2 a day. A clear reduction in the number of people living on less than US$1 a day has lately taken place in East Asia and the Pacific. On the other hand, income poverty has increased clearly both in Sub-Saharan Africa and in South Asia (World Bank 2001). Consumption poverty is a somewhat wider term than income poverty. The concept is widened more by including the multiple aspects of nutrition and food, health and education, empowerment of people and freedom of choice. Furthermore concepts like sustainable livelihoods and five-capital approaches have been introduced. The latter are composed of natural, human, social (political), cultural (physical) and financial capital. A success in poverty reduction is dependent access to all of the five kinds of capital (Hyden 1998, Smith and Scherr 2002, Angelsen and Wunder 2003). Accordingly, a theoretical deduction can be made, that in poverty reduction access to forests as one kind of natural capital alone can only play a rather limited role.

Matti Palo 9 The World Bank (2001) has adopted a three-dimensional concept of poverty: opportunity, security and empowerment. Security refers to the risk of people falling below the poverty line or other welfare indicators. Empowerment means access and control over local resources, public services and influence in local decision- making. Opportunity includes income, education and health. Therefore it is quite similar to the Human Development Index by UNDP, which is composed as a simple average of life expectancy, education and GDP per capita indexes (UNDP 2003). A case study on poverty and deforestation in Cameroon was conducted by Ekoko (1996). He also analysed the concept of poverty. His conclusion was that poverty does not necessarily lead to deforestation, and property rights for the poor not necessarily to forest conservation. However, these case study findings lack any power for generalization. Angelsen and Wunder (2003) analysed the varying concepts of poverty. After a multiple of concepts they arrived at a definition of poverty as a subjective well-being. Their one conclusion was that at the end of the day, what matters is a person’s own subjective assessment of well-being. Another conclusion on the different concepts was that ultimately the choice of the poverty indicator is dependent on the research context and goals, budget, duration and the specific need for comparative analyses. Accordingly, there exist a number of poverty concepts available for our analysis. We are restricted in the use of a couple of objective concepts with readily available empirical measures, namely “income poverty” and “opportunity” in the meaning of the World Bank (2001). These are absolute poverty concepts. We shall not use any relative poverty concepts. On the other hand, we shall make our analysis at the national level. In this way we exclude the subjective and individual or household poverty concepts as well as a number of more multidimensional concepts, which we shall discuss to some extent only in the context of policy instruments applied in Finland.

10.00

Venezuela Papua New Gu Gabon Brazil Guinea-Bissa Malaysia Trinidad & T Nicaragua

t Puerto Rico Indonesia 1.00 Peru Colombia Ecuador Panama GuatemalaJamaica Benin Bolivia Costa Rica Honduras Mexico Liberia Sri Lanka Senegal Cameroon Ghana Zambia Thailand Dominican Re Nepal Paraguay Congo Dem. R Central Afr Philippines Myanmar Singapore Malawi Cote d'Ivoir Sierra Leone Uganda

(log scale) Madagascar Tanzania Mozambique Zimbabwe Guinea Togo India Botswana El Salvador Nigeria Forest area/non-forest area 0.10 Namibia Angola Bangladesh Sudan Gambia Burkina FasoRwanda Burundi Ethiopia Chad Mali Pakistan

8000 Haiti 70006000 5000 Kenya Cape Verde 4000 3000 Niger 2000 Somalia 1000

GDP per capita t-10 1000 100 (USD, log scale)

10 Population densityt-10 (inh./sq.km, log scale)

1

Figure 3. Relative forest area as a function of population density and GDP/capita in 71 tropical countries. Weighted adjusted R square = 0.24. (Forest areas from original inventory year data, t = random year 1970–1991; data sources: FAO FORIS 1995, NBER 1994)

10 Poverty reduction by tropical forests: rhetoric or a viable option? POVERTY AND TROPICAL FORESTS

It makes also a difference which forest concept to apply in relation to poverty (Palo 1999, Angelsen and Wunder 2003). Here we shall use the concept of natural forests, which covers all kinds of other tree formations but plantation forests. Accordingly, rain forests, moist, semi-moist, semi-arid, arid, montane and cloud forests in the tropical countries are included. Forest and tree concepts of FAO/FORIS-database (Marzoli 1995) are applied. “Human beings have always depended on forests. Initially, we used them as places to live. We hunted in them for game, foraged for fruits and nuts and gathered for fuel. Our relationship with our habitat was essentially no different than that of any other animal. The development of settled agriculture economies to replace those based on hunting and gathering required the clearing of forest.” (Drushka and Konttinen 1997, p.17.). We may conclude from this citation, that those forest people were, and still are in many corners of the tropical world, income poor but eventually consumption rich as long as the population densities are not too high in relation with the carrying capacity of the forest habitat. This refers to a situation of some importance still today, that income alone may not be a valid measure of poverty in the tropical world. For this paper we made pilot modelling about the relationship of forest and poverty. Among 71 tropical countries relative forest area increased along with an increase in income per capita (Figure 3). But when forest areas are declining or deforestation is taking place in all of these countries, it is more rational to view the process from the opposite direction: at the national level increasing income poverty is reducing forest area. Population density is another independent variable applied in this simple model: also with increasing population density the relative forest area is reduced. Income poverty and population density jointly explain 24 percent of the variation of the relative forest area variable while weighted least square estimation (WLS) of the regression model is applied (see explanation in Palo and Lehto 2003b). We measured the relationship of forest and poverty also as one dimension of the poverty concept by the World Bank (2001): opportunity or its close counterpart, the Human Development Index (HDI) by UNDP.

Suriname Guyana 10.000 Brunei Belize

Dominica Papua New Gu Brazil Guinea-Bissa Colombia Indonesia 1995 Gabon Venezuela Malaysia Peru Guinea Equat Trinidad & T 1.000 Panama Ecuado St. Kitts _N St. VincentCambodia Congo Rep. Laos Dominican Re Mexico Nicaragua Guatemala Bhutan Honduras MyanmarSri Lanka Bolivia Costa Rica ThailandAntigua & B Ghana Cameroon Philippines Dem.Vietnam R Paraguay Congo Benin Nepal Zambia Jamaica Malawi Bahamas Cuba Grenada Senegal Singapore Central Afr Tanzania Uganda India Botswana Zimbabwe St. Lucia (log scale) Togo Madagascar Cote d'Ivoir Nigeria Guinea 0.100 Namibia El Salvador

Forest area/non-forest area Sudan Mozambique Angola Bangladesh Ethiopia Gambia Sierra Leone Burkina Faso Burundi

Chad Cape Verde Pakistan Kenya Mali 0.010

1.0 0.9 Djibouti Haiti 0.8 0.7 Niger 0.6 0.5 Mauritania 1000 Human Development 0.4 Index1995 (log scale) 0.3 100

Population density 10 1990 0.2 (inh./sq.km, log scale)

1

Figure 4. Relative forest area as a function of population density and Human Development Index in 83 tropical countries. Weighted adjusted R square = 0.43. (data sources as in Figure 3 & UNDP 1998)

Matti Palo 11 HDI is a simple average of indexes on life expectancy at birth, combined adult literacy and school enrolment as well as local purchasing power parity of GDP per capita (UNDP 2003). In 83 tropical countries an increase of poverty by this measure also decreased relative forest area (Figure 4). HDI and population density jointly explained 43 percent of the variation of relative forest area. It is highly interesting that by replacing GDP per capita by HDI the degree of determination (the adjusted R square) was doubled. A wider poverty concept, “opportunity”/Human Development Index had a double explanation effect in comparison with the income poverty concept. Also of special interest in this model is that it gives us a pan-tropical explanation over the three tropical continents. Among 17 tropical Asian countries an even more fitting outcome from this kind of modelling was received (Figure 5). HDI and population density jointly explained 69 percent of the variation of relative forest area. The higher degree of determination in Asia than in the pan-tropics may be due to more homogenous ecological and cultural conditions in Asia than in the rest of the tropics. From our previous studies we know that the variation of ecological conditions measured with multiple variables is statistically highly significant (Palo et al. 2000, Uusivuori et al. 2002). The degrees of determination with these new two independent variable models were unexpectedly high in comparison with our previous studies. We were able to control the above outcomes from two independent variable modelling with a seven independent variable modelling, where we applied three ecological variables and four socio-economic variables. The model explained 73 percent of the variation of relative forest area in 64 pan-tropical countries. The poverty variable of HDI was statistically highly significant (under 1 percent risk) and with an expected sign: the more poverty, the less relative forest. The other socio-economic variables were GNP/land area, external trade/GDP and agricultural productivity. All of them were statistically highly significant and with expected signs. The message from our modelling about the role of poverty in relation to forest is not absolutely clear. The outcome is, however, unique and highly interesting for further studies. However, we may conclude that high poverty and low relative forest area at the national level are strongly statistically correlated. We may

Brunei

Papua New Gu

Indonesia 1.00 Malaysia 1995 Cambodia Laos Bhutan Sri Lanka Thailand Myanmar Philippines Vietnam Nepal (log scale) Singapore India

Forest area/non-forest area 0.10

Bangladesh

1.0 0.9 0.8 Pakistan 0.7

0.6 1000 Human Development 0.5 Index1995 (log scale) 0.4 100

Population density1990 0.3 (inh./sq.km, log scale) 10

Figure 5. Relative forest area as a function of population density and Human Development Index in 17 Asian tropical countries. Weighted adjusted R square = 0.69. (Data sources as in Figure 4)

12 Poverty reduction by tropical forests: rhetoric or a viable option? have here a vicious cycle as described by Dasgupta (1995). Higher population density at low level of income consumes more forest goods and services and increases deforestation, forest degradation and desertification. Poorer forest environment increases poverty, which in turn increases population density in the remaining forest and so on. This may be true especially under African and South Asian conditions. These countries represent about half of our pan-tropical data. We try to avoid the impression that a poor marginal farmer is regarded, as a consequence of our modelling, as a cause of tropical deforestation. The late Jack Westoby, the well-known forest economist of FAO, used to say that this statement is equally true if an individual soldier is regarded as a cause of war. The local economic agents are striving for subsistence or profit maximization, but they are primarily reacting to the economic incentives by the national governments and international markets. Accordingly, real causes of deforestation are the policy, economic, institutional, distributional and demographic factors underlying these local factors (Uusivuori et al. 2002). “In the humid tropics the horizontal expansion of the different forms of agriculture (and animal husbandry) constitutes the most important direct overall factor, since it is responsible for nearly 85 percent of deforestation“ (Lanly 2003, p. 79). The former head of the FAO Forest Resources Division in this citation fails to realize that the high opportunity cost of sustainable forest management is to a great extent due to the prevailing administrative underpricing of standing timber (Repetto and Gillis 1988, Treue 1994, Angelsen and Wunder 2003). The artificially low value of natural tropical forest facilitates much wider clearing of forest for agriculture than would be the case under competitive market pricing of standing timber. Adopting local visible forest clearing agents as causes of deforestation is consequently a biased interpretation. Lanly (2003, p. 78) does report that the annual average tropical deforestation was estimated as 11 million ha in 1980, but he fails to report that it was estimated as 14 million ha in 2000 (www.fao.org). Otherwise, however, he is reporting trends from 1980 to 2000 by transfers between land cover classes and also distribution of deforestation in 2000 by continents in percentage. In Finland shifting cultivation, deforestation and forest degradation were common during the 19th century. The Great Land Reform (Isojako) and the establishment of the State Forest Service and the College of Forestry in the middle of the 19th century supported the closing of open access to forests. Industrialization in Western Europe increased simultaneously the demand for forest products and raised the stumpage prices under clear and strong property rights and also labour incomes from forestry for the farm forest owners. Also the numerous landless people could benefit work incomes from forestry. Under poorly developed financing institutions of that time this forestry income had a key role in raising agricultural productivity. In Finland shifting cultivation and deforestation were closed down primarily as market driven processes with necessary juristic infrastructure: increasing value of forest lowered the opportunity cost of forestry and increasing agricultural productivity provided sufficient food from a smaller area than during the shifting cultivation era (Palo 2003). Next we shall turn from the forest and the poor to the forest and the rich or elite, starting by considering the undervaluation of forest and especially the standing timber.

UNDERVALUATION BY CORRUPTION

Tropical deforestation is a complex, dynamic, multisector and multilevel phenomenon. The visible direct local actors of deforestation such as colonists, agriculturalists, shifting cultivators, cattle ranchers, fuelwood gatherers, industrial loggers and infrastructure developers are acting according to prices, taxes and subsidies or coercion applied by the national or international actors. The real causes of deforestation are underlying the local level. In order to slow down deforestation we have to deal with these underlying causes (Palo 2000, Palo et al. 2000, Uusivuori et al. 2002). Naturally, the direct local actors of deforestation have their individual motivations and goals that may be called direct causes of deforestation. Profit maximization and survival are representative examples of such goals. In a brief way, we may state that tropical deforestation is continuing in a non-decreasing pace, because for such economic agents deforestation is more beneficial than maintaining natural forest cover or practising sustainable forest management. A low monetary value of natural forest is a key factor making the opportunity cost of forestry high. Most tropical forests are owned by the state, in one way or another. The state has had the prevailing tendency to apply administrative pricing of standing timber or stumpage pricing at lower levels than the competitive price levels (Repetto and Gillis 1988, Treue 1994, Angelsen and Wunder 2003). In this way, the high opportunity cost of sustainable management of natural tropical forests is, at least partially, artificially made. We may ask why? After more than half a century of forestry development projects by the FAO, the World Bank, ITTO and other agencies, how and why this kind of undervaluation of tropical natural forests

Matti Palo 13 is continuing? When the private ownership is prevailing, like in Finland, the state forest service can get competitive price references from the private stumpage and timber markets. We define socialistic forestry as forestry, where most forests in a country are state owned (Palo 1997). There seems to be a tendency under socialistic forestry to set stumpage prices low (e.g. Haley 2001) in order, de jure, to promote domestic industrialization, but, de facto, to facilitate a financing source for high profits of logging and often also of corruption. For example, in Indonesia during the times of President Suharto, his family, generals and concessionaires were in alliance to reap benefits from exploitation of forests (Kasa 1999). The corruption system has not collapsed in Indonesia with the removal of Suharto from the presidency. Similar corruption practices seem to flourish especially in the countries with ample commercial forest resources (FAO 2001). Corruption can be defined as the misuse of public power for private benefit, for example bribing public officials, kickbacks in public procurements, or embezzlement of public funds (Lamsdorf 2001). Transparency International (www.transparency.org) has been integrating a Corruption Perception Index since 1995. Lately, 35 tropical countries were covered by this Index. Increasing corruption (declining of Corruption Perception Index) is decreasing relative forest area along with decreasing income/capita (Figure 6). Corruption and income/ capita in a regression model behind Figure 6 are both statistically significant under 1 percent risk. They jointly explain 35 percent of the variation of relative forest area in 34 tropical countries. Corruption seems to be more rampant in poorer tropical countries. We made also more integrated regression modelling with relative forest area as a dependent variable and with nine independent variables. Four ecological variables controlled the variable ecological conditions among countries. Corruption and four other economic variables were considered as underlying causes of deforestation. The nine independent variables explained 96 percent of the variation of relative forest area in 29 tropical countries with 69 percent of total natural tropical forest area. Corruption Perception Index had

Brazil

2.0 1.6 Venezuela Malaysia Peru Colombia 1.2 Indonesia Panama Trinidad & T 0.8 MexicoCameroon

1955 Bolivia Ecuador Zambia GuatemalaSenegal Nicaragua Botswana Honduras Dominican Re Ghana Costa Rica

0.4 Thailand Namibia Philippines Tanzania Malawi Zimbabwe Uganda

India (log scale)

Nigeria Forest area/non-forest area El Salvador

4000 3500 3000 Pakistan 2500 Kenya 2000 Bangladesh 7 1500 6 5 1000 4 GNP/capita1990 3 2 (USD, log scale) 500 1 Corruption Perceptions

Index 2001 (High=0, Low=10; log scale)

Figure 6. Relative forest area as a function of GNP per capita and Corruption Perception Index in 34 tropical countries. Weighted adjusted R square = 0.35. (Data sources: FAO 1999, Transparency International 2001, World Bank 1999)

14 Poverty reduction by tropical forests: rhetoric or a viable option? the highest elasticity among the five economic variables: a 10 percent decrease in corruption would increase relative forest area by 6 percent (Palo and Lehto 2003b). We have only two principal means on how to control allocation, production and distribution of tropical forest resources in order to satisfy human wants for various forest goods and services: the public and private means (Figure 7). In the public route there are such instruments as laws, plans, budgets, taxes and subsidies. In the private route markets, contracts and traditions play the most important roles. Corruption tends to block both of these means by creating government failures and market failures (Wibe and Jones 1992, Bass and Hearne 1997, Palo 1997). This is the secret behind continuously declining tropical forest area (Figure 2, 1980: 11 million and 2000: 14 million ha y-1) despite all the global politics and rhetoric to stop deforestation (FAO 2001, 2003).

Using forest resources

Public means Private means

Political process Markets, contracts, traditions

Laws, plans, budgets Pricing process

Public wants Private wants

Human wants Ð wood Ð biodiversity Ð carbon stocks Ð water Ð wildlife Ð range Ð wilderness Ð aesthetics and others Ð TOURISM Figure 7. The two control systems of production, distribution and consumption of forest goods and services: the public means and the private means (Palo et al. 2001)

Our conclusion here states that combating corruption would be a key to revalue tropical natural forests at a competitive stumpage price level. Eliminating corruption would not be a sufficient instrument alone, but it would be an effective and necessary beginning. This would dramatically lower the opportunity cost of sustainable forest management and in this way save more forest also for poverty reduction. This transition could be an important initial process in the reduction of poverty by tropical forests. Surprisingly, in a great number of forest valuation studies (e.g. Wardle and Kaoneka 1999, Kristrom and Boman 2001, UNU 2001) the concentration is in non-timber products and services and the undervaluation of the most valuable forest product, timber (cf. Angelsen and Wunder 2003), is excluded. An increased activity has lately taken place in the front of reducing or eradicating corruption (often covered by the term of “illegal logging”) in forestry (e.g. FAO 2001, Landell-Mills et al. 2002). A wide agenda may not be viable in this front, because corrupt governments are not willing to implement such wide agendas. A few selected measures in order to transform the corruptive culture via external funding and pressures would be more effective. Such instruments might include as follows (Palo and Lehto 2003b). First, as a short-term measure, a nationwide information campaign could be launched in the schools, universities and via media to the public at large. The message of the campaign would tell all the negative consequences of corruption in order to try and change the attitudes and eventually the corruptive culture (cf. FAO 2003): Second, another short-term measure is to simplify forestry and marketing regulations, because in many tropical countries the system of public regulations and fees has been done by purpose into a complex one in order to facilitate more frequent points for corruption (cf. Smith and Scherr 2002, Angelsen and Wunder 2003).

Matti Palo 15 Third, as a medium-term instrument adapt assessment of competitiveness of stumpage pricing in a market driven process of forest certification. This measure would create an incentive with external market and NGO pressures to neglect the administrative pricing system (Palo 2000). Fourth, another medium-term instrument would be to improve forest research, statistics and forest monitoring systems in order to have valid, reliable, transparent and timely follow-up of the changes in forest ecosystems, in forestry, forest industry, in the markets and policies (cf. Wardle 2003). Fifth, a demanding long-term instrument would be to privatize and decentralize forest resources (cf. Hyden 1998, Smith and Scherr 2002, FAO 2003, see below). Implementing these five instruments would provide an effective beginning in combating corruption and deforestation as well as mobilizing a large-scale poverty eradication in the tropics. An integrated approach in all sectors of economy would produce even better outcomes in combating corruption. Finland was assessed by Transparency International in 2001 and 2003 as the least corrupt country among the 102 and 133 countries included in the report (www.transparency.org). By reviewing the historical evolution of forestry in Finland, we do not find any period when corruption in forestry had played as negative role (Palo 2003). In some other industrialized countries such as the United States of America and Great Britain, corruption in forestry was a real problem 100Ð200 years ago (Albion 1926, Pinchot 1949). When Finland had in the past practically no corruption, it was possible to avoid the worst government and market failures. In fact, these failures block the effectiveness of the two control systems, public and private means (Figure 7), in allocation, production and distribution of forest goods and services in the contemporary tropical countries. Next, we introduce some of the policy reforms we consider as necessary in order to eliminate corruption and to facilitate a large-scale tropical forest-based poverty reduction scheme.

PRIVATIZATION AND DECENTRALIZATION

As we have shown above forests and poverty are strongly correlated. Less forest at the national level in the tropics means more poverty (Figures 3Ð5). Most likely, slowing down deforestation would be beneficial for poverty eradication. However, according to our analysis (Figures 6Ð7), in order to slow down deforestation, first corruption has to be combated. Our long-term policy proposal above to combat corruption was privatization and decentralization of state forests. The Clean Development Mechanism CDM of the Kyoto Protocol identifies reforestation and afforestation as relevant forestry measures for application. Prevention of deforestation projects is not presently eligible under CDM. Via CDM new funding from industrialized countries to tropical forestry is feasible, when the Protocol will become ratified. Some local poverty reduction in this way may be a viable option, but no large-scale poverty reduction is likely to occur under prevailing socialistic forestry in the tropics (cf. Smith and Scherr 2002.). In order to slow down deforestation and to facilitate effective poverty reduction by reforestation and afforestation open access to forests has to be closed by property rights (Figure 8). Along with economic development, until a certain threshold point of time, natural forests will continue to decrease. In the case of strong and clear property rights and closed access to forests the stumpage prices (prices of standing timber) will start to increase, when economic scarcity of timber has appeared. The rising real stumpage prices give the profit-making motivation to the property rights holders and they start to plant more trees.

Forest area/ Deflated Stumpage total land area (%) Price (USD) 100

Natural + Plantation forest (%)

Price of standing timber or fuelwood (USD)

Natural forest (%) Plantation forest (%) 0 Economic development Figure 8. From deforestation to transition via markets—a model (Palo 2000)

16 Poverty reduction by tropical forests: rhetoric or a viable option? The efficient property rights structure is universal, exclusive, transferable and enforceable. Universality means that all resources are privately owned. Exclusivity refers to a situation where all benefits and costs accrue only to the owner. Transferability means that property rights are transferable from one owner to another on a voluntary basis. Enforceability refers, finally, to a situation where property rights are secure from involuntary seizure or encroachment by others (Bromley 1991, Zhang 2000). We introduce next one empirical graph indicating how total forest area (natural plus plantation forests) is correlated with income per capita—an empirical response to Figure 8. Among 166 countries we may find some empirical support for the key role of the private property rights (Figure 9). Here a U-shape distribution of countries can be observed. If Ireland is considered as the bottom of this U-shape, above and right from it there lie 19 countries. Among them only Brunei and Canada practise socialistic forestry. In the other 17 countries private forest ownership is prevailing. We found further empirical evidence of the existence of this U-shape distribution among 67 tropical countries with multiple regression modelling (Uusivuori et al.2002). Establishment of property rights can be a complex and slow process; at least this was the case in the past. In Finland the Great Land Reform (Isojako) was mobilized in the 1770s and it lasted about 150 years to cover all of the country. The aim was to delineate private fields and forests out of the state domain and the commons both in the terrain and in the official files. As a consequence already by the middle of the 19th century private forest ownership began to dominate in Finland. A poor country has not perhaps adequate funding available to cover the transaction costs needed for this kind of land reform. Here exists a vital option for the ODA and other external funding. Transaction costs are composed of costs accruing from closing of open access and marketing costs. Ex ante costs of closing access derive from defining the property rights in the terrain and in the official files. Ex post costs of closing access, on the other hand, are due to protecting the property rights. Marketing costs are composed of marketing intelligence, buyer identification, marking of trees, tendering and business negotiations, scaling of timber and making the exchanges (Coase 1937, Zhang 2000). Major problems may be encountered in implementation of this kind of land reforms. First of all, the political will of the government to allocate the state forests to private hands may be missing due to corruption. Second, if a land reform is executed under corruptive conditions a total failure may result as many experiences from Latin America indicate (Laarman 1996). Accordingly, first corruption must be eradicated to a workable level and then the implementation must be guided by a fair and democratically based strategy of privatization (Hurskainen 1996). The strategy, as a minimum, should define, who are eligible people for getting forest from the state, on which terms, under which schedule, under which kind of implementing organization, and under which kind of further regulation of forest management and logging activities. Privatization of state forests has been an expanding process since 1990, especially in the countries with economies in transition nearly everywhere but not in Russia (FAO 1997, Zhang 2000). Some privatization of plantation forests has also taken place in such countries as New Zealand, the United Kingdom, Republic of South Africa and Australia. If privatization and decentralization are based on economic theory, then the extent of market external effects, externalities, is decisive on how far and how to proceed (Bass and Hearne 1997). The forests without remarkable externalities fit best for private property rights. Forests with local externalities such as local watershed, landscape or biodiversity impacts fit best to be decentralized to local communities. Finally, forests with national externalities should be left in the hands of the national government. Usually, these forests are in the minority of the total forests and thus state forestry or conservation of forests in this situation is not considered as socialistic forestry. The degree of privatizing socialistic forestry depends thus on the context of the environmental and socio-economic conditions of the country concerned. A dogmatic ideological neo-liberal orientation should be avoided. Rather an optimum mix of markets and policies should be strived for (Figure 7, Stieglitz 2003, Palo et al. 2001). Decentralization of forests from the national government to the local governments or communities has been practised lately on an expanding scale (Landell-Mills and Ford 1999, FAO 2003). It may be a step forward from a socialistic forestry system in the way that open access is easier to close down, when the local community is motivated to watch and implement it. A major risk in decentralization under corruption is to decentralize, not only forests, but also the corruptive culture. On the other hand, community ownership is missing one important market, the market of forest holdings, which under the private property rights is feasible to create. This market has been operating in Finland for more than a century but from 1925 to 1996 under some state regulation. In recent years this market has been fully liberated. Lower personal motivation in community forestry makes it also inferior to family forestry. Mexico with 77 percent of community forests for nearly a century and Papua New Guinea with 99 percent of community forests also for a long time provide cases, which indicate, that decentralization in this way cannot always be successful (cf. Angelsen and Wunder 2003).

Matti Palo 17 Switzerland

Bermuda

Japan

Norway

Finland

Sweden

Iceland

Denmark

USA

Germany

U Arab Emirat

Canada

France

Brunei

Austria

Belgium-Lux

Netherlands

Italy

Australia

UK

Qatar

Singapore

New Zealand

Kuwait

Bahamas

ea as a function of GNP/capita in 166 countries (Palo 2000)

Spain

Ireland

Israel

1990

Malta

GNP/capital (USD, square root scale)

Bahrain

Cyprus

Greece

Saudi Arabia

Barbados

ests) divided by total land ar

Portugal

5000 10000 15000 20000 25000 30000 35000 40000

Puerto Rico

Oman

Korea Rep

Antigua & B

Gabon

Latvia

Seychelles

Estonia

Lithuania

South Africa

Botswana

Algeria

Belarus

Russian Fed

Slovakia

Trinidad & T Trinidad

Czech Rep

Argentina

Iran

Mexico

Bulgaria

Brazil

Hungary

Cuba

Uruguay

French Guiana

St. Kitts &N

Iraq

Venezuela

Costa Rica

Turkey

Belize

Thailand

Chile

Mauritius

Grenada

Fiji

Malaysia

Panama

Kazakhstan

Dominica

St. Lucia

Djibouti

Vanuatu

Poland

Namibia

Rumania

Jamaica

Syria

Ecuador

Guatemala

Ukraine

Tunisia

St Vincent

Angola

Egypt

Jordan

Zimbabwe

Senegal

Azerbaijan

Bolivia

Lesotho

Honduras

Armenia

Peru

Suriname

Swaziland

Colombia

Congo

Dominican Rep Paraguay

Papua New Guinea

Samoa

Morocco

El Salvador

Liberia Cameroon

Ethiopia

Tajikistan

Kyrgyzstan

Pakistan

Myanmar

Yemen

Mauritania

Equat Guinea

Gambia

Cape Verde

China

Madagascar

Burkina Faso

Cote d'Ivoire

Sao Tome &P Sao Tome

Togo

India

Sierra Leone

Ghana

Philippines

Guyana Guinea-Bissau

Niger

Haiti

Solomon Is

Malawi

Uganda

Tanzania

Bhutan

Indonesia

Vietnam

Chad

Nicaragua

Benin

Total forest area (natural and plantation for area forest Total

Nigeria

Cambodia

Laos

Mali

Sri Lanka

Nepal

Somalia

Mozambique

Congo D.R.

Zambia

Kenya

Central Afr

Sudan

Burundi

Bangladesh

Rwanda

Guinea

0

80

60

40

20 1995 100 (%) cover forest Total

Figure 9. Figure

18 Poverty reduction by tropical forests: rhetoric or a viable option? The competitive forest holding market plays an important role for the intensification of forest management, because it shortens the time horizon of investments with otherwise long maturation times (in Finland 60Ð150 years). When tending of a seedling stand or pruning of standing trees is accomplished, the owner can take the increased value of the holding either by selling the holding or in the form of increased value of the holding as a collateral, while borrowing money. The system of allocating only use rights to the local people, but the government remaining the owner of land, such as implemented in plantation forests in China (Zhang 2000), suffers from the same reason. Accordingly, community forestry seems to miss one key market, namely forest holding market, in support of sustainable forest management. Reducing poverty by tropical forests and especially via the CDM of the Kyoto Protocol provides new options, but may be rather time consuming in order to safeguard expected results on any larger scale. First corruption has to be reduced, land reforms carried out and a number of market supporting juristic and information infrastructure created. Implementation of such projects can provide labour income and with some use rights and also some sales income, but the full arsenal of the market system, which has eradicated poverty in Finland in a national scale, is still missing in the tropics. Next, we shall take a closer look at the evolution of this system in Finland.

FIVE-CAPITAL APPROACH IN FINLAND

Without a continuous economic growth any major poverty reduction is not feasible. However, a delicate issue remains on how the welfare would trickle down to the poor? “Sometimes growth helps the poor, sometimes not. There are policies that in the long run may enhance growth and reduce poverty, such as enhancing education opportunities…” The countries in East Asia have promoted simultaneously growth and equity. Therefore, they provide illustrative cases of the effectiveness of this strategy (Stieglitz 2003). History may not know any country where a remarkable poverty reduction has taken place via a voluntary action by the elite class. The poor have to take the economic and political power in order to change the income distribution to reduce poverty. The idea of sustainable livelihoods and the five-capital/assets approach (Hyden 1998, Angelsen and Wunder 2003) may be helpful to understand the operation of this process. The framework for action by the World Bank (2001, p. 37) reads as follows: “To attack poverty requires promoting opportunity, facilitating empowerment, and enhancing security—with actions at local, national and global levels. Making progress on all three fronts can generate the dynamics for sustainable poverty reduction.” In Finland the real income per capita as a precondition for poverty reduction has grown to 16.5 times in the 85 years since final independence (the volume index of GNP/capita 0.4 in 1917 and 5.8 in 2002, when 1938=1: personal communication by Riitta Hjerppe, University of Helsinki). In the early 20th century Finland was predominantly an agrarian society, and poverty was mainly located in the rural areas (www.tilastokeskus.fi). Human capacity building was then expanded in the form of compulsory primary school to cover the whole country. University education was considerably expanded and intermediate education mobilized, e.g. for forest rangers and agrotechnicians. Human capacity building was also expanded by creating various civil society NGOs. Finland has created this wealth primarily with the key role of exporting forest products. Even Nokia began as a pulp and paper company in 1870. In 1984 it sold out all its forests as well as pulp and paper mills and changed its strategy towards electronics and mobile phones. The share of forest products from the value of all the commodity exports varied in Finland between 70 and 90 percent from 1920 to 1960. Afterwards the share declined (Figure 1) due to diversification of the economy, although the volume of forest products exports has remained on a continuously increasing trend (Palo 2003). For a small economy like Finland exports play a key role in economic growth. Finland has relied on this strategy of export-lead growth. Westoby‘s (1962) theory of forest industries in the attack of underdevelopment has found strong empirical support in Finland (Wardle 2003), but it is difficult to find any tropical country with similar development. Of course, forest industrialization in Finland started towards the end of the 19th century, when no globalized forest industry corporations existed. The technology was then also relatively simple. It was possible for the corporations not only to process timber, but also start manufacturing the machinery needed in timber processing and logging as well as to expand into related consultancy, research and development areas. Gradually a strong forest cluster was created (Palo 2003). Finland has today 20 million ha of forests, which cover 66 percent of the national land area. Private families own 61 percent of the total forest area and private corporations 9 percent. Accordingly, a total private ownership of forest area covers 70 percent of the national forest area. The state has 25 percent and the remaining 5 percent is owned primarily by communes and the church parishes. However, the private families make up 85 percent of the commercial timber supply of 54 million m3 y-1 and about 90 percent of stumpage income. The growing stock of timber is todayat about the same level as it was two centuries ago in spite of large-

Matti Palo 19 scale exploitation of timber for two centuries (Figure 1). The growing stock is still projected to increase until 2030 (METLA 2003, www.metla.fi). The share of family ownership of forests has been increasing over the long-term, also due to several land reforms favouring farmer ownership, which prevailed until recently. Urbanization and ownership transition through inheritance have lately left the farmers in a slight minority among the family forests. The farmers and farmer forest owners organized themselves in a strong political party (Maalaisliitto/ Keskustapuolue) nearly a century ago. This party was able to seize remarkable political power starting in the 1920s. The current (October 2003) Prime Minister of Finland, Mr Matti Vanhanen, comes from this party. On the other hand, workers in the forest sector along with other workers established their own political party, a Social Democratic Party (Suomen Sosialidemokraattinen Puolue) a century ago. That party has also been surviving strongly and has been supporting the well-being of forest sector workers. Accordingly, the poor in Finland have been able during about a century to capture enough social and political capital for reduction of poverty from forest resources. The farmers started simultaneously with their political mobilization to reap also economic power by establishing the Farmers Union, MTK, and a number of cooperatives in processing food and forest products and in retailing. The labour established even somewhat earlier various labour unions and also cooperatives in processing and retailing. Both kinds of unions are surviving very strongly as well as the main part of the cooperative movement. For example, family forest owners are the main owners of M-Real forest product corporation, which by turnover is the third largest in Finland and fourth largest in Europe. Human capital building jointly with social and political capital building helped the poor reap a remarkable share of economic power in a century in Finland. The natural forest capital increasingly in the hands of farmers in Finland for a century also facilitated an increase in agricultural productivity as explained above. Increasing income flows both from forestry and agriculture facilitated creation of two primarily farmer-based banking systems: a saving bank system and a cooperative banking system. Both were established as local banks but eventually they created two strong central banks to coordinate their financial operations. In this remarkably successful way the poor were able to create easier access to financial capital. The two systems were essential ones in reducing poverty until the 1960s, when processing industries and services along with urbanization surpassed employment in the primary industries.

DISCUSSION

I defined the title of this paper following considerable thought as: “Poverty reduction by tropical forests: rhetoric or a viable option?” It is now time to respond to this vital question. Why has the Westobian theory (Westoby 1962) obtain empirical support in Finland and not in the tropics? It may be so, that the necessary implicit preconditions, such as closed access to forests, strong and clear private property rights and absence of corruption, absence of major government and market failures, have existed in Finland but not in the tropics. When openness of a country to external trade increased in Finland, it has supported both economic growth and sustainable forest management. On the other hand, in the tropics an increase in the openness of a country to external trade has increased deforestation (Palo and Lehto 2000). No “invisible hand” in the form of increasing real stumpage prices as a market-based brake has appeared along with advancing deforestation (Figures 2, 8, 10). When the value of the decreasing remaining tropical forests has not been increasing, no financial incentive for intensification of sustainable forest management has appeared. Additionally, too often the financial capitals have flowed abroad or to luxury goods by the elites benefiting from timber exploitations, instead of investments in domestic forest plantations or timber processing. The FAO transited from export-led or import-substituting forest industrialization paradigm towards community and social forestry in the later part of the 1970s and 1980s, as did also the World Bank (Palo 1988). The mission of community and social forestry was to attack economic underdevelopment /poverty not through the top-down as in the Westobian approach but through the bottom-up strategy. So far, we have not seen any remarkable large-scale poverty reduction via community and social forestry. Why? Maybe no integrated theoretical framework supporting them has been developed far enough. Theory at its best is very practical: it can guide research and policy in the face of complex processes like poverty reduction by forests. Action without guidance of relevant explicit theory will remain ineffective. Human actions are mostly guided by theories, but often in an implicit way. Poverty reduction on a large scale by the tropical forests, we believe, will stay as rhetoric as long as no integrated theory exists to indicate the operational steps to be followed. “Sustainable livelihoods approach combined with governance” process as described by Hyden (1998) for the UNDP is one worthwhile candidate

20 Poverty reduction by tropical forests: rhetoric or a viable option? Figure10. Declining natural forest area in tropical Africa 1960– 2050. In the scenarios until 2050 the solid lines indicate low and high trend scenarios and the squares with broken lines low and high regression model-based scenarios (Palo and Lehto 2003b) in this front. In fact, we have implicitly adopted an approach close to that in this paper. This recap is, however, strong: to advance stable and democratic governance. Such recap has earlier been considered as a radical engagement into the internal affairs of the national governments, if not even revolutionary. Hyden (1998) regards that supporting effective “governance” or changing the rules of the politics to favour the poor is a fitting approach for UNDP experts and consultants. In fact, UNDP (2003) was supporting this approach and has been quite radical already for 13 years by publishing most sensitive national data about the progress of human welfare. What about agencies that have been more concerned with tropical forests, such as FAO, the World Bank and ITTO? No similar publishing of national progress in sustainable forest management or forest-based development has taken place. Maybe the UNDP is by its organizational structure closest to the UN mainstream ideology? As long as “socialistic forestry” paradigm is prevailing in this world, we cannot see any chance for a large-scale reduction of poverty by the tropical forests. I wrote an article “No sustainable forestry without adequate privatization” (Palo 1997), where I introduced and defined the term “socialistic forestry”. As a conclusion of this analysis I may revise that title to read as follows: “No large-scale poverty reduction by the tropical forests without large-scale devolution of socialistic forestry”. Why have the IGOs and NGOs presently adopted the rhetoric of poverty reduction? For decades global and other international politics have failed in stopping deforestation (Figure 2). There is a good reason to cover this failure by introducing a new rhetoric as has happened already since the 1960s by shifting from forest-based industrialization to community and social forestry. Another potential explanation is that when the rhetoric is up-to-date (according to the UN Millennium Development Declaration), the agency has better chances to get more external financing for forestry development projects of various kinds with a poverty hat. We may conclude here, that poverty reduction by the tropical forests will remains as rhetoric at least for some decades to come, if no radical change in the strategies and their implementation take place. We have indicated in this paper with empirical evidence, that decreasing forest area and increasing poverty are strongly correlated, especially in the 17 tropical Asian countries (Figures 4Ð5). Our scientific scenarios show a continuous decline of tropical forests at least until the 2020s (Figure 2). During the same time 29Ð44 percent of the Asian tropical forests will be deforested. These findings are based on two scientific articles (Palo et. al. 1999, Palo and Lehto 2000a). A third article indicates that about half of the African tropical forests may be lost by the 2020s (Figure 10, Palo and Lehto 2003c). When most of the poor reside in tropical Africa and tropical Asia, these scenarios undermine seriously the ambitious goals of poverty reduction by the UN and its family members.

Matti Palo 21 We may have another conclusion as good news: a visible rhetoric plays a positive role in the world politics. A number of positive past global achievements by the UN has been identified (UNDP 2003, p. 31). It can be regarded as an achievement that poverty reduction by the tropical forests is included in the world political agenda, but it is not a sufficient advancement. Under continuous deforestation and socialistic forestry no real advancement in a large-scale reduction of poverty is registered. What makes the bad news? After changing the rhetoric each decade, from forest-based industrialization to community forestry, to social forestry and to poverty reduction, an impression is given to the media and the public at large, that each rhetoric/agenda has been effectively implemented. This paper serves the purpose of mobilizing an evaluation of the accomplishments of these varying agendas. However, in order to avoid too pessimistic a view, it may be worthwhile to introduce some other positive country cases. Costa Rica may today be the only tropical country which has been able to stop deforestation Ð with 2 million ha of remaining forest, which cover 38 percent of the land area of 51 000 km2 and a population density of 77 inhabitants km-2. The Republic of Korea provides another interesting case with 6 million ha of forest, which covers 63 percent of the land area of 98 000 km2 and a population density of 471 inhabitants km-2. Sweden and Japan as major forestry and forest industry countries have maintained high forest covers, are practising sustainable forest management and have reduced during the past hundred years poverty by forests in remarkable degrees (FAO 2003). In fact, this combination of both high forest cover and population density makes Korea a unique case among 197 countries in the world (Palo 2000). Costa Rica and Korea exhibit illustrative cases along with Finland of the effectiveness of land reforms, privatization of forests, economic growth and advancements in democratization and removal of corruption (www.transparency.org) in support of sustainable forest management. Costa Rica, on the other hand, provides illustration, on how commercialization of forest services, e.g. carbon sequestration, biodiversity and ecotourism, can bring additional benefits in the reduction of poverty by tropical forests. Malaysia in tropical Asia, and especially Peninsular Malaysia, provides an illustrative case, on how large-scale deforestation of natural forests into rubber and oil palm plantations has created sustainable development but mostly outside forestry. Both logging and timber processing have been in the domestic hands, which has increased the impact on income sustainability. The long-term stability of the government, relatively low corruption, and the income distribution policy in favour of the poor have been other factors in advancing sustainable development. However, maintaining of socialistic forestry has undermined intensification in sustainable forest management. As a consequence, some options in poverty reduction by forestry have been missed. But Malaysia is still distinguished in the advancement of poverty reduction in comparison with the neighbouring countries, e.g. Indonesia and the Philippines (UNDP 2003, p.198). In both these countries rampant corruption and unstable governments have undermined, not only the past but also, the future prospects of poverty reduction by the tropical forests. It is interesting that Costa Rica, the Republic of Korea, Sweden and Japan have applied, to a great extent, a similar five-capital approach as we have described above in the illustration of the evolution of sustainable forestry and poverty reduction by forestry in Finland. No doubt, more of both theoretical and applied research are needed in support of poverty reduction by the tropical forests (cf. Angelsen and Wunder 2003). On the other hand, no more research findings are needed in order to change the implementation strategies and policy instruments with their effective implementation of national and international agencies active in this front. A viable option to transit from rhetoric in effective reduction of poverty by the tropical forests is already described in this paper.

ACKNOWLEDGEMENTS

I wish to acknowledge my colleague Erkki Lehto in Helsinki for his expertise and computations in creating the new and old figures of this paper. My acknowledgements are also extended to my colleagues Dr Jussi Uusivuori of Metla, Finland, and Dr Yaoqi Zhang of Auburn University, the United States, for reviewing and commenting on the draft. My special thanks to the editors for the language checking and copy editing of this paper. I also feel indebted to Professor Yeo-Chang Youn for inviting me to this Workshop, as well as to him and my other fellow speakers by whom I have learned and been inspired more about the Kyoto Protocol, CDM, Asian forestry and poverty reduction.

22 Poverty reduction by tropical forests: rhetoric or a viable option? BIBLIOGRAPHY

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24 Poverty reduction by tropical forests: rhetoric or a viable option? Making markets for forest communities: linking communities, markets and 4 conservation in the Asia-Pacific region—The RUPES project F.J.C. Chandler*

ABSTRACT

Current thinking is that market oriented approaches to forest management are going to provide an efficient mechanism for promoting and financing forest protection and sustainable forest management. However, linked with the continuing degradation of forest ecosystems in the tropics is the issue of poverty. In Asia, nearly one quarter of the absolute poor (some 250 million people) eke out a meager existence in upland areas and most depend directly on a mixture of agriculture and forest resources for their livelihoods. They live in contexts where their natural resource base is rapidly deteriorating. Many upland and mountain communities in Asia manage landscapes that provide environmental services to outside beneficiaries, but without sharing in the benefits of those services. Clear opportunities are now emerging in this respect. However, the current successes in environmental transfer payments have only benefited large landowners and concessionaires. In addition there is a danger that some types of transfer payment mechanisms that are currently evolving are being designed and implemented to the disadvantage of the upland poor. Rewarding Upland Poor for Environmental Services (RUPES) is a programme to develop appropriate methods for rewarding the poor upland communities for the environmental services that they provide. The RUPES Programme will build working models of best practices for successful environmental transfer agreements adapted to the Asian context. The programme will look at whom the rewards should go to, who will pay the rewards, how and in what form they would be collected and what amount or form is appropriate. This paper provides the rationale for the RUPES project and how it has and will contribute to linking upland communities, markets and conservation of ecosystem services in the Asian region.

THE CHALLENGE

Market oriented approaches to forest management are becoming increasingly common as they are seen as being able to provide an efficient mechanism for promoting and financing forest protection and sustainable forest management (Landell-Mills and Porras 2002). It is often the failure of markets along with policy and institutional failures that causes deforestation and environmental service loss. Market and policy failures mean that forest products are undervalued in the market place while for forest services providing public good values there is usually no market place at all (Richards and Moura-Costa 1999). It is presumed that the market will ensure that beneficiaries of the services provided by forests pay the land managers for adopting land management practices that deliver the desired services. The total value of forests to human kind is not insignificant. There are both use and non-use values of forests that can directly and indirectly benefit people. Forests provide livelihoods (direct-use values) both at present and, for many forest users, provide a buffer in times of hardship and so act as a “bank” when there are shortages (option values). The indirect values of forests include watershed protection, soil fertility, landscape value, biodiversity protection and carbon sequestration. Other values, often seen as non-use values, are those associated with the forests’ ability to provide peace of mind (bequest value) and benefits to culture and society (existence value). As often happens the more valuable the benefits from forests, the greater the competition for control, and in competitive environments it is the poorer and marginalized groups who become vulnerable. And conversely the continuing loss of forest ecosystems—especially in the tropics—is linked to rural poverty.

*The World Agroforestry Centre, Bogor, Indonesia; E-mail: [email protected]

25 Among the vast multitude of the poor in Asia, the populations that have been most affected by the process of marginalization are those living in the uplands, namely in the hills and mountainous areas which cover almost half the total area of Asia1. Nearly one quarter of Asia’s absolute poor (some 250 million people) eke out a meager existence in these areas and most depend directly on a mixture of agriculture and forest resources for their livelihoods. The benefits of national and local investments in economic development have tended to bypass most of the poor upland people because the composition of development initiatives and/or their products are often irrelevant or inaccessible to the upland communities. Being far away and disconnected from administrative and economic power centres means that the political, social, economic and ecological niches occupied by them are not central to national development concerns or priorities. Hence their development needs and aspirations are often not on the “map” of the decision-makers and rank very low in the hierarchy of national priorities. In addition, upland and mountain people often bear a disproportionate share of the negative externalities of the development process. This may be due to the loss of their production base to land acquisition for development projects or to migration from the lowlands or the appropriation of natural resources (including forest and water) by national and non-local interests. The lack of security of tenure over livelihood resources has led not only to disempowerment but also to unsustainable natural resource management practices. The steepness of slopes and the high risks of erosion, landslides and flooding in downstream villages, however, should make the uplands a priority target for development initiatives to reduce poverty. However, lack of local capital and security of tenure over land and tree resources have resulted in a low level of investment. It has also led to practices that are environmentally unsustainable, such as slash-and-burn agriculture with insufficient fallow periods, farming on steep slopes with inadequate investments in soil and water conservation, or inappropriate exploitation of forest and other biological resources. It is increasingly realized that the real plight of mountain and upland poor has been overlooked. The vulnerability of poor areas and poor people to different livelihood shocks and stresses was never seriously considered, resulting in inadequate measures to safeguard these people. Years of continuous neglect and the recent crises (financial, El-Nino, La-Nina, political insurgency) have created a sense of helplessness in the uplands. There is a major challenge to help restore the lost self-confidence of these people in their own abilities to come out successfully from the current situation. The poor clearly need policies, markets, technologies, and infrastructure that can help them improve their incomes and well-being. The urgency for preventing or reversing the deterioration of livelihood systems of target groups in upland areas is not justified exclusively by humanitarian concern for these marginalized populations. Many upland and mountain communities in Asia manage landscapes that provide environmental services to outside beneficiaries, but without sharing in the benefits of those services. The services include clean and abundant water supplies from watersheds, biodiversity protection, landscape beauty as a core element of ecotourism and stocks of carbon that alleviate global warming. Clear opportunities are now emerging to bring environmental services into the marketplace. However, the current successes (re: Malaysia, Costa Rica, Colombia, Venezuela, Chile) in environmental transfer payments have only benefited large landowners and concessionaires. In addition there is a danger that some types of transfer payment mechanism that are currently evolving are being designed and implemented to the disadvantage of the upland poor. They may actually exacerbate the displacement of poor people from the uplands, and increase their poverty. This is potentially true for carbon sequestration. There are also risks that the concerns of national and global societies about biodiversity protection, and about the hydrological services of watersheds, may negatively affect the welfare and land rights of poor upland communities. These risks must be countered by proactive efforts. Given the above, there is a pressing need to ensure that the major potential benefits offered by transfer payments are tailored to the specificity of target groups and directed to them. This, as the Environment Report (November 2000) has stated, is one of the most strategic and forward-looking interventions that can be undertaken in the coming years.

THE RUPES PROJECT

There are many initiatives across the world to develop new markets and economic instruments to buy and sell forest services; however, these initiatives are dispersed and often isolated within particular disciplines, sectors or countries (Scherr and Martin 2000). The valuable lessons generated from these initiatives are not readily accessible to the growing number of stakeholders around the world interested in this topic.

1 Out of a total of 1700 million hectares that make up the continent, nearly 236 million hectares (14 percent) have slopes exceeding 30 percent and a further 664 million hectares (39 percent) have slopes between 8 and 30 percent.

26 Making markets for forest communities: linking communities, markets and conservation in the Asia Pacific region— The RUPES project In 2002, the World Agroforestry Centre (ICRAF) in collaboration with the International Fund for Agriculture and Development (IFAD) designed a project to develop appropriate methods for rewarding the poor upland communities for the environmental services that they provide. ICRAF has taken on the role of coordinating a consortium of partners interested in participating in rewarding upland poor for environmental services they provide (RUPES). These include such organizations as the Center for International Forestry Research (CIFOR), World Resources Institute (WRI), World Conservation Union (IUCN), Winrock International, Conservation International (CI), the Ford Foundation, The Nature Conservancy (TNC), International Institute for Environment and Development (IIED), Worldwide Fund for Nature (WWF), national partners from the countries in Asia where RUPES is conducting action research, and other investors. RUPES aims to enhance the livelihoods and reduce poverty of the upland poor while supporting environmental conservation at local and global levels. The purpose of undertaking the project is to create the basis for applying proven institutional mechanisms that will recognize and reward poor upland communities for the environmental services they provide. To achieve this, project activities will be aimed at creating the knowledge to direct rewards to upland communities. New methods for environmental transfer payments to upland communities will be tested and monitored through action research. These methods will ensure that the transaction costs for these activities are competitive and that there is full community involvement in the decision-making process. The programme will also explore the most appropriate means of institutionalizing a sustainable process of transfer payments. To lay out the framework for the RUPES action research activities, the World Agroforestry Centre, in February 2002, hosted a workshop to review and learn from mechanisms for environmental transfers. Commissioned papers were presented on insights from developed country experience (Anne Gouyon); experience and potential for the Philippines (Herminia A. Francisco), the setting in development assistance for Philippine upland communities (Lina Jensen), and CIFOR assessment of carbon transfers (Mary Milne). The following is a summary of the papers delivered at the review workshop that examined various issues associated with linking poor, upland communities, markets and protection of forest ecosystem services.

REWARDING THE UPLAND POOR FOR ENVIRONMENTAL SERVICES: A REVIEW OF INCENTIVES FROM DEVELOPED COUNTRIES (PREPARED BY A. GOUYON, DIRECTOR, IDE FORCE, JAKARTA, INDONESIA)

Developed countries have already established a number of mechanisms to implement environmental transfers either within their own country or towards other countries, including developing nations. All these mechanisms have been designed to provide rewards to farmers for environmental services and the study done for the RUPES workshop focused on those that seemed to target upland farmers. In as much as not all the schemes had poverty alleviation as their objective, they did have some social orientation and so could be targeted to reach poor upland communities. Five main types of mechanism were identified, as summarized below:

1. People-friendly conservation strategies group all the projects in which conservation objectives are linked with interventions aimed at making sure that the rural population benefit from conservation activities and has an interest in contributing to them. This includes Integrated Conservation and Development Projects (ICDPs), community forestry, community-based resource management projects, etc. These activities are usually funded out of public expenditures, including levies on environmentally harmful activities, local taxes, and international development funding. In some cases they are also financed or co-financed by private donors and NGOs. 2. Contractual rewards for environmentally friendly agriculture and forestry. This includes several types of instruments in which environmentally beneficial practices are defined and rewards are proposed to their users on a contractual basis. This contractual basis usually includes payments from a public source (for example, public subsidies), sometimes from a private source (from an NGO), or certification of products (ecolabeling), in which case the reward is an improved market access. Several sources can be combined. The main limitation of contractual approaches in developing countries is the degree of institutional development needed for their design and implementation, and the costs involved in the process. They can be applied in developing countries, but there are a number of conditions. First, there must be some institutions able to design contracts adapted to local conditions. Second, funds must be available to finance the process if it has to benefit the rural upland poor, who cannot pay for requested changes or even for the certification of existing beneficial environmental practices. This can be done through public aid, through NGO funding, or through private companies marketing ecolabeled products purchased from the poor. Finally, the whole process depends on the credibility and accountability of the institutions managing it.

F.J.C. Chandler 27 All these conditions mean that contractual approaches, despite the huge hopes that they create— especially in the case of certification—remain difficult to implement on a large scale in developing countries, especially if the upland poor are the target beneficiaries. 3. Environmentally and socially sound tourism (Ecotourism) includes all interventions in which tourists are brought to a natural area in conditions that are aimed to benefit environmental conservation and the welfare of local people. Like in all other RUPES instruments, ecotourism, to be sustainable and to succeed in actually reaching the poor, must be based on a proper institutional framework. Adequate institutions and funds are also needed to provide capacity building to local players in the form of training, marketing support and seed financing when needed. Finally, ecotourism projects need to ensure that there is a dialogue between the stakeholders to avoid harmful conflicts and set up a participatory monitoring and evaluation system managed by the stakeholders. Ecotourism can be subject to ecolabeling to guarantee consumers and other stakeholders that it actually meets a number of social and environmental conditions. But this brings in the constraints associated with certification, i.e. complexity and costs. 4. Sharing of benefits from genetic resources includes all kinds of rewards received by rural people and other stakeholders in exchange for the conservation and provision of genetic resources that can be used commercially by the agriculture, pharmaceutical or biotechnology industries. However, there are a number of issues to be considered, which explain the controversies surrounding these schemes. First, the earnings from genetic resources use are uncertain and take at least 10 years to materialize. The recipe for success seems to combine public funds to start a programme and royalties from private companies as a “bonus”. The involvement of public institutions, especially international ones, can also help to ensure that the host country receives assistance in its negotiations with the foreign private partners, and that there is some transparency in benefit sharing within the country. Another cause for controversy is the fact that because the largest part of the added-value in the creation of a new crop variety or drug is made in high-tech developed countries laboratories, the share of the benefit going to the suppliers of the raw genetic information will always remain small—unless they can access that technology. Hence technology transfer and capacity building should be key components of any genetic resources benefit-sharing project. 5. Trade in emissions permits includes watershed conservation strategies based on waste emissions trade and, more recently, carbon trade. Direct trade of waste emissions in watershed was found to be difficult to implement in developing countries due to the institutional conditions required to establish and regulate such a market—too many occasions of fraud would be possible. Levies and funds from industrial polluters or users of water can, however, be used for funding community-based natural resources management projects. This mechanism remains weak for a number of other reasons. First, the funds available are not that great yet. For the moment, the market seems rather experimental and based on the goodwill and image strategy of companies, and their anticipation of the market. If this market fails to materialize and if countries and private companies can continue emitting carbon without any clear sanction or benefits in case of emission offset, they might lose interest in this type of project. Another worrying element is the number of projects and countries that are offering carbon credits or planning to develop some. When compared to the actual low requirements of carbon emissions reductions, this means that supply could become so abundant that prices will fall. This means that the future of such projects will depend a lot on the success of international organizations to make international treaties stronger and binding.

There are three main conclusions to this review. The first is that the path leading to effective implementation of RUPES mechanisms is very narrow. All the mechanisms reviewed here require a fair amount of institutional development, and hence need funding for capacity building, if they have to actually reach the poor and effectively promote environmental conservation. This is bad news since the funds available for such projects are very limited when compared to the needs. The second lesson is that market-based mechanisms seem to have a much larger potential in terms of funding available and that they can be effective RUPES whenever they are implemented by the private sector in cooperation with NGOs or other institutions enabling the involvement of all stakeholders. Market- based mechanisms are defined here as the ones which are the most efficient at internalizing the social environmental costs or benefits of a particular practice. The involvement of private companies often result in a greater efficiency under the condition that their activities are closely monitored and complemented by NGOs representing all stakeholders, and ensuring that the benefits of these mechanisms actually reach the poor. The last and first lesson of this review is that these mechanisms in most cases have little chance to be of use because their potential impact is contradicted by a number of perverse incentives running against

28 Making markets for forest communities: linking communities, markets and conservation in the Asia Pacific region— The RUPES project the upland poor and against environmentally friendly practices. Identifying and trying to remove these penalties should be the first step before starting to design and implement RUPES mechanisms. The effectiveness of removing them rather than trying to implement complicated RUPES mechanisms with limited resources needs to be assessed. In many cases, it is likely that removing the penalties will provide a more effective way of meeting environmental conservation and poverty alleviation objectives than any of the RUPES mechanisms.

ENVIRONMENTAL SERVICE “PAYMENTS”: EXPERIENCES, CONSTRAINTS AND POTENTIAL IN THE PHILIPPINES (PRESENTED BY H. AROCENA-FRANCISCO, DEPARTMENT OF ECONOMICS, COLLEGE OF ECONOMICS AND MANAGEMENT, COLLEGE, LAGUNA, PHILIPPINES)

The paper discusses the various forms of environmental service “payments” that have been implemented through the various upland development programmes in the Philippines. Environmental service “payments” (ESP) as defined in this paper refers to assistance in cash or in kind received by upland dwellers in exchange for their participation in efforts to protect the environment. “Payments” often take the form of free planting materials, wages as hired labourers in reforestation and other forest protection activities, material support in construction of soil conservation measures, credit, technical assistance and training opportunities, among others. Several upland sites were analysed to investigate the forms of ESP, the kind of services rendered by the upland communities, and the potential for the implementation of RUPES initiatives. The sites chosen represent varying socio-economic, environmental and political conditions to capture the diversity in upland situations. The paper strongly emphasizes the need to look at payments from two perspectives: payments to the providers (upland poor) of the environment services (SUPPLY-SIDE) and payments from the beneficiaries of the environmental services (DEMAND-SIDE). It makes the point that current RUPES document seems to negate the demand-side aspect, which is equally important in sustaining efforts to support the supply-side payment. These two aspects though would require different strategies and may involve different collaborators but are two important efforts that should be pursued side-by-side to ensure a more sustainable system of “payment” to the upland poor. Finally, the paper closes by identifying key questions that must be addressed in the development of the reward mechanism for RUPES.

DEVELOPMENT ASSISTANCE TO UPLAND COMMUNITIES IN THE PHILIPPINES (PRESENTED BY C. JENSEN)

Over the last two decades, there has been a growing concern about the alarming rate of Philippine forest degradation and upland poverty. The government has initiated and implemented programmes, and policy reforms were adopted to address the problem. The country has also been the recipient of substantial development assistance of loans and grants from international funding agencies in support of sustainable forest management and poverty reduction. Although there were some successes, upland development assistance has been short of its targets in addressing poverty reduction and natural resource degradation. This can be attributed to:

1. Sustainable forest management is a long and costly process. Implementation periods are not long enough to achieve sustainable forest management and poverty reduction. As indicated in the programme/projects reviewed, follow-on to previous endeavours becomes necessary to sustain programme-initiated activities. 2. Community-based forest management democratizes resource use rights, but politics still has the “distributive power”. Enabling, broad, legal framework empowering the community to develop, utilize, manage and conserve forest resources is in place. However, policy implementers have deferred devolution and decentralization of resource management through unnecessary bureaucratic requirements. 3. Ineffective policy implementation contributes to deforestation. Ineffective policy implementation had been attributed to lack of understanding, inconsistent interpretation, constant policy changes due to change in administration, “patronage politics” and lack of political will. 4. Ecological values of the forest are implicit in the programmes. The need to value resources is recognized; however, this has not been an explicit programme/project activity. Putting monetary value on the resources and the benefits therefrom could serve as an incentive to and make various stakeholders appreciate the need for resource protection and conservation. 5. Good environmental governance is key to effective forest management as it promotes transparency and accountability, hence could effectively address the systemic graft and corruption prevailing in the forest sector.

F.J.C. Chandler 29 ASSESSING THE LIVELIHOOD BENEFITS TO LOCAL COMMUNITIES FROM THE PROFAFOR CARBON SEQUESTRATION PROJECT, ECUADOR (PRESENTED BY M. MILNE AND P. ARROYO, CIFOR, INDONESIA)

The Clean Development Mechanism (CDM), under Article 12 of the Kyoto Protocol, is one of three “flexibility mechanisms” available to industrialized countries (Annex 1 countries) to meet their emission reduction targets and also contribute to sustainable development of non-Annex 1 countries. A pilot phase called “Activities Implemented Jointly” (AIJ) was initiated to explore ways of implementing CDM-like projects and institutionalizing, in the future, the provision for working jointly to achieve emissions reductions objectives. Drawing on experiences from the AIJ pilot phase, it is possible to begin assessing, whether or not, land use, land-use change and forestry (LULUCF) projects have the potential to protect carbon and biodiversity, and simultaneously contribute to long-term sustainable rural development. This study assesses the actual and potential livelihood impacts of PROFAFOR, a carbon sequestration project in Ecuador, in the knowledge that the AIJ phase projects did not have a sustainable development requirement, but that this was an opportunity to explore the livelihood opportunities and risks of LULUCF projects. For PROFAFOR, addressing the livelihood needs of contracted communities will help to increase the duration of the carbon sequestered.

Short-term impacts on community assets

In the short term, the financial contribution, technical assistance and provision of planting material by PROFAFOR have, to differing degrees, increased the financial, environmental, human, social and physical capital of project participants. In most cases, the subsidy had been used for paying local wages and food for the community members in establishing the plantations and the surplus funds had either been used for community or individual needs. Since the project prohibits the grazing of livestock and agricultural activities in the plantations, there were some reported community conflicts over the use of the land under plantation.

Short-term livelihood impacts on community activities and income

The project has provided the communities with the opportunity to either expand their existing exotic plantation area or diversify on-farm activities. Many of the surveyed community members were experiencing reduced income from livestock and agricultural activities and hence needed the project subsidy to establish the plantations to provide local employment and additional income.

Long-term livelihood impacts on communities

All communities expected that the plantations would generate increased income for community members in the future. Community projections of the importance of forestry activities, particularly in terms of contribution to income, were varied. In a few cases, if existing constraints to livestock and agricultural activities continued, forestry activities were likely to replace agricultural activities. Some communities were establishing plantations to diversify their income base whilst others were expecting timber revenues to become the major income source for the community. Given decreasing returns from other on-farm activities, the project contracts for 15 to 20 years represent a potentially profitable investment for the surveyed communities, particularly to those with plantations of exotic species. Fire, harsh climatic conditions, pests and diseases, and access to markets were noted as the major risks to the profitability of the plantations. However, under the new 99-year contracts, only communities interested in both financial and environmental benefits are likely to gain. As a purely financial investment the 99-year contracts are likely to be unprofitable, especially if the opportunity cost of the land increases in the future. Community members would be better off establishing plantations under other schemes, where contract conditions are more flexible.

Recommendations

Forest carbon projects have multi-stakeholders and multi-objectives. To ensure that all objectives are met and that no stakeholder is made worse off, it is important to identify potential trade-offs and conflicts of interest at the start of the project. In the two case studies, the community members were not expected to receive benefits directly from the carbon offsets, but instead earn income from project related activities. At the outset, projects managers should implement socio-economic assessments in communities that are interested in participating in the projects or are expected to be impacted on by project activities, in order

30 Making markets for forest communities: linking communities, markets and conservation in the Asia Pacific region— The RUPES project to identify initial risks and opportunities to project goals. In particular, the opportunity cost of land under the project needs to be assessed in detail before projects are implemented. Once projects are implemented, monitoring of socio-economic conditions should continue, thereby capturing changes at the community level that may impact on the goals of the project. Since forest carbon projects have a longer time frame than most development projects, project designers need to provide adequate incentives to stakeholders to ensure their long-term commitment and enter into collaborative and flexible partnerships with communities. For poorer communities with limited land, inflexible long-term contracts are likely to have adverse livelihood impacts, and may also be counter productive to achieving the carbon sequestration goals. Most forest carbon projects have invested in long-term benefits to communities, either through supporting community plantation activities or supporting local enterprises. In doing so, project managers will need to ensure that the community members receive adequate training and information on both the production and the marketing side, to develop profitable and sustainable enterprises. If community ventures do not generate adequate funds for the community, the project risks negative leakage and early emission of carbon.

IMPLEMENTING THE RUPES PROJECT

As concluded from the input to the RUPES Inception Workshop, the main challenge found in all RUPES mechanisms is how to make sure that the rewards effectively reach the upland poor. This is all the more difficult since upland communities are remote, isolated, and usually lack institutions able to represent them in a democratic and effective way. There are three main types of institutions that have been found to channel environmental rewards to the poor. The first is government, whether at national, regional or local level. They usually take part in the coordination and regulation of RUPES mechanisms. When they are the ones counted on to deliver the rewards, lack of capacity and corruption are important constraints to effective delivery. For this reason, NGOs—including international, national and community or local level ones—have increasingly been relied upon to deliver benefits to the rural poor through their capacity, representatively and legitimately. Finally, a number of mechanisms rely on the market to deliver the benefits to the farmers such as ecolabeling and trade in carbon emissions offsets. However, even in such cases, NGOs are often needed to make sure that the poor really benefit from the transfer. Another way to differentiate amongst RUPES mechanisms is through the type of rewards. Three main types have been identified. The first is direct financial rewards such as subsidies given in exchange of the implementation of a particular land-use change. The second is rewards in kind, like the case in many community development projects providing infrastructure, training or other material benefits or services to the upland poor. The third is access to resources or markets such as land tenure, or access to better markets through ecolabelling, or schemes in which the allocation of public contracts is given partly based on environmental quality. The most effective RUPES systems are the ones in which a clear link of conditionality between the environmental service and the rewards with some sanctions exists, usually in the form of a contract. This is the case of targeted agro-environmental subsidies in Europe and the USA, and is also the case of most ecolabelling schemes, as well as some bioprospecting schemes. However, these schemes require a sophisticated institutional setting, with the capacity to understand contracts and to enforce them. This directly leads to the last point in the RUPES analysis, i.e. whether there is a monitoring and evaluation system to ensure that the poverty alleviation and environmental targets are met. Schemes that are based on a contract usually have such evaluations in order to check that the contracts are respected. Mechanisms that are project-based usually rely in classical project cycle evaluations. The approach taken in the RUPES project is to build working models of best practices for successful environmental transfer agreements adapted to the Asian context. It will conduct targeted action research at a number of sites across the region to examine and explore what the environmental services are and how can they be measured. Mechanisms to anticipate and prepare for changes to environmental services will also be considered as part of the programme. The programme will look at whom the rewards should go to, who will pay the rewards, how and in what form they would be collected and what amount or form is appropriate. The action research will define appropriate methods with the beneficiaries for best practice in environmental transfer payments. It will provide simple, practical examples of how innovative, institutional arrangements and reward mechanisms can be applied to foster local development while at the same time preserving and restoring the environment. The emphasis will be on easily understood, sound and financially and institutionally sustainable approaches. There will be a particular focus on the development and strengthening of local institutions associated with environmental transfer payments. Networking at global, regional and national levels will be another key element of the RUPES Programme.

F.J.C. Chandler 31 PROGRESS TO DATE

Through the RUPES Programme, a target set of ten sites is expected to generate the diversity of experience and lessons for institutionalization leading to wider applications throughout relevant situations in Asia. The first year of the programme focused on reviewing past experiences and initiatives to assist in the planning and establishment of the criteria for the selection of the action research sites. Initial sites were identified in the first year; however, it was recognized that further investigation and solicitation are needed so as to ensure a diversity of sites are included. Efforts were made to firm up the organizational and institutional collaboration for the RUPES Programme to set in place a firm foundation for the set of activities that will be implemented at the pilot sites and at a wider programme level according to each of the programme outputs. Inputs to the project identified well over 50 initial “ideas” for RUPES sites. Through a series of interactions, conversations, discussions, etc., more formal indication of probable sites was received through the completion of 31 in-depth, comprehensive questionnaires. These in turn were honed down and developed into 17 proposals that were considered by the RUPES International Steering Committee (ISC). Two sites are now officially conducting RUPES activities. The first is in the Philippines and the second in Nepal. The Ikalahan Ancestral Domain includes the Kalahan Reserve and totals approximately 58 000 ha of mountain lands between 550 and 1717 m above sea-level on the island of Luzon in the Philippines. The reserve has been under the legal control of the Ikalahan community, represented by its People’s Organization, the Kalahan Educational Foundation, Inc., since 1974. The Philippine Government in 1999 approved the Ancestral Domain Claims. The Domain provides both water for drinking and irrigation systems and has a proportion of the land in production forests as well as agriculture. About 20 000 persons live within the Ancestral Domain of whom at least 90% belong to the Ikalahan and another 5% belong to other tribes of indigenous people, primarily the Ifugao, Ibaloy and Kankanaey. About 2500 persons live within the Kalahan Reserve. The RUPES project with the Kalahan Foundation will confirm the carbon sequestration and watershed protection functions of the reserve and the Ancestral Domain and test payments for these services. The buyer of the carbon is still to be determined although there is some certainty that the managers of the irrigation systems will provide the payment for the Ikalahan community’s efforts in protecting the watershed. In addition there is the possibility of using payments from ecotourism efforts to bolster the biodiversity conservation in the reserve. The Kulekhani watershed is located in the Makwanpur district, approximately 50 km southwest of Kathmandu in Nepal. At an altitude of between 1400 and 2300 m this watershed has a total area of 12 496 ha and has a total population of 43 003 with the majority of the inhabitants being disadvantaged ethnic groups and low caste people (Dalits). Water from the Kulekhani River and its tributaries is the source of power for two hydropower plants located downstream of this watershed. In their work with RUPES, Winrock International will work with local communities to identify the range of environmental services being provided, quantify and value such services, and identify transfer payment mechanisms, including new methods and approaches, and determine what preconditions are necessary and constraints to consider in implementing these services. The project will work towards strengthening the capacity of local institutions to implement transfer payments through appropriate institutional arrangements, agreements, and monitoring and enforcement mechanisms, and then compile and disseminate best practices and lessons learned from these projects to raise awareness at all levels on how the transfer of payments in delivering environmental services can benefit upland communities in Nepal and other Asian countries. Nine additional sites are just completing their project proposals. These sites are in Indonesia (6) and the Philippines (3) and cover the testing of rewards and reward mechanisms for biodiversity conservation (2 sites) and watershed protection (7 sites). Currently there are two sites (under the auspices of WWF) that are included in the RUPES portfolio but are there purely for sharing of information and knowledge (e.g. no funds are required from the project to assist the activities). In addition to the action research activities at the sites, there are a number of other studies underway to facilitate the understanding and implementation of RUPES. These include an institutional study in Indonesia that will help to understand and shape social, political, legal and economic environments to become more supportive of rewards that are linked to environmental services provided by upland communities. Also being undertaken is a typology of environmental services as the term “environmental services” is often used as a generic concept. Yet, for any effective relationship between outside beneficiaries of these services and the upland communities that generate them, it is necessary to be explicit in defining what the functions are, and how they can be measured and monitored. The typology aims to decompose the broad concept into components.

32 Making markets for forest communities: linking communities, markets and conservation in the Asia Pacific region— The RUPES project ICRAF is leading a study to review the development of environmental services markets in Indonesia. The objective of this study is to undertake a literature review to assess the development of environmental services market. The assessment will follow a framework of environmental services typology that has been developed and the focus of the assessment will be to identify the sellers and buyers of environmental services, the payments/rewards of environmental services and the mechanisms, intermediaries, transaction cost, supporters and obstructers. To facilitate any transfer of benefits from environmental payments, it will be necessary to understand at each of the action research sites, what the environmental services are, who provides them, and how they are generating benefits. Threats to these services that cause changes across various spatial and temporal scales will need to be assessed to facilitate the development of appropriate land management schemes and the corresponding environmental reward mechanisms that will benefit the upland poor. RUPES is currently undertaking a scoping study to make recommendations on the design of an appropriate information system that will support the needs of the RUPES sites, enable both local and independent monitoring of the welfare of the beneficiaries and provide regular and credible monitoring of environmental services at appropriate levels. The design of the appropriate information system that will serve these objectives will include an inventory and analysis of existing information systems on upland poor target beneficiaries of environmental rewards, land-use practices at the site level, environmental services and their users and potential buyers at three of the RUPES action research sites (Indonesia, the Philippines and Nepal) in order to guide an appropriate information system for all action research sites working with the RUPES project. In Viet Nam, RUPES has been supported by the Swedish SIDA to explore constraints and potential to addressing important aspects of poverty in Viet Nam uplands through rewarding the upland poor for environmental services they provide. The conclusion of this study in late 2003 will result in the nomination of potential RUPES testing sites in that country. There has already been a RUPES “kick off” workshop in Yunnan Province, China, which brought together over 25 participants from a range of organizations in both the governmental and the NGO sectors to discuss China’s Sloping Lands Conversion Programme and the feasibility, roles and action plan for initiating one or more RUPES testing sites in China. With the leadership of the IUCN’s Regional Environmental Economics Programme in Asia, RUPES “kick off” workshops are being planned for Lao PDR and Sri Lanka that will lead to more awareness of the RUPES project and identification of RUPES testing sites in those countries. In support of the capacity building aspects of the RUPES project, the Netherlands under an SII grant to ICRAF is conducting a nine-day workshop in September for invited participants (including, but not limited to, site personnel at RUPES action research sites who can influence decisions on their site project) to share their experiences and add to their knowledge on environmental transfer payments and the poor. The workshop will be a combination of theoretical knowledge on the basic principles of rewarding upland poor for environmental services they provide interwoven with case studies relating experiences and the extent to which rewards or payments for environmental services did or did not reach and benefit the poor.

CONCLUSION

The primary impact of the RUPES project will be to create and study experiences, on the use of environmental reward transfers as a tool for promoting effective and sustained environmental management while at the same time increasing benefit flows to poor upland communities. The main result will be a deeper and more practical understanding of how to formulate such arrangements, their viability and potential for replication. This initiative will serve as an intellectual focal point for collection and analysis of experience derived for these innovative approaches. Experience and analysis will feed directly into government planning for environmental management and poverty alleviation in the uplands of selected countries and present opportunities for IFAD to become the leading financial and intellectual resource in support of such approaches in IFAD priority areas. Poverty alleviation impact will likely come from rewards to upland communities taking the form of secure land tenure, development assistance such as credit, market infrastructure, improved/expanded extension services, particularly in terms of better access to quality germplasm for trees or other agricultural products, and when appropriate, direct financial payments. The emerging market for carbon, whether or not linked to offset arrangements, offers the most immediate potential opportunity for the upland poor to generate a capital base on which to grow economically. As more experience is gained and analysed in this and other environmental service markets, the greater is the potential for magnifying impact beyond the initial project areas. Another anticipated project impact would be on understanding and addressing factors that constrain efforts to link the provision of environmental services to rewards to the providers. It is likely that institutional

F.J.C. Chandler 33 and policy constraints will be prominent and a deeper understanding of these and a way to address them may be among the important impacts of the project. Expanding the influence on the global poverty and environment agenda. The global climate agenda has been largely driven by global environmental issues, with little recognition of the tight linkages between environmental degradation and poverty. The international agencies and developed country governments driving the efforts in climate change mitigation are often focused on this limited objective, without adequately considering how their actions may negatively impinge upon the poor. They are not always adequately cognizant of how, with careful attention, their actions and investments in environmental mitigation could also better contribute to meeting the objective of eradicating poverty. The RUPES project will be a mechanism to acquire the necessary knowledge base to influence the global poverty and environment agenda. The programme will provide a flow of scientifically credible knowledge and pragmatic, tested solutions that enables it to confidently influence the entire direction of climate change investments. (For more information on the RUPES project please visit the RUPES website at http:// www.worldagroforestrycentre.org/sea/Networks/RUPES/index.htm).

BIBLIOGRAPHY

IUCN. 2001. Incentive measures for biodiversity: a training module for natural resource managers. The Economics Unit, IUCN Ð The World Conservation Union. Landell-Mills, N. & Porras, I.T. 2002. Silver bullet or fools’ gold? A global review of markets for forest environmental services and their impact on the poor. London, IIED. Richards, M. & Moura-Costa, P. 1999. Can tropical forestry be made profitable by ‘internalising the externalities’? ODI Natural Resources Papers. Scherr, S. & Martin, A. 2000. Developing commercial markets for environmental services of forests. Katoomba Workshop II proceedings and summary of key issues. Vancouver and Parksville, British Columbia, Canada. The World Agroforestry Centre. 2001. Project design for the project “Rewarding Upland Poor for the Environmental Services They Provide”. Bogor, Indonesia, ICRAF.

34 Making markets for forest communities: linking communities, markets and conservation in the Asia Pacific region— The RUPES project How forest producers and rural farmers can benefit from the Clean 5 Development Mechanism M. Satyanarayana*

ABSTRACT

This paper outlines how the Clean Development Mechanism in the context of Land Use, Land-Use Change and Forestry (LULUCF) of the Kyoto Protocol (UNFCCC) benefits forest producers and rural communities in enhancing their livelihoods. It examines the potential of afforestation and reforestation activities to mitigate climate change. Forests play important roles both positively as “sinks” for carbon and negatively as a “source” of carbon. The emergence of new opportunities for developing, and attracting foreign investment into carbon mitigation projects is of importance to developing countries, particularly in the Asia-Pacific region. When the Kyoto Protocol becomes fully operational, it is anticipated that the “carbon credits” will be bought and sold in a new environmental carbon trading market with the global potential of LULUCF activities estimated at 50 MtC annually at $10 per tonne of carbon. The paper illustrates some pilot projects undertaken in various parts of the world so that the developing countries in the Asia-Pacific region can learn from experiences elsewhere. An account is given of various steps involved in the development of a CDM project and the strategy for operationalizing CDM in forestry sector. The paper also underlines the limitations and identifies the issues to be addressed, and recommends a holistic approach to integrate carbon sequestration objectives with improving livelihoods to achieve the ultimate goal of sustainable development coupled with poverty eradication.

INTRODUCTION

Rising levels of greenhouse gas emissions are a major source of climate change and many people working in land use and forestry sectors are becoming increasingly aware of the inclusion of these sectors in international policy deliberations on climate change. Forest ecosystems play important roles both positively by acting as “sinks” for carbon (sequestering carbon through photosynthesis), and negatively as a “source” of carbon (through deforestation, decomposition, soil erosion, etc.) The emergence of new opportunities for developing and attracting foreign investment into carbon mitigation projects is of importance to developing countries particularly in the Asia-Pacific region. These exciting opportunities are provided in the context of Land Use, Land-Use Change and Forestry (LULUCF) under the Clean Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change (UNFCCC), which is also known as the Kyoto Protocol.

What is the Kyoto Protocol

It is an intergovernmental agreement to stabilize greenhouse gases in the atmosphere, at a level that would prevent adverse changes to the climate. The UNFCCC was agreed upon at the United Nations Conference on Environment and Development (UNCED) in Rio, 1992, and to date 186 countries have ratified the Convention. To put the Convention into operation, a protocol was outlined in Kyoto in 1997 which is popularly known as the Kyoto Protocol. The developed countries with emission reduction targets are called the Annex 1 countries, whereas those without targets are known as non-Annex 1 countries. The Annex 1 countries can invest in JI (Joint Implementation)/CDM projects as well as host JI projects, and non-Annex 1 countries can host CDM projects.

*Government of Orissa/Government of India, New Delhi, India; E-mail: [email protected]

35 Clean Development Mechanism

The Clean Development Mechanism (CDM) was established to assist Annex I Parties in complying with the emission limitations and reduction commitments under the Kyoto Protocol. Under this Protocol, at present, the developing countries have no obligation to limit or reduce their greenhouse gas emissions. But they can, on voluntary basis, contribute to global emission reduction targets by hosting projects under the CDM. The two key goals of the CDM are:

¥ to provide developed countries with flexibility for achieving their emission reduction targets, by allowing them to take credits from emission reducing projects undertaken in developing countries; and ¥ to assist developing countries that host CDM projects to achieve sustainable development.

In addition to initiatives in energy, transport and other sectors, Land Use, Land-Use Change and Forestry (LULUCF) is an important aspect of CDM wherein afforestation and reforestation are included in the first commitment period (2008Ð2012). Deforestation, forest, crop and grassland management projects do not qualify under the CDM at present though they may be included in a subsequent commitment period (beyond the year 2012). The role of land use and forestry projects in the CDM beyond 2012 will be decided as part of the negotiations on the second commitment period. A framework known as CDM Executive Board (EB) (10 members) has been established for supervising and approving CDM projects by the 7th Conferences of Parties (COP) held in Marrakech in November 2001. The CDM EB is also establishing more detailed rules, methodologies and guidance for projects, including for land-use projects. Operational entities, accredited by the executive board, review project proposals and verify and certify emission reductions from projects. The greenhouse gas benefits of each CDM project will be measured according to internationally agreed methods and will be quantified in standard units, to be known as “Certified Emission Reductions” (CERs). These are expressed in tons of CO2 emission avoided. When the Kyoto Protocol becomes fully operational, it is anticipated that these “carbon credits” will be bought and sold in a new environmental carbon trading market. However, the governments still need to agree upon definitions and methodological issues such as setting baselines, verifying additionality, leakage, non-permanence and accounting for socio-economic and environmental impacts (including impacts on biodiversity and natural ecosystems) methods for afforestation and reforestation projects. These issues are likely to be finalized in the COP 9 in December 2003, scheduled to be held in Italy. Developed Annex 1 countries over the years have reoriented their domestic policies to comply with the provisions of the Kyoto Protocol with the expectation that there will be a growing demand for carbon credit once the Protocol comes into operation and the developing countries need to position themselves to take benefit of carbon trading market. While many factors may influence the size and stability of the global market, it is expected that the market could be to the tune of several billion dollars a year. It may be mentioned here that total foreign aid for forestry activities in developing countries is currently at about US$1.5 billion a year. The CDM can offer developing countries an opportunity to promote and attract investment in sustainable forestry, land restoration, energy efficiency and renewable energy projects. For a project developer, it may offer the additional input required to make a project financially viable and for a local farmer, it may provide an additional source of income. Afforestation and reforestation activities create rural employment in establishing, protecting and maintaining forests or plantations and provide diverse biomass products (fuelwood, fodder, timber and non-timber forest products such as fruits, oil seeds, leaves, gum, honey, etc.) contributing to the socio-economic development of rural areas. The CDM would provide a good opportunity to obtain external financial support and technology (for high yields), to promote the commercial forestry strategy aimed at meeting the domestic biomass demands as well as to reduce CO2 emissions and remove CO2 from atmosphere. The global potential of LULUCF activities is estimated at 50 MtC annually at $10 per tonne of carbon.

CDM rules and conditions

While the detailed procedures and methodologies to be applied for CDM forestry projects are still to be agreed, the overall framework is already in place for approving projects and accounting for the carbon credits generated:

¥ Only areas that were not forest on 31 December 1989 are likely to meet the CDM definitions of afforestation or reforestation. ¥ Projects must result in real, measurable and long-term emission reductions as certified by the Operational Entities (OE). ¥ Sequestration must be additional to any that would occur without the project. ¥ The carbon stocks generated by the project need to be secure over the long term (permanence).

36 How forest producers and rural farmers can benefit from the Clean Development Mechanism ¥ Only projects starting from the year 2000 onwards would be eligible. ¥ Each CDM project’s management plan must address and account for potential leakage. ¥ Projects need to select a crediting period for activities, either a maximum of seven years that can be renewed at most twice or a maximum of ten years with no renewal option. ¥ Some of the proceeds from carbon credit sales from all the CDM projects will be used to cover administrative expenses of the CDM. ¥ Two percent of the carbon credits awarded to a CDM project will be allocated to a fund to help cover the costs of adaptation in countries severely affected by climate change and would provide support for land-use activities that are not presently eligible under the CDM, for example conservation of existing forest resources.

Development of a CDM project

It includes various steps irrespective of whether the CDM projects are initiated by communities, NGOs or even government agencies, viz.:

¥ identification of project and developing a project concept note ¥ quantification of greenhouse gas benefits and development of Project Design Document: a. set project and baseline boundaries b. define baseline scenario and additionality c. set baseline emission level and crediting period d. calculate baseline emissions e. calculate project emissions f. adjust for leakage g. adjust for risk h. host country approval i. validation of project by the OE j. submission of validation reports and Project Design Document by the OE k. possible review by the CDM Executive Board l. registration with the CDM m.project implementation and monitoring n. verification and certification by the OE o. possible review by CDM Executive Board p. issue of CERs to project developers

Some of the pilot projects that have already been undertaken in various parts of the world are given below to better understand the kind of projects that can be supported in afforestation and reforestation under the CDM.

PILOT PROJECTS

Scolel Te (the tree that grows) and the Plan Vivo System

The pilot project implemented in Mexico with support from the UK DFID’s Forestry Research Programme began with an agreement to provide 18 000 t CO2 “prototype carbon credits” per year, at a price of US$2.7 per t CO2 (US$10 per tC) to the International Automobile Federation. Companies, individuals or institutions wishing to offset greenhouse gas emissions can purchase carbon credits from the Fondo BioClimatico, a local trust fund. These funds were used to provide farmers with carbon payments to cover the costs of establishing agroforestry systems, small-scale plantations and community reforestation activities. The system favours small- scale farmers and allows them a greater degree of self-sustainability. The local promoters help farmers draw up working plans (known as Planes Vivos) for forestry or agroforestry systems that reflect their specific needs, priorities and capabilities. These Planes Vivos are assessed for technical feasibility, socio-economic and environmental impacts and carbon sequestration potential. The Scolel Te project is now run by a trust fund which has become a financially viable organization, whose income is derived from the sale of carbon services. There are currently over 400 individual participants from about 30 communities, representing four different ethnic groups and a wide range of agro-ecosystems. The project promotes significant carbon sequestration, provides secure commercial and subsistence outputs, encourages capacity building, facilitates application of sustainable agricultural production systems and benefits biodiversity.

M. Satyanarayana 37 Community-based forest management projects such as this that utilize local and traditional knowledge can greatly benefit the CDM projects and communities. The use of traditional knowledge enhances the ability of local communities to change and improve their resilience to adverse conditions. Communities can also benefit from innovative projects by learning new skills through training and learning by doing. The participatory approach has particularly contributed to the success of this project.

Tamarind project in southern India

The Plan Vivo system is now also being used in an agroforestry and bioenergy project in southern India, run by an NGO called “Women for Sustainable Development”. Under this innovative project, small farmers with holdings of about 2 ha have come together under a society and entered into a carbon sale agreement with “Future Forests”, an international company based in UK. Under this, mango and tamarind plantations have been raised over each 2 ha of land belonging to a small farmer and it is expected that 18 tC would be fixed over 6 years. It has been agreed to sell the fixed carbon at the rate of $10/tC which provides INR8640. The amount is to be paid by the company to the farmer in five installments starting from the 2nd year. The farmer would receive 50 percent of the amount, i.e. INR4320 in the 2nd year as the 1st installment and 20 percent of the amount as 2nd installment in the 3rd year and the balance 30 percent in the remaining three installments in the 4th, 5th and 6th year respectively. The farmers are able to get additional income for the sale of carbon in addition to the income generated by the fruits, etc.

Costa Rican model

Costa Rica was the first developing country to launch a national carbon sequestration programme in 1997. The Private Forestry Programme (PFP) encourages land owners to opt for forestry related land uses by providing direct payment for environmental services, CO2 fixation, water quality, biodiversity and landscape beauty. As monetary incentives increase the attractiveness of forestry compared to environmentally damaging land uses, incentives are paid to land owners, following the signing of a contract to keep land under a specified use for at least 20 years. Farmers who sign up for these incentives hand over their environmental service rights to the government, which in turn sells them to investors. The institution coordinating these incentives is called FONAFIFO, a Forestry Financing Fund under the Ministry of Energy and Environment which receives and analyses applications, conducts field verifications, carries out the payments and monitors the forestry projects. The carbon credits are marketed by the Costa Rican Office for Joint Implementation (OCIC), which acts as a “one- stop-shop” for buying and sale of carbon credits known as Certified Tradable Offsets or CTOs. International investors purchase the CTOs developed either by the government or individual developers from the OCIC. By centralizing carbon trading, the OCIC lowers the transaction costs. The first batch of carbon credits (200 000 tonnes of carbon) was sold to a Norwegian consortium at US$10/tC (US$2.70/tCO2), for a total of US$2 000 000.

Malaysian experiment

The InnopriseÐFACE Foundation Rainforest Rehabilitation Project (INFAPRO) was the first large-scale forestry- based carbon offset project in the world. It is a cooperative venture between the Sabah Foundation, a semi- governmental forestry organization in Malaysia and the FACE Foundation of the Netherlands. Its objective is to rehabilitate 25 000 ha of degraded land and the total investment committed by the FACE Foundation amounts to US$15 million. It is expected that the project will sequester at least 4.25 million tonnes of carbon

(15.6 million tonnes CO2) during its lifetime at an average cost of US$3.52 per tonne of carbon (US$0.95 per t CO2). The planting phase will last for 25 years and forests will be maintained for 99 years. At the end of the first 60-year growth cycle, these forests will be exploited for timber, which belongs to the Sabah Foundation and the FACE Foundation will have exclusive rights to the carbon sequestered through the 99 years of the project. However, if the current definition of afforestation and reforestation is applied, this project may not be eligible under the Kyoto Protocol, since the areas to be rehabilitated have a dense canopy cover and would already be classed as forest. Appropriate definitions of forestry would have to be developed and adopted to enable the inclusion of a wide range of projects.

Norwegian experience

Tree Farms AS, a Norwegian forestry company, hopes to sell carbon credits to private GHG emitters in Norway as the Kyoto Protocol targets begin to bite and the government presses companies to attain emission reductions (Aukland et al. 2002).

38 How forest producers and rural farmers can benefit from the Clean Development Mechanism Large-scale plantation forestry in Tanzania, the Guaraquecaba Climate Action Projects in Brazil, and the carbon sequestration project in Uganda are some other examples where carbon offsets are to be supplied through afforestation (Orlando et al. 2002).

Strategy for operationalizing the CDM in the forestry sector

In order to take advantage of the CDM in the forestry sector, the countries need to:

¥ establish a National Authority for CDM; ¥ develop sustainable development policies, plans and criteria; ¥ develop and integrate national and regional policies which are coherent with each other and informed by the CDM rules; ¥ identify eligible land categories; ¥ identify potential afforestation and reforestation activities including agroforestry models; ¥ determine appropriate size or scale of the project; ¥ identify institutions for implementing the CDM projects; ¥ appoint Operational Entity (OE); ¥ form Technical Advisory Committee at the federal level and project clearing houses at provincial levels; ¥ develop baselines, measurement and monitoring, etc. consistent with decisions of the CDM Executive Board; ¥ involve stakeholders; ¥ identify capacity building needs for various stakeholders; ¥ develop institutional framework for operationalizing the CDM; ¥ identify approaches to minimize transaction costs.

LIMITATIONS

The US decision not to participate in the Kyoto Protocol will likely mean a reduced demand for project credits, particularly from the CDM. However, it is expected that there will be a carbon trading market even outside the Protocol. Further, the carbon credits from afforestation and reforestation projects under the CDM that can be generated annually by an industrialized country cannot exceed one percent of that country’s base year emissions as of 1990. This means that the total global market potential for afforestation and reforestation project credits is limited to a maximum of approximately 33 million tonnes of carbon per year. Kemfert (2001) estimated that the trading of emission allowances between economies in transition and other industrialized countries would dominate the global market because of the large number of allowances and low prices at which they are expected to trade. Under this scenario, carbon credits from the CDM projects would not be traded. Another factor influencing the carbon trading is price. Estimates of the market price of a tonne of carbon range from US$3 to US$57(Boehringer 2001, Buchner et al. 2001, Den Elzen and de Moor 2001, Eyckmans et al. 2001, Jakeman et al. 2001, Jotzo and Michaelowa 2001, Kemfert 2001). All estimates, however, are likely to change over time as the market evolves and the rules for trading become known.

ISSUES TO BE ADDRESSED

The requirements of the CDM projects can be daunting for smaller groups with few international connections. The transaction costs can be high and there are considerable information, negotiation, design, monitoring and risk management requirements and it will be difficult for smaller companies and community groups to access the benefits of the CDM. Unless there is some active intervention on the part of developing countries, governments and agencies wishing to promote people oriented forestry, an emphasis on monocultures with “few people” may dominate the CDM in forestry for the simple reason that it will be difficult to organize smaller scale, livelihood-oriented forestry projects despite their benefits to the local communities. This can be addressed through appropriate institutional arrangements and facilitation through an NGO, rural banks or even by confederations of village committees. The institutional arrangements should be put in place to ensure information flow to the stakeholders, consistency of management regime, and financial and administrative systems for costÐbenefit sharing amongst many small and marginal players. In order to involve smallholders/communities in the CDM projects, their land-use systems need to be recognized by the sustainable development criteria applied to the CDM nationally and also the transaction costs need to be overcome.

M. Satyanarayana 39 National laws regarding property ownership may need to be reviewed and amended to address the emerging carbon market. Clarifying issues such as land tenure and access to and control of resources will be especially important in determining the success of activities and projects with social components. As we realize that local stakeholders are often not a homogeneous group, project participants and evaluators should therefore include social heterogeneity in their project analysis and review. Project participants should also identify strategies that can minimize social hardship and/or social conflicts among local stakeholders. Agroforestry and integrated rural forestry and energy projects provide considerable livelihood benefits though carbon conservation activities such as biodiversity conservation, ecotourism, etc. which may offer some of the highest livelihood benefits rather than afforestation. There is concern that only a few larger developing countries which have adequate infrastructure and institutional arrangements to handle large projects may be benefited and the majority of the poorer developing countries, where the private sector is unlikely to pay any attention, may not be in a position to take advantage of the CDM in forestry. This can be addressed through using the Prototype Carbon Fund of the World Bank which may wish to spread its projects in poorer developing countries or by using the Overseas Development Assistance (ODA) to help poorer developing countries build the national capacity to develop and promote the CDM projects.

CONCLUSION

The CDM, therefore, is a “win-win” strategy, providing local as well as global benefits. The CDM projects, if implemented through innovative institutional, technical and financial mechanisms, could contribute positively to forest conservation and also at the same time provide socio-economic and environmental benefits to rural communities. Environmentally sound and socially equitable climate change mitigation projects in the forestry and land-use sectors will require a strong enabling environment both at national and international levels. We should learn from the mistakes of the past and adopt an integrated approach instead of a sectoral approach by integrating carbon sequestration projects and activities into existing land-use planning, environment, development, and financial policy processes. The stakeholders, who include buyers, sellers, project developers, financial institutions and communities, can take steps to deliver environmentally sound and socially beneficial outcomes of climate change mitigation projects under the CDM of the Kyoto Protocol. It is important to adopt a holistic approach to integrate carbon sequestration objectives into improving livelihoods to achieve the ultimate goal of sustainable development coupled with poverty eradication.

BIBLIOGRAPHY

Aukland, L., Moura-Costa, P., Bass, S., Huq, S., Landell-Mills, N., Tipper, R. & Carr, R. 2002. Laying the foundations for clean development: preparing the land-use sector. A quick guide to the Clean Development Mechanism. London, United Kingdom, IIED. Boehringer, C. 2001. Climate politics from Kyoto to Bonn: from little to nothing. Discussion Paper No. 01- 49. Mannheim, Germany, Centre for European Economic Research (ZEW). Buchner, B., Carrazo, C., Cersosimo, I. & Marchiori, C. 2002. Back to Kyoto? U.S. participation and the linkage between R&D and climate cooperation. CEPR Discussion Paper No. 3299. London, United Kingdom, Centre for Economic Policy Research. Den Elzen, M.G.J. & de Moor, A.P.G. 2001. The Bonn Agreement and Marrakesh Accords: an updated analysis. Bilthoven, The Netherlands, National Institute of Public Health and the Environment (RIVM). Eyckmans, J., Van Regemorter, D. & Van Steenberghe, V. 2001. Is Kyoto fatally flawed? An analysis with MacGEM. ETE Working Paper 2001-18. Leuven, Belgium, Katholiekie Universiteit. Jakeman, G., Heyhoe, E., Pant, H., Woffenden, K. & Fischer, B.S. 2001. The Kyoto Protocol. Economic impacts under the terms of the Bonn Agreement. Canberra, Australia, Bureau of Agricultural and Resource Economics (ABARE). Jotzo, F. & Michaelowa, A. 2001. Estimating the CDM market under the Bonn Agreement. HWWA Discussion Paper 145. Hamburg, Germany, Hamburger Institute of International Economics (HWWA). Kemfert, C. 2001. Economic impact assessment of the alternate climate policy strategies. Scientific Pool of Environmental Economic Disciplines (SPEED), University of Oldenburg, Oldenburg, Germany. Orlando, B., Baldock, D., Canger, S., Mackensen, J., Maginnis, S., Manguiat, M.S., Rietbergen, S., Robledo, C. & Schneider, N. 2002. Carbon, forests and people Ð Towards the integrated management of carbon sequestration, the environment and sustainable livelihoods. Gland, Switzerland, IUCN.

40 How forest producers and rural farmers can benefit from the Clean Development Mechanism Policy support for enhancing economic returns from smallholder tree 6 plantations using carbon credits and other forest values Promode Kant*

ABSTRACT

The developing countries have a very large number of small landholdings in which tree planting may fetch better economic returns to the owners. The expectation of the smallholder tree planter would be that his income should be high, waiting period reasonable, access to market easy, the risks manageable and that his asset liquidity should not be lower than what it would be under agriculture. Enhancement of income would result from production of more goods and services like carbon sequestration, soil and water conservation and aesthetic services that can start yielding early and increased demands and better prices for these products. Higher demands for wood products would result from policies disfavoring wood substitution by high energy consuming products like cement, steel and aluminum. Policy interventions should result in creation of explicit demands for these goods and services, remove bottlenecks in meeting these demands, lead to easier financing for both the growers and the purchasers and create carbon trade opportunities. Risk lowering could come from a long- term certainty about the investment climate, sharing of responsibility by the state for losses on account of illegal felling and encroachments, higher allocations for research in control of forest diseases and fires and lowered premium on insurances. The problem of asset liquidity will have to be tackled by ensuring that the tax burden on transfer of landholding on account of tree wealth on the land does not increase and also by ease of transfer of liabilities for providing ecological goods and services to the purchaser of the assets.

INTRODUCTION

In almost the entire heavily populated developing world, and particularly in India, per capita land availability is low and consequently the number of small landholdings is very large, many of which are marginal lands of low agricultural productivity. Further, mismanagement of irrigation as well as excessive fertilizer and insecticide application has laid waste a significant extent of agricultural lands, most of which belong to smallholders who were not always adept at the use of the technologies. At the same time, with adoption of newer technologies by the bigger farmers, overall agricultural production has risen steeply in India in the past two decades to the extent that enormous food surpluses have built up. With supply exceeding demand the agriculture product prices are not keeping pace with the general inflation resulting in lowered returns to the smallholder even as his cost of production continues to rise. Even in the case of lands of higher agricultural productivity many smallholders are engaged in non-agricultural economic activities for their livelihood and would rather leave their lands fallow than rent them to others to cultivate for fear of losing their ownership to the tenant cultivator. Tree growing, which taps nutrients and water at altogether different depths from agricultural crops, may be more appropriate for marginal lands of low-productivity. Absentee landowners would also prefer to place their lands under tree cultivation, which does not require constant presence on their part leaving them free to pursue other livelihood activities. But long gestations and accompanying risks, by way of damage by fire, insect attacks or diseases, policy changes and price fluctuations, render tree growing an economically unattractive proposition. The smallholder would be willing to invest in economic activities that increase his income, have low gestation, easy market access and manageable risks. Further, his assets should not get locked for long periods. This paper looks at the policies that can enable the smallholder to invest in tree planting.

* Indian Council of Forestry Research and Education, Dehradun, India; E-mail: [email protected]; [email protected]

41 APPROACH

Trees provide valuable ecological goods and services like carbon sequestration, soil and water conservation and aesthetic services throughout their life time and if there is a market for these goods and services the owner need not wait for the long rotation period before realizing his profits from tree harvest. There could be an argument that if indeed these are such valuable goods and services that mankind is in need of, why have not markets evolved around them? The answer perhaps lies in the nature of these goods and services, the fact that over countless generations we have got used to obtaining these services without paying individually with money even though societies have been paying for a few of these, namely water and soil conservation, for quite some time now. Communities living in the Himalayas are willing to pay opportunity costs for not using oak forests in their neighbourhood for firewood preferring to walk long distances to obtain it from far because they value the water conserved by the dense oak forests in the village streams. The sharp rise in populations placing ever increasing demands on the finite natural resources of the earth has changed the environment far beyond what its elasticity permits. Had there been a market for these goods and services the sharp increase in demand and limited supplies would have placed a high premium on them resulting in a more efficient demand management. A market is needed but inertia prevents a quick response to the changed situation in which higher prices may have to be paid for these goods by their consumers. A set of policy interventions would be required to nudge the people out of this inertia. These policy interventions should result in creation of explicit demands for these goods and services, remove bottlenecks in meeting these demands, provide a market place for the producers and consumers to meet, and lead to easier financing for both the producers and the purchasers to increase their capacities to produce more and to consume more and thus create more trade opportunities. Enhancement of income would result from production of more goods and services from the land and enhanced demands and better prices for these goods and services. Lowered wait for economic returns would come from production of goods and services that can start yielding early. Risk lowering could come from a long-term certainty about the investment climate, higher allocations for research in control of forest diseases and fires and lowered premium on insurances. The problems of asset liquidity will have to be tackled by ensuring that the tax burden on transfer of landholding on account of tree wealth on the land does not increase and also by ease of transfer of liabilities of continuance of ecological goods and services to the purchaser of the land. The policies should also delineate clearly the sovereign functions of the state from the duties of the growers and the purchasers and result in reduction in transaction costs like devising standardized contracts and simplified guidelines for verification and reporting.

ENHANCING DEMANDS FOR FOREST PRODUCTS

There have been concerted efforts to promote wood substitution in India in the last three decades in order to protect forests. Similar attempts have also been initiated in several other countries. This involved substitution of construction and furniture timber by cement, steel and aluminum and use of fossil fuels in place of firewood. In India this has meant ban by huge public sector bodies like the Central Public Works Department and its sister bodies in the states on the use of wood in buildings except under certain conditions. This has lowered the demand resulting in the prices of wood and other forest products remaining static compared to the general inflationary trends in the economy. The globalization of trade and consequent opening of markets to import wood from other countries in Asia and Africa and also from New Zealand and Canada have increased the supply of low-priced wood further depressing the demand for indigenous timber and disappointing small growers who expected better prices from their long-term investments. A case in point is the surplus eucalypt production in the States of Haryana and Punjab in northern India. Planted in the mid-eighties when the prices were rising, the maturing of these plantations saw lowered demands on account of substitution and increased supplies from other sources. With flattened prices the farmers had the option of waiting out the glut or harvest quickly to limit their losses. Many resorted to the latter and sought support prices through political channels to transfer the losses to the state. When the move did not succeed on account of the inability of the state to pay, farm forestry suffered its first serious blow.

¥ Since the production of cement, steel and aluminum requires large amounts of energy its contribution to global warming is significant. A reversal of earlier policy of substitution of wood by these products and encouraging the use of firewood instead of fossil fuels would be in conformity with the Kyoto Protocol and generate income through carbon credits. This would also enhance demand for wood products making tree growing economically more attractive.

42 Policy support for enhancing economic returns from smallholder tree plantations using carbon credits and other forest values ¥ Fuelwood substitution by cooking gas has also been attempted in India though with limited success. Even today fuelwood is used as source of energy in 71.7 percent households in rural India and 32.7 percent in urban India (MoEF 1999). This, however, is not a simple case of substitution of one energy source by another but has close linkage to women’s health and education since in the villages and small towns of India a very large number of girls and young women spend several hours every day to collect firewood and then use it in smoky inefficient wood stoves endangering their health. A policy of return to firewood would thus be acceptable only if the wood is gasified and supplied to the household through pipes or cylinders. It is technically feasible though economically costly in the current state of development of technology.

CREATING DEMANDS FOR OTHER ENVIRONMENTAL GOODS AND SERVICES

Forests provide goods and services like water and soil conservation and societies across the globe have tended to protect forests in the watersheds of rivers and streams important to them. In recent years the role of forests in sequestration and storage of carbon has been well documented and forests are now recognized as providing a significant opportunity for mitigation of global warming. The crucial importance of biodiversity for the survival and continued prosperity of human beings and the important role that forests play have also been studied in detail by scientist and generally accepted by the civil societies across the world. Ecotourism recognizes the commercial value of aesthetics of forests and has developed them as major revenue earners in many countries across the world.

Water conservation

Global fresh water consumption doubles every 20 years. There is thus a huge ever increasing demand for fresh water and for quality drinkable water. Forests in the watersheds greatly influence the local water cycle and improve water quality. Dry season water availability in forest streams and wells in the catchments near forests is considerably higher in well-forested watersheds. The increase in non-rainy season water availability and quality improvement due to afforestation of the watersheds is quantifiable. It should be possible for plantation owners to stake claim to the increase in water availability due to improved forests and negotiate for appropriate water prices from the down-stream users for the additional water. Water conservation services generated by the tree plantations are universally acknowledged as important but as yet no attempt has been made to establish quantitative links between the tree cover and the amount of water conserved. The increase in non-rainy season availability of water due to tree plantation in the catchment is measurable in the water flow in streams and depth of water in the wells. The quantum of this increase would depend upon the rainfall, its intensity and spread, gradient, root spread and foliage of the species planted, its spacing and age among other factors. The variables in such a computation are too many for a simple model to be developed for all lands, species, spacing, age etc. This would require long-term commitment by forestry research institutions to develop models and to continue to modify them as knowledge and experience expand. In the meanwhile the government would be required to issue notifications of acceptance of specific models developed by research institutions for specific locations and species and to ensure that contributions of water conservation by plantations are measured on the basis of the model notified for the purpose. In water conservation an important issue is who will pay for the services generated. The ideal thing would of course be for the users to pay. This may, however, not work in developing societies like India where water supply is seen as a duty of the government and users are willing to pay only a small part of the distribution costs involved. The subsidies involved in providing this service are enormous and it would be naïve to expect a change in this situation in a hurry. So it would be necessary for the government to pay for the water conservation caused by the plantations in the beginning and then gradually reduce subsidies to transfer the burden to the user. Related to this is the issue of the amount payable for the additional water made available. This would be best calculated on the basis of the current cost of taking water to the site. This would make the amount payable different for different localities and some may view these differences in valuation as undesirable. But what this confers is valuation of the situational advantage of the venture that is an important part of development of new markets.

Promode Kant 43 Soil conservation

Siltation of ponds and small water bodies is a serious problem for rural communities and governments spend large sums every year to desilt these. Regeneration and protection of watershed forests decrease soil erosion significantly. This decrease in soil erosion is quantifiable and economic benefits from reduced siltation can be calculated. Soil conservation services by planting trees offer a parallel to the water conservation. But unlike water this service should be paid for by the state or the community because quantification of benefits accrued to the individual beneficiaries would be nearly impossible. Measurement of soil losses prevented would require modelling on the same lines as that suggested for water conservation above and similar steps would be required to be undertaken by the state. The price of the services offered could be based on the amount that the state (or the community) is currently spending on prevention of soil losses by raising tree cover in the area under consideration because this gives a fair measure of what the society is willing to pay for the services generated. Since the state would be expected to have kept before itself a certain target for conserving soil the achievements of the smallholder would reduce the task of the state to that extent and the state would owe, but not pay in cash, the cost that it would have incurred in making the same achievement. What it owes it would pay in terms of services it would provide to the smallholders by way of measurement, verification and certification of carbon sequestered and the other services it provides to the smallholder that are not the sovereign duties of the state.

Carbon sequestration

Tree growing for carbon sequestration offers a new opportunity. It enhances income significantly as monetary values are now attached to carbon sequestration apart from the final value of the forest product on harvesting. Secondly, the gestation is cut down sharply as the income flow would begin as soon as the carbon sequestration becomes significant and one could expect first flow of funds as early as the third year. Further, since clean development mechanism (CDM) is an international commitment governed by a protocol, the domestic policy changes are unlikely to trouble the potential investors.

Additionality

The carbon sequestered would become eligible for carbon credits if the issues of additionality, leakage prevention and biodiversity conservation are adequately addressed. An ongoing or planned tree plantation project or activity by any agency is not an eligible activity under CDM. For a project to qualify for CDM it will have to be a fresh project and it would be necessary to establish its technical, institutional or financial additionality. The technical additionality can be established by the addition of new technologies or practices leading to greater sequestration and/or efficiency. Developing or adopting new institutional arrangements and capacity building activities to overcome institutional barriers for expansion or for bringing in greater efficiency in planting can introduce the institutional additionality. The last criterion of financial additionality could be achieved by enhanced investments over and above those planned earlier. The concept of additionality essentially requires that the carbon sequestered should be additional to the amount that would have been sequestered in the absence of the project. It should pose little problem because of the very fact that the smallholders are setting up plantations on their lands currently under other uses with expectation of earning from carbon credits should itself establish the fact of additionality. However, it would still require certification from a national body like the national CDM board which would in turn base it upon the current land use and its status as on 31.12.1989.

Leakage

Assurance of prevention of carbon leakage, another core requirement of CDM, would be more difficult. Leakage is changes in emissions and removals of greenhouse gases outside the accounting system that result from activities that cause changes within the boundary of the accounting system. There are four types of leakage: activity displacement, demand displacement, supply displacement and investment crowding (IPCC 2000). Unless specific attention is paid to avoid or compensate, all these types of leakage, particularly the first three, can occur in a forestry plantation project in India. In India most private lands meet the fuel needs of only the owners and not of the communities who depend upon the community or public resources. Leakage prevention may offer serious problems because smallholders often depend upon their lands for meeting their fuel needs and if they cannot depend upon them any longer on account of plantation raised on their land they can be expected to meet their demand from public resources in the neighbourhood. The likely leakage on account of the planters’ self-consumption activities should, therefore, be accounted for.

44 Policy support for enhancing economic returns from smallholder tree plantations using carbon credits and other forest values Measurement and certification

Who should measure the carbon sequestered, the planter or the state? And who should certify it? Is it a sovereign function of the state or should it lie in the domain of the owner? This issue has two aspects, the capacity to measure and the international credibility of the process. The methods of measurement of these goods and services available today are neither credible nor cost effective. Research is required to be undertaken for creating such credible and cost-effective measurement methods. Smallholders may not have the technical capacity to measure and, even if it is possible to develop such a capacity, the costs to individuals would be too high. Also measurements by the seller of the goods would lack credibility and independent verification would be necessary. The Good Practices Guidelines for the Land Use, Land-Use Change and Forestry (LULUCF) prepared by the United Nations Framework Convention for Climate Change (UNFCCC) is expected to lay down the acceptable practices for verification and the countries will have to chose one of the workable options prescribed.

Facilitating direct CDM investments by power utilities from developed countries

The power utilities in developed countries have the highest need of earning carbon credits and the likely strategy among them would be to source carbon credits both through trade as well as direct investments in afforestation and reforestation activities. Their involvement would mean easy access to both capital and the latest technology and attention to the infrastructure development needed for physical access, measurement, verification and certification. But the limiting factor would be the scale of operation as these utilities can be expected to be interested only in large-scale afforestation activities. These utilities would naturally gravitate towards countries where large landholdings are available for afforestation and it would require effort to make them interested in smallholders. This could happen if smallholdings could be organized in neighbourhood clusters, form legal units without transfer of land ownership for the purpose of afforestation and be bound by a single contract with the investing party. There is a law in India that permits cooperatives to be formed by landowners that serves the purpose but has the handicap of creating unnecessary bureaucratic procedures because the secretary of the cooperative has to be a functionary of the government who carries with him powers that can effectively veto the decision-making powers of the members. This hurdle would have to be addressed by the government. Also the state would be required to create an authority in an existing organization like the Forest Department to make efforts to organize the smallholders interested in afforestation in clusters and facilitate negotiations between them and the investing parties.

Forming organizations to enhance collective bargaining power and reduced undercutting

In new ventures of this kind with a high degree of scientific, technological and business uncertainties, and lack of clarity in policy it is necessary for the small ventures to form networks to enhance their bargaining power in the emerging markets. Network is a voluntary and cooperative arrangement between individuals or institutions to carry out jointly certain specified activities for the purpose of direct exchange of relevant technologies, experience and information to address a common problem. A competent system of networking, informal or formal, can reduce costs and lead to a more efficient use of resources. Important features of networks are (a) focus on specific issue, (b) a well-defined manner of cooperation among members, and (c) a distinct membership. The network would be expected to disseminate information, organize seminars, study tours, maintain database and share information on likely policy changes and their effect on the members (IUFRO 1998). In the beginning the state will have to take the responsibility of helping create such networks and this can best be done by equipping one of its existing departments like the Forest Department with the necessary expertise and authority.

Biodiversity conservation

The international community and most national governments are deeply concerned about the threat to the biodiversity of the earth. This concern is now being widely shared by the civil societies in general. It is exhibited in a number of international treaties and increased allocations for biodiversity conservation in multilateral, bilateral and national projects. The smallholder plantations, with technical support from the state, can ensure biodiversity conservation in their areas of operation. Their impact on biodiversity can be measured only to a limited degree in the current state of knowledge. Since the state would be expected to have kept before itself a certain target for conserving biodiversity the achievements of the smallholder would reduce the task

Promode Kant 45 of the state to that extent and the state would owe, but not pay in cash, the cost that it would have incurred in making the same achievement. What it owes it can pay in terms of services it would provide to the smallholders by way of measurement, verification and certification of carbon sequestered as discussed in the case of soil conservation above.

Aesthetics and ecotourism

Forests enhance aesthetics and may result in increased tourist traffic flows to existing tourism destinations and may even create new destinations. Increased earnings could be quantified and shared in an appropriate manner with those responsible for creating these aesthetic values. As in the case of the soil and biodiversity conservation the state allocates certain funds for promotion of tourism as an economic activity expecting to meet certain physical targets. The smallholders would achieve part of the target and the state would have to spend an equivalent amount less in tourism promotion. It is this amount that the state would owe to the smallholder planters. It may also not be paid directly but spent in providing services to the smallholder to facilitate his trade as has already been discussed in relation to soil and biodiversity conservation.

Asset liquidity

The liquidity of assets is a serious concern to the smallholder. There are two ways in which the liquidity is affected. One is that the contracts entered by the planter for providing carbon credits and other ecological services may not be transferable to the purchaser of the assets. The other is that the taxation on assets transferred by sale may be charged on not only the value of the land but also the value of the new assets of the trees and the carbon sequestered and thus the increased taxation at the time of asset transfer may become so high as to inhibit transfer. The first problem could be addressed by designing the contract format for carbon credits and ecological services to have an inbuilt provision for a composite ownership transfer that would transfer the ownership of land with all the attendant liabilities for servicing the contract conditions. The second issue of taxation on asset transfer has already been tackled in India where on transfer of lands by sale the value of tree crop is excluded from the valuation for the purpose of calculating tax.

Developing markets

What is required is the creation of new markets for these new goods and services. New markets grow organically over long periods of time through errors and course corrections. This organic growth can also be speeded up by an appropriate research and development strategy to broaden the base of forest goods and services. These are optimization of production of these goods and services, measurement of goods and services delivered, economic valuation of these goods and services and determining the key players in the market. Production optimization would require research to establish ecologically sound models for optimizing the product mix to give greatest economic satisfaction to the planters for all biogeographic zones and plantation sizes. Research is also needed to make appropriate choices of forest species and maximizing their production at least cost. Another important area of research is on working plan prescriptions for managing forests to produce these results. The smallholders would be able to enter the market with greater confidence if they have access to data on the true economic values of the goods and services that they produce. There is a general lack of a wide base of knowledge for these products and, therefore, research on economic valuation of all these goods and services and their various combinations is an urgent requirement. Related to this, and perhaps even more important, is the field of research on how leakage, additionality and rotation effect the monitory benefits to the producer in carbon trade.

Legal and policy research

In a normal situation of market development, enabling policies and laws develop as a need of the society. However, to hasten the development of market for these goods and services it would be necessary to create an enabling environment to begin with. This calls for a thorough research in this field. Further, in the case of these goods, it would also be necessary to establish who, and to what extent, are the producers and to what extent they can demand payment for services rendered by them. Research would also be necessary to establish practices and benchmarks for fair negotiations between the producers and consumers.

46 Policy support for enhancing economic returns from smallholder tree plantations using carbon credits and other forest values Risk coverage

Trees, being long-term crops, are exposed to a variety of risks like thefts, pests, fires, diseases, floods, droughts and cyclones. Sharp turns in policies can also result in severe drop in demand and, consequently, of the prices. These risks are a great dampener on the enthusiasm of the smallholder to invest in this venture. There is thus a need to have a comprehensive risk management strategy to minimize the losses and to cover the losses by appropriate insurance instruments. There is also a need to understand the sharing of responsibility between the state and individuals in reducing the risks. For example, fire in smallholder plantation is most likely to come from outside sources over which the individual owner may have little control. He can only be expected to take fire control measures like removal of incendiary material from his plantation and to lay and maintain firelines around the plantation. Similarly, theft prevention is a law and order problem and should lie within the sovereign duties of the state. The state should not only make efforts to reduce the instances of theft but also pay for insurance cover against theft. On the other hand, the risks against diseases and pest attacks, droughts, floods and cyclones and drop in demand on account of changes in consumer preferences should lie in the domain of the grower and he should pay for the insurance cover against these risks. Investment in science and technology to provide information about potential impacts and make better evaluation of risks is the responsibility of the state. Such an approach would encourage a larger number of entrepreneurs to enter this field as it would make it possible to plan against risks with greater economic efficiency.

Subsidies and minimum support prices

Fear of prices crashing down twenty years or more down the line acts as a strong deterrent on long-term investments. But since growing of long-term tree crops is in the interest of the society on account of the environmental benefits it should be the state’s endeavour to encourage those who may invest in longer-rotation crops. This could be tackled by giving subsidies linked to length of the rotation to reflect the environmental value of the enterprise. Subsidies are a standard tool of economic and fiscal policies of the state given specifically for promoting a particular course of action or for employing specific factors of production. Differential grants may also aim at promoting a particular form of forestry like planting native species, bringing larger areas under endangered species and long-rotation crops, etc. (Price 1989). Minimum support prices can also be utilized to reduce the fear of falling prices. In the case of crops with rotation longer than 25 years the minimum support price will, however, benefit only the harvester of the crop who might be different from the individual making the long-term investment today. This may, therefore, not be a sufficient motivation for investment. Subsidies given at different intervals for retaining crops beyond an agreed number of years would benefit the individual investing today and can, therefore, be more effective.

CONCLUSION

The poverty alleviation capacity of smallholder tree planting efforts would be significantly enhanced by expanding the product base by incorporating in its fold the environmental goods and services like carbon sequestration, fossil fuel replacement, water conservation, soil conservation, biodiversity conservation and enhanced aesthetics. But the market for these new goods and services has to be developed through the tool of appropriate state policies as its organic growth would take too long a time. These policies should aim at:

¥ enhancing demand for forest products by reversing the policy of wood substitution; ¥ encouraging wood gasification for use as fuel to replace fossil fuel; ¥ creating demand for carbon sequestration under the Kyoto Protocol by setting up appropriate infrastructure of measurement, verification and certification; ¥ facilitating direct CDM investments by large companies interested in earning carbon credits in the developed countries; ¥ recognizing water conservation benefits through tree plantations and enabling measurement and payment of services rendered; ¥ recognizing soil conservation, biodiversity conservation and ecotourism benefits to the society through tree planting, enabling measurement of their contributions and investing the amount owed for the services generated in creating infrastructure for the smallholders; ¥ ensuring asset liquidity of smallholder plantations through appropriate fiscal and legal policies; ¥ extending risk coverage and sharing insurance premium for covering risks on account of fires and thefts;

Promode Kant 47 ¥ introducing subsidies and minimum price support to encourage larger investments in long-rotation tree crops; and ¥ enabling networking among smallholders to enhance their collective bargaining powers and reduce undercutting.

ACKNOWLEDGEMENT

The author is indebted to R.P.S. Katwal, Director-General, Indian Council of Forestry Research & Education, Dehradun, for his many valued suggestions during the writing of this paper.

BIBLIOGRAPHY

Adamowicz, W.L., White, W. & Phillips, W.E. (Eds). 1993. Forestry and the environment: economic perspectives. Wallingford, Oxon, UK, CAB International. 304 pp. IPCC. 2000. Land use, land-use change and forestry, 2000. In R.T. Watson, I.R. Noble, B. Bolin, N.H. Ravindranath, D.J.Verardo, & D.J. Dokken, eds. A special report of the Intergovernmental Panel on Climate Change (IPCC), pp. 10Ð19. Cambridge, UK, Cambridge University Press. IUFRO. 1998. Proceedings of the International Consultation on Research & Information Systems in Forestry. An Austrian and Indonesian initiative in support of the programme of work of the Intergovernmental Forum on Forests, IUFRO, Vienna. 161 pp. McDougal, R.A. 1999. Clean Development Mechanism: discussion. In J. Pan, N. van Leeuwen, H. Trimmer & R. Swart, eds. Economic impact of mitigation measures, pp. 117Ð119. Netherlands Bureau for Economic Policy Analysis, The Hague. MoEF. 1999. National Forestry Action Programme Ð India, Vol. I. Ministry of Environment & Forests, Government of India, New Delhi. 180 pp. Nautiyal, J.C. 1988. Forest economics, principles and applications. Dehradun, India, Natraj Publishers. 580 pp. Price, C. 1989. The theory and application of forest economics. Oxford, UK, Basil Blackwell Ltd. 401 pp. Prototype Carbon Fund. 2002. A public/private partnership, annual report 2002, p. 34. Washington, DC, Prototype Carbon Fund.

48 Policy support for enhancing economic returns from smallholder tree plantations using carbon credits and other forest values Market mechanisms and assessment methods for environmental services 7 from private forests in Australia Rodney J. Keenan*, Stuart Davey*, Alistair Grieve**, Brendan Moran*** and Jim Donaldson***

ABSTRACT

Forest ecosystems provide a wide range of economic, social and environmental benefits and services. In some regions of Australia there have been considerable land and water degradation and loss of biodiversity and other environmental services. The role of forests and trees in mitigating these environmental impacts has been recognized for some time. Governments have implemented a variety of incentive arrangements to encourage private landowners to retain existing forest, replace forests on areas cleared for agriculture and effectively integrate trees with current farming systems. While landowners can make financial profits from the sale of wood or other commercial forest products, environmental services (clean water, dryland salinity mitigation, soil protection, carbon sequestration or biodiversity conservation) are not effectively valued or traded as market goods. Allowing forest owners to realize financial returns for the supply of environmental benefits could result in improved environmental outcomes and a more sustainable mix of land uses. Australian organizations have been early movers in developing institutional arrangements for trading carbon credits from forests and a variety of approaches are being developed for marketing other forest services and benefits. This paper focuses on approaches to marketing carbon, biodiversity and salinity mitigation from forests and revegetation. We conclude that developing markets for environmental services can provide a basis for harnessing private capital for environmental repair and for more efficient investment of government funds to achieve broader environmental outcomes and to efficiently quantify the benefits of investment. Marketing environmental services needs to be underpinned by a scientifically credible system for assessment and monitoring of the services. Experience gained through pilot schemes for trading, monitoring and reporting is important in creating confidence for public and private investors.

INTRODUCTION

Australia is the world’s smallest continent and one of the most biologically diverse countries in the world. The economy is highly diversified but there is a continuing dependence on the production of agricultural crops and livestock and utilization of forests and other natural resources particularly in regional areas. Australia has experienced considerable environmental degradation of vegetation, land and water resources since the arrival of European settlers just over 200 years ago. These problems are now widely recognized and their causes are largely understood. Governments at all levels have invested considerable public funds in attempting to reverse declining trends in the condition of natural resources. These programmes have been successful to some extent, particularly in generating awareness of the scale and extent of environmental problems and in changing attitudes to land and consideration of alternative land management practices. The challenge ahead is to build on this awareness and implement wider reaching changes in land management that will result in more sustainable use of natural resources.

* Bureau of Rural Sciences; ** State Forests of NSW; *** Department of Agriculture, Fisheries and Forestry; Canberra, Australia; E-mail: [email protected]

49 Quantifying and marketing environmental services produced from trees and forests could provide a basis for active retention and management of native ecosystems and greater incorporation of trees into land management systems. In this paper we briefly describe the Australian environment and land management problems, outline the Australian experience with quantifying and marketing environmental services, focusing on carbon, biodiversity and salinity mitigation and discuss some implications of this experience for developing countries.

THE AUSTRALIAN ENVIRONMENT

Australia has a land area of 7.6 million km2 and is situated between 10° and 43° S. The population of 19 million is concentrated largely in cities in the east and south around the coast. Australia has the lowest precipitation and run-off of any continent. Climate is highly variable with temperature across a range from tropical to cool temperate and rainfall ranging from per-humid to arid. Rainfall varies considerably from year to year as a result of events such as the El-Nino Southern Oscillation (ENSO), a two- to five-year sequence that causes below-normal rainfall and drought in much of eastern Australia. The geology is generally ancient and heavily weathered; there are uplifted areas forming mountain ranges over 2000 m in altitude and very productive agricultural and forest areas but Australian soils are generally nutrient poor with low productivity. Low and variable rainfall, poor soils and long isolation from other continents have resulted in the evolution of a distinct flora and fauna. Humans have been in the Australian landscape for millennia. Aborigines have been in Australia for at least 40 000 and perhaps over 60 000 years and developed a strong spiritual affinity and attachment to the land. Their extensive use of fire shaped the Australian landscape and the consequences of their removing their influence from much of landscape are still being felt. European settlers spread rapidly across the continent in the first half of the 19th century, taking up land and often clearing forest and woodland vegetation for grazing and cropping. Clearing of land for agriculture accelerated in the early part of the 20th century and further increased with the development of heavy machinery and population growth following World War II. Significant areas of forest and woodland are still being cleared for grazing and cropping, particularly in northern Australia. Sixty-one percent of the land area is under some form of agricultural management. Depending on the season, between 20 and 25 million ha are sown to crops, and 94 million ha are in improved pastures (with 35 million ha sown to introduced legumes and grasses). The pastoral industry covers about 70 percent of the continent (Hamblin 2001). Australia is one of the world’s “megadiverse” countries. Eighty percent of flowering plants, mammals, reptiles, frogs and fish and about 50 percent of birds are found nowhere else. Vegetation composition and structure vary considerably with the diversity of climate, geology, landform and disturbance history. Forest cover is dominated by trees from three main genera, Eucalyptus, Acacia and Callitris. Most forests are open (50Ð70 percent canopy cover) or woodland in structure. The total native forest area (defined as land with actual or potential tree cover greater than 20 percent canopy cover and 2 m in height) is now about 162 million ha (National Forest Inventory 2003). Timber harvesting has occurred since the first days of European settlement and forests provide a diverse range of products. About 13 million ha of native forest are used for wood production and the remainder for other commercial purposes such as grazing and for conservation and recreation. One hundred and eight million hectares of native forest (including lower canopy cover woodlands) are under private ownership or leasehold management and wood from private forests makes a significant contribution to wood supply in a number of regions (Ryan et al. 2002). Plantations have been established since the 1920s and the total area of plantations is now 1.5 million ha (Wood et al. 2001) and they supply over 50 percent of the current forest removals of 23 million m3. About 50 percent of harvest is exported.

ENVIRONMENTAL PROBLEMS

Loss of tree cover and inappropriate cropping and grazing practices have resulted in significant degradation of land and water systems (Hamblin 2001). About 50 000 km of streams have been degraded by sand and silt deposition, mainly in southeast Australia. Clearance of native vegetation has resulted in mobilization of ancient salt stores and rising water-tables resulting in salt-affected river and land systems. Impacts of salinity can take 15 to 150 years to develop depending on soil type and regional hydrology. Up to 20 000 km of inland waters could be salt-affected by 2050 with high salt concentrations making river water unsuitable for drinking or irrigation and having significant impacts on stream biota and riparian vegetation. Land can become salt-affected through rising water-tables leaving it marginal or unsuitable for agricultural production. About 5.7 million ha in agricultural regions are currently affected or at potential risk from salinity and 2 million ha of native remnant vegetation could be adversely impacted (NLWRA 2001). Salinity also affects infrastructure (e.g. roads, pipes and house foundations) and at least 200 rural towns could experience salt damage over the next 50 years.

50 Market mechanisms and assessment methods for environmental services from private forests in Australia Habitat destruction, fragmentation and introduced predators have resulted in the loss of over half of Australia’s mammals since European settlement. The number of threatened bird, reptile, frog and fish species is increasing with principal threats including forest clearing, salinity, altered fire regimes, climate change, disease and invasive species (Australian State of the Environment Committee 2001). The severity of the environmental effects resulting from clearing of woody vegetation and unsustainable land management practices has created a national requirement to protect existing vegetation and re-establish tree cover in many parts of the landscape. However, there is a growing recognition that trees do not necessarily have positive outcomes in every situation and the notion that “any tree, anywhere” is automatically a good thing is increasing being questioned (Alexandra and Campbell 2002). Increasing the area of commercial timber plantations can have positive regional financial benefits but negative impacts on downstream water yield, biodiversity values and even soil loss can occur in some locations.

APPROACHES TO IMPROVING FOREST AND LAND MANAGEMENT

Environmental policy has typically adopted “command and control” procedures involving regulation, zoning or strict agreements with landowners such as covenants on ownership (Bardsley et al. 2002). Under this approach, the “impacter” generally pays for the reduction or loss of prescribed values or services below a certain standard. These requirements need to be clearly identified in the property rights conferred on individuals. Where these rights are changed through government action there is often a demand for compensation from existing owners and the costs of implementing this approach can outweigh the benefits (Aretino et al. 2001). Government programmes have also fostered development of a conservation ethic in the Australian rural land management community and maintained or expanded woody vegetation cover to address environmental problems. For example, the Landcare Movement (http://www.landcareaustralia.com.au) has promoted participation of rural landowners in networks of local groups to exchange information on sustainable land management practices and undertake voluntary works to mitigate soil erosion or restore vegetation cover. However, it is unrealistic to expect that volunteer efforts of individual landowners and community groups will result in the scale of revegetation required to address Australian environmental problems (Robins et al. 1996). Governments are continuing to invest in knowledge and capacity building through research and extension programmes across a range of disciplines and in supporting community action. More emphasis recently has been placed on developing ways to mobilize private capital to address environmental problems and alternative approaches that more efficiently allocate government resources to achieve environmental outcomes or to facilitate public-private partnerships that involve a mix of commercial and environmental outcomes.

MARKET-BASED MECHANISMS FOR FOREST ENVIRONMENTAL SERVICES

‘Market-based’ mechanisms are an alternative approach to achieving desired environmental goals at lower cost to government and the community. If well designed and operating efficiently, markets can link values, policy decisions and management actions. Potential sources of capital for investment in such environmental services are government, voluntary private sources, or regulated private investment (Binning et al. 2002). Quantifying and marketing environmental services can result in improved land management while allowing for private benefits (this could include the sale of wood, or carbon) to accrue to private investors at the lowest cost and allow for efficient allocation of government funds to achieve environmental benefits that accrue to the broader community. Market mechanisms for environmental services can include:

¥ “cap-and-trade” where point sources of emissions such as nutrients or salinity are known; ¥ auction or tender systems where services might be provided by a broader range of suppliers; ¥ non-profit investment banking type fund arrangements that leverage “public good” outcomes through brokering customized financing for individuals and groups who propose to undertake natural resource management activities delivering public and private benefits; ¥ insurance type underwriting arrangements where there is a perceived risk of changing to more environmentally sensitive land management practices that increase costs.

Market-based approaches can also create greater public and land manager awareness of previously unpriced environmental assets resulting in behaviour changes leading to improved environmental outcomes. Markets arrangements can force direction of efforts to where value is greatest and markets for different environmental “products” can reveal opportunity costs in pursuing one value over another (Bardsley et al. 2002).

Rodney J. Keenan, Stuart Davey, Alistair Grieve, Brendan Moran and Jim Donaldson 51 EXAMPLES OF TRADING ARRANGEMENTS

Carbon

The Kyoto Protocol sets out legally binding commitments for developed countries to reduce greenhouse gas emissions. Under Article 3.3 greenhouse gas emissions and removals due to afforestation, reforestation and deforestation can be used to meet emission reduction targets. Because the total area that might be converted to plantations is limited, increased carbon storage in forest plantations is generally regarded as a part of transitional strategy to reduce atmospheric concentrations of greenhouse gases over the next 50 years or so. Inclusion of “sinks” in the Protocol has created expectations of increased investment in forest plantations for carbon storage. Ideally investment in carbon credits would be directed at locations where environmental benefits are maximized rather than in plantations that are currently commercially viable, but this is likely to be difficult to regulate in practice. The market price for carbon credits depends on demand and supply, and the nature of an emissions trading market (Hinchy et al. 1998, Tulpulé et al. 1998, AGO 1999a, b, c, d). The potential for carbon credits from plantations to compete against alternative abatement options will depend on the cost of generating plantation-based credits. Key factors in determining this are the extent, availability and cost of suitable land, tree growth rates, commercial and legal infrastructure arrangements and the nature of supportive government policies, risk factors and transaction costs associated with selling carbon credits. Australia led the development and implementation of institutional and legal mechanisms aimed at allowing efficient trade in carbon credits. NSW State Forests has been particularly active. After negotiation of the Kyoto Protocol, this state-owned forest management agency decided to become an innovator in the area of climate change business opportunities. As a learning exercise, a financial trade was undertaken with Pacific Power (also a state-owned corporation) purchasing the rights to carbon being sequestered in 1000 ha of newly planted forests, initially for one year, and subsequently for ten years. Concurrently, another trade was set up with Delta Electricity, where the right of State Forests to grow trees on land owned by Delta was exchanged for the rights to the carbon sequestered during the rotation. These trades were based on independent verification, including confirmation that the land was non-forested at the time of plantation establishment and assessment of the methods used for estimating carbon sequestration (Brand 2000). As a result of these initial trades, it was determined that legislation by the New South Wales Government would be beneficial to the further legal recognition of carbon offsets and future establishment of carbon offset trading. Accordingly, the NSW Parliament passed the Carbon Rights Legislation Amendment Act in November 1998. This Act includes amendments to the Conveyancing Act, the Electricity (Pacific Power) Act, the Energy Services Corporations Act and the Forestry Act. Under this arrangement NSW State Forests has designed investment packages combining carbon sequestration and timber production. In February 2000, the Tokyo Electric Power Company signed a contract for the carbon rights to 40 000 ha of new plantations over the next decade (Brand 1999). Plantation growers in other states, such as North Forest Products in Tasmania, the Western Australia Department of Conservation and Land Management, and Greenfield Resources Options and the Queensland Government have entered into arrangement for plantation carbon rights with petroleum producers or energy generators. The use of carbon sequestration credits by overseas investors while the Australia Government does not ratify the Kyoto Protocol is uncertain. The “Replanting Victoria” programme provides a different model, with the Victorian Government providing a subsidy of A$600 per hectare to small-scale plantation growers in return for the rights to carbon sequestered in the plantations. This has been an effective way for the government to foster plantation development for regional development or environmental benefits and reduce the transaction costs associated with carbon measurement in small-scale plantings. In 1999 the Sydney Futures Exchange developed a new carbon sequestration product in new forests established since 1990. The SFE decided not to proceed with the development of this product for commercial reasons and the current policy environment in Australia regarding ratification of the Kyoto Protocol is uncertain. The SFE initiative was intended to provide a risk management product to hedge the effects of the Kyoto Protocol. Trading carbon sequestration credits (CSCs) could help companies manage future permit price uncertainties by enabling them to trade future credits at a price agreed at the time of trade. Suppliers of carbon to the market were to use an agreed standard and adhere to the conditions of a carbon deed. This deed included requirements for risk management, including insurance and demonstration of sound prudential assets and financial liquidity. Potential benefits from this early trading in sinks included:

¥ providing for early risk management; ¥ realization of the potential for vegetation sinks as a low-cost emissions abatement option and in providing other environmental benefits; ¥ providing early price discovery; ¥ demonstration that financial market participants can make an emissions trading system work.

52 Market mechanisms and assessment methods for environmental services from private forests in Australia Biodiversity

In Australia, biodiversity conservation on private land has generally been implemented through land purchases or agreements with the owners of high quality habitats. For example, a private forest reserve programme established under the Tasmanian Regional Forest Agreement has a target of 100 000 ha of private forests reserved through the programme. The programme is spending $A30 million to place voluntary covenants or management agreements over properties containing priority forest types required for protection. An alternative approach is being adopted in the State of Victoria. Called “Bushtender”, landholders are invited to put forward tenders for the provision of alternative management approaches that will provide improved biodiversity conservation, for example, fencing and habitat protection rehabilitation activities, in native vegetation at a given price. Potential benefits are assessed using the “biodiversity benefits index” described below. Successful tenderers are chosen based on an assessment of benefits and price and they enter into a management agreement with the state government to undertake the proposed management for a given period of time.

Salinity

While the problems of dryland and stream salinity are well-known, causes are complex and processes are incompletely understood. Trading arrangements to mitigate these problems have therefore been limited. In some catchments (such as the Hunter River, north of Sydney) salinity can be treated as a point source and emission “cap-and-trade” arrangements have been implemented to reduce salinity inputs to streams. Across larger catchments, such as the Murray Darling locations of salt stores and inputs to rivers or dryland salinity areas are uncertain (Dent et al. 1999). Over 10 million ha of land in low to medium rainfall areas may need to be revegetated with woody vegetation by 2050 to halt the spread of dryland salinity and keep stream salinity to levels where water is suitable for agricultural irrigation or urban water use. The investment required to fund such revegetation is beyond the capacity of government. Commercial options are therefore needed to attract private investment into forestry for environmental outcomes. Environmental service payments potentially provide a means whereby public funds can be invested in commercial projects without violating competitive neutrality principles. By purchasing the salinity mitigation benefits of targeted plantations, public funds can be employed to provide a totally new income stream and thus increase the internal rates of return for low rainfall forestry without directly subsidizing the private investment in wood production. Using existing and developing salinity hazard mapping, it is possible to quantify to a known level of certainty the impact of plantations on mean annual flow and salt load to deliver a flow weighted salinity effect for afforestation. Applying market mechanisms to salinity mitigation using forest vegetation is complex, particularly when there may be multiple benefits accruing to different parties (Figure 1).

Internal rate of return (%) 10 More profitable investment environmental credits

8 value-added processing Acceptable return on investment optimised harvesting and transport systems 6 optimised silviculture genetically improved planting stock standard practice

increasing productivity

500 600 700 Annual rainfall (mm) Figure 1. A conceptual model to illustrate how improvements in commercial forestry and environmental credits can together create profitable plantation investments in lower-rainfall environments. Relationships and notional values of IRR are indicative to illustrate trends and aid discussion (C. Harwood, CSIRO, pers. comm. 2002)

Rodney J. Keenan, Stuart Davey, Alistair Grieve, Brendan Moran and Jim Donaldson 53 State Forests NSW and Macquarie River Food and Fibre have launched a pilot programme to trial salinity control credits in the development of a response to dryland salinity in the Macquarie catchment of the Murray-Darling Basin. In this as in many other salt affected catchments, the salinity impact of land clearing occurs downstream of the clearing activity. There is therefore little incentive for the landowners responsible for the clearing to revegetate. The opportunity costs in lost production as well as the capital costs associated with this revegetation are prohibitive and act as a major disincentive in the adoption of the desired land- use change. In an attempt to overcome these disincentives, State Forests has entered into an agreement with various landholders to plant and manage native forest on their land. The landholders are paid an annual annuity which is characterized as a “salinity control credit” based on the transpiration level of the planted forest. This transpiration implies a reduction in the water contributing to salt mobilization and hence downstream salinity. The rights to these “credits” are sold to Macquarie River Food and Fibre whose members will be adversely affected by the increasing salt load within the catchment. In the case of this scheme, State Forests has the right to harvest the timber. It may be difficult in the future to reconcile this right with the need to maintain transpiration for salinity control. A pooled approach as is used in managing carbon sequestration may be applicable. Other projects underway to develop and test public/private co-investment models include:

1. The Commercial Environmental Forestry project. This aims to develop a farm forestry investment framework to underpin sustainable land-use change for commercial and environmental outcomes. This toolbox will optimize commercial outcomes in low to medium (500Ð800 mm) rainfall forestry by assisting species selection, location in the landscape, plantation management and product decisions and assessment of environmental values. 2. The NSW Government Environmental Services Scheme. Under this scheme, 25 landholders have been selected to take part. Staffs from the Department of Infrastructure, Planning and Natural Resources, State Forests and NSW Agriculture are working closely with these landholders to implement land-use changes aimed at integrating the production of environmental services into more traditional rural production. The land-use changes on the properties involved are funded through an investment of $2 million from the Salinity Strategy’s Environmental Services Investment Fund. The aim of the Environmental Services Scheme is to look at some of the practical issues that will arise in the development of a market to support the environmental services produced on-farm. These include the costs associated with including environmental services within rural production, how to define and create ownership of the services produced, and the type of financial, contractual and incentive arrangements necessary. The scheme will allow the government to work with landholders to identify the practical requirements for environmental service markets and incentive programmes to operate for the mutual benefit of landholders and the community. 3. Under the National Action Plan for Salinity and Water Quality, the Commonwealth, State and Territory governments will jointly fund $5 million for 10 natural resource management projects under the first round of the National Market Based Instruments (MBI) Pilots Programme. The projects will investigate ways to use innovative financial arrangements to encourage better land and water management and to reduce salinity in irrigation-based agriculture. Pilots are expected to begin operating in June 2003 and be completed in mid-2005. For example, one pilot project is a scheme where irrigators can choose the most cost-effective way to manage salinity levels in a river catchment. To ensure salinity levels do not increase, a cap or target is set for the whole irrigation area. The cap or target can be achieved by undertaking activities to reduce salinity levels or by purchasing credits from other landholders who can achieve the same results more cheaply. The Goulburn-Broken Catchment Management Authority in Victoria is implementing a project to extend the auction approach successfully trialled in the Bushtender programme to include salinity, water quality, water quantity and biodiversity. It will consider how intervention in the landscape can cause multiple outcomes. Planting trees, for example, may reduce accessions to groundwater-tables (the cause of dryland salinity) and buffer nutrients from surface water, but trees also reduce the flow of surface water, which can adversely affect water quality in streams. This pilot also intends to address the development of appropriate duty-of-care benchmarks.

MEASUREMENT SYSTEMS TO SUPPORT TRADING ARRANGEMENTS

Systems for quantifying the environmental value of land-use /management changes on private land are important in generating potentially tradable environmental services. Where possible, the impact of these changes would ideally be measured directly, e.g. the creation of an increased carbon sink through tree planting. In many instances, however, it is not possible to measure directly the value of these changes in contributing to additional

54 Market mechanisms and assessment methods for environmental services from private forests in Australia environmental service levels, e.g. where the off-site impacts are the product of a large number of individual inputs as in reducing recharge for salinity management, or where the impacts are not evident until long after the original action is taken as in the case of improving habitat for biodiversity. In these cases it is necessary to determine suitable parameters that can be used as a satisfactory indicator of these “environmental services” (sometimes referred to as a surrogate). Suitable parameters should:

¥ provide a measure at a property level that can be related to the environmental service at a catchment or regional scale; ¥ be simple to understand; ¥ be cheap to measure, repeatable and reliable to use; ¥ be capable of comparing benefits across regions and sometimes across countries. This will allow full ‘fungibility’ of trading in services or allow governments to more easily quantify the outcomes of different investment alternatives.

Because environmental services are often not “delivered” for some time into the future, systems are required for prediction of potential outcomes (these are usually computer models or tables of values generated from models) and for monitoring the actual outcomes of the investment.

Carbon

Carbon sequestration in forests is perhaps one of the easier environmental services to measure. There is a reasonably sound scientific base for quantifying carbon stocks in forest types and there is a strong relationship between traditional forest inventory variables and carbon stock. Guidelines for national accounting for greenhouse gas emissions and removals in forests and agricultural lands have been developed by the Inter- governmental Panel on Climate Change (IPCC 1997) and good practice guidance related to implementation of the Kyoto Protocol (including CDM projects) is currently in development. Forest inventory has generally focused on obtaining estimates of timber volume in the bole of the tree. Carbon generally makes up about 50 percent of the mass of most plant material, and carbon is estimated from an inventory of total biomass. In plantations this requires assessment of the biomass stored in other components of an ecosystem, including:

¥ stems, branches, leaves and roots of the living trees and understorey vegetation; ¥ dead coarse (woody) and fine litter in the forest floor; ¥ highly decomposed and transformed plant material incorporated within the mineral soil, generally described as soil organic matter.

The rate of accumulation of carbon in a plantation established on cleared land generally follows a logistic (sigmoidal) curve, with initial emissions from soils following establishment, slow initial growth, more rapid accumulation after the site is occupied followed by a decline as the trees mature. Changes in carbon stocks in vegetation and soil removed or affected by plantation establishment need to be accounted. Reduction in carbon stocks due to harvest or other natural disturbances will also need to be accounted. In New South Wales, the Carbon Sequestration Predictor (Montagu et al. 2003) provides a tool for predicting likely changes in both biomass and soil carbon associated with a number of land-use changes at the property scale. The principal focus of the model is on changes from herbaceous (cropping, pasture) to woody vegetation (commercial and environmental tree plantings) in inland regions (<800 mm y-1 rainfall) contributing to dryland salinity in NSW. The tool provides two predictions of changes in carbon stocks (biomass, soil and total carbon). A table presents predicted changes in carbon stocks expressed as tonnes of carbon per hectare, 10 years after the land-use change. Many land-use changes take a considerably longer time to reach a new quasi-equilibrium carbon storage level. A graph of predicted carbon changes over 40 years is also provided to indicate the longer-term benefits. Few, if any, countries currently perform all measurements required for carbon accounting in forests routinely, particularly soil inventories (Watson et al. 2000). Most countries are likely to adopt a combination of modelling and direct measurement as part of their accounting system. Besides plantation projects developed under joint implementation or the CDM, other issues need to be addressed. For example, a project would need to demonstrate that increased carbon storage resulting from the project is additional to that which would occur without it, and a baseline would need to be developed to quantify these additional sequestration benefits (Brown et al. 2000).

Rodney J. Keenan, Stuart Davey, Alistair Grieve, Brendan Moran and Jim Donaldson 55 Biodiversity

Biodiversity is a more challenging indicator to measure. The Habitat Hectares methodology developed by the Department of Natural Resources and Environment (Victoria) is one approach to quantifying the biodiversity value of a site and how a site value could vary from a change in land management. The methodology has been further developed for application to revegetation (Oliver and Parkes 2003). The biodiversity benefits index is calculated on the basis of three surrogate measures:

¥ Vegetation condition Ð this is important for estimating the current biodiversity value at the site scale. It is defined as the degree to which the current vegetation differs from a vegetation condition benchmark representing the average characteristics of the mature native vegetation type/s predicted to have occupied the site prior to agricultural development. It describes the degree to which critical habitat components and other resources needed by indigenous plants and animals are present at the site. Predicted changes to vegetation condition due to land-use change are also estimated and included in the index. ¥ Conservation significance Ð this is important for estimating the biodiversity value of a site in a regional context. Some sites may represent elements of biodiversity that are common in the landscape, others may represent elements that are now rare. Conservation significance recognises the amount of each element now in the landscape compared with a time prior to agricultural development, as well as the likelihood of the element persisting. Predicted changes to conservation significance are also included in the index. ¥ Landscape context Ð this is the third surrogate and recognises that the biodiversity value of an area of vegetation will vary depending on where the site is located in the wider landscape. Small sites surrounded by a “sea” of agriculture or distant from natural refuge areas will have poor landscape context compared with sites surrounded by a mixture of agriculture and natural systems or close to large semi-natural areas.

The biodiversity index, is calculated as:

(CS t0 + LC) VC t0 / c (the biodiversity significance score) x

((VC tn - VC t0 ) + (CS tn - CS t0 )) / d (the land-use change impact score) where:

CS t0 = current conservation significance, that is, prior to land-use change, CS tn = potential conservation significance, i.e. after land-use change, LC = landscape context,

VC t0 = current vegetation condition, that is, prior to land-use change, VC tn = potential vegetation condition, i.e. after land-use change and an agreed period of time, c, d = constants

The biodiversity index is calculated as a change in benefits per hectare during the 10-year period following land-use change. Application of the index to the ESS sites will require that vegetation benchmarks are developed for each relevant vegetation type. This will be carried out using a rapid expert panel based system, pending more comprehensive data becoming available.

Salinity

The contribution of a particular property and the effects of land-use change on stream salinity is a complex interaction of local and regional hydrological processes. In NSW, the approach used to estimate salinity mitigation benefits arising from land-use change employs models of salt and water flow in the landscape (Herron 2003). The modelling methodology used to determine the potential impacts of the different land- use changes on catchment salt and water exports is a simplification of the CATSALT v1.5 methodology. Mean annual streamflow and salt loads, calculated for the reference period 1975 to 1995, are distributed across their contributing area based on the major factors affecting hydrological behaviour such as land use, topographic position, salt storage and discharge potential (the last two parameters defining salt hazard). Every unique combination of land use, topographic index and salinity hazard is defined in terms of its contribution to total water and salt yields. With these values known, it is then possible to predict the consequence of a land use anywhere in the catchment on flow and salt yield. The salinity benefits index model is used in conjunction with a spatially based platform called the Land-Use Options Simulator (LUOS). The Options Simulator is a GIS based tool designed for:

56 Market mechanisms and assessment methods for environmental services from private forests in Australia ¥ recording, updating and correcting spatial information such as land use; ¥ using decision rules and models to locate areas for potential land-use change; ¥ quantifying the effects of land-use change using scientific models; ¥ comparing land-use options for the basis of property agreements and environmental credit allocation.

The tool is designed for use within the office, or to be taken on site visits using a laptop. It is fully scalable and capable of switching scale or area of interest, so individual properties or whole catchments can be assessed. It has been developed to require no previous GIS experience, and to minimize training time for operators. The salinity benefits model estimates the impact of land-use changes at a site on the average annual streamflow and salt load exported from the catchment in which the site is located. By calculating the ratio of salt load to streamflow for existing conditions and for post-land-use change conditions, the model calculates a raw salinity benefits index (SBI) value. The local catchment outlet is the reference point for this calculation. The SBI value is expressed as a percentage change in stream salinity. To allow for comparison between catchments (which may have significantly different stream salinities), the change is expressed as a percentage of the current in-stream salinity, rather than as an absolute value in tonnes/megalitre. The percentage change to in-stream salinity is multiplied by -1 so that a drop in in-stream salinity gives a positive (beneficial) value, and an increase gives a negative (detrimental) value. The results can be further scaled to give numbers that generally lie in a reasonable range (say, normally less than 10). The magnitude of the raw SBI is affected by the size of the land-use change at a site relative to the size of the catchment at the reference point. A given land-use change at a site will have a greater percentage impact on the streamflows and salt load exports from a small catchment than from a large one. Amongst other things, this means that raw SBI values calculated at different reference points are not comparable (they may be reasonably comparable where catchments at each reference point are of about the same areas, but not where the catchment areas differ markedly). In order to allow for comparisons to be made between sites which are located within the same valley, or between sites located in different valleys (state scale), the raw SBI can be expressed in relation to the aggregates of stream flow and salinity loads at these different scales. Care needs to be exercised in interpreting indices derived at these different reference points, as both the magnitude and the sign of the index can change.

DISCUSSION

Market-based initiatives for achieving environmental outcomes from forests in Australia are moving rapidly from concept to implementation. There are a number of factors that need to be considered if market-based approaches are to widely adopted.

Transaction costs

Transaction costs are part of any business arrangement and are incurred in matching buyers to sellers, negotiating costs and finalizing contracts. They include advertising, tender assessment and the costs of estimating, verifying and certifying the service delivered. Depending on the nature of the market, transaction costs can be borne by the buyer or seller. In general, transaction costs will raise costs (and lower the net benefit) to each participant in the trade, and may reduce the volume of exchanges. They will be determined in part by regulations established for trading environmental credits, the volume of trading and the degree of certainty required by the purchaser of the service or benefit. In the case of the carbon traded in the CDM, other costs, such as the adaptation levy on CDM projects (set at 2 percent), could affect the volume of trade.

Risks and uncertainties

Institutional risks and natural uncertainties will affect decisions to invest in environmental services. Institutional risks include changes in government policy, or shifts in the price of services. For example, forest growers who sell carbon credits in one market, may have to purchase them in another when they intend to harvest for timber. There are also risks related to shifts in government policies such as pricing and allocation policies for timber, plantation related regulations such as environmental requirements and forest ownership rights, and taxation provisions. Natural risks include impacts of drought, pests, or fire on revegetation projects. Risk can result from asymmetric information. For example, sellers of organically grown produce may not find a market because an uninformed public can be cheated by fraudulent products. This can be addressed through

Rodney J. Keenan, Stuart Davey, Alistair Grieve, Brendan Moran and Jim Donaldson 57 independent certification processes. The general public has often been the uninformed party in environmental policy. Lack of accountability for how money has been spent and what has been achieved on the ground or in environmental outcomes has resulted in a lack of confidence in environmental programmes. This may explain the interest in volunteer programmes, where volunteers can at least monitor their efforts and those of other community participants. The capacity of landowners to deliver the intended environmental services from existing forest or revegetation will vary. When the processes are well described, management requirements are well-understood and the manager has appropriate experience, then the risk of non-delivery may be low. Carbon stocks and biodiversity habitat can be monitored through a visual inspection to ensure the trees are still in place and well-managed, with less frequent measurement to compare with original projections. For services such as dryland salinity mitigation, the processes are not well-understood and the results may not become apparent for a considerable time after the investment is made. In some cases, unless large-scale land-use change is achieved, the impact may not be detectable. It may be that government investors in these services have to accept some uncertainty in achieving a single outcome. This uncertainty might be balanced by investing in schemes with multiple outcomes. The level of risk might be reflected in the payment arrangement, with payments made as the service is delivered over time. This will depend on the requirements of the landowner and the initial cost of setting up to deliver the service. In some cases, such as revegetation, upfront costs can be substantial and unless finance is made available to cover these they can be a significant impediment to adopting alternative land uses. Risks can be covered in a sales contract, but this may add to transaction costs. For instance, a buyer may want compensation for the lack of delivery of a service if a fire or other natural event occurs or if regulations change. Financial risks can be hedged if other commercial products such as wood are produced. Risks could also be managed through the formation of “pool managers” who keep a certain proportion of the service “in reserve” to allow for losses associated with unforeseen circumstances.

Unintended social or environmental impacts

Concerns have been raised about potential social and economic impacts on smaller rural communities and environmental implications of large-scale revegetation programmes such as plantation-based carbon-offsets projects (Bass et al. 2000). These include impeding or removing access to land for traditional uses and sources of livelihood for rural communities, and the inability of small community-based projects to compete in the market with large-scale reforestation activities. In Australia, communities are reacting to the rapid expansion of plantations onto agricultural land, and perceived impacts on community structure and employment (Williams et al. 2003). Individual countries are best placed to assess whether prospective projects for purchasing environmental services such as carbon sequestration will assist them achieve sustainable development objectives. Other solutions to potential community impacts include social and environmental impact assessment of projects, providing incentives for projects with multiple benefits, and reducing transaction costs for community-based projects Concerns have been raised about the potential impacts of afforestation on water yield and quality and biodiversity. For example, higher water utilization by trees may have unintended consequences such as reduction in downstream water flows and decreased aquifer recharge (MDBC 2003, Vertessy 2003). There is considerable debate in Australia about how public policy can achieve more sustainable land management through forestation of the lower rainfall salinized catchments to reduce salt accession into rivers and the containment of future plantation development in the higher rainfall areas to maximize high quality dilution flows to salinized catchments. This will require careful planning of plantation location based on a sound understanding of landscape topography, soils and hydrology. Biodiversity conservation values of commercial plantation projects can be moderated by using native species where possible, retaining and enhancing areas of native vegetation within the plantation development, and incorporating more compositional and structural diversity in the plantation by maintaining a mix of age classes and plantation species (Keenan et al. 1999, Lindenmayer et al. 2002).

CONCLUSIONS

It is generally recognized that a combination of market and non-market approaches will be required to achieve environmental policy objectives depending on the value of the resource and the potential number of suppliers of the environmental good or service. Market-based approaches to funding environmental services from forests can take a variety of forms. The appropriateness of implementing market-based approaches will depend on

58 Market mechanisms and assessment methods for environmental services from private forests in Australia the level of diffusion or scientific uncertainty around cause and effect, the number of potential suppliers of the service and transaction costs.

1. Developing markets for environmental services can provide a basis for more efficient investment of government funds to achieve broader environmental outcomes and to efficiently quantify the benefits of investment. 2. Markets for environmental services can provide a basis for private investment where private benefits can be identified or for joint public-private partnerships if there is a mix of benefits. 3. Markets for environmental services need to be underpinned by clear and unambiguous property rights for landowners. 4. Marketing environmental services needs to be underpinned by a scientifically credible system for assessment and monitoring of the service. 5. This system should be relatively low cost and provide a standard approach for quantifying services across different types of environments and management jurisdictions. 6. Policy design needs to be system wide and not ad hoc. It needs market mechanisms that reveal information and provide confidence to public and private investors about the likely outcomes. 7. There is little substitute for experience—pilot programmes and learning by doing in undertaking trading, monitoring and reporting on the result and adjusting the system based on experience. 8. There may be resistance from decision-makers to adopt approaches that diminish their capacity to appropriate political or institutional “rents” from the allocation of resources for environmental outcomes. Consequently, there needs to be strong institutional support for the development of market mechanisms.

ACKNOWLEDGEMENTS

We would like to thank Dr Quentin Grafton and Mr Frank Jotzo for valuable comments on the manuscript.

BIBLIOGRAPHY

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Rodney J. Keenan, Stuart Davey, Alistair Grieve, Brendan Moran and Jim Donaldson 59 Dent, D.L., Lawrie, K.C. & Munday, T.J. 1999. Running down the salt in Australia. 1. A multi-disciplinary approach. The Land (Ghent) 3(3):179Ð198. Hamblin, A. 2001. Land. Australia’s state of the environment report 2001 (Theme Report), Collingwood, CSIRO Publishing. Herron, N. 2003. The salinity benefits index: notes to accompany the land-use options simulator salinity module. NSW Department of Infrastructure, Planning and Natural Resources, internal report. 22 pp. Hinchy, M., Hanslow, K., Fisher, B.S. & Graham, B. 1998. International trading in greenhouse gas emissions: some fundamental principles. ABARE Research Report 98.3, Canberra. IPCC. 1997. Revised IPCC guidelines for national greenhouse gas inventories, Volume 3, Reference Manual. Bracknell, UK, IPCC, WGI Technical Support Unit. Keenan, R.J., Lamb, D., Parrotta, J. & Kikkawa, J. 1999. Ecosystem management in tropical timber plantations: satisfying economic, conservation and social objectives. Journal of Sustainable Forestry 9: 117Ð134. Lindenmayer, D.B., Hobbs, R.J., et al. 2002. Plantation forests and biodiversity conservation. Australian Forestry 66: 62-66. MDBC. 2002. Basin salinity management strategy. Murray-Darling Basin Commission, Canberra. 26 pp. Montagu, K., Cowie, A., Rawson, A., Wilson, B. & George, B. 2003. Carbon sequestration predictor for land-use changes in inland areas of NSW. Version 2.0Ð background, user notes, assumptions and preliminary model testing. State Forests of NSW website. (in press) National Forest Inventory. 2003. Australia’s State of the Forests 2003. Canberra, Bureau of Rural Sciences. 372 pp. NLWRA. 2001. Australian dryland salinity assessment 2000: extent, impacts, processes, monitoring and management options. Canberra, Commonwealth of Australia, National Land and Water Resources Audit, The Natural Heritage Trust,. Oliver, I. & Parkes, D. 2003. A prototype toolkit for estimating the benefits (and disbenefits) of land-use change. NSW Department of Infrastructure, Planning and Natural Resources website. (in press) Robins, L., McIntyre, K. & Woodhill, J. 1996. Farm forestry in Australia: integrating commercial and conservation benefits. Canberra, Greening Australia. 54 pp. Ryan, M.G., Keenan, R.J. & Spencer, R. 2002. Private native forests in Australia: what did we learn from the Regional Forest Agreement process? Australian Forestry 65:141Ð152. Tulpule, V., Brown, S., Lim, J., Polidano, C., Pant, H. & Fisher, B.S. 1998. An economic assessment of the Kyoto Protocol using the Global Trade and Environment Model, 27th Conference of Economists, Economic Society of Australia, University of Sydney, 28 September to 1 October 1998. Vertessy, R., Zhang, L. & Dawes, W. 1992. Plantations, river flows and river salinity. Australian Forestry 66:55Ð61. Watson, R.T., Noble, I.R., Bolin, B., Ravindranath, N.H., Verardo, D. & Dokken, D.J.E. 2000. Land use, land-use change and forestry: a special report of the IPCC. Cambridge, UK, Cambridge University Press. 377 pp. Williams, K., Nettle, R. & Petheram, R.J. 2003. Public response to plantation forestry on farms in south- western Australia. Australian Forestry 66:93Ð99. Wood, M.S., Stephens, N.C., Allison, B.K. & Howell, C.I, 2001. Plantations of Australia 2001. Canberra, National Forest Inventory, Bureau of Rural Sciences. 172 pp.

60 Market mechanisms and assessment methods for environmental services from private forests in Australia Carbon budgets of tropical forest ecosystems in Southeast Asia: 8 implications for climate change Rodel D. Lasco* and Florencia B. Pulhin**

ABSTRACT

Terrestrial ecosystems have an important role to play in the global carbon (C) cycle. Tropical forests in Southeast Asia are constantly changing as a result of harvesting and conversion to other land covers. In the last few years, research on the C budgets of forest ecosystems as a result of these changes has intensified in the region. Natural forests in SE Asia typically contain a high C density (up to 500 Mg ha-1). Logging activities result in at least a 50 percent decline in C density of the forest. On the other hand, complete deforestation (conversion to grassland and annual crops) leads to C densities of generally less than 40 Mg ha-1. Conversion to tree plantations and other woody perennial crops also reduces C density to less than 50 percent of the original C in the forests. Finally, the implications of the above changes in C budgets to climate change and the CDM are discussed.

INTRODUCTION

There is considerable interest on the role of terrestrial ecosystems in the global carbon (C) cycle. It is estimated that about 60 Pg1 C is exchanged between terrestrial ecosystems and the atmosphere every year, with a net terrestrial uptake of 0.7 ± 1.0 Pg C (Schimell et al. 1995). The world’s tropical forests, which cover 17.6 M km2, contain 428 Pg C in vegetation and soils. On the other hand, land use, land-use change and forestry

(LULUCF) activities, mainly tropical deforestation, are significant net sources of CO2, accounting for 1.6 Pg y-1 out of the total anthropogenic emissions of 6.3 Pg y-1 (Houghton 1996, Watson et al. 2000). However, tropical forests have the largest potential to mitigate climate change amongst the world’s forests through conservation of existing C pools (e.g. reduced impact logging), expansion of C sinks (e.g. reforestation, agroforestry), and substitution of wood products for fossil fuels (Brown et al. 1996). In tropical Asia, it is also estimated that forestation, agroforestry, regeneration and avoided deforestation activities have the potential to sequester 7.50, 2.03, 3.8Ð7.7, and 3.3Ð5.8 Pg C respectively between 1995 and 2050 (Brown et al. 1996). In spite of their importance to the C cycle, there is little information on the effects of land-use change and management activities on the C budgets of forest ecosystems in the tropics. For example, one of the major research needs identified in the Second Assessment Report of the IPCC is how different silvicultural and other management practices would affect the C dynamics in forests (Brown et al. 1996). In the last few years, research on C stocks and dynamics in forest ecosystems in Southeast Asia has intensified and new data have been generated (Lasco and Pulhin 2000, Murdiyarso 2000, Lasco et al. 2001, Lasco 2002). This paper attempts to review the available information on C budgets of forest ecosystems in Southeast Asia in response to land-use change and management activities such as harvesting and deforestation.

* Institute of Renewable Natural Resources (IRNR) and Environmental Forestry Programme (ENFOR), College of Forestry and Natural Resources, University of the Philippines, College, 4031 Laguna, Philippines; E-mail: [email protected] **Forestry Development Center, College of Forestry and Natural Resources, University of the Philippines, College, 4031 Laguna, Philippines; E-mail: [email protected]

1 Pg= 1015 g; 1 Tg= 1012 g; 1 Mg= 106 g= 1 tonne

61 FOREST LAND-USE CHANGE IN SOUTHEAST ASIA AND THE C CYCLE

Rate of deforestation and land-use/cover change in Southeast Asia

The last few decades have seen massive deforestation and land-use/cover change in the tropics and Southeast Asia was no exception. In fact, tropical deforestation is the dominant change in land use in the tropics (Lugo and Brown 1992). Deforestation rates in tropical Asia were estimated to be 2.0 M ha in 1980 and 3.9 M ha in 1981Ð1990 (Brown 1993). In Southeast Asia, the 1990 annual deforestation rate was about 2.6 M ha y-1 (Table 1).

Table 1. 1990 annual deforestation estimates for countries in Southeast Asia (from Trexler and Haugen 1994) Country Deforestation (ha) Indonesia 800 000 Laos 200 000 Malaysia 275 000 Myanmar 600 000 Philippines 200 000 Thailand 300 000 Viet Nam 200 000 Total 2 575 000

There exist varying estimates of the rates of deforestation for each country, partly because of different time frames and sources of data. This is illustrated in the case of the Philippines where deforestation rates have fluctuated in the last 100 years with an average of about 150 000 ha y-1 (Table 2). The forest area in Thailand declined from 28.03 M ha to 13.35 M ha between 1961 and 1993 (Boonpragob 1998), an average loss of 445 000 ha y-1, much higher than the estimate in Table 1. However, a recent GHG study in the country, estimated deforestation rate at 150 000 ha y-1 in 1992Ð93 (ALGAS 1998 as cited by Macandog 2000). The initial National Communication of Indonesia estimated the rate of forest conversion at about 800 000 y-1 (State Ministry for Environment 1999); other estimates place it at 1 M ha in the early 1990s and 721 000 ha in 1994 (Macandog 2000).

Table 2. Deforestation rates in the Philippines in the 20th century Period Years Forest lost (ha) Rate (ha y-1) 1900–1934 35 4 000 000 114 286 1935–1988 54 9 700 000 179 630 1989–1996 8 1 200 000 150 000 Mean 147 972 Forest loss data adapted from Lasco and Pulhin (2000).

Forest land-cover change dynamics in Southeast Asia2

In the last century, commercial logging in the Philippines has been the main cause of conversion of old-growth (primary) forests to secondary forests. In addition, small-scale swidden farming is also deemed responsible for the formation of secondary forests (Kummer 1992). Since 1900, the Philippines has lost about 15 M ha of tropical forests. It can be presumed that these were first converted to secondary forests before being totally denuded. Secondary forests could be converted to the following land uses: upland farms, pasture areas, brushlands and tree plantations. Conversion to upland farms is typically done by farmers who follow at the heels of loggers. Logged-over areas are easy to clear because the largest trees have been removed and logging roads provide easy access. Upland farms may revert back to secondary forests through fallow. Forest fallows are more often associated with indigenous peoples. Several indigenous fallow systems have been documented in the Philippines (Hanunos of Mindoro Tagbanua of Palawan, etc.). However, upland farms of migrant farmers hardly, if ever, revert back to forests as they are continuously cultivated until the soils are very degraded. Most grasslands in the Philippines are formed in this manner.

2 This section was adapted from Lasco et al. (2001).

62 Carbon budgets of tropical forest ecosystems in Southeast Asia: implications for climate change Clearing of secondary forest areas for pasture could also have happened in the past; however, it is more likely that pasture areas were former upland farms. When abandoned, pasture areas remain grasslands because of very poor soils and regular burning. If fire is controlled, studies and observations have shown that grasslands can return to secondary forests through natural succession (Friday et al. 1999). Secondary forests could become brushlands as a result of continuous cutting of trees, mostly illegal. Brushlands contain about 20 percent forest cover or less. If further denuded, they could become grassland areas. However, if disturbance ceases, they revert back to secondary forests. Finally, secondary forests could also be converted to tree plantations. This is not allowed anymore at present, but could have been significant in the past. Tree plantations rarely return back to natural forests. The case of the Philippines is not unique. In many countries in the region, forest conversion starts with selective logging and ends with degraded pastures and grasslands (Detwiler and Hall 1988).

C budgets of forest ecosystems and their potential for C sequestration

Tropical forests contain a significant amount of C in the biomass, necromass and in the soil. In tropical Asia, 41Ð54 Pg C and 43 Pg C are found in vegetation and soils respectively (Dixon et al. 1994). Annual C flux from tropical Asian forests is estimated at -0.50 to -0.90 Pg y-1. In terms of their potential to mitigate carbon from the atmosphere, the amount of C that could be sequestered in above-ground biomass of the technically suitable present forest lands in Asia is estimated to be about 15 Pg or an average of 88 Mg C ha-1 (Iverson et al. 1993). Another study showed that Southeast Asian countries have the potential to sequester 9.0 Pg to 21.0 Pg of C from 1995 to 2050 in 66 M ha through forest regeneration, farm forestry and plantation development (Table 3).

Table 3. Potential C sequestration of regeneration, farm forestry and plantation development activities in Southeast Asia (from Trexler and Haugen 1994) Regeneration Farm forestry Plantation Total C stored (Tg C) Country (000’ha) (000’ha) (000’ha) (000’ha) Low High Indonesia 20 000 5 000 10 000 35 000 5 400 14 000 Laos 10 000 1 000 2 000 13 000 530 1 000 Malaysia 6 000 500 400 6 900 1 000 1 900 Myanmar 13 000 1 000 500 14 500 390 950 Philippines 5 000 3 000 1 000 9 000 840 1 600 Thailand 4 000 4 000 1 000 9 000 170 630 Viet Nam 8 000 0 4 000 12 000 620 1 300 Total 66 000 14 500 18 900 99 400 8 950 21 380

CARBON BUDGETS FOLLOWING LOGGING OPERATIONS IN NATURAL FORESTS

Carbon stocks and rate of sequestration of natural forests in Southeast Asia

Using GIS, Brown et al. (1993) estimated that in 1980 the average C density for tropical forests in Asia was 144 Mg ha-1 of actual biomass, and 148 Mg ha-1 in soils (up to 100 cm) which corresponds to total estimates of 42 and 43 Pg respectively, for the whole continent. It was noted that C densities and pools in vegetation and soil varied widely by ecofloristic zone and country. Actual biomass C densities range from less than 50 to more than 360 Mg C ha-1 with most forests having 100Ð200 Mg C ha-1. The higher biomass is in Borneo and Irian Jaya (Indonesia) while there was lower biomass C in forests in India and Thailand. C densities in soils range from 60 to 160 Mg ha-1. A similar study by Iverson et al. (1993) reported an average maximum C stock in present forest lands in tropical Asia of 185 Mg C ha-1 with a range of 25 to more than 300 Mg C ha-1. On the other hand, Palm et al. (1986), as reported by Houghton (1991), found out that forests in tropical Asia have C density of 40Ð 250 Mg ha-1 and 50Ð120 Mg ha-1 in vegetation and soils respectively (Table 4). Brown et al. (1991) reported that Southeast Asian forests have a biomass range of 50Ð430 Mg ha-1 (25Ð215 Mg C ha-1) and >350Ð400 Mg ha-1 (175Ð200 Mg C ha-1) before human incursion. For national GHG inventories, the IPCC (1996) recommends a default value of 275 Mg C ha-1 for wet forests in Asia.

Rodel D. Lasco and Florencia B. Pulhin 63 Table 4. Carbon in vegetation and soils of forest ecosystems in tropical Asia (from Palm et al. (1986) as cited by Houghton (1991)) Carbon pool Tropical moist forest Tropical seasonal forest Tropical dry forest Vegetation (Mg ha-1) High biomass 250 150 60 Low biomas 135 90 40 Soils (Mg ha-1) 120 80 50

There are limited data on carbon densities of natural forests in specific Southeast Asian countries. Most of the recent studies have been reported for Indonesia and the Philippines. These studies are largely based on the use of allometric equations to estimate tree biomass (e.g. equations from Brown (1997)). Indonesian forests have C density ranging from 65 to 390 Mg C ha-1 (Table 5).

Table 5. Biomass and C density of natural forests in Indonesia Biomass density C density Forest type Source (Mg ha-1) (Mg C ha-1) Primary humid evergreen 600–650 300–325 Murdiyarso and Wasrin 1995 Montane 450–700 225–350 Murdiyarso and Wasrin 1995 Lower montane 505 253 Murdiyarso and Wasrin 1995 Lowland dipterocarp 322 161 Murdiyarso and Wasrin 1995 Swamp forest 500 250 Murdiyarso and Wasrin 1995 Mangrove 130 65 Murdiyarso and Wasrin 1995 Natural forest 254 Noordwijk et al. 2000 Undisturbed forest 390 Hairiah and Sitompul 2000

On the other hand, recent studies report that Philippine natural forests contain 86Ð201 Mg C ha-1 (Table 6). The IPCC Revised Guidelines (IPCC 1996) estimates that old-growth forests in the Philippines contain 370Ð520 Mg ha-1 of above-ground biomass equivalent to about 185Ð260 Mg C ha-1 at 50 percent C content.

Table 6. Biomass and C density of natural forests in the Philippines Biomass density C density Forest type Source (Mg ha-1) (Mg C ha-1) Old growth forests 446 201 Lasco et al. 1999 Mossy forest 419 189 Lasco et al. 2000 Mangrove forest 409 184 Lasco et al. 2000 Pine forest 191 86 Lasco et al. 2000

For Thailand, it is reported that the various types have a C density ranging from 72 to 182 Mg C ha-1 (Table 7). A similar data set for Thailand is presented in Table 8. These C data are used in the national GHG inventory reports of the country.

Table 7. Above-ground biomass and C density of various forest types in Thailand (Boompragob 1998) EGF MDF DDF PF MF C content, % 54 52 49 48 55 Above-ground biomass (Mg ha-1) 337 266 126 160 200 C density (Mg ha-1) 182 138 62 77 110 (from various sources; C density calculated based on 50 percent C content) EGF – tropical evergreen forest; MDF – mixed deciduous forest; DDF – dry dipterocarp forest; PF – pine forest; MF – mangrove forest

Table 8. Biomass and C density of forests in Thailand (from Macandog 2000b) Forest type AGB (Mg ha-1) C density (Mg ha-1) Source of AGB data Tropical evergreen forest (EGF) 358 179 Ogawa et al. 1965 Mixed deciduous forest (MDF) 311 156 Ogawa et al. 1965 Dry dipterocarp forest (DDF) 126 63 Ogawa et al. 1965 Pine forest (PF) 162 81 Sabhasri 1978 Mangrove forest (MF) 200 100 Aksornkoae et al. 1972 C density calculated based on 50 percent C density.

64 Carbon budgets of tropical forest ecosystems in Southeast Asia: implications for climate change Malaysian forests have C density ranging from 100 to 160 Mg C ha-1 and from 90 to 780 Mg C ha-1 in vegetation and soils respectively (Table 9). Cairns et al. (1997), citing various sources, reported that mature lowland forests have above-ground biomass and root density of 431 and 43 Mg ha-1 respectively, equivalent to 216 and 22 Mg C ha-1 respectively.

Table 9. Carbon density of various forest types in Malaysia (Abu Bakar 2000) Forest type Area Carbon density (Mg ha-1) Total C (M ha) Vegetation Soil Total (Mt) Dipterocarp Superior 0.831 260 100 360 299 Good 1.116 220 100 320 357 Moderate 1.466 190 100 190 425 Hill Partly exploited 1.268 160 100 260 330 Disturbed 1.714 130 100 230 390 Poor edaphic and upper hill 0.701 130 90 220 154 Swamp 0.815 100 780 880 717 Mangrove 0.150 130 320 450 68 Total 8.061 2744

Carbon budgets of forest ecosystems after logging operations

Natural forests in the Southeast Asian region have been one of the world’s foremost sources of tropical hardwoods. Logging activities are therefore dominant in many countries. As discussed earlier, logging operation is primarily responsible for the conversion of primary forests to secondary forests. Destructive logging and subsequent agricultural conversion have vastly depleted natural forests and left millions of hectares of degraded lands in each country. Some countries, notably Thailand and the Philippines, have banned logging operations in primary forests. In general, logging leads to a reduction of C stocks in the forest as biomass is reduced by the extraction of wood. C is released upon the decomposition or burning of slash and litter. However, regenerating trees sequester C back to biomass over time. In general, the biomass and C density of tropical forests in Asia decline by 22Ð67 percent after logging (Table 10).

Table 10. Biomass and C (in parenthesis) density (Mg C ha-1) of tropical forests in Asia (Brown and Lugo 1984) Closed – broadleaf Closed – conifer Open forest Undisturbed – productive 196.3 (98.2) 144.9 (72.5) 79.0 (39.5) Logged 93.2 (46.6) 112.5 (56.3) 26.32 (13.16) % Decline 53 22 67

In the Philippines, we studied the carbon density of logged-over forest plots with varying ages after logging (Lasco et al. 2000). Right after logging, C density declined to about 50 percent of the mature forest (198 Mg C ha-1). There was no other similar study in other Southeast Asian countries which tracks the decline of C density after logging. However, measurements have been taken in logged-over forests which could be compared to primary forests in those countries. In Indonesia, estimates of C density of logged-over forests range from 38 to 75 percent of the original forest cover (Table 11).

Table 11. Carbon density after logging of Indonesian forests AGB C density (Mg ha-1)% of Source Undisturbed Logged original C Hairiah and Sitompul 2000 390 148.2 38 Noorwijk et al. 2000 254 150 59 Murdiyarso and Wasrin 1995 325 245 75

As can be gleaned from above, logging is typically a very destructive practice. In Malaysia, extracting 8Ð15 trees (80 m3; ca. 22 Mg C ha-1) damaged as many as 50 percent of the remaining trees (Putz and Pinard 1993). Out of the initial 348 Mg C ha-1, 95 Mg C ha-1 are transformed to necromass, which eventually releases its C via decomposition. In the Philippines, for every tree cut greater than 75 cm dbh, 1.5 and 2.6 trees are damaged in favourable and unfavourable conditions respectively (Weidelt and Banaag 1982).

Rodel D. Lasco and Florencia B. Pulhin 65 However, numerous studies have shown that logging damage can be significantly reduced by directional felling and well-planned skid trails (Putz and Pinard 1993). These practices are collectively known as reduced- impact logging (RIL). The effect of RIL on C conservation has been thoroughly investigated in a study conducted in Sabah, Malaysia, as reported by Pinard and Putz (1997, 1996). The rest of this section is based on their reports. The biomass and C density are very similar before logging operations (Table 12). About one year after logging, forest areas logged conventionally and under RIL contained 44 percent and 67 percent of their pre- logging biomass respectively (Table 13). The C density of RIL was 88 Mg C ha-1 higher than conventional logging. In terms of logging damage, in RIL about 27 percent of trees >10 cm dbh were damaged and about 19 percent were dead within the first year after logging. In contrast, in conventional logging, about 54 percent were damaged and about 46 percent died. Expectedly, there was 86 Mg C ha-1 less necromass in RIL compared to conventional logging (Table 14), which will translate to lower CO2 emissions from decomposition. After logging, biomass C is projected to decline in both areas for 2Ð6 years because of high mortality rates and decay of logging debris. Following stabilization of mortality rates, biomass accumulation will be greater in RIL areas. Indeed, they will become net sinks in fewer years than conventional logging. Modelling showed that during the 40-year project life span, about 90 Mg C ha-1 will exist in forest biomass due to RIL. Of these, 55 percent will be present 10 years after logging due to less damage.

Table 12. Above- and below-ground biomass of dipterocarp forest in Ulu Segama Forest Reserve, Sabah, Malaysia, before logging (SD, number of plots or logging units) Conventional logging Reduced-impact logging Trees > 60 cm dbh 190 (35, 4) 190 (53, 4) Trees 40 – 60 cm dbh 53 (20,4) 46 (6.5, 4) Trees 20 – 40 cm dbh 46 (2.5, 4) 46 (6.3, 4) Trees 10 – 20 cm dbh 21 (2.7, 4) 23 (2.8, 4) Trees <10 cm dbh 13 (2.0, 4) 12 (2.0, 4) Vine biomass 7.6 (3.8, 4) 7.6 (3.8, 4) Understorey biomass 2.87 (1.50, 45) 2.94 (1.67, 45) Butt root biomass 26.8 (6.2, 4) 24.5 (5.7, 4) Coarse roots (alive) 35.9 (33.0, 40) 39.4 (38.7, 40) Coarse roots (dead) 1.6 (2.6, 30) 1.8 (3.5, 26) Fine root biomass 2.57 (1.30, 31) 2.74 (1.43, 18) Total mean (SD) biomass before logging 399 (40) 394 (59) C density 196* 194* C content= 49.2%.

Table 13. Above- and below-ground biomass (and necromass) for the two logging treatment areas 8 –12 months after logging; for coarse roots, three months after logging. Means (Mg ha-1) presented with SD and N noted parenthetically. For trees, vines, and butt root mass, SD describes variation among logging units and does not incorporate errors in biomass equations Conventional logging RIL Trees > 60 cm dbh 49 (15,4) 100 (16, 4) Trees 40 – 60 cm dbh 37 (13,4) 41 (4.9, 4) Trees 20 – 40 cm dbh 29 (5.0, 4) 42 (7.0, 4) Trees 10 – 20 cm dbh 11 (2.7, 4) 16 (3.6, 4) Trees <10 cm dbh 6.9 (1.2, 4) 9.8 (1.8, 4) Vine 2.6 (1.1, 4) 0.99 (0.49, 4) Understorey (skid trails) 0.30 (0.38, 40) 0.82 (0.97, 30) Understorey (disturbed forest) 1.24 (1.02, 60) 1.17 (1.03, 45) Butt root 11.53 (3.0, 4) 17.39 (2.73, 4) Coarse roots (skid trails—alive) 2.80 (6.08, 20) 1.81 (3.75, 20) Coarse roots (skid trails—dead) 2.58 (3.32, 20) 8.28 (15.0, 20) Coarse roots (disturbed forest—alive) 28.1 (30.2, 20) 30.0 (36.8, 20) Coarse roots (disturbed forest—dead) 0.98 (1.43, 20) 4.08 (14.8, 20) Mean (SD) total biomass after logging 176 (34) 264 (40) C density 86 130

66 Carbon budgets of tropical forest ecosystems in Southeast Asia: implications for climate change Table 14. Mean (SD) Mg biomass per ha converted to necromass. SD describes variation among four logging units and does not incorporate error in biomass equations Conventional logging units RIL units 50% of extracted timber 32.22 (4.4) 25.50 (1.12) Branches, stumps, and butt roots of extracted trees 67.14 (9.76) 45.93 (22.96) Destroyed trees (uprooted and crushed) 67.49 (45.68) 14.28 (9.56) Damaged trees dead within one year after logging 7.20 (6.90) 4.01 (5.00) Lianas destroyed 5.05 (3.23) 6.61 (3.3) Understorey plant death 1.74 (1.77) 1.78 (1.94) Coarse root death (excluding butt roots) 10.8 (42.39) 10.4 (48.47) Total necromass produced 192 (37) 108.5 (22.5) Mean (SD) difference between two logging methods 86 (43) Mg necromass per ha

CARBON BUDGETS FOLLOWING CONVERSION FROM FOREST TO NON- FOREST COVER Impact of deforestation on carbon budgets

As discussed earlier, deforestation is a major land-use change in Southeast Asia. There are no studies that directly track the change in C budget through the deforestation process. However, there are studies that have quantified the C stocks in deforested lands, typically covered with grasslands or annual crops. In Indonesia, various reports show that above-ground C density in grasslands and shifting cultivation areas is less than 40 Mg C ha-1 (Table 15). In the Philippines, grassland and crop lands contain 3.1 to 13.1 Mg C ha-1. In both countries, these are vastly lower than the C density in the natural forests they replaced. Soil organic carbon (SOC) may also be affected by the change in land use. However, no data are available for Southeast Asia. In general, many studies have shown that continuously cultivated systems have lower SOC than adjacent forests (Lugo and Brown 1993). However, pasture areas can accumulate as much C in the soil as adjacent natural forests.

Conversion to tree plantations and perennial crops

Natural forest areas, usually after commercial logging, can be converted to plantations of forest trees or perennial crops. This land-use change is expected to reduce C stocks. There are no studies that directly measure the change of C stocks as a result of this change through time. However, by comparing the C stocks of the resulting land use with the C stocks of a natural forest, we can have an idea of the magnitude of change. This kind of comparison is of course preliminary as the C stocks vary with age of the plantation and the site characteristics. In a multi-country study, tree and agricultural plantations have C stocks that are 7Ð51 percent lower than natural forests (Table 16). Similarly, another study in Indonesia showed that agroforestry and plantation farms had C stocks that are 4Ð66 percent lower than that of an undisturbed forest (Table 17). These data also show how C stocks vary with the age of rubber plantation, with older rubber agroforests having almost seven times more C than a 5-year-old plantation.

Table 15. Above-ground biomass density of grasslands and annual crops in Indonesia and the Philippines AGB carbon density Land cover Reference (Mg C ha-1) Indonesia • Chromolaena sp. 4 Sitompul and Hairiah (2000) • Imperata sp. 1.9 Gintings 2000 • Cassava 1.7 • Cassava/Imperata sp. 74 Noordwijk et al. (2000) • Upland rice/bush fallow rotation 39 • Cultivated agricultural lands 5 Murdiyarso and Wasrin (1996) • Shifting cultivation 15–50 • Grasslands 15–20 • Grasslands 6.0 Prasetyo et al. (2000) Philippines • Imperata sp. 8.5 Lasco et al. (1999) • Sacharrum sp. 13.1 • Rice 3.1 • Sugarcane 12.5 • Banana 5.7 • Imperata sp. 1.7 Biomass from Lachica-Lustica (1997); converted to C

Rodel D. Lasco and Florencia B. Pulhin 67 Table 16. C density of tree and agricultural plantations in the Philippines and Indonesia Carbon density % of Category Source of data (Mg C ha-1) natural forest Philippines • Mahogany 264 51 Lasco et al. (2000) • Legumes 240 46 • Dipterocarp 221 43 • Acacia sp. 81 16 • Teak 35 7 Natural forest 518

Indonesia • Oil palm (10 y) 62 19 Sitompul and Hairiah (2000) • Oil palm (10 y) 31 10 • Oil palm (14 y) 101 31 Soekisman and Mawardi (2000) • Oil palm (19 y) 96 30 • Coffee 18 6 Natural forest 325

Table 17. C stocks of agroforestry and plantation farms in Jambi and Lampung, Indonesia (C density data from Sitompul and Hairiah 2000) Land use C density (Mg C ha-1) % of undisturbed Forest Undisturbed rain forest 390 Opening for agriculture: With burning 257.4 66 Without burning 81.9 21 Mature agroforest (rubber jungle) 104 27 5-y-old rubber 15.6 4 Oil palm plantation 62.4 16 Coffee mixed garden 18 5

In a lowland peneplein in Indonesia, rubber and oil palm plantations were estimated to contain 36Ð 46 percent of the C of the natural forest (Table 18) while various land-cover types in Indonesia were estimated to contain 14Ð63 percent of the C density of a natural forest (Table 19). These land-cover types are briefly described below:

¥ rubber jungle: rubber and secondary vegetation; Jambi Province (Prasetyo et al. 2000); ¥ home gardens: cultivation of annual and perennial crops on the same piece of land near the house (Sitompul and Hairiah 2000). The data presented is from Malang; ¥ oil palm: 19-year-old plantation; soil organic C 48.3 Mg ha-1 (Tjitrosemito and Mawardi 2000); ¥ cinnamon: part of 10-ha demo plots in Sarolangun Bangko district; in vast areas of degraded grassland (recovery); 7-year-old plantation (Gintings 2000); ¥ Acacia mangium: 9-year-old plantation (Siregar et al. 1998).

Table 18. Time-averaged C stocks for lowland peneplein in Indonesia (above-ground biomass and top 30 cm soil) (age and C data from Noordwijk et al. 2000) Maximum age Time averaged C stock % of Land-use system (y) (Mg ha-1) natural forest Natural forest 120 254 Rubber agroforests 40 116 46 Rubber agroforests with 30 103 41 selected planting material Rubber monoculture 25 97 38 Oil palm monoculture 20 91 36

68 Carbon budgets of tropical forest ecosystems in Southeast Asia: implications for climate change Table 19. C density of various land cover in Indonesia C density % of Land cover Source of data (Mg C ha-1) natural forest* Rubber jungle 35.5 14 Praetyo et al. 2000 Home gardens 70–80 20** Sitompul and Hairiah 2000 Oil palm (30 y) 40.3 16 Tjitrosemito and Mawardi 2000 Cinnamon 77 30 Gintings 2000 87 34 Gintings 2000 A. mangium 159 63 Siregar et al. 1998 Natural forest 254 Noordwijk et al. 2000 * Natural forest assumed to contain 254 Mg C ha-1 based on Noordwijk et al. 2000. ** Calculated by Sitompul & Hairiah (2000).

In Mindanao, Philippines, tree plantations of fast-growing species contain 3Ð45 percent of the C of a natural dipterocarp forest (Table 20). On the other hand, a mature coconut plantation in Leyte Province contains 86 Mg C ha-1 in above-ground biomass (Lasco et al. 1999), which is about 43 percent of a natural forest in the same area (259 Mg C ha-1; Lasco et al. 2001).

Table 20. C density of tree plantations in Mindanao, Philippines Species Age AGB C density % of (y) Mg ha-1 Mg C ha-1 dipterocarp forest Albizia falcataria 1 4 69.5 31.28 26 A. falcataria 2 5 75.6 34.02 28 A. falcataria 3 7 96.4 43.38 36 7 8.1 3.65 3 A. falcataria 4 9 108.2 48.69 41 9 28.7 12.92 11 Gmelina arborea 1 7 85.7 38.57 32 G. arborea 2 9 87.4 39.33 33 G. arborea 3 9 120.7 54.32 45 Dipterocarp* 265.4 119.43 * Harvested 20 years ago. Biomass data from Kawahara (1981); C content assumed to be 45 percent (Lasco and Pulhin 2000)

Agroforestry systems have been widely promoted as an alternative technology to slash-and-burn farming. They involve planting of tree and perennials in conjunction with agricultural crops. Various forms of agroforestry exist in the Philippines (Lasco and Lasco 1989). A Leucaena leucocephala fallow field in Cebu, Philippines, has a mean C density of 16 Mg C ha-1 during its 6-year cycle (Table 21). This is very low compared to natural forests in the country. A coconut-based multistorey system in Mt. Makiling has a C density in AGB of 39 Mg C ha-1 (Zamora 1999) which is only about 15 percent of the C of adjacent natural forests.

Table 21. C density and MAI of a Leucaena leucocephala fallow field in Cebu, Philippines (from Lasco and Suson 1999) Years Mean dry wt. of Annual rate of C C in Biomass under above-ground biomass % leaves accumulation (tonnes ha-1) fallow (tonnes ha-1) (tonnes ha-1y-1) 1 4.3 d 36.5 2.2 2.2 2 16.1 cd 13.8 8.1 5.9 3 17.6 cd 8.9 8.8 0.7 4 36.4 bc 7.4 18.2 9.4 5 53.8 ab 5.3 26.9 8.7 6 63.6 a 6.1 31.8 4.9 Mean 32 16 5.3 Means in a column with the same letter are not significantly different using DMRT at 0.05.

In conclusion, it appears that tree and perennial crop plantations typically have C stocks in above- ground biomass that are less than 50 percent of that of natural forests they replace. In the process of converting natural forests to agricultural and tree plantations, burning is often used for site preparation. In Indonesia, changes in C stocks during land clearing from old jungle rubber/secondary forest for replanting rubber varied depending on whether burning is used (Noorwijk et al. 2000). “Slash and burn” lost 66 percent C from ca.

Rodel D. Lasco and Florencia B. Pulhin 69 80 to 25 Mg C ha-1 while “slash and mulch” (no burning) lost only 20 percent C (ca. from 110 to 90 Mg ha-1). In north Lampung, the biomass declined from 161 Mg ha-1 to 46 Mg ha-1 because of burning (Hairaih et al. 1999). This is equivalent to a loss of about 58 Mg C ha-1. Once tree and perennial crop plantations have been established, they begin to accumulate C. Noordwijk et al. (2000) reported C accumulation rate of 2.5 Mg C ha-1y-1 in natural fallows (secondary forests), agroforests and more intensive tree-crop production systems in Indonesia. An example of these is jungle rubber system (Hairiah and Sitompul 2000). Table 22 shows the rate of annual C accumulation by various forest plantations as used in the first Indonesian national communication to the UN Framework Convention on Climate Change (UNFCCC). It ranges from 0.50 to 12.50 Mg ha-1 y-1.

Table 22. Annual C accumulation rate of various forest plantations used in the national GHG inventory of Indonesia (State Ministry of Environment 1999) Annual growth rate Annual C accumulation Land-use type Species/forest type -1 -1 -1 (Mg ha ) (Mg C ha y ) Forest plantation Tectona grandis 3.90 1.95 (Java) Pinus merkusii 6.93 3.47 Swietenia spp. 7.97 3.99 Paraserianthes falcataria 19.07 9.54 Rimba 4.3 2.15 Timber estate Acacia spp. 25.00 12.50 (outside Java) Paraserianthes falcataria 19.07 9.54 Dipterocarp 5.78 2.89 Reforestation Pinus merkusii 6.93 3.47 Tectona grandis 2.41 1.21 Acacia spp. 25.00 12.50 Eucalyptus spp. 14.00 7.00 Others 6.82 3.41 Other forests Production forest 1.61 0.81 Conversion forest 2.11 1.06 Protection + conversion forest 2.78 1.39 Others 2.22 1.11 Afforestation Pinus spp. 6.93 3.47 Acacia spp. 25.00 12.50 Eucalyptus spp. 14.00 7.00 Paraserianthes falcataria 19.07 9.54 Others 4.30 2.15 Estate Hevea brasiliensis 12.00 6.00 Coconut 15.00 7.50 Oil palm 10.00 5.00 Others 1.00 0.50

A 7-y-old cinnamon plantation in Indonesia accumulates C at the rate of 4.49 to 7.10 kg C tree-1 (Table 23). In the Philippines, commercial tree plantations of fast-growing species sequestered C at the rate of 0.50Ð 7.82 Mg C ha-1 y-1 (Table 24). The next section also presents estimates of C density and rate of sequestration of reforestation/afforestation species .

Table 23. Rate of biomass and C accumulation (in kg) of a 7-y-old cinnamon plantation in Indonesia (Gintings 2000) Tree Root Biomass Total R/S C density MAI In Blui Tinggi 1 18.94 91.58 110.52 20.7 49.73 7.10 2 15.05 59.36 74.41 25.4 33.48 4.78 3 18.72 67.17 85.89 27.9 38.65 5.52 4 19.32 58.85 78.17 32.8 35.18 5.03 5 18.42 70.98 89.4 26.0 40.23 5.75 In Bukit Suban 1 10.8 45.54 56.34 23.7 25.35 3.62 2 12.03 72.61 84.64 16.6 38.09 5.44 3 13.23 88.03 101.26 15.0 45.57 6.51 4 7.01 62.81 69.82 11.2 31.42 4.49 5 7.18 64.7 71.88 11.1 32.35 4.62

70 Carbon budgets of tropical forest ecosystems in Southeast Asia: implications for climate change Table 24. MAI of biomass and carbon of tree plantations in Mindanao, Philippines Biomass MAI C MAI Species Age (y) (Mg ha-1y-1) (Mg C ha-1y-1) Albizia falcataria 1 4 20.20 7.82 A. falcataria 2 5 11.20 6.80 A. falcataria 3 7 8.40 6.20 7 2.20 0.52 A. falcataria 4 9 5.30 5.41 9 3.70 1.44 Gmelina arborea 1 7 11.30 5.51 G. arborea 2 9 10.50 4.37 G. arborea 3 9 9.60 6.04 Sweitenia macrophylla 16 19.60 7.33 Natural forest* 100 4.90 1.19 * Harvested 20 years ago; assumed to be 100 years old. Biomass data obtained by destructive sampling (Kawahara et al. 1981).

Soil organic matter/carbon (SOM/SOC) is also affected by the change in land use. C in the soil is a significant pool. It has the longest residence time among organic C pools in the forest (Lugo and Brown 1993). However, the exact effect of land-use change on SOC is largely unknown in tropical forests, specially the rates and direction of change. Below are the available data in the Southeast Asian region, mainly from Indonesia and some from the Philippines. In north Lampung, Indonesia, the total LUDOX fraction of SOC was reduced by 70Ð80 percent under degrading situations (burnt Imperata; sugarcane with burning; forest plantation with bulldozer for land clearing) in the top soil (0Ð5 cm), 8Ð10 years after converting the forest without effort of maintaining SOM (Murdiyarso et al. 1996). The methods of forest conversion also has big impact on SOM: slash-and-burn practices on forest plantation reduced total LUDOX fraction about 50 percent which may be due to washing away of the SOM during high intensity rainfall. On the other hand, clearing the forest using bulldozer reduced LUDOX fraction by about 70 percent. Planting fast-growing species like P. falcataria increased LUDOX fraction at 0Ð5 cm by about five times higher than forested area. However, a mixed plantation of P. falcataria and A. magium reduced total LUDOX fraction up to 50 percent compared to forest. In the Rantau Pandan site, a newly developed cinnamon plantation reduced SOM by 30 percent while cassava plots increased SOM. In the Sitiung site, Imperata grass with regular burning after years of intensive cultivation also had great reduction of SOM. In another study, tree plantations in Indonesia also have lower SOC density than natural forests (Table 25). In the Philippines, a coconut plantation was found to have about half the SOC density of a natural forest (111 Mg C ha-1 vs 191 Mg C ha-1) (Lasco et al. 1999).

Table 25. SOC at various depth and land use (Siregar and Gintings 2000) Organic C C density Land use % (Mg ha-1) Mineral soil, dipterocarp forest, LOA 0–10 cm 2.6 26 10–20 cm 1.0 10 Mineral soil, dipterocarp forest, buffer zone 0–10 cm 7.0 70 10–20 cm 1.3 13 Mineral soil, Shorea polyandra 25 year old plantation 0–10 cm 2.4 24 10–20 cm 1.2 12 Mineral soil, dipterocarp forest, seriously damaged 0–10 cm 1.8 18 10–20 cm 1.1 11 Mineral soil, Eucalyptus deglupta, 2-y-old plantation, sandy and acid soil 0–10 cm 1.7 17 10–20 cm 1.0 10

Rodel D. Lasco and Florencia B. Pulhin 71 IMPLICATIONS FOR CLIMATE CHANGE AND THE CDM

Land use, land-use change and forestry (LULUCF) activities, mainly tropical deforestation, are significant -1 -1 net sources of CO2, accounting for 1.6 Pg y out of the total anthropogenic emissions of 6.3 Pg y (Houghton et al. 1996, Watson et al. 2000). The preceding discussion shows how logging activities, deforestation and land-use change affect the C stocks of tropical forests in SE Asia. Lowering of C stocks in terrestrial ecosystems means a corresponding increase of C emissions to the atmosphere. Significant C is emitted to the atmosphere as a result of forest disturbance and clearing. As expected, deforestation causes the highest C emissions, more than 90 percent of the above-ground C stocks of a natural forests being lost. If the land is not reforested, these losses become permanent addition to the CO2 concentration in the atmosphere. Logging also results in a loss of about 50 percent of C stocks. However, the C could be reabsorbed if the forests are allowed to regenerate. The biomass may not reach the level of the primary forest if there is overcutting or premature cutting. Conversion of natural forests to plantations will also increase C emissions as the forest is cleared. The C could also be reabsorbed as plantation crops grow. However, the C stocks are usually lower in plantations compared to the natural forests they replace. In 1997, during the Third Conference of Parties (COP), the Kyoto Protocol was drafted, which is the first international agreement that places legally binding limits on GHG emissions from developed countries (UNFCCC 1997). The Protocol also provides for flexible mechanisms to meet carbon reduction obligations. The most relevant to developing countries is the Clean Development Mechanism (CDM) contained in Article 12. Essentially, the CDM allows Annex 1 (developed) countries to meet their carbon reduction quota via activities in developing countries (non-Annex 1 countries). Two forestry activities are allowed under the first commitment period: reforestation and afforestation. The CDM provides a way for developing countries to be more actively involved in the mitigation of GHG in the atmosphere, short of actual reduction commitments. But perhaps more importantly in the short term, developing countries stand to benefit from the CDM through investment inflow and technology transfer that will support their respective sustainable development agenda (Frumhoff et al. 1998). The CDM offers an opportunity for SE countries with wide areas of barren lands to generate resources for their reforestation and thereby reabsorbed the C emitted from these lands due to deforestation. In addition, many social and environmental co-benefits could accrue as a result of reforestation activities. For example, the Philippines, with its wide areas of land needing reforestations stands to benefit in the CDM, should it decide to participate. There are anywhere from 2 to 9 M ha of denuded and degraded upland areas that need immediate rehabilitation (Lasco and Pulhin 2000). These areas were former tropical forests but are now mainly grasslands, brushlands and cultivated farms. At the present rate or reforestation (less than 100 000 ha y-1), it will take more than 100 years to fully rehabilitate these areas. In addition, up to 19 million people are living in the uplands, half of whom rely on some form of shifting cultivation. By reforesting these lands, the country could potentially reap many co-benefits: income-generation, soil conservation, watershed rehabilitation, biodiversity conservation, etc.

CONCLUSION

On the basis of the foregoing review of C budgets with harvesting and land-cover change, the following conclusions emerge:

¥ C density in above-ground biomass declines by at least 50 percent after logging. ¥ Deforested areas covered with grasses and annual crops have C density less than 40 Mg C ha-1, much lower than natural forests. ¥ Conversion of natural forests to tree plantations and perennial crops reduces C density by at least 50 percent relative to natural forests. ¥ Most studies conducted to estimate C density relied on allometric equations derived globally rather from within the country. ¥ SOC declines with deforestation and conversion of natural forests to plantations. ¥ There are still limited data on the C dynamics of tropical forests in Southeast Asia. Most of the existing data are on above-ground biomass C; there are less data on below-ground C in roots and soil.

72 Carbon budgets of tropical forest ecosystems in Southeast Asia: implications for climate change In spite of the rise of available information in the last few years, there is clearly much more that needs to be done. It has to be noted that many research results are found in “grey literature”. In addition, many of the biomass and C data are based on extrapolation using allometric equations (mainly from Brown (1997)) rather than primary data collection. The following research topics need to be further pursued:

¥ generation of country-specific allometric equations for biomass and C density; ¥ assessment of C dynamics associated with key land-use/cover change; ¥ comprehensive C stocks assessment of LULUCF activities including above- and below-ground biomass and soils; ¥ effects of silvicultural treatments and management practices on C budgets of forest ecosystems.

BIBLIOGRAPHY

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Rodel D. Lasco and Florencia B. Pulhin 75

Forests for poverty reduction in Nepal: 9 policies, programmes and research

Ramesh Shakya*

ABSTRACT

About 40 percent of the total land of Nepal is forested. The poorest of the poor people of the country live in and around the forest land. The main goal of the Ninth and Tenth Five-Year Periodic Plan is “poverty alleviation or reduction”. The community forestry policy introduced more than two decades ago focused mainly on the management of the forests or forest resources for the daily needs of the local communities. Income generating activities were not envisaged in the community forestry. The Leasehold Forest Policy introduced in early 1990s focused on income generation activities in the forest land. The Leasehold Forestry Programme focused mainly on poverty reduction in the mid-1990s and more on farming programmes to help the poorest of the poor people from late 1990s. A new policy has been set to include the Leasehold Forestry Programme within the Community Forestry Programme. The activities in the Leasehold Forestry Programme will be focused on income generating activities. More than 18 percent of the total land of the country is designated as protected areas where the government has given emphasis on biodiversity conservation and ecotourism. Nepal is rich in biodiversity which could be an asset for poverty alleviation, namely ecotourism and sustainable management of medicinal and aromatic plants and non-timber forest products (NTFPs). The Nepal Biodiversity Strategy has been prepared for the conservation of biodiversity. However, biodiversity in the country is closely linked to the livelihoods and economic development of most of the people. Research in the past has focused more on traditional aspects and very little on socio-economic and cultural aspects of the forest. There is a need to identify the research gap for formulating and implementing programmes and activities in sustainable development and conservation of the environment.

BACKGROUND

The forestry sector plays an important role in Nepal’s economic development and ecological stability because about 40 percent of the total land is forested. The poorest of the poor people of the country live in and around the forest land. Forestry contributes significantly by its protective, regulative, and productive functions. Nepal’s rural economy depends basically on forestry because the farming system of the country is forest based. The Agriculture Perspective Plan has indicated that three hectares of forest are needed to cultivate one hectare of agricultural land. The agriculture sector has occupied more than 24 percent of the total area of the country, so in order to maintain the fertility of the agricultural land 22 percent or more needs to be covered with trees to supply forest products to the growing population. The protective functions of forest include protecting the land/soil from degradation due to rain, wind and radiation, and protecting the flora and fauna from overexploitation. The regulative functions of forest include absorption, storage and release of carbon, oxygen, water, nutrients, radiant and thermal energy. Even the adverse effects of sound and wind can be absorbed by forest belts. The production functions of forest include a number of economic goods and services. The goods are fuelwood used as energy for cooking, poles and timber for housing, furniture, and posts; and the bulk of the farmers’ plough and agricultural tools are all made of wood. Similarly, fodder, bedding material,

* Department of Forest Research and Survey, Kathmandu, Nepal; E-mail: [email protected], [email protected]

77 grasses, charcoal, essential oils, resins, gums, honey, katha, kutch, medicinal herbs, fruits, seeds, pulp and paper, fibre, canes and bamboos also come from the forest. Services from the forests include conservation of soil and water, preservation of biodiversity, enhancement of landscape, aesthetic value, recreation, ecotourism, etc. Forests provide over 70 percent of the rural energy requirement. It is estimated that forests contribute 40 percent total digestible nutrient (TDN) as a source of food to the livestock. Soil and watershed management programmes provide technology for optimum land use as well as retain land productivity and ground water recharge. For tourism industry to flourish, development of the forestry sector is important. Management of national parks, wildlife reserves, conservation areas and plant resources contribute to the conservation of biodiversity and in improving the livelihoods of the people. About 18 percent of country’s area has been put in protected area management to conserve biodiversity. The forested area of the country is only 0.15 percent of the world’s total forest area (FAO 1993), but it contains 118 ecosystems, 75 vegetation types and 35 forest types, 5160 flowering plants (i.e. over 2 percent of flowering plants in the world), 6 percent of insects (4500 species, out of which 641 are butterfly species only), 8 percent of birds (844 species), 4 percent of mammals (181 species), 100 species of reptiles, 43 species of amphibians and 185 species of fish (BPPN 1996). Recently published forest statistics of the country indicate that the forest area is declining. According to the Forest Resources of Nepal, 1999, out of the total land area of 14.72 million ha, forest covers about 4.27 million ha (29.0 percent) and shrub covers 1.56 million ha (10.6 percent). Both forest and shrub together cover 39.6 percent of the total land of the country. In comparing the new results with the Land Resource Mapping Project results from 1978/79, in the Terai, forest area has decreased at an annual rate of 1.3 percent from 1978/79 to 1990/1991. In hilly area, forest area has decreased at an annual rate of 2.3 percent from 1978/79 to 1994, whereas forest and shrub together decreased at an annual rate of 0.2 percent. In the whole country, from 1978/79 to 1994 forest area has decreased at an annual rate of 1.7 percent. Most of the forests are under natural forest as the total plantation in the country is estimated to be less than 0.25 million ha. The per capita forest area is 0.025 ha (Shrestha and Nepal 2002). Forest and shrub cover of the country by development region is presented in Table 1 below:

Table 1. Forest and shrub areas by development region (ha) Total land Forest Forest % Shrub Shrub % Forest Region* area area of total area of total and shrub (ha) (ha) land area (ha) land area total % FWDR 1 953 900 687 400 35.2 263 900 13.5 48.7 MWDR 4 237 800 1 192 400 28.2 442 000 10.4 38.6 WDR 2 939 800 7 343 000 25.0 256 900 8.7 33.7 CDR 2 741 000 916 600 33.5 233 800 8.5 42.0 EDR 2 845 600 736 100 25.9 362 600 12.7 38.6 Total 14 718 100 4 268 800 29.0 1 559 200 10.6 39.6 Source: DFRS (1999). * FW = far-western, MW = mid-western, W = western, C = central, E = eastern, DR = development region

The total population of the country is over 23 million (CBS 2001). More than 70 percent of the population depend on agriculture. The per capita GNP of the country in 1997 was US$220 (CBS 2001). The per capita GDP in 2001 was US$240 with an annual growth rate of 5.8 percent (NPC 2003). In the absence of recent national level household data (the last Nepal Living Standards Survey was carried out in 1996), it is difficult to provide an accurate and up-to-date measure of the Ninth Plan’s progress in reducing poverty. Preliminary estimates made in the context of the mid-term review of the Ninth Plan suggest that the poverty ratio declined the most in the central region (0.493), followed closely by the eastern (0.484) and western (0.479) regions. This is largely due to the fact that most of Nepal/s trading centers and productive economic activities are concentrated there. In contrast, the mid-western (0.402) and far-western (0.385) regions, far from the centre of power, have been traditionally neglected. Despite recent efforts to include them in the country’s modernization process, these areas (except for mid-western Terai) have also made the least progress in terms of the level of improvement in Human Development Index (HDI) between 1996 and 2000. All rural households derive much of their household income from agriculture (including earnings as paid farm labour) and also from non-agricultural sources through self employment and wage employment. But the dependence on agriculture is significantly higher for the poorer households. This is also suggestive of the fact that opportunities for non-agricultural employment are limited in rural areas; and with their low educational achievements and skills, it is difficult for the poor to obtain higher-paying non-farm employment and break out of the poverty cycle.

78 Forest for poverty reduction: policies, programmes and activities identification of research gaps in Nepal The foregoing evaluation of the Ninth Plan and the poverty situation clearly demonstrates that past development efforts have fallen behind to meet the expectations of poverty reduction. Poverty is more widespread particularly in rural areas, and deeper and more severe among women, ethnic groups and Dalits, and those living in backward areas—mid- and the far-western and mountain areas. Poverty could not be reduced to a desired level due to the failure to achieve high and sustained broad-based economic growth particularly in rural areas; inadequate human development commensurate with heightened desires and needs of the people, in large part due to less than satisfactory implementation of public actions to effectively provide essential social and economic services and infrastructure to the poor and backward communities and areas; poor accountability; economic malpractice; and poor monitoring of development programmes. The impact of development on the deprived areas and communities has been limited. In the absence of effective policies for ensuring social and economic inclusiveness, the poor and deprived communities could not come to the mainstream of the development process. In addition, the recent spells of violent activities and disorder have badly slowed down development and service delivery by the government. They have also adversely affected the poor and backward areas and communities even more than others (NPC 2003).

POLICIES

National Forestry Plan 1976

The National Forestry Plan 1976 was prepared and adopted by the Seventh Five-Year Plan. The policy objectives of the plan were to meet the people’s needs for forestry products, including timber, fuelwood and fodder, to maintain or restore the ecological balance through reforestation and watershed management programmes, and to derive maximum economic gains from forestry products by promoting the export of medicinal herbs. As regards the conservation and promotion of natural resources, this plan ensured maximum people’s participation in activities related to soil and water conservation by giving priority to protecting the water sources of villages and watersheds serving heavily populated areas of the hills.

Master Plan for the Forestry Sector 1989

The Master Plan for the Forestry Sector (MPFS 1989), approved in 1989, provides a 25-year policy and planning framework for the forestry sector. The long-term objectives of the Master Plan for the Forestry Sector include the following:

¥ to meet the people’s basic needs for forest products on a sustained basis; ¥ to conserve ecosystems and genetic resources; ¥ to protect land against degradation and other effects of ecological imbalance; ¥ to contribute to local and national economic growth.

The Master Plan for the Forestry Sector guides forestry development within the comprehensive framework of six primary and six supportive programmes to achieve its objectives.

¥ Primary Forestry Development Programmes: a. community and private forestry b. national and leasehold forestry c. wood-based industries d. medicinal and aromatic plants e. soil conservation and watershed management f. conservation of ecosystems and genetic resource ¥ Supportive Forestry Development Programmes: a. policy and legal reforms b. institutional reforms c. human resource development d. research and extension e. forest resource information system and management planning f. monitoring and evaluation

Ramesh Shakya 79 The main feature of the Master Plan is an integrated and programme-oriented approach. The idea to employ a programme approach to support these six primary programmes and six supportive programmes was a turning point in Nepal’s history of forestry sector policy.

The National Planning Commission has incorporated the policies of the Master Plan for the Forestry Sector (1989), into the Eighth Five-Year Plan (FY 1992/93Ð1996/97). The basic objectives of the Eighth Five- Year Plan for the Forestry Sector include:

¥ to stabilize the supply of timber, fuelwood, fodder and other forestry products necessary for the general people in their day-to-day lives; ¥ to increase the productivity of forest to ensure the supply of raw materials to forest-based industries which contribute to the national economy; ¥ to increase income from the employment opportunities in the forestry sector for underprivileged families; ¥ to develop national parks, wildlife reserves and protected areas in order to preserve biological diversity, to maintain ecological processes and ecosystems, and to create recreational areas; ¥ to help maintain land fertility through the conservation of soil and other watershed resources.

The following policies have been adopted to achieve the Eighth Five-Year Plan for the Forestry Sector:

¥ Public participation will be intensified through the implementation of private, leasehold forestry and users’ group-based community forestry programmes. ¥ Deprived sections of the society will be given preference when land is allocated for leasehold forestry so that their opportunities for employment are increased. ¥ The development of industrial forestry will be emphasized in appropriate areas. ¥ To reduce conflicts between local residents and national parks and reserves, the people will be allowed to help manage national parks. In addition, to restore the people’s faith in national parks and reserves, a share of the fees generated will be spent on developing neighbouring areas.

The Ninth Five-Year Plan (1997Ð2002) followed the Master Plan for the Forestry Sector in order to continue its main thrust of people’s participation in forest management practices. The main objective of the Ninth Five-Year Plan is poverty alleviation through providing economic opportunities for poor people and encouraging their participation in developing activities. To reduce poverty effectively in the long run, poverty- focused sectoral and targeted programmes will be launched in a coordinated, integrated and effective way. In addition, the Ninth Plan for the Forestry Sector emphasized the need to cultivate non-timber forest products in community forests and to promote employment and income generating opportunities for poor and marginal families. The main policies and strategies which have been adopted by the Ninth Plan to reduce poverty include:

¥ support to poverty alleviation which will be provided to promote and establish participatory forest management by implementing community-based development activities.

The Forestry Sector Policy 2000

¥ Land-use planning: Existing land-use categories will be improved to their full potential so that productivity is increased and the forestry sector developed. ¥ Conservation of biodiversity, ecosystems, and genetic resources: Biodiversity conservation will receive high priority to ensure both security and a sustainable livelihood for millions of people living in the eastern Himalayan region. Tourism in protected areas will be regulated and kept within the carrying capacity of the local ecosystems. Part of the income from tourism will be made available for community development. His Majesty’s Government of Nepal will adopt a National Biodiversity Action Plan (NBAP) to provide an operational planning framework to conserve biological diversity, maintain ecological processes and systems, and to ensure the equitable sharing of benefits. ¥ Production and utilization: Forests in the mountains will be managed with the users’ participation. The traditional right of the people to collect fuelwood and fodder will be regulated according to the decisions and management plans of the users. Forests in the Terai and the Siwaliks of high economic and national importance will be managed and utilized by implementing management plans. Collaborative partnership with the households living adjacent to such forests will be established. Especially in suitable parts of the Terai, the production, processing and marketing of non-wood forest products will be encouraged.

80 Forest for poverty reduction: policies, programmes and activities identification of research gaps in Nepal ¥ Social aspects of land and forest resources: A holistic approach to the multiple use of land will be taken up by blending forestry management with biodiversity conservation and community development activities. Emphasis will be placed on integrated farming for strengthening soil conservation and watershed management, for research, extension and agroforestry, and for other activities related to the Forestry Sector Policy 2000. The principles of decentralization will be applied in the forestry sector through community forestry, which, according to the Forest Act of 1993 and the Forest Rules of 1995, has priority over other forest management strategies. Priority will be given to underprivileged communities or to the underprivileged people within a community. ¥ The role of the private sector: Establishment of private forests, herbal farms, and wildlife ranching on private land will be encouraged. Similarly, the establishment and development of forests on leasehold government land will be promoted as long as such forests are socially acceptable. ¥ Investment in the Forestry Sector: His Majesty’s Government will solicit cooperation and assistance from all concerned parties, including donor agencies and international financial institutions, to implement the forestry policy and to finance the forestry sector programmes.

Classification of forests and protected areas: For the purpose of conservation and management, forests and protected areas are classified as indicated below.

¥ Forests All forests except those designated otherwise are national forests. They are divided into the following categories: a. Government Managed Forest: National forest areas managed by His Majesty’s Government using approved forest management plans; b. Community Forests: A part of national forests which are handed over to users’ groups as community forests to conserve, manage and utilize for their basic needs; c. Leasehold Forests: Forest on land that have been leased by central or local government agencies to private owners including individuals, cooperatives, institutions and commercial firms; d. Religious Forests: Forests belonging to religious institutions; e. Private Forests: Forests or trees raised and managed on privately owned land; f. Protected Areas: A national forest declared by HMG/N as protected forest pursuant to the Act of 1993, which considers it as having a special environment or scientific or cultural importance; g. Conservation Areas: Land such as national parks, reserves, protected areas, or other categories gazetted under the National Park and Wildlife Conservation Act of 1973; h. Protected Watersheds: Any land under public or private ownership designated as a protected watershed under the Soil and Watershed Conservation Act of 1982. ¥ Policy related to poverty reduction programmes Focus on providing livelihood to poor and landless people in forestry related activities: a. Employ the poor and landless in nursery, plantation and management work, construction, forest harvesting and forest-based industries. b. Train individuals, provide financial support to establish private nurseries and purchase their products. c. In allocating leasehold forests, give people below the poverty level priority, but only encourage them to engage in forestry if the benefits will exceed the costs. d. Employ the poor and landless in government and leasehold forest plantations, including those using agroforestry techniques. f. Initiate programmes and incentives to establish and manage tree farms on leasehold forest land for industrial and multiple-use purpose. g. Pay a just income to the rural poor who collect raw materials like medicinal and aromatic plants for industries based on such forest products.

Leasehold Forestry Policy

Leasehold forest is defined as a national forest handed over to any institution on industry based on forest products or community established under current law (Forest Act 1993). Leasehold forest, therefore, is forest which is degraded, and without or with only scattered trees, and is handed over on a leasehold basis with community consensus for raising a plantation and to nurture the forest and to utilize the forest products. The annual rental is NRs.1000, NRs.1200 and NRs.1500 per hectare in the mountain, hills and Terai regions respectively. However, communities or groups of people living below the poverty line do not have to pay any rental charges.

Ramesh Shakya 81 POVERTY IN NEPAL

Nepal is one of the poorest countries in the world. A decade ago, according to Human Development Index (HDI), Nepal was ranked in the 22nd position from below among 173 countries in the UNDP’s 1993 assessment (UNDP 1993). The HDI is a parameter to assess the relative position of each country with regard to three main dimensions, namely longevity, knowledge or education and standard of living (Thapa 1995). So the HDI indicates that the living standard of the Nepalese is very low. The major cause of the poverty in Nepal is population growth, which is currently estimated at 2.3 percent per annum. The demand for basic needs such as education, health and employment for the increasing population cannot be met by the country with its limited resources. The National Planning Commission (NPC) has estimated that about 40 percent of the total population were absolutely poor. It measured poverty in terms of income required to supply the minimum food calorie requirement. The Living Standard Survey (LSS) of Nepal (CBS 1996) has per capita income as criterion to determine the poverty. The LSS has determined 2124 calories as per day necessity, which is equivalent to NRs.2637 in monetory terms. Per capita annual expenditure is estimated at NRs.4404 including expenditure on non-food items. Based on this, the estimated population living below the poverty line is 43 percent. Out of this, 24.9 percent are poor and 17.1 percent estimated to be ultra-poor. The poverty situation in different physiographic regions and urban and rural areas is shown in Table 2.

Table 2. Population below the poverty line by geographical regions and rural and urban areas Population below the poverty line % Region Poor Ultra-poor Total Geographical Mountains 29.3 26.7 56.0 Hills 21.3 19.7 41.0 Terai 28.7 13.3 42.0 National Average 24.9 17.1 Urban and rural areas Urban 13.2 9.8 23.0 Rural 26.2 17.6 44.0 Source: The Ninth Plan (1997–2002), HMG/N.

Poverty alleviation programmes of the HMGN

The poverty alleviation programme was first introduced in the HMGN Five-Year Plan in the Eighth Plan (1992Ð1997) as one of the objectives of the Plan. During the commencement of the Plan, 49 percent of the population were living below the poverty line. The Plan succeeded to bring down the poverty to 42 percent at the end of the Plan. The Ninth Plan (1997Ð2002) has considered poverty alleviation as the only principle objective. It aims to bring down the poverty by 10 percent to 32 percent in the next 20 years. The main strategy of the Plan to reduce poverty is to improve the socio-economic conditions of the poor people by attaining high GDP and controlling high population growth. The Ninth Plan has been reviewed and the forestry sector programmes in the Tenth Plan are discussed briefly below.

Review of the Ninth Five-Year Plan

The Ninth Five-Year Plan is reviewed based on its concept, objectives, strategies, working strategies and major quantitative targets.

¥ The Community Forestry Development Programme (1 341 973 households, 12 540 users’ groups and 955 358 ha of forests handed over) and the Leasehold Forestry Programme (10 500 households, 1600 groups and 6600 ha of forest handed over) for the people below the poverty line have been found very satisfactory. ¥ The participation of women, poor and marginalized group people to some extent has increased together with income generation activities. ¥ The Forest Act 1993 has been revised to make users’ committees more accountable to the group constitution and the Operation Plan and user members. ¥ Biodiversity legislation on patent rights of forestry sources and intellectual property rights is in the process of formulation to look forward to WTO membership.

82 Forest for poverty reduction: policies, programmes and activities identification of research gaps in Nepal ¥ Development of the National Biodiversity Strategy as well as policy formulation and legislation is in the final stage. ¥ Buffer zone area delineation in Langtang, Makalu Barun, Royal Bardiya and Se-Phoksundo National Park area has already been initiated. Shivapuri Watershed and Wildlife Reserve has already been declared a National Park. ¥ All five buffer zone management plans were completed. However, only 7 management plans for national parks and wildlife resource were completed out of 16 as planned. ¥ No progress could be made in policy reforms and legal amendments to simplify the process to hand over the Leasehold Forestry Programme for the poorest group of people. ¥ No significant progress has been made in generating employment (4.1 million man-days) prescribed in the OMFP since no harvesting operation was carried out. The target could not be met in the preparation of the NTFP Plan and a separate plan for the NTFP-based enterprise development. ¥ It is felt that there is lack of intersectoral coordination, hence it has been very difficult to review the progress of the Ninth Five-Year Plan in various areas of cross-sectoral linkages such as development of alternatives to fuelwood, Ayurvedic medicine and the promotion of cosmetics industries. Similarly, it has been difficult to access the impact that the forestry sector may have made on the promotion of small cottage industries such as silk, tanning, vegetable ghee, dyes, rubber, spices and cosmetics as well as that of the forestry sector’s contribution to the farming system as a whole and to the protection of the environment, biodiversity conservation and tourism and ultimately to the local and national economy.

Programmes

The main goals of the forestry sector in the Tenth Five-Year Plan are:

¥ to significantly contribute to the national aim of poverty reduction through the management of forest resources and conservation of watersheds and biodiversity with the active involvement of the people; ¥ to stop further depletion of its occupied area and transform 10.6 percent of its bushy area into high forest within 15 years. The remaining 29 percent of forest shall be managed to make use of its intensive production potentially and optimum land-use plan; ¥ to focus on the poor, women and the deprived group for their access to and control of forest resources through their active participation in planning, decision-making, implementation , monitoring and benefit sharing; ¥ to contribute to fulfilling the needs of forest products besides protecting the land and environment to retain ecological balance, biodiversity and genetic resources.

The main objectives of the Tenth Five-Year Plan are:

¥ to increase the income and employment opportunities for livelihood of the poor, women, and the deprived group in order to contribute to national poverty reduction objectives of the forestry sector; ¥ to increase the productivity of forest land for sustainable supply of forest products through intensive management of community, government-managed leasehold forests together with the promotion and research of tree species and plant resources; ¥ to manage protected and buffer areas in order to conserve and extend biodiversity; ¥ to manage and conserve soil and watershed areas focusing more on Churia region to increase ground water recharge.

In order to achieve the above-mentioned objectives, the roles of different agencies and stakeholders (government, non-government, private and local bodies) will be clearly defined to derive the supportive role for the development of the forestry sector. Policy revision, legal amendments, institutional and organizational reforms are also aimed during the Tenth Plan period.

FORESTRY PROGRAMMES RELATED TO POVERTY REDUCTION IN THE TENTH FIVE-YEAR PLAN

Policy and programmes

¥ Community and private forestry programme shall be continued and made more effective focusing more on intensive management of the forest resources as well as gender equity and livelihood issues. For

Ramesh Shakya 83 these, the concept of subgroup within forest user groups (FUG) will be introduced and promoted to ensure increased access and control over forest resources by the poor, women and the marginalized group of people. In order to improve the existing conditions and position of women in the communities, women’s representation shall be increased in forestry sector development programmes including planning, decision-making, implementation, monitoring and evaluation by ensuring that their strategic and practical gender needs shall be recognized and addressed at all levels. ¥ In order to improve the condition of the forest and people below the poverty line, leasehold forestry programme shall be launched in more districts. ¥ The importance of the conservation of biodiversity and genetic resources shall be sensitized, and with the involvement of the local people, conservation of biodiversity and its sustainable use shall be promoted in all types of ecosystems as envisioned in the Biodiversity Strategy Plan. ¥ Involvement of non-government organizations in the development of the forestry sector shall be promoted to reduce the work pressure of the government organizations and to effectively deliver services to user groups. Front line staff, the poor, women and the deprived groups shall get priority in all capacity building activities. ¥ Awareness programme in wild life conservation shall be promoted and domestication of some wild life species will be allowed. ¥ Foreign Aid Policy for the Forestry Sector shall be finalized. All forestry sector programmes shall be implemented in the programme approach. For effective implementation of the programme, policy reform, legal amendments as well as organizational reforms shall be done.

Some of the forestry sector programmes in the Tenth Five-Year Plan, which focuses on poverty alleviation and research and extension programmes in the Plan, are highlighted below:

¥ Programme a. National and leasehold forestry Users’ group (below poverty line) Leasehold forest for ecotourism Biodiversity and genetic resources National parks and reserves plan implementation Buffer zone management plan implementation National parks management Reserves management b. Research and extension Natural forest management Plantation and tree improvement Agroforestry Soil survey Social and economic research Forest inventory and survey Pest and disease control

Activities

Some of the activities of the programmes in the Tenth Five-Year Plan are briefly described below:

¥ Output: Forestry sector contributed to broad-based economic growth ¥ Activities: a. baseline assessment of natural and social resources; b. support to forest user groups (FUGs), collaborative forest management groups (CFMGs), leasehold forest groups for poor, religious forest groups (RFs) as well as private forest owners/groups and forest-based entrepreneurs in planning, implementation and monitoring various forestry development activities; c. establishment of nursery, seedling distribution, plantation, and establishment of demonstration plot/s; d. design, planning and implementation of district forest resource management plan/s; e. preparation of sub-watershed management plan; f. prevention of natural disasters; g. conservation of land productivity; h. Gatal protection area development in Mahabharat range; i. promotion of ecotourism in 16 protected areas;

84 Forest for poverty reduction: policies, programmes and activities identification of research gaps in Nepal j. implementation of buffer-zone management plan; k. planning and implementation of habitat management activities; l. biodiversity registration; m.sustainable collection of biodiversity resources; n. national biodiversity framework development and its use; o. development of botanical gardens and management; p. agricultural biodiversity management; q. policy formulation on integrated wet land area management plan; r. policy and legislation on formation of national rangeland development; s. rangeland development management in Himalayan region; t. implementation of protected areas management activities; u. preparation of inventory of plant resources; v. promotion, processing, and cultivation of medicinal plants; w. micropropagation and dissemination of economically viable crops; x. establishment and management of botanical gardens/herbal centres; y. carrying out various research and survey activities of the forest resources (including trees outside forest); z. study on soil and its relationship with suitability of forest/species and soil fertility improvement and fodder nutrient related research.

¥ Output: Forestry sector contributed to social development ¥ Activities: a. awareness raising activities in community forestry (CF), leasehold forestry (LF)/collaborative forestry, religious forestry (RF), non-timber forest products (NTFPs), private forestry, soil conservation and watershed management areas, buffer zones, conservation areas; b. identification and handing over of forests to CFUGs, LFUGs, CFMG, RFG, CGs, buffer zone management groups; c. support to forest user groups (FUGs), collaborative forest management groups (CFMGs), leasehold forest groups for the poor, religious forest groups (RFs) as well as private forest owners/groups and forest-based entrepreneurs in planning, implementation and monitoring various forestry development activities; d. creation of rural community infrastructure and related activities (community and household physical capital); e. activities to improve the condition of forest resources (natural capital); f. activities related to improve various capitals (social, human, financial) at resource and household levels; g. employment generation to local people through various forestry development activities.

¥ Output: Forestry sector contributed to the empowerment process of the marginalized section of rural people ¥ Activities: a. awareness raising programmes and the formation of poor and marginalized focused groups within CF/LF/CMF/RF/NTFPs,CGs, buffer zone management groups, plant resource/garden management committees/agencies; b. employment generation to local people through various forestry development activities; c. formation of cooperatives and networks among marginalized groups mentioned.

REVIEW OF FOREST RESEARCH IN NEPAL

Forestry research was stated in early 1960s by the then Forest Resources Survey Office (now DFRS). During 1979 to 1996 a number of research projects (small and big, short term to long term) were conducted covering various aspects of forestry funded by the Overseas Development Administration (ODA) of the United Kingdom. The main thrusts were given to silvicultural trials on species (exotic and indigenous), provenance, species elimination, spacing, mixed species plantation and nursery research on seed germination techniques, seed storage techniques, quality seedling production, types of planting material and propagation techniques. Some thrusts were also given to natural forest management and other aspects of research such as community forestry, bamboo, socio-economics, utilization, and non-timber forest products (NTFP). It was identified that more research work on such topics is needed to fulfill the increasing demand of forest products in a sustained way.

Ramesh Shakya 85 Research work on socio-economic and utilization aspects were started at the end of the project period. The silvicultural research carried out during this period was in small trials and results obtained need to be verified through pilot plantations. In addition there are many other aspects of forestry research which need to be addressed for the sustainable development of the forestry sector in Nepal. The DFRS is responsible for carrying out forest inventory, preparation of forest and natural resource maps based on geographic information system (GIS) and remote sensing and preparation of management or operational plans for community forests as well as national forests. The DFRS carries survey and inventory of natural forest resources, and updates the estimation of growing stocks in natural forests from time to time.

Research and survey outputs

Research outputs

Some of the outputs of research activities conducted in the last three decades are as follows:

¥ Natural forest management a. results of natural forest management trials on Schima-Castanopsis forest in central and western hills of Nepal and sal (Shorea robusta) forest in the eastern, central and western Terai of the country; b. biomass tables for the above-mentioned forest types. ¥ Plantation silviculture and management a. selection of a number of fast-growing fuelwood and fodder species both exotic and indigenous for the hills and the Terai of eastern, central and western regions; b. provenance selection of some of the fast-growing tree species, e.g. eucalyptus, pine (both exotic and indigenous), Dalbergia sissoo, Azadirachta indica, Australian acacias; c. plantation establishment techniques of some fodder species on degraded sites; d. nursery techniques of some exotic and indigenous species; e. identification, distribution and uses of bamboo in the Terai and hills of Nepal; f. results of propagation, growth and management trials on bamboo; g. yield and biomass tables of some important fuelwood species. ¥ Agroforestry a. preliminary results on tree crop interactions in the eastern and central Terai; b. lopping techniques of some of the fodder species; c. preliminary results on tree and aromatic plant interactions; d. selection of fodder species for planting barren land in the central hills of Nepal. ¥ Tree Improvement a. identification of mature and quality seed both in natural and artificial stands; b. establishment of Breeding Seed Orchard (BSO) of commercially important tree species; c. conservation of rare and endangered tree species.

Soil survey and analysis

a. soil survey reports prepared for various forestry projects including the Sagarnath Forestry Development Project; b. reports on siteÐspecies matching; c. indigenous soil classification system based on the local knowledge.

Information, extension and dissemination

a. library containing 6000 books, 4000 documents and journals, 16 periodicals, 115 rolls of microfilm and CD ROM facilities; b. half-yearly publication of the forestry journal, “Banko Janakari”, which contains research results of the trials conducted by researchers; c. monographs of species; d. bulletins; e. booklets and leaflets; f. occasional papers; g. manuals of afforestation in Nepal; h. nursery manuals; i. report of Forest Resources Inventory;

86 Forest for poverty reduction: policies, programmes and activities identification of research gaps in Nepal j. volume tables for forest tree species; k. proceedings of workshops and seminars; l. various other publications of research and survey results.

Survey outputs

a. district and national level forest resource inventory reports of Nepal; b. various forest resource maps of the country using GIS; c. woody vegetation (both forest and shrub) maps of the country using remote sensing data and GIS; e. preparation of Operational Forest Management Plans for some Terai districts; f. preparation of volume tables for forest trees of Nepal.

Research gaps

Most of the research activities carried out in the past are on station research. However, a few projects, for example the Farm Forestry Project supported by the International Development and Research Centre of Canada (IDRC) and implemented by the Institute of Forestry (IOF) and the Terai Community Forestry Project (TCFP) had conducted research on farms in the Terai region. The Lumle Agricultural Centre (LAC) in the Western Development Region and the Pakhribas Agricultural Center (PAC) in the Eastern Development Region had conducted on-farm research in the past. These research activities were focused mostly on technical aspects of forestry and very little on socio-economic aspects. As mentioned earlier, socio-economic research or studies in the DFRS started only in mid-1990s. There is lack of statistics such as contribution of forestry to gross domestic production (GDP), economic studies in various forest management practices and economic aspects of forests. However, economic volume tables of some commercial tree species such as sal (Shorea robusta), sanjh or asna (Terminalia tomentosa) have been prepared.

Suggestions to fill the gaps

Research on socio-economic and cultural aspects of forests and people has been limited to some academic exercises. Certainly, there is a big gap in research with respect to technical, social, economic and cultural fields for implementation of forestry sectoral programmes related to poverty alleviation or reduction. For the successful implementation of the programmes and activities related to poverty reduction, additional related research should be carried out on pilot scale.

BIBLIOGRAPHY

BPPN. 1996. An assessment of the representation of the terrestrial ecosystems within the protected areas system of Nepal. Biodiversity Profile Project, Nepal. Kathmandu, Nepal, Ministry of Forests and Soil Conservation. CBS. 1996. Nepal living standard survey report, main findings. Volume 2. Kathmandu, Nepal, Central Bureau of Statistics. CBS. 2001. Population census main report. Kathmandu, Nepal, Central Bureau of Statistics. DFRS. 1999. Forest resources of Nepal. Publication No. 74. Kathmandu, Nepal, Department of Forest Research and Survey. FAO. 1993. Forestry statistics today for tomorrow, 1961, 1991, 2010. Rome, Food and Agriculture Organization of the United Nations. MPFS. 2000. Revised Forestry Sector Policy 2000. Kathmandu, Nepal, Ministry of Forests and Soil Conservation. NPC. 2003. The Tenth Plan (Poverty reduction strategy paper) 2002Ð2007. Summary. Kathmandu, Nepal, National Planning Commission. Shrestha, S.M. & Nepal, S. 2002. National Forest Policy review, Nepal. In T. Enters, Ma Qiang & R.N. Leslie, eds. An overview of forest policies in Asia, pp. 191Ð222. EC-FAO Partnership Programme, Rome 2000Ð2002.

Ramesh Shakya 87

Strategy for the implementation of CDM and carbon trade in 10 Indonesia Y.S. Hadi* and M.B. Saleh*

ABSTRACT

Indonesia’s market share in the CDM scheme is very small (6 percent) compared to its potential carbon supply. According to the data interpreted from satellite image of 2000, the area potentially to be rehabilitated is about 44 million ha. The Ministry of Forestry has set a target of rehabilitating 18 million ha of forest land in the next five years. Rehabilitation of forest land is a highly important activity; however, from previous experience, this type of activity is difficult to implement, particularly with the never ending economic crisis and transition of decentralizing the governance. To benefit from the opportunity offered by environmental services, a strategy to implement the CDM-Carbon trade in Indonesia must have the following characteristics: small acreage, medium contract duration, intensive marketing, direct payment, being a part of rural development, and availability of enabling incentive. Enabling incentive is better provided by international, central and local governments simultaneously. The type of enabling incentive to be provided should include competitive price of carbon, low information expense, low transaction expense, long-term payment guarantee and a simple mechanism. To reduce the rate of tropical forest degradation, it is better to give enabling incentives for the rehabilitation of secondary forests and implementing reduced impact logging.

BACKGROUND

For the study of global environmental problems, particularly those that also involve local ones, mapping the influence of a broad assemblage of actors is needed. For example, little is known about how local level institutions or ordinary citizens are involved in global environmental policy processes and what motivates public demands for global environmental quality, especially for those pervasive environmental problems like global climate change and sustainable development that require the attention and acquiescence of ordinary citizens (Auer 2000). A variety of non-sovereign actors, including non-governmental organizations (NGOs), inter-governmental organizations (IGOs), market-oriented actors (e.g. transnational corporations), and knowledge-based communities participate in solving global environmental problems (Litfin 1993, Kauffman 1997, Schreurs 1997, McKormick 1999). Princen et al. (1994) state that global solutions require local approaches when global environmental crisis results from both the aggregation of local resource decisions and from the impact of the global political economy on local communities. Moreover, to the extent that local approaches approximate the conditions for sustainable economies, global solutions must necessarily be based locally. Young (1997) correctly notes that more attention must be paid to the connections between top-down and bottom-up policy arrangements bearing on international environmental problems. The logic that sustainable development succeeds only when local actors are key players throughout the policy process is averred in recent declarations by bilateral and multilateral aid agencies. The demand of CDM and carbon trade compared with its potential supply is relatively small. On the other hand, the critical land in Indonesia is huge. Forest resources in Indonesia during the last three decades have contributed immensely to national economy and other positive impacts like foreign exchange earnings, labour employment and also economic growth and development. However, such harvesting activities have

* Faculty of Forestry, Bogor Agricultural University, Indonesia; E-mail: [email protected]; [email protected]

89 caused considerable damage to the environment. Interpretation of year 2000 Landsat image showed that forest and land which requires rehabilitation (excluding Papua) is 96.3 million ha (50.3 percent of Indonesia area) consisting of 43.60 million ha of Land Cover Group I (shrubs, opened area, mixed dryland agriculture), 36.36 million ha of Land Cover Group II (secondary forest, logged-over forest) and 16.37 million ha Land Cover Group III (mining, dryland agriculture, settlement, rice field) (Badan Planologi Kehutanan 2002).

POTENTIAL SUPPLY OF CDM AND CARBON TRADE

The Clean Development Mechanism (CDM) has two goals: it is designed to lower the overall cost of reducing greenhouse gas (GHG) emissions released to the atmosphere, and also to support sustainable development initiatives within developing countries. These twin objectives reflect the need to coordinate action between differently positioned developed and developing countries, which nevertheless share a common aim of reducing the buildup of GHGs (Duncan et al. 1999). The study on CDM for Land Use, Land-Use Change and Forestry (LULUCF) has identified the following three factors that may affect the size of the carbon market that can be absorbed by Indonesia (Ministry of Environment 2003):

¥ international negotiation process; ¥ international carbon market dynamics; and ¥ national capacity.

Internationally there will be rather complex rules and modalities in implementing forest carbon projects under CDM. The implementation of activities aimed to mitigate global GHG emissions is more cost-efficient in developing countries than in most of the industrialized world. The main reason is that many abatement opportunities are less expensive in developing countries. GHG emissions contribute equally to climate change irrespective of where they occur; globally the impact on the environment is the same (Duncan et al. 1999). Thus it has been a major, but contentious, topic in the climate negotiations to allow crediting of emissions reduction in developing countries towards domestic emission targets of industrialized countries (Dutschke and Michaelowa 1998). On the contrary, the sink market under CDM has been restricted with a cap of 1 percent. Technical issues related to definition of forest and accounting methodologies (including baseline, additionality, leakage and permanence) are being resolved at the international level.

Indonesia’s total CDM volume is 36 Mt CO2 per year (market share of 6 percent), from which the forestry sector contributes 28 Mt CO2 per year with a total revenue of about US$7 million per year. Thus 32.5 million ha of land can be potentially included in the forest carbon projects and half of this is eligible for CDM projects (Ministry of Environment 2003). The price of carbon is too low; observed prices in the current marketplace for permits that are likely to be CDM compliant are in the range of US$3 to US$8 per tonne CO2. Based on forest plantation of Pinus taeda (loblolly pine) in the southern US, the average costs of sequestering an additional tonne of carbon on land already intensively managed vary from US$4.18 to US$181.27 and the average costs of sequestering an additional tonne of carbon on unstocked land ranges from US$0.74 to US$27.32 (Huang and Kronrad 2001). Ideally conservation of soil and water as main goals for the rehabilitation of land and forest activities are adequate enough an incentive for various parties, considering the long-term direct and indirect benefits. However, the need for quick and adequate earnings and lack of income for the community and also the existence of policy, market and institution failures have progressively decreased the area of critical land. Efficiency and effectiveness of forest rehabilitation are too low, caused by not balancing the local factors and a non-uniform incentive which is based solely on the efficacy of planting. Therefore the approach of watershed management, which emphasizes participatory management, coordination and perception adjustment before implementation, could be used in implementing forest rehabilitation.

90 Strategy for the implementation of CDM and carbon trade in Indonesia Table 1. Outstanding technical issues relating to CDM-LULUCF projects Issue Indonesian context Definition of forest, afforestation Definition will influence the type of projects that will be eligible under and reforestation the CDM. Additionality: project activities Defined on a project-by-project case. It is very likely that without any need to be additional to the new initiative the national carbon stock will decrease. Thus any new business as usual or baseline case initiatives for increasing planting rate should meet the additionality criteria. Baseline Defined on a project-by-project case. Government plan on forest rehabilitation evaluated by considering the level of success of past programme. Leakage Locations and project types that may have low risk of leakage to be defined. The potential for leakage varies with land-use competition. As a result, the risk posed by leakage will vary with location. Guidelines for accounting for leakage to be provided. Non-permanence This provides flexibility to the government or host country to use the CDM project lands for other activities. Crediting period This may be relevant to PP34 where permits for forest activities related to environmental services are limited to 10 years. But this may discourage investors. Source: Ministry of Environment (2003).

Structuring forest rehabilitation following the logical framework of watershed management and emphasizing the involvement of all stakeholders are crucial. In line with decentralization, the Ministry of Forestry needs to facilitate these efforts because of many local autonomous communities that must be coordinated with agreement reached. Forest and land rehabilitation concerns various parties that have different interests. Their efficacy is therefore determined not solely by the direct executors in the field, but by all parties from the planning through monitoring and evaluation stages. Societies represent the protagonist element while government acts as the element of authority of policy and facilitator. There are other parties, such as the academic institutions, research and development agencies, and NGOs, which partake to support the efficacy of management of forest and land rehabilitation. Therefore this link between the local and global importance has to be developed through some forms of transparent contract.

CDM IN NATIONAL INTEREST

The market share of Indonesian CDM is very small due to the acreage of critical land as can be see in Annexes 1, 2 and 3. But we need to implement forest and land rehabilitation to make better use of Indonesia’s forest resources. For the next five years, the Ministry of Forestry has set a target of rehabilitating about 18 million ha (Ditjen RLPS 2002). According to the Ministry of Environment (2003), the allocation for the CDM in forestry is only in afforestation and reforestation. The types of forest carbon projects are outlined in Table 2.

Y.S. Hadi and M.B. Saleh 91 Table 2. Types of forest carbon project according to the afforestation and reforestation definitions of the Marrakech Accord Category and project type Marrakesh Accord 1. Conservation and forest This project type is not eligible according to the Marrakech Accord, as the areas management: are already under forest cover. Protection forest Enrichment planting It may be classified as reforestation as long as the lands were already degraded (not forest) before 1 January 1990. At present this is only allowed for Joint Implementation (JI). Reduced impact logging At present this is only allowed for Joint Implementation (JI). 2. Sink enhancement: It may be classified as reforestation as long as the lands were already degraded Reforestation (not forest) before 1 January 1990. Forest plantation Community forest Social forestry Afforestation Private forest Conversion of agriculture It may be classified as afforestation if the lands have been used as agriculture land to forest lands since 50 years ago. 3. Substitution of fossil fuel based energy with biomass energy: Source: Ministry of Environment (2003).

These days development in Indonesia, especially in forestry development, is in a state of flux in almost all aspects. However, these changes generally are not strengthening the governmental and community role in reducing forest damage. The problem in essence is not technical, but institutional. It is caused by divergence of policy, different interests and also the capacity of the government to implement the policy relative to the problems that are always expanding. Therefore forestry policy must strengthen the existing institutions. In the field, the results of this policy could be indicated by the increase in forest cover from rehabilitation and also the increase of the sense of belonging and interest of protecting the forest. The sense of belonging of the community to the forest is basically generated by the available choices. The effort to reduce forest damage and strive towards rehabilitation is a long-range and correct choice. This could be triggered through various efforts, like appropriate economic incentive, guarantee of community/society rights, local institutional reinforcement, and also reinforcement of the capacities of local governments which are managing directly the activities of rehabilitation. On a national scale, the efforts are in the form of:

¥ precondition preparation for forest and land rehabilitation; ¥ synchronization of the benefit aspects, justice and legality in realizing the needed regulation; ¥ effectiveness of the Ministry of Forestry and local governments in forest and land rehabilitation.

Rehabilitation of forest and land, in the form of afforestation and reforestation, solely rely on governmental initiatives, with little public participation. Limited access to exploitation of the forest by the local and traditional societies has generated a separate set of problems. The government has yet to identify and map the forest under customary rights, thus generating vagueness in accountability in forest management. Incidences of degradation outside forest areas basically resulted from excessive exploitation, not applying proper soil conservation and also due to weak institutions.

Problems of forest and land rehabilitation can be classified into:

¥ problems in the field, such as certainty of status, economic infrastructure, seed availability, etc; ¥ problems of available management rights for local community in rehabilitation activities; ¥ administrative problems, concerning financing, funding scheme, planning, controlling, etc; ¥ problems of regulation related to controlling of exploitation permits of forest resources; ¥ problems of institutions responsible for managing the rehabilitation activities, their capability and coordination with the other relevant institutes.

During this transition period to decentralization, there was no common perception of public policy among the stakeholders. The confusion has in fact caused more forest damage.

92 Strategy for the implementation of CDM and carbon trade in Indonesia As the criterion of efficacy of afforestation/reforestation is not well defined, it has limited impact at the programme level. The external effects of afforestation are also very difficult to assess. Indonesian forestry is strongly influenced by external factors from within the country and outside:

¥ economic crisis, which shifted priority from rehabilitation programme; ¥ decentralization pushing the local government to accelerate economic growth through exploiting the natural resources; ¥ forestry industrial structure, which is big and concentrated at the upstream leading to the deficit of raw material; ¥ global market demand for “green products” through mechanism of ecolabelling; ¥ global commitment concerning forestry like biodiversity conservation, carbon trade, and “debt for nature swap”; ¥ pressure in the political system to implement the principles of democratization, human rights and gender equality.

The efficacy of afforestation/reforestation is determined more by forest area certainty and also the ability and readiness of the implementers than the availability of funds. Enabling incentive has become so important and rehabilitation in most cases will fail without supporting activities (Faculty of Forestry IPB 2001). Market mechanism should be used to motivate the private sector, which is profit oriented, to involve in rehabilitation while the execution of rehabilitation to provide benefits for the public would remain to be the government’s obligation. For commercial forest plantation development, the problem is not simply whether the activity is financially, socially and ecologically viable, but how the investor or the communities in and around the forest should be involved. Should the local communities leave the area, or could they continue with their previous activities? The fundamental issue is how the communities could rationally accept this new activity of rehabilitation of forest and land. The “market situation” or more precisely an incentive structure, which should include transaction cost besides consideration of financial eligibility, could help. The biggest transaction cost is the expense of preparation of the area, and also expense to obtain the subsidy or loan. The communities (including the entrepreneur) pay both these expenses. Other transaction costs are the expense of preparation and/or stipulating the organizer (especially by communities that stay in and around the forest), coordination expenses, and also expenses of monitoring and evaluation. All these expenses ought to be the responsibility of the government. In applying CDM, attention is needed simultaneously on the production, social and environmental aspects, therefore

¥ relevant ministries such as the forestry, agriculture, environment, foreign affairs and internal affairs, need to provide the information; and ¥ provincial and district governments have to provide the promotion expense.

CDM-CARBON TRADE: INCENTIVE OR DISINCENTIVE?

Without careful assessment of the non-carbon attributes, there is a danger that CDM will become little more than a cost-reduction tool for developed countries legitimizing many of the incidental secondary benefits that may or may not be consistent with a developing country (Duncan et al.1999). On the other hand, the forest and land in Indonesia need to be rehabilitated. For Indonesia, CDM-Carbon trade could become an incentive as well as a disincentive. Tropical forest in Indonesia that has been degraded is about 36 million ha, but in the CDM scheme this type of forest is ignored as potential carbon project. This might cause a disincentive for rehabilitation to reduce deforestation of tropical rain forest. Incentive in rehabilitating forest and land in principle is not limited to economic incentive, but covers various other instruments, especially law, policy and various social development instruments. In designing and implementing a new incentive, the whole context has to be considered, including its social and political aspects. There are at least three macro aspects which must be considered in the designing and implementation of incentives:

¥ Formal constraint: law, policy and ownership rights, for example, for tax or subsidy to rehabilitate the forest and land; or legalizing and arranging the market for the products/services resulted from rehabilitating the forest and land.

Y.S. Hadi and M.B. Saleh 93 ¥ Social constraint: a lot of unwritten orders governing economic and social activities are based on belief system, inclusive of cultural norms, social agreements, mores, ethics, traditions and taboos. Communities bow to the social constraint not because of law, but because of agreement. ¥ Compliance: an incentive action will only be effective when all parties follow the rules of the game. The degree of compliance to certain rules of the game could vary among the parties, and thus needs to be considered when designing an incentive scheme.

In implementing forest and land rehabilitation, the following procedures are necessary:

¥ defining forest and land area to be rehabilitated, to be confirmed by a validation process in the field by all interested parties; ¥ categorizing the defined forest area by its function through a participative process; ¥ formulating a mechanism of rights allocation and cost-benefit sharing; ¥ developing a mechanism of controlling and monitoring.

Results of the study conducted at three watersheds, Ciliwung, Rokan and Dodokan, showed that the main factor that contributed to the efficacy of forest and land rehabilitation is not direct incentive, but enabling incentive, especially the reformulation and consistency of policy execution. Effectiveness of the direct incentive, like existence of cheap fund, preparation of seeds and fertilizers in forest and land rehabilitation, depends on the enabling incentive condition that prevails in the communities. Without this indirect incentive condition, the existence of direct incentive will only give the project a short life without community support. The performance of forest and land rehabilitation in the field is still dependent on the central and local governments which have yet to consider the weaknesses of indirect incentive, especially the enabling incentive, as a major constraint in the execution of forest and land rehabilitation. Direct incentive is still considered a primary factor, thus information about community condition related to enabling incentive has yet to become an important ingredient in the programme and projects of forest and land rehabilitation. The selection of the rehabilitation site is determined by fund limitation of the government, probability of efficacy of rehabilitation and importance of the area. Execution of forest and land rehabilitation in every province has different constraints and problems, which must be investigated more thoroughly when determining the site. The difficulty level and/or the efficacy level of the rehabilitation programme is basically determined by two special circumstances, that is the critical level of the forest and land degradation and also the overall condition of its forest resources. Hence each region can be in one of the following categories:

¥ critical level of forest/land is high and forest resource almost used up; ¥ critical level of forest/land is low but forest resources almost used up; ¥ critical level of forest/land is low and forest resource still huge; ¥ critical level of forest/land is high but forest resource still huge.

The critical level of forest and land is determined by the acreage of degraded forest area, log production level and raw material needs. The forest resource is determined by the ratios of production forest area, protection forest area and conservation forest area, and the acreage of remaining forest cover. The provinces in Indonesia could be grouped into the following quadrants:

Forest resources small Forest resources huge Critical level low Jakarta, Jogya, Bali, Jambi Papua, Aceh, Riau, Sumut, Sumbar, Bengkulu, Kalteng, Sulsel, Gorontalo, Sulteng, Malut Critical level high Lampung, Sumsel, Kalsel, Kalbar, Kaltim, Babel, Sultra, NTB Sulut, Banten, Jabar, Jateng, Jatim, NTT

The execution of forest and land rehabilitation in each province must be appropriate to its conditions as classified above, so that incentive policy and other instruments can be implemented accordingly. In selecting the location of rehabilitation within or in the administrative boundaries, the following must be taken into consideration:

¥ first priority given to watershed; ¥ set a broader watershed; ¥ local initiative to rehabilitate; ¥ community cooperation with the investor/industrialist in rehabilitating;

94 Strategy for the implementation of CDM and carbon trade in Indonesia ¥ real market for the product of forest rehabilitation; ¥ more attention paid to upstream area compared with its downstream in a watershed; ¥ protection and conservation area given more priority compared to production area; ¥ residential and industrial area given more priority than remote area; ¥ poor area given more priority than rich area.

CLOSING REMARKS

Concluding from the above, the strategy for the implementation of CDM-Carbon Trade in Indonesia should incorporate these principles:

¥ small acreage: that can be handled by the community in a single village or group of villages; ¥ proactive marketing: building up other schemes rather than CDM only; ¥ short to medium period of contract (minimum of 10 years or two contracts of 7 years each); ¥ price paid directly to the executor; ¥ provide enabling incentives such as capacity building, infrastructure buildup, markets of rehabilitation products, reduced impact logging and enrichment planting; ¥ competitive price (not as a small percentage of all sequestering cost); ¥ low information expense due to the technical and research limitation; ¥ low transaction expense due to regulation and bureaucratic process; ¥ part of countryside development; ¥ well guaranteed and clear mechanism.

BIBLIOGRAPHY

Auer, M.R. 2000. Who participates in global environmental governance? Partial answers from international relations theory. Policy Sciences 33: 155Ð180. Netherlands, Kluwer Academic Publishers. Badan Planologi Kehutanan. 2002. Penyempurnaan master plan rehabilitasi hutan dan lahan (MP-RHL) nasional. Badan Planologi Kehutanan, Departemen Kehutanan. Ditjen RLPS. 2002. Pola rehabilitasi hutan dan lahan nasional. Direktorat Jenderal RLPS, Departemen Kehutanan. Duncan, A., Faeth, P., Motta, R.S., Ferraz, C., Young, C.E.F., Ji, Z., Junfeng, L., Pathak, M., Srivastava, L. & Sharma, S. 1999. How much sustainable development can we expect from the Clean Development Mechanism. http://www.wri.org/wri/. Washington, DC, World Resources Institute. Dutschke, M. & Michaelowa, A. 1998. Creation and sharing of credits through the Clean Development Mechanism under the Kyoto Protocol. Paper presented at the experts workshop “Dealing with Carbon Credits after Kyoto”, Callantsoog, the Netherlands, 28–29 May 1998. Fakultas Kehutanan IPB. 2001. Sistem insentif untuk rehabilitasi hutan dan lahan. Laporan Internal. Fakultas Kehutanan IPB, Departemen Kehutanan. Huang, C.H. & Kronrad, G.D. 2001. The cost of sequestering carbon on private forest lands. Forest Policy and Economics 2: 133Ð142. Elsevier Science B.V. Kauffman, J.M. 1997. Domestic and international linkages in global environmental politics: a case study of the Montreal Protocol. In M.A. Schreurs & E. Economy, eds. The internationalization of environmental protection, pp. 74-96. Cambridge, Cambridge University Press. Litfin, K. 1993. Eco-regimes: Playing tug of war with the nation-state. In K. Conca & R. Lipschutz, eds. The state and social power in global environmental politics, pp. 94Ð17. New York, Columbia University Press. McKormick, J. 1999. The role of environmental NGOs in international regimes. In N.J. Vig & R.S. Axelrod, eds. The global environment: institutions, law and policy, pp. 52Ð71. Washington, DC, Congressional Quarterly Press. Ministry of Environment. 2003. National strategy study on CDM in forestry sector. Ministry of Environment, Jakarta. Princen,T., Finger, M. & Manno, J.P. 1994. Transnational linkages. In T. Princen & M. Finger, eds. Environmental NGOs in world politics: linking the local and the global, pp. 217Ð236. London, Routledge. Schreurs, M.A. 1997. Domestic institutions and international environmental agendas in Japan and Germany. In M.A. Schreurs & E. Economy, eds. The internationalization of environmental protection, pp. 134Ð161. Cambridge, Cambridge University Press. Young, O. 1997. Global governance: toward a theory of decentralized world order. In O.Young, ed. Global governance: drawing insights from the environmental experience, pp. 273Ð299. Cambridge, MIT Press.

Y.S. Hadi and M.B. Saleh 95 e,

Not priority Total

est

oup III – mining, dry land agricultur

est; and Land Cover Gr

ea

Priority watershed

est, logged over for

oup II – secondary for

Protected forest and conservation ar forest Protected

ehabilitated (1000 ha)

Not priority Total

e; Land Cover Gr

Protected forestProtected Conservation for

eas that need to be r

ea, mixed dry land agricultur

Priority watershed

123 123

oup I – shrubs, opened ar

. Protected forests and conservation ar forests . Protected

Region

Sumatera 477.4 646.3 759.2 1577.4 3460.3 115.0 186.1 288.4 1079.5 1669.0 Kalimantan 111.4 946.9 497.5 666.7 2222.5 65.3 266.7 445.3 342.8 1120.0 Sulawesi 524.2 542.6 313.5 968.0 2348.3 33.9 138.1 150.8 211.9 534.7 Jawa 45.8 166.8 7.6 158.0 378.2 22.7 105.4 9.2 62.4 199.8 Bali 12.3 11.1 5.5 0.0 29.0 0.0 10.2 2.9 0.4 13.5 NTB 0.9 18.9 0.6 146.6 167.0 1.0 11.1 24.6 55.6 92.4 NTT 167.4 58.7 0.0 361.2 587.3 36.9 23.5 0.0 163.6 224.0 Maluku 0.0 8.8 69.7 427.6 506.1 0.0 4.6 0.0 123.0 127.6 Indonesia I 613.9 646.0 396.9 1633.1 3289.9 122.6 239.9 230.4 730.2 1323.0 II 673.9 1657.7 1195.9 2404.7 5932.2 138.1 475.5 653.5 1179.3 2446.5

III 51.7 96.5 60.8 267.7 476.7 14.1 30.4 37.3 129.7 211.5 TOTAL 1339.5 2400.2 1653.6 4305.5 9698.8 274.8 745.8 921.2 2039.2 3981.0

Annex 1

Source: Badan Planologi Kehutanan (2002). Source: Note: Land Cover Gr settlement, rice field.

96 Strategy for the implementation of CDM and carbon trade in Indonesia Total

Not forest

1 2 3 priority

Production forest Production

Total

Not Priority watershed

ehabilitated (1000 ha)

Production forestProduction forest Limited production Fixed

Priority watershed

1 2 3 priority

Production forests that need to be r forests Production

Region

Sumatera 539.7 214.1 1316.2 2415.1 4485.2 445.3 468.2 530.2 1765.6 3209.3 12823.8 Kalimantan 892.0 3967.4 4796.8 966.3 10622.4 302.8 2414.9 2148.1 1257.8 6123.5 20088.5 Sulawesi 107.8 239.7 79.9 439.7 867.2 245.9 470.2 349.4 768.0 1833.5 5583.7 Jawa 97.5 278.9 35.7 505.1 917.2 26.7 83.9 15.5 114.8 240.9 1736.1 Bali 0.1 1.6 0.1 0.0 1.8 0.1 3.6 0.6 0.0 4.3 48.6 NTB 2.3 6.5 1.3 88.7 98.7 0.0 10.2 0.1 94.2 104.4 462.5 NTT 52.4 49.8 0.0 145.0 247.3 35.2 22.8 0.0 129.0 187.0 1245.6 III 57.7 150.8 181.9 454.0 844.4 49.0 159.9 122.4 251.4 582.7 2115.2 Maluku 0.0 3.6 36.6 636.7 676.8 0.0 55.7 86.7 638.1 780.5 2091.0 Indonesia TOTAL 1691.8 4761.5 6266.6 5196.6 17916.6 1056.1 3529.5 3130.5 4767.4 12483.5 44079.8 I 500.9 2342.8 1684.4 2745.3 7273.4 245.4 859.7 511.2 1631.4 3247.7 15134.0 II 1133.3 2267.9 4400.3 1997.3 9798.8 761.7 2509.9 2496.9 2884.6 8653.0 26830.6

Annex 2.

Source: Badan Planologi Kehutanan (2002). Source:

Y.S. Hadi and M.B. Saleh 97 Not priority Total

Priority watershed

ehabilitated (x 1000 ha)

Not priority Total

est Non-forest

Conversion for

123 123

est and non-forest areas that need to be r areas est and non-forest

. Conversion for

Region Priority watershed

Sumatera 810.0 136.2 1017.0 2048.1 4011.2 2010.5 2297.0 1546.5 7127.8 12981.8 Kalimantan 291.2 1675.5 2195.1 306.0 4467.8 861.8 4373.5 2065.6 2649.6 9950.5 Sulawesi 21.9 97.9 64.2 208.5 392.6 781.2 978.2 667.3 3069.6 5496.3 Jawa 0.0 0.0 0.0 0.0 0.0 1377.0 2496.9 501.1 4671.9 9047.0 Bali 0.0 0.0 0.0 0.0 0.0 80.5 106.3 177.2 0.1 364.0 NTB 0.0 0.0 0.0 0.0 0.0 40.4 46.7 15.3 636.9 739.3 NTT 48.6 6.3 0.0 42.3 97.2 597.5 380.2 0.0 1697.3 2675.1 Maluku 0.0 56.4 83.4 1458.2 1598.0 0.0 8.3 10.6 416.4 435.4 Indonesia I 567.2 1030.1 1421.4 1919.5 4938.2 3384.4 6416.7 2481.8 11248.9 23531.8 II 434.6 769.3 1397.6 1353.0 3954.5 535.3 1379.5 1502.2 2161.7 5578.6

III 169.9 173.0 540.7 790.6 1674.2 1829.2 2890.9 999.7 6859.0 12578.8 TOTAL 1171.7 1972.3 3359.7 4063.1 10566.8 5748.8 10687.1 4983.7 20269.6 41689.2

Annex 3

Source: Badan Planologi Kehutanan (2002). Source:

98 Strategy for the implementation of CDM and carbon trade in Indonesia What is biodiversity worth to 11 developing countries?

T. Ravishankar*

ABSTRACT

The livelihoods of millions of farmers, fishermen and tribal communities in the developing countries are closely knit with the biodiversity components within their proximity. The human race has been dependent on plants for their survival, material and emotional needs since its evolution. Biodiversity has provided many valuable genes in the development of crop plants that are extensively cultivated today. Medicinal properties of plants have been recognized and exploited for thousands of years. New chemicals are continuously being discovered and extracted from plants for combating many human ailments. The very existence of cultural diversity is directly dependent on biological diversity; erosion of either of these would greatly affect humankind. The traditional way of living, followed by tribal communities using biodegradable components, when replaced by the ideas of policy-makers without consulting or taking tribal communities into confidence, has resulted in disinterest of the younger generation. This had, in many instances, led to the disappearing of much traditional knowledge vital to tribal livelihoods. NTFP resources, traditionally a source of income to the rural and tribal communities in developing countries are fast dwindling because of the increased dependency by local communities and over-harvesting by commercial agencies. There is also a threat of overexploitation of seed material of a few species of NTFPs, which may lead to the eventual extinction of such species. To gain acceptance and enhance effectiveness, policy guidelines on micro-level management addressing the above issues should be developed in consultation with local communities and should be included in the work plans of respective forest divisions.

BIOLOGICAL DIVERSITY AND CULTURAL DIVERSITY

In the context of worthiness, biodiversity encompasses a range from terrestrial wild and domesticated plant genetic resources to fresh water and marine living resources. The livelihoods of millions of farmers, fishermen and tribal communities in the developing countries are closely knit with the biodiversity components available within their proximity. Rational management that meets the requirements of conservation of biodiversity and the livelihoods of people in the fringe areas of biodiversity rich forested areas is the need of the hour. Technically plant biodiversity is grouped under the wild and domesticated class. Wild biodiversity includes edible and medicinal plants and plants used in culture, religion and material culture, land races and traditional varieties and wild relatives of cultivated crops. Domesticated diversity includes the cultivated crop diversity (Figure 1).

* M.S. Swaminathan Research Foundation, Ramaraopet, Kakinada 533004, India; E-mail: [email protected]

99 Resins Gums Leaves Nuts Flowers Fruits Rhizomes Tubers Roots Corms Yams Cereals & minor millets Cultivated Wild plants (Land races) Pulses Oil crops

Edible

Veterinary Human medicine Material culture

PeopleEthnobotany Plants Tree of Ethnobotany Study on the utilization and conservation practices of tribal communities

Figure 1. Biodiversity values

Biological diversity is measured in terms of genetic diversity (within the species), species diversity (diversity at species level) and ecosystem diversity. The human race has been dependent on plants for survival, material and emotional needs since its evolution. All over the world people have developed intimate relationships with the surrounding vegetation. Such a close interaction prevails among various tribal communities throughout the world even today. The interaction has enabled a unique system of knowledge on the utilization and conservation of plant genetic resources to evolve. Cultural diversity in terms of ethnic groups gives knowledge on the worthiness of plant resources. The knowledge of ethnic groups on the cultural, spiritual, social and economic values of plants is of immense value to humankind. Biodiversity has provided many valuable genes in the development of crop plants that are extensively cultivated today. It can equip humankind with several new chemicals for combating many human ailments in future. We have examples that the ethnic knowledge has contributed to the betterment of human life. A drug has been developed and marketed for retention of memory from the semi-aquatic herb Bacopa monnieri and Centella asiatica that have been traditionally used in India for enhancing memory power. Similarly several new drugs have been developed from the plants used by the Amazon tribes (Schultes 1991). All these examples clearly give a message that cultural diversity is the prime source of the utilitarian aspects of plant biodiversity. The very existence of cultural diversity is directly dependent on biological diversity. This traditional ecological knowledge of ethnic groups is not confined to mere sustenance only since the tribal communities depend upon biological resources for their spiritual, religious and cultural needs too. The tribal communities understand all these as life-sustaining resources. Therefore they not only utilize them but also conserve them. Erosion of either of these diversities would greatly affect humankind. Hence both the biological and cultural diversities should be considered as a unit for a meaningful conservation.

Sacred groves: Sacred groves are set-aside forests preserved with reverence in some developing countries in the tropical region. In India it is believed that the local deity resides in the patch of forest protecting the village and the traditional communities living nearby. Hence a spiritual reason is attached to conserving the patch of forest. This helps in water conservation and maintenance of microlevel water-table, which caters to the water requirement of the villagers. The local community preserves the forest with traditional rules, which restrict people from entering the forest without the permission of the priest and collection of biomass from the sacred forest. Women are restricted from entering during the menstrual cycle. The old trees are preserved with greater reverence. This system has helped in conserving keystone species.

100 What is biodiversity worth to developing countries? UNIQUE ASPECTS OF UTILIZATION OF PLANTS BY TRIBAL COMMUNITIES

In southern India certain interesting characteristics accompany the tribal utilization of plants. Often many plants are used for a single purpose although other parts of the plants may have potential utility values. For example, the following plants are used almost exclusively for their edible fruits and seeds: Bridelia retusa, Canthium dicoccum, Ficus racemosa, Madhuca longifolia var. latifolia, Palaqium ellipticum, Phyllanthus emblica, Polyalthia cerasoides, Premna tomentosa, Scleichera oleosa, Terminalia bellerica and Xylia xylocarpa. These plants are not used even for construction or making agricultural implements and similar uses.

TRADITIONAL KNOWLEDGE OF TRIBES ON MEDICINAL PLANTS

Medicinal properties of plants have been recognized and exploited by tribal communities as a tradition for thousands of years. Members of the community possess knowledge on some common medicinal plants in their locality. However, the elderly members possess a greater deal of knowledge on medicinal plants as well as on medicines for curing certain life threatening diseases. Tribal people use plants solely or in combination. The same plants may be used for different disorders: for example, Centella asiatica used for gynecological problems and for jaundice, Dodonaea viscosa used for headache, stomach pain and piles, and Wrightia tinctoria for treating mumps and as lactagogue.

Data sheet of ethnobotany of a plant species

Holoptelea integrifolia (Roxb.) Planch. in Ann. Sci. Nat. Bot. ser.4. 10: 259. 1848; FPB 3: 127; FPM 3: 1348. Ulmus integrifolius Roxb. Pl. Cor. t. 78. 1978. Trees, up to 20 m tall; bark whitish gray. Leaves elliptic or ovate glabrous, base rounded or cordate, apex acuminate. Flowers green, in axillary racemes or fascicles. Samara orbicular. Fl. & Fr.: November–April. Common; in dry deciduous forests. TRS 83102 & 86584. Loc. name: Nemuli (Gonds). Uses: Root bark crushed with the roots of Plumbago zeylanica and the extract orally administered by Koyas for abortion at two to three spoonfuls thrice a day for five days. Stem bark powdered, mixed with water and orally administered for peptic ulcer by Gonds and Kolams—three to four spoonfuls thrice a day for seven days. Leaves ground into paste applied for leucoderma, by Gonds. Leaf paste applied on boils and blisters and tied on them till cured. Leaves warmed and tied over abscesses and tumours by Gonds and Kolams. Tender seeds edible. Wood used for making agricultural implements.

TRADITIONAL AGRICULTURAL PRACTICES OF TRIBAL COMMUNITIES

In the agricultural scenario, the knowledge of tribal people in traditional agriculture is invaluable. Their farming practices give a real meaning to the word “sustainability”. Tribal communities, namely Irulas and Malayalis living in Tamil Nadu in India, have been cultivating the traditional cultivars and enhancing their genetic value by selecting healthy individual plants from the crop during every season. Their subsistence life style, local diet habits and dependence on rain-fed irrigation have influenced them to cultivate and conserve the grains for consumption and as seed material for the coming season. By selection and conservation of these seeds from one season to the next season, they are able to sustain themselves and continue to be self- reliant. The tribal communities prefer to grow the traditional cultivars, as these are ecologically suitable and economically viable. They are also drought and pest tolerant and disease resistant. The tribal communities practise a unique method of farming, namely mixed cropping system (MCS). The MCS enables them to cultivate cereals, leafy vegetables, pulses and oil crops together in a limited area depending on monsoon rain. The practice is such that the seeds of common millet, finger millet, grain and leaf amaranth, pulses and castor are mixed together and broadcasted. Primarily the common millet is harvested followed by finger millet. Edible leaves of amaranth and seeds and pods of pulses are used for daily consumption. Edible grains of amaranth are harvested and stored for future use. Castor seeds are harvested and used for both domestic consumption and to be sold in the market. The MCS primarily helps in utilizing the seasonal rainfall but also in keeping the soil unexposed thereby preventing topsoil erosion. Secondly, the combination of crops with legumes uses nitrogen fixation, thus maintaining the soil fertility. This helps the farmers to derive maximum benefits from their small landholdings. Hence this concept of MCS can be adopted and introduced in places where rain-fed agriculture or wherever monocropping is in vogue.

T. Ravishankar 101 Community cooperation and participation prevailing in the Malayali tribal community has helped in conserving the seed material of minor millets. The practice is such that every family in the community has to contribute an amount of grain to the community granary maintained and managed by the chieftain of the hamlet. During important occasions like marriages, social events and festivals, and also in cases of need for daily consumption, the grain can be borrowed and paid back. This system has enabled the tribals to conserve the seed material even if the produce in that season is less or if the grain stored for domestic consumption is exhausted.

SELECTION OF BETTER GENETIC MATERIAL OF CROPS

By virtue of their age-old indigenous knowledge on the viability of the seeds, which are used for sowing in the following season, healthy cobs or seeds are selected and stored every season thereby enhancing the genetic potential of the crop. For example, healthy cobs are left in the field so as to allow them to dry to the maximum to make sure that no moisture is left in the seeds. The selection of large and healthy seeds and also the selection based on the colour of the seeds (e.g. in the case of castor seeds) have also helped them select more viable seeds.

Storing: Seed material for sowing and the grains for consumption are preserved in traditional granaries made up of bamboo coated with red soil and thatched with local grass and also in earthen pots. This indigenous practice has saved many varieties of cereals, millets and legumes in Tamil Nadu in south India. Knowingly or unknowingly this practice has enabled them to maintain, preserve and conserve the seed material. The reason being, owing to free flow of air in and out of these indigenous granaries, the seeds could maintain their viability. Leaves of a few botanicals, particularly neem and Vitex, are used as insect and pest repellents. Seeds of legumes are preserved along with their pods thereby preventing fungal or bacterial infection. Owing to the above practices, the genetic strains could be conserved by these people for a long time, which are of great value to the poverty-ridden developing countries. In order to prevent any genetic erosion, the traditional cultivars need to be conserved through protection as they form the basic raw materials for further crop improvement using the genetic variability present in the traditional cultivars, as these are resistant to various biotic and abiotic stresses.

TRADITIONAL KNOWLEDGE SYSTEMS AND THE CONSERVATION OF PLANT GENETIC RESOURCES

Policy decisions affecting the ecological balance of biodiversity should be taken through prior consultation of people inhabiting the areas. This is essential because the survival of any species depends on the survival of its associated species and the ecological niche. The traditional way of living followed by tribal communities using biodegradable components, when replaced by the ideas of policy-makers without consulting or taking tribals into confidence, has resulted in disinterest in the younger generation. For example in southern India, an ethnic group called Malaimalasar inhabits a tribal hamlet by the name “Koomatty”. The traditional houses are being replaced by reinforced concrete structures, which are alien to the tribals. This results in the loss of knowledge of the tribes in house-building using plant species. As the knowledge is lost, the tribal attitude towards conserving the plants used for house building decreases. On the other hand, another tribal community called Kadars uses the reed plant, Ochlandra travancorica, in house construction, weaving mats, making baskets and blow guns, which is continued as part of their culture and helps in conserving the plant population. Likewise the Konda Reddy tribe in Andhra Pradesh in southern India has been cultivating 20 varieties of traditional cultivars in slash-and-burn agriculture (Table 1).

102 What is biodiversity worth to developing countries? Table 1. Traditional varieties of crops cultivated by the Konda Reddy tribe (slash-and-burn agriculture)* Sl. no Traditional cultivar Botanical name English name 1. Konda jonna Sorghum biclor Sorghum 2. Konda mokka jonna Zea mays Maize or Indian corn 3. Konda saama Panicum miliare Little millet 4. Konda korra Setaria italica Italian millet 5. Konda bontha Echinochloa colona Echinochloa frumentacea Millet 6. Konda sode Eleusine coracana Finger millet 7. Konda kandhi Cajanus cajan 1. Thella kandhi There seems to be three varieties Red gram Note: Generally two 2. Yerra kandhi cultivated by them; of white, red seeds are sown in a pit with 50 3. Nalla kandhi and black colour percent chance of survival. 8. Arisanda/alisanda Legume 9. Konda budamalu Variety of Oryza sativa Paddy 10. Gongura Hibiscus sabdariffa Roselle plant 11. Konda benda Hibiscus esculentus Okra 12. Pandiri pandlu Lycopersicon sp. Tomato 13. Vari Oryza sativa Paddy 14. Thiveralu 15. Dhamalu Mucuna utilis Seeds are edible, repeatedly cooked and washed five times and eaten, otherwise due to toxicity it might lead to insanity. 16. Dippalu Lagenaria ciseraria Bottle gourd 17. Donki Lagenaria ciseraria Bottle gourd 18. Boodida Gummadi Benincasa hispida Gummadi Cucurbita maxima Pumpkin 19. Bobbarlu Vigna sp. Legume 20. Kulamalu Cucurbita sp. *Source: Field study during 1996–1997, T. Ravishankar.

NON-TIMBER FOREST PRODUCTS (NTFPs)

The NTFP resources are a source of income to the rural and tribal communities in developing countries and play a vital role in the microeconomics. These NTFPs are dwindling day by day because of the increased dependency by local communities and overharvesting by commercial agencies. There is also a threat of overexploitation of seed material of a few species of NTFPs, which results in non-recruitment of these species and may lead to extinction of such species in the long run, causing ecological and economic stresses. On the other hand, the increased poverty of tribal and rural communities is creating an unprecedented pressure on the NTFPs. Hence the future management of plant biodiversity in the biodiversity rich developing countries in South Asia will need to address the issues of poverty mitigation and at improving rural socio- economic conditions with sustainable development and better management of NTFP resources.

NEED FOR POLICY INTERVENTIONS

These circumstances emphasize a greater need for policy interventions for microlevel management of NTFPs in developing countries. In order to develop policies for sustainable management of NTFPs there is a need for data on the following:

¥ ecological and economic evaluation of NTFP resources of the state, nation and region; ¥ pressure on NTFPs based on the dependency by different tribes or communities in a given area; ¥ quantifying the resource availability vis-à-vis dependency on the local communities; ¥ status of NTFPs in a given area, e.g. common or rare or endangered.

T. Ravishankar 103 Policy guidelines while addressing the above should also address mechanisms for regulated harvesting of NTFPs with provisions to implementation of the same guidelines. Policy guidelines on microlevel management of NTFPs can be developed taking cognizance of the existing mechanisms or institutions like TRIFED, LAMPS and Girijan Cooperative Corporation (GCC) in India, which deal either as value-adding institutions or cooperative mechanism towards influencing the livelihoods of rural and tribal communities. The policy guidelines on microlevel management addressing the above issues can be developed in consultation with local communities and should be included in the work plans of respective forest divisions.

ECONOMIC VALUES OF ECOSYSTEM†

Why economic evaluation?

The link between economics and biodiversity (or natural resources) is vital to understanding their value. In our life, we come across many items which are marketed, and we realize their value based on their price. But most of the natural resources that we use have value but not priced and also not traded in the market like other goods. For example, we know the value of air but there is no price. Hence, unless a price tag is attached to any resource, its value is not realized. The natural resources need valuation because of few factors like missing market, the alternatives and alternative uses of the natural resources, uncertainty in demand and supply of the natural resources, to formulate policies for conservation of natural resources and finally to arrive at natural resource accounting using any of the costÐbenefit analysis (Kadekodi 2001). The valuation of any natural resource should be from the ecosystem functions. Ecosystem has three distinct characteristics in valuation, namely existence, intrinsic and option values. All species have right to exist and they have a high degree of dependency between them, which brings in some intrinsic value. The intrinsic value needs to be separated from economic value. Above all the functions performed by the biological resources that are not captured under use-values should also be considered. Thus the logical approach will be to assign value to the ecosystem uses/functions as a whole, rather than its individual components that constitute it (Kadekodi 2001).

Economic value of biodiversity

Biodiversity has ecological, intrinsic values besides representing a socio-economic and monetary asset. The values associated with biodiversity have been grouped as below (McNeely et al. 1996):

Indirect use value ¥ productive use value ¥ consumptive use value ¥ indirect use value a) Productive use value. It is the value assigned to the products that can be harvested for exchange in formal market and is the only value of biological resources that appears in the national income account. Example: Firewood, fodder, timber, fish, medicinal plants b) Consumptive use value. The value assigned to natural products that are consumed directly, i.e. the goods that do not enter normal channels of trade. Example: A variety of non-timber forest products (NTFP) c) Intrinsic value. It is the value related primarily with the functions of the ecosystem but sometimes outweighing the consumptive/non-use values. Example: Maintenance of ecological balance, prevention of soil erosion, etc.

† This section is sourced from the paper “Economic evaluation of biodiversity conservation”, presented at the National Workshop on “People’s Participatory Approaches in Conservation and Management of Forest Resources”, organized by M.S. Swaminathan Research Foundation, Kakinada, and supported by the Food and Agriculture Organization of the United Nations, 16Ð19 December 2002, by R. Narayanakumar, Senior Scientist, Research Center of Central Marine Fisheries Research Institute, Kakinada, India.

104 What is biodiversity worth to developing countries? The value can also be grouped as given below (Garrod and Wills 1999):

Value type Subtype Example Direct-use value Consumptive Variety of home-consumed forest products Productive Plant breeding Indirect-use value Non-consumptive Tourism Option Non-consumptive Ecological process, future values of drugs Quasi-option Non-consumptive Value of being able to ascertain option value Non-use value Non-consumptive Existence value of elephants, turtles

The perception of benefits of biodiversity differs between rich and poor countries, developing and developed countries. For the local the direct-use value is high; option and existence values are high for developed countries. All these values may not be congruent (Flint 1992). However, there is no uniform currency for valuation and it depends on the location. It is also emphasized here that not all aspects of the environmental goods or services provided by them can be valued. There are a few such aspects which go outside the frontiers of the economic science. Thus economic evaluation should be viewed in this background.

CONCLUSIONS

The plant species used by the tribal communities all over the world which have been time tested by the sacrifice of many tribal lives over the generations could be used for solving many ailments and diseases and problems of population explosion. These herbal drugs have the potential of solving the ever-increasing and ever-erupting problems. These drugs may not only solve the problems but also do not produce any side effect. In certain societies human value is measured in terms of material possession. This is possible when more yields can be harvested from the limited area through practices like mixed cropping system and when sufficient raw material from plant diversity is available. Hence the human value is recognized only when the biodiversity is conserved, maintained and passed onto posterity. It is evident that if the green cover is reduced or degraded, the human value gets nullified like in Ethiopia. Thus the knowledge available with the tribal groups on utilization and conservation of biological diversity would help us derive benefits based on their ecological prudence if the above described conservation methods, followed by tribal communities, are adopted by every one of us involved in biodiversity conservation. This in turn would enable tribal communities to derive more stable income from the natural resources available to them.

ACKNOWLEDGEMENTS

I wish to thank the tribal headmen, traditional doctors and herbalists of Tamil Nadu for sharing their knowledge and to Prof. M.S. Swaminathan, Chairman, M.S. Swaminathan Research Foundation (MSSRF), Madras, for his encouragement. I am also grateful for the help and assistance received from my colleagues and officials of the Departments of Forests of Andhra Pradesh, Tamil Nadu and Kerala.

BIBLIOGRAPHY

Flint, M. 1992. Biological diversity and developing countries. In A. Markandya, ed. Earthscan Reader in Environmental Economics, pp. 437Ð469. Garrod, G. & Wills, K.G. 1999. Economic evaluation of the environment: methods and case studies. Earthscan Reader in Environmental Economics, pp. 263Ð288. Kadekodi, G.K. 2001. Valuation of natural resources: What we have learnt from Indian experience? Ind. J. of Agric. Econ 56(3): 285Ð312. Schultes, R.E. 1991. The reason for ethnobotanical conservation. In O. Akerele, V. Heywood & H. Synge, eds. Conservation of medicinal plants, pp. 65Ð75. Cambridge, Cambridge University Press.

T. Ravishankar 105

Economic value of biodiversity: a rural perspective for sustainable 12 realization P. Seema*

ABSTRACT

Quality of life in an economy is determined by management of different portfolios of assets—human, man- made, social and natural. Institutions determine how these portfolios are managed in an economy. As a stock of natural capital, biodiversity could be a source for increasing man-made capital as well as sustenance of communities. Substitution of natural assets by man-made assets in different stages of economic development happens at different rates. Also, in a developing economy, economic realization of such benefits encounters problems. Undervaluation and poorly defined property rights often contribute to inefficient management of natural capital. The realization of benefit flows from natural assets for subsistence is constrained by a host of other factors. Notable attempts at realizing the value in subsistence rural economies are reviewed to identify emerging issues in different contexts.

INTRODUCTION

We generally find an asymmetry in the distribution of man-made and natural capital. The disparity in the distribution of man-made and natural capital is more distinct in developing economies than in the developed world. This could be because as man-made capital accumulates, some of it will be substituted and returned back by natural capital. As economies grow, the nature of relationship between man-made and natural capitals varies from complementarity to trade-off with different rates of substitution. This becomes evident when we compare cities in the north with those in the developing world or with their own historical stages in development. Many developing economies including India still have clear asymmetry in distribution of natural and man- made capital. While harnessing the benefits of man-made capital without depleting its stock has been a widely practised economic activity, the same may not hold true for natural capital. Though ecological sustainability has been discussed in different fora, practising the same is ridden with problems. Biodiversity (at gene, species or ecosystem level) is a form of natural capital, ignoring the induced diversity in some instances of cultivated crops. How and to what extent this can result in economic benefit to rural subsistence communities forms the theme of this paper.

POVERTY AND MARKET-BASED INSTRUMENTS (MBIS)

If development is about having the choice among ways to earn livelihood and income security, biodiversity can be instrumental in opening the options for the food and income security. But the poor are resourceless, i.e. they do not have rightful access (may have usufruct rights to common properties) to goods or marketable skills (remember traditional knowledge and skills do not enter the current markets and mostly end up as low- priced commodities). Hence the scope of market-based instruments in alleviation of poverty becomes limited.

* Ashoka Trust for Research in Ecology and the Environment (ATREE), Bangalore, India; E-mail: [email protected]

107 A major option to provide the resourceless with food and income security is the social security system of a government. Most often these schemes end up providing temporary relief from hunger or unemployment. This is far from creating options for food and income security. Also the system is marred by corruption often eating into the basis of all options, i.e. biodiversity itself. In this context, the paper attempts to think on modalities to facilitate sustainable realization of biodiversity benefits minimizing the inefficiencies of market-based and social security schemes. The way out could be linking markets to traditional knowledge and skills based on sustainable extraction of natural resources. Again, this would be affected by the functioning of the government machinery in assessing and checking permissible harvests or in the laxity to facilitate evolution of ex situ alternatives to natural sources of raw material or control overexploitation of resources like water.

REALIZING THE BENEFITS FROM NATURAL CAPITAL STOCK

Market-based mechanisms have been operational in realizing the benefits from man-made capital. These instruments may not work in similar perfection in the context of natural assets due to the absence of clearly specified property rights. Thus subsistence economies in the resource-poor situations find it difficult to realize the benefits from biodiversity, especially if realization involves a flow of benefits in money terms as also in kind for immediate consumption or use. Realizing the benefits in money terms involves conversion of natural forms of capital to man-made ones. Also we generally agree that the current stock of natural resources needs to be preserved if not augmented. It has been recognized that the relationship between man-made and natural capitals moves from complementarity to trade-off between various stages of economic development (Pearce et al. 1990). While substitution of natural capital by man-made capital seems to be happening at a faster pace, there also are increasing instances of investing in the reverse substitution like the long-term research process of increasing varieties of cultivated species or by gradual cross-breeding in domestication. This addition to the natural diversity is only a minute proportion of the natural biodiversity stock of the world. There are also instances of substituting man-made capital in, say, corporate firms doing expensive outdoor landscaping in their office premises or owning a stretch of country club for their employees. When it comes to the collectively owned and enjoyed assets without clear property rights, the substitution of natural capital by human/man-made capital happens at unsustainable rates. Due to undervaluation and lack of property rights, we may need to sacrifice more than one unit of natural capital for one unit of man-made capital. Natural capital stock in subsistence economies already has kinked benefit functions at the current stock levels, evident from the less than stipulated forest cover as percentage of total land area in such countries. Hence it is important to consider the methods of realizing economic value of biodiversity which would not deplete the stock any further. Also substitution of natural assets by man-made assets need not always have a positive impact on the value of remaining lesser quantum of natural assets, i.e. the marginal economic value of the natural environment may not always be positive. A riverside farm in the suburbs of a big city may fetch buyers like a corporate firm, but the owner of the farm (as well as his neighbours) compromises on his own natural capital in that his remaining farm, if any, would be less appealing and less valuable now. The remaining natural assets in the area are subjected to the negative externalities that the new land use inflicts on water extraction, increased traffic, pollution and congestion in the area. If the original land owner is not able to (or happy to) reinvest and build further man-made capital with the compensation he received for a part of his land, he may turn out to be a net loser. While substitution of man-made capital takes place, the compromises are less in magnitude, as the first substitution does not reduce the value of the remaining units of its capital stock. When externalities are taken into account, conversion efficiency of unit natural capital to the profit generated in a corporate enterprise apparently would be poor compared to the efficiency of converting it for purposes of subsistence. This can be attributed to the nature and scale of externalities involved in both. Profit- seeking in biodiversity will have larger externalities than subsistence oriented biodiversity dependence. So studies on realization of value of biodiversity with respect to the subsistence communities seem to be more important from the perspective of rural poverty alleviation than in the context of sustainability. Nevertheless, the teeming population pressure causes concern about maintaining the stock and hence the realization of biodiversity value is being discussed in the context of sustainability and long-standing sustenance.

108 Economic value of biodiversity: a rural perspective for sustainable realization REALIZING THE BENEFITS FROM NATURAL CAPITAL STOCK IN A SUBSISTENCE ECONOMY

Rural subsistence economy is characterized by dependence on natural resources with no clear rights on them. Given the disadvantage in realizing economic benefit from the natural capital stock, the case of rural poor with no ownership rights over assets like land, water sources, biomass sources and technical skills will be even worse. They do not own much but are directly dependant on the collective natural capital. In the current scenario, in most of the developing economies, this dependency itself is being discouraged by state economic policies of privatization and nationalization. Take the case of a river ecosystem collectively dependent as anywhere else, but which recently got privatized by the Chattisgarh State Government in India. One of the poor states in the country, Chattisgarh has more than the stipulated area under forests while many other states with negligible forest area have thriving economies with high domestic product. Such poor states have been struggling to improve their economy and have been even requesting for economic compensation to keep the nations’ best forests intact even though most of their population are dependant on these. The Government of Chattisgarh leased out River Seonath to a private firm, depriving the access of surrounding communities and livestock to the river. In the absence of alternatives to bathe, fish and irrigate, communities started reacting and fearing political backlash, the lease is being reconsidered by the government, which may be legally and financially difficult given the contractual agreements and the heavy investments in huge check dams by the lessee. This illustrates the relative easiness to access the common natural assets by the resourceful rather than by the dependant communities. There also are instances of denied access to the biodiversity by depleting the forest cover by mining, inflicting the damage of pollution and land degradation and providing some compensatory employment and health hazards. So depletion or delineation from the natural assets preventing their realization by subsistence communities has been conspicuous in development history. Common grazing lands are shrinking fast and forests are becoming protected areas with reduced and controlled access for locals. When owned assets are very meager to transact or very fragile to produce well, rural marginal landholders face an uphill task. These people generally live in the periphery of dry forests with low input dry land agriculture and limited extraction from government forest area. The probability of conversion of land forest for expanding agriculture being almost non-existent and owned land being insufficient, these people are in a dire situation across the developing world. With increasing pressure on ground water- table from uncontrolled extraction by immigrant land users, and with scarce resources to dig deeper wells, rural marginal landholders are reduced to wage labourers Ð even that employment comes occasionally in the form of afforestation or soil conservation programmes. Most of these marginal farmers as mentioned earlier face declining yields due to what some refer to as “socially induced drought” (Mehta 2000) attributed to our dry land blindness in development planning. Indian villages in the dry zones are a typical example of such extreme situation. Their numbers are swelling due to large-scale rehabilitation of displaced population from hydroelectric projects. While external agencies find it easier to access natural resources like water for soft drink factories or wilderness for potential ecotourism areas, with the advent of economic liberalization, the native population who had been both the guardians and dependants of biodiversity assets, find it more and more difficult to realize the benefit of natural assets even for sustenance. There are alternative sources for profit-making or entertainment in soft drinks and ecotourism, but for sources of sustenance there are no long-term substitutes (we have seen earlier in the paper, the substitutability of natural assets is less in general and for commonly owned assets it is even lesser). The pressures of subsistence prevent complete delineation of local communities from common natural assets like forests resources, fishing in streams, etc. As the population increases, realization of value of biodiversity in these areas becomes a challenge in balancing the sustainability of biodiversity conservation, livelihood sustenance and economic growth. Answers lie mostly in the issues themselves: access to forests, incentives for suitable biomass regenerating, conservative land uses in marginal lands, regulation of natural resource extraction in rural areas (water, minerals, timber and non-wood products) and strengthening of community institutions to harness the value of biodiversity sustainably.

P. Seema 109 STRATEGIES FOR SUSTAINABLE REALIZATION OF VALUE OF NATURAL CAPITAL STOCK

Let us examine some success stories, which have proved that this balance is achievable and analyse what all the key issues and bottlenecks are in achieving this apparently ambitious but essential goal with the focus on tropical dry zones.

¥ Leaves of tendu trees have been harvested for decades in dry deciduous forests of central India for making beedi (country cigarettes). This has been coordinated by the Forest Department and collectors’ cooperatives quite well such that it is conserved as a good source of revenue for the government and the collectors, while the tree itself is protected due to its livelihood linkage. ¥ Similar possibilities exist for teak (Tectona grandis) leaves and palas (Butea monosperma) and similar species with the realizable benefit in plant parts, which can be harvested sustainably. The leaves of these species are used to make disposable cups and plates. With growing concern for eradicating plastic disposables and need to afforest areas, such species with possible interim benefits could be used in participatory afforestation areas. For species requiring destructive harvest (for instance, roots, tubers, bark and stem), any commercial exploitation from the wild threatens existence of the species involved. ¥ The religious value attached to the tree and extraction of mahua (Madhuca indica) flowers and fruits in central India for consumptive and commercial uses have ensured protection of the species as well as sustained realization of benefits for rural poor. It is not uncommon to see denuded hillocks in central India where the only woody component left standing are mahua trees just because of the perceived religious and use values attached to it. ¥ The religious and consumptive use values have been the factors, not high price or state incentives. This implies that once the belief in sustainability is inculcated as an ethnic concept, it would not need many incentives to prevent exhaustive exploitation if consumptive use is permitted. Relevance of constant interaction with the people living in the periphery of forests and continuing a mutual learning process is lacking at present in the functioning of state forest departments. ¥ In the case of amla (Phyllanthus emblica), a common tree found in the dry deciduous forests, the fruits are used both for consumptive and commercial medicinal uses. As the demand for the fruits in the fast expanding Indian system of medicine increased, the unsustained methods of harvest proliferated, almost endangering the native varieties in many parts of the country. ¥ While the importance of herbal sources of therapeutics should be recognized as important sources of revenue, the unsustainable rates of harvest of non-timber forest products (NTFPs) can be cause for concern. Certification of NTFPs to ensure sustainable harvest rates and substitution of natural sources of the raw material by thoughtfully designed alternatives might be an apt approach. ¥ The alternative sources of NTFPs (especially those for which exhaustive harvest is necessary) for the expanding pharmaceutical industry need not alienate the forest dependant communities nor prevent them from realizing benefits of biodiversity. Since the active ingredient content of a raw material is dependant on its natural habitat, it is ideally grown just adjacent to forests in marginal dry lands of local communities. This also ensures that such marginal lands can be rejuvenated, livelihood security assured, and also on-farm biomass production improved while the pharmaceutical industry gets good raw material. Again what is needed is a good network of producers and industries with an independent body to ensure/certify that the product origin is from natural environments but not from inside forest areas. While consumption of NTFPs from the wild sources cannot be curtailed for subsistence reasons, the commercially oriented harvests should ideally be transplanted from natural forests. ¥ Tamarind and women self-help groups in Tamil Nadu (Southern India): A NGO initiated an attempt at avoiding the middlemen in the NTFP trade, simultaneously creating community and individual revenue with microcredit as well as facilitated trade. For the past three years, many women self-help groups have been working to collect tamarind fruits, gather and sell to industries at remunerative prices, while generating a common fund, a multiple of which they receive as microcredit from an affiliated bank for starting income generating enterprises. ¥ Microcredit facilities and trade facilitation are thus found to help realization of NTFP values. ¥ The now famous community initiatives at ecorestoration of common lands in Ralegaon Sidhi (Maharashtra, India), Sukhomajhri and Dhamala (Haryana, India) also provide lessons in sustainability of collective actions and issues emerging in the long run. Creation of social capital gains emphasis in the light of such experiences. Creating an environment for constant dialogue among villagers finds obstacles in the politics of democracy. At the same time democratic institutions help maintain equitable distribution of decision-making power, responsibilities and benefit sharing. Since the community involvement is inherent at all stages, conflict resolving mechanisms should be well developed in such community based natural resource management.

110 Economic value of biodiversity: a rural perspective for sustainable realization ¥ NGO-initiated seed fairs in Maragwa, Kenya have helped to promote agrobiodiversity while strengthening food security since 1996 (Koziell & McNeill 2002) in that country. Efforts at preserving the food security helps preserve the biodiversity. ¥ It should be mentioned that investments in promoting irrigation in dry lands may not improve productivity, food security and agrobiodiversity of these dry lands. The traditional crops here are suitable more for low input dry farming methods and the incremental yield in coarse-grained crops with irrigation is not much compared to crops like wheat and rice. Impacts of large-scale waterlogging in soils of such areas are yet to be understood. We also have been seeing indebted farmers committing suicide in dry regions because the steep loans taken for deepening wells could not be repaid. The most cost-effective investment will be in promoting millet-based agrohorticultural systems with soil and water conservation practices at the farm level (Purushothaman 2003). This conclusion is based on stakeholder priorities, microclimatic suitability and subsistence needs. ¥ The Soil and Water Conservation and Agroforestry Programme (SWaCAP) (1988Ð1995) in Lesotho combined natural resource management with appropriate agricultural technologies that allowed environmentally sustainable livelihood improvement for the poor residing on degrading hillsides. The greatest success of SWaCAP was the reintroduction of an indigenous farming technique known as the Machobane Farming System (MFS), a low external input farming system that relies on relay and intercropping a series of cash and subsistence crops on plots of land generally not larger than one hectare. ¥ Communal Areas Management Programme for Indigenous Resources (CAMPFIRE) is another community-based ecotourism venture, in the Sunungukai camp, Zimbabwe. If the clearing of woodland for agricultural production and harvesting of these forests for fuelwood and poles had continued unabated, forest resources would have been depleted and the river would have silted. With the silting of the river, fish population would have declined. This could have triggered game poaching for an alternate source of protein. In general, mounting environmental degradation has had a direct and negative impact on economic development in the Sunungukai area. In the long term, the community stood to suffer as the ecosystem’s capacity to provide essential environmental services that support the socio-economic subsystem was endangered (Munasinghe 1995). ¥ Serious human resource constraints, inadequate financing arrangements, inefficient management structures and weak management systems variously contribute to the community-based organization’s inability to effectively and sustainably manage natural resources. The beautiful Sunungukai camp is not well marketed and remains underutilized with low initiative towards profit-making. ¥ Efforts by the Green Foundation near Bangalore, India, in conserving land races and centuries of accumulated skills in cultivation have laid a firm foundation to the cause. On-farm conservation is significant not only for breeding material but also for food security. It was also learnt that the improvement of the potential of the land races, development of market for farmer’s produce, establishment of community-based seed networking and integration of conservation strategies at all levels are the priority areas considered necessary to sustain a system. Importance of persistent efforts to keep the momentum and establish seed banks is emphasized by the foundation workers.

CONCLUSIONS ON FACTORS FACILITATING REALIZATION OF SUBSISTENCE BENEFITS FROM NATURAL CAPITAL

A number of factors can facilitate the realization of subsistence benefits from natural resources. For one, there should be control and regulation in the extraction of soil, water and bio-resources for commercial purposes. Where species have realizable benefits in plant parts, their harvesting from natural stands on a sustainable basis should be regulated by the government. However, if commercial harvesting involves destructive means (e.g. removal of roots, tubers, bark, stem, etc.), these threaten the survival of the species and should be avoided. Alternate means using afforestation and domestication by the communities should be explored. Once the belief in sustainability is inculcated as an ethnic concept, it would not need many incentives to prevent exhaustive exploitation even if consumptive use is permitted. Other measures that can be incorporated in the development include certification of NWFPs which will guarantee sustainable harvesting practices. Such schemes can be strengthened with micro credit facilities and trade facilitation for under exploited species/ products. More can be done by improving the farming techniques, such as reintroduction of indigenous farming techniques incorporating components of nutrition and soil conservation. It would also help to make available the propagation materials of local varieties to ensure food security. Finally, human resources constraints and inadequate financing arrangements can hamper a community’s attempt to harness biodiversity value. Multilateral

P. Seema 111 matching of goals between various stakeholders and agencies can help build social capital at the local governing bodies and community institutions. This is a constant and crucial componet in realizing the benefits of biological diversity.

BIBLIOGRAPHY

Koziell & McNeill. 2002. Poverty reduction through conservation and sustainable use of biodiversity. London, IIED. Mehta, L. 2000. Drought diagnosis dryland blindness of planners. Economic and Political Weekly 35(27): 2439Ð 2441. Munasinghe, M. 1995, Tropical forests and sustainable development: a framework for analysis. In R.A. Kramer, N. Sharma and M. Munasinghe, eds. Valuing tropical forests: methodology and case study of Madagascar, pp. 11Ð18. Washington, DC, World Bank Pearce, D.W., Barbier, E. & Markandya, A. 1990. Sustainable development economics and environment in the third world. London, Earthscan. Purushothaman, S. 2003. Economics of land-use options in a tropical dry deciduous area. SANDEE Project Report.

112 Economic value of biodiversity: a rural perspective for sustainable realization Market-based instruments for watershed protection—what do we 13 know? Shin Nagata*

ABSTRACT

Using market mechanism for resource allocation is generally inadequate. Public and future goods arguments are needed for forest, or watershed management. This may require special arrangements in the form of government intervention, or direct government administration. Biodiversity is one example of the “area functions” of forest where we need to consider a certain area where each spot carries out its own task (spot- specific functions), such as production of wood and non-wood forest products, carbon sequestration, watershed conservation, erosion control and strict nature preservation.

WHY SHOULD WE PROTECT WATERSHEDS?: MARKET FAILURE VS. GOVERNMENTAL FAILURE

We rely on market mechanisms for resource allocation in general, but there are exceptions, as in the case of market failures. For forest, or watershed management, public goods and future goods arguments are relevant. In other words, we need a special arrangement other than market mechanism for dealing with the environmental function and long-term elements of resource management. This special arrangement may be government intervention, or direct government administration. These days, we hear of governmental failures as well as market failures. If the government were perfect and ideal, there would not be government failures. In reality, however, the government, just as the market, is not perfect and ideal.

CLASSIFICATION OF PUBLIC GOODS

Paul Samuelson (1954) may be the first economist who characterized public goods in his monumental article, “The pure theory of public goods”. He emphasized joint consumption of public goods and private goods. Others, like Masgrave (1939), emphasized public goods exclusively. Joint consumption and the exclusivity of goods are related, but yet we can consider them independently. In some cases joint consumption can be achieved without any interaction from consumers; we may take this as pure joint consumption. Yet in some cases, there occurs much intermingling. On the extreme, one’s consumption prohibits the other’s—a pure individual consumption. We can envisage cases where joint consumption is possible, but consumption can be controlled; we restrict the entrance to the theater where joint consumption, i.e. watching the act, is possible inside. We call this case as club goods. Depending on the technical or physical characteristic of consumption, entrance restriction is easy in some cases, but difficult in others. We can arrange entrance control; some theaters can be set free of charge, i.e. public in some sense. If we draw a figure with a horizontal axis to represent the extent of joint consumption and a vertical axis to represent the extent of entrance ease, the first quadrant indicates “public goods”, the third “private goods”, the second “club goods”, and the fourth “common pooled resources”. This last case is problematic;

* University of Tokyo, Tokyo, Japan; E-mail: [email protected]

113 entrance is free, but joint consumption is limited, i.e. one’s consumption interferes with the other’s. In some cases free entrance is restricted to certain members. In still other cases, the rule of use is different for members and non-members; use is prohibited to non-members, and among members certain rules are kept to avoid overuse.

Joint vs. individual consumption

Exclusivity

Public goods, private goods, club goods, and common pooled resources

Extent of coverage

Global vs. regional public goods We may need another simple and purely technical classification of public goods, by the extent of coverage of service. Carbon sequestration is one important function of the forest to prevent global warming; the beneficiary is everybody on earth. Coverage of water control and/or erosion control by the forest depends on the watershed under consideration. In some cases, it covers a limited area within a local community, but in others, it covers a rather wide area spreading over several prefectures. With international rivers, it may cover several countries.

Spot-specific functions and area functions of forest

Biodiversity is surely one of the most important issues today. We may want to retain endangered species for biodiversity, but if we keep only these species, we cannot have diversity. In some places we may keep some endangered species but in nearby places we may need another, and next to them still yet another. So to have diversity, we need to consider a certain area where each spot carries out its own task. Biodiversity is one example of the functions of forest where we need to consider “area”. Educational and recreational functions of forest are other examples. We may add landscape conservation to this list of area functions of forest. These area functions of forest are based on spot-specific functions of forest, because they can be fulfilled well when each spot of forest is designed to perform its spot-specific task. I may enumerate spot-specific functions of forest as production of wood and non-wood forest products, carbon sequestration, watershed conservation, erosion control and strict nature preservation.

Mutual relation among spot-specific functions: using production possibility sets

If we produce wood, which is formed from water and carbon dioxide in the air, we fix carbon from the air. So we may postulate that, as wood production increases, so does carbon fixation in a parallel fashion (Figure 1). Strict nature conservation can be fulfilled if no human intervention takes place. So we may postulate that if wood production is carried out in any amount, strict nature conservation function disappears (Figure 2). These two combinations are rather extreme cases. In most cases, most functions of forest are compatible, but not in a perfect parallel fashion. If we take wood production and water conservation, they are at a minimum with no trees in the forest area. If we set felling age too low, the extents of their functions would be small. They increase as felling age increases to some point, but if we set felling age too high, they will decrease. So, if we evaluate their functions in monetary values, we may draw diagrams as shown in Figure 3. If we take a locus of wood production and water conservation as felling age increases, we may derive a production possibility set for wood production and water conservation (Figure 4).

114 Market-based instruments for watershed protection – what do we know? 1 3

Carbon Evaluation fixation

Total sum

Water conservation

Wood production

Wood production Tp Ts Tw Felling age

2 4

Strict Water nature conservation S preservation

IC E

P P S

Wood production Wood production

Figures 1–4. Mutual relations among spot-specific functions

We may call these three cases as perfect compatible, non-compatible, partially compatible, and we may write a matrix indicating the mutual compatibility of each of the two spot-specific functions as follows:

12345 1 wood production Ð P C C N private goods 2 carbon fixation P Ð C C N global public goods 3 water conservation C C Ð C N local public goods 4 erosion controll C C C Ð N local public goods 5 strict nature conservation N N L L Ð public goods

P stands for perfect compatibility, N for non-compatibility, and C for partial compatibility. L indicates that if strict nature conservation is targeted, erosion control and water conservation are fulfilled in a limited way.

Ways to protect watershed: price vs. quantity regulation, voluntary vs. mandatory planning

Incentive mechanism may be key issues here. Price regulation, if it is embodied as tax-reduction, may work if there is well-defined tax system. Otherwise tax-reduction may not indicate the desired corrective action. Likewise, quantity regulation may not work if the enforcement mechanism is well defined. If a certain fine is negligible, in monetary and social senses, many people do not obey the quantity regulation. We may envisage voluntary and mandatory plannings to regulate long-term resource management. Again, we have to think about the incentive mechanism behind each of the planning schemes. Voluntary planning may bring a certain reward to the volunteers; that is probably why they become volunteers. If one does not obey mandatory planning, one is punished. In that sense, mandatory planning is observed, because there is incentive to avoid punishment.

Shin Nagata 115 BIBLIOGRAPHY

Musgrave, R.A. 1939. The Voluntary Exchange Theory of Public Economy. Quarterly Journal of Economics 53:213Ð37. Samuelson, P.A. 1954. The Pure Theory of Public Expenditure. Review of Economics and Statistics 36:387Ð 89.

116 Market-based instruments for watershed protection – what do we know? Inter-regional partnership for 14 watershed conservation in Korea

Yeo-Chang Youn* and Jaekyong Chun**

ABSTRACT

There are many conflicts of interest in the conservation and use of natural resources, a good example is the conservation of watershed. The case of the Han River was investigated to identify the important factors for successful implementation of land-use policy for watershed conservation. The watershed conservation policy is an output of a series of negotiations between representatives of downstream and upper region residents. The new policy introduced an instrument for internalization of externalities from watershed conservation, based on the concept of environmental justice among the stakeholders. The conflicts of interest among the stakeholders can be resolved through the establishment of a partnership among themselves, with the help of governmental and non-governmental agencies. The effectiveness of the policy instrument is determined not only by the participation of the stakeholders but also by a sound understanding of the facts, the lack of which makes it difficult for the water users to pay for the watershed conservation.

INTRODUCTION

There are many conflicts of interest in relation to the conservation and use of natural resources. The conservation of watershed is a good example of such conflicts in many parts of the world. This paper explains our experiences of resolving the conflicts related to watershed conservation in Korea by forming a partnership between regions in the lower and upper parts of a watershed. The case of the Han River was investigated to identify the important factors for successful implementation of land-use policy for watershed conservation.

THE CASE

The Han River is the sole source of drinking water for residents in Seoul Metropolitan and the neighbouring cities and thus the watershed is considered a vital environmental resource for the people living in the lower regions. Figure 1 shows the Han River watershed area in the Korean peninsula. The lower region is urbanized while the upper region is a mixture of rural and urban areas. As the economic activities in upper areas expand, the water quality of the Han River has been deteriorating as seen in Figure 2. The water drawn from the Han River is not directly drinkable any more as the quality has dropped below the limit of drinkable water. Even though the water drawn from the Han River is treated for drinking water supply, there are not many households which directly consume the tap water without further treatment. The Government of South Korea has set the standard of water quality as a guideline of its environmental conservation policy. The government’s water quality control policy was in the past based on command and control only without any considerations given to the costs borne by the stakeholders in the upper regions. But such policies were not effective as evidenced by the deteriorating water quality in Figure 2.

* Seoul National University, Seoul, Korea; E-mail: [email protected] ** Korea Legislation Research Institute, Seoul, Korea.

117 The Ministry of Environment sets the standard for water quality in rivers and the total amount of effluents into the river is controlled by the state. The Ministry of Environment, based on the watershed conservation law of major rivers, moderates the interregional partnership. The government introduced a new policy for watershed conservation in 1999, starting with the Han River when the water quality reached an unendurable level. The policy was extended to other major rivers in 2002. The new water quality conservation programme is based on a partnership between communities in the upper and lower watershed areas. The partnership is legalized by political process and compromises.

The Han River watershed Major rivers in South Korea

Figure 1. Location of the Han River watershed

BOD in Paldang Dam 1.6

1.4

1.2

1

0.8 mg/l 0.6

0.4

0.2

0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 year Figure 2. Water quality in the Han River

118 Inter-regional partnership for watershed conservation in Korea WHAT MATTERS IN THE WATERSHED CONSERVATION POLICY?

A new policy is usually formulated to resolve a social problem, which involves many stakeholders. In the process of policy-making, the political power of stakeholders is decisive. Usually the political power is based on the social structure concerned. In a democratic society, the political powers of stakeholders are usually expressed in the forms of voting, campaigns and lobbying during the course of policy processes. The scientific information on water quality and watershed management is vital in the water quality policy formulation and allocation of resources during the policy implementation. Without such information, the issues of water quality control and watershed conservation cannot be properly communicated among the interest groups. Information on watershed management is essential for the evaluation of a watershed conservation policy based on a newly introduced partnership among stakeholders. The public awareness of issues and facts about water quality and watershed conservation is the first stage of a policy formulation. The awareness of water quality was instrumental in the case of the Han River watershed conservation partnership programme. The public awareness of the water quality problem brought out the downstream residents’ willingness to pay for benefits from watershed conservation. The watershed conservation policy is an output of a series of negotiations between representatives of downstream and upper region residents. The stakeholders expressed their cases in the process of designing a new policy instrument composed of income transfer and collection of an extra water user fee. The new policy introduced an instrument for internalization of externalities from watershed conservation, based on the concept of environmental justice among the stakeholders.

STATUS QUO IN LEGAL SYSTEM

In Korea, there are many statutes relating to the watershed conservation as given below. The old but still valid statute, that is, the Civil Act, regulates the basic relations about water distribution and use among the residents in upper-and down-stream areas. But the new special statutes like the Riparian Act and the Dam Construction Act surpass the Civil Act in the respect of legal effect. According to such special statutes, the enterprises that obtained the licenses of water use by the government can obstruct the traditional rights to the riparian water of the indigenous peoples under the Civil Act or distribute the water of rivers. The following are laws ruling the social relations regarding water resource use and conservation:

The Civil Act of 1958 (subtitle 3 of title 2: neighbourship rules) The Clean Water Act of 1990 The Natural Conservation Act of 1997 The Riparian Act of 1999 The Dam Construction Act of 1999 The Han River Water System Act of 1999 The Nag Dong River Water System Act of 2002 The Geum River Water System Act of 2002 The Young San and the Sum Jin River Water System Act of 2002

WHO ARE THE STAKEHOLDERS?

There are many stakeholders in the new watershed conservation policy. The residents, fishermen, and manufacturing and service sectors in the lower areas such as the Seoul Metropolitan will be the beneficiaries of the new watershed conservation programme while they pay less for their use of the water from the Han River. The farmers, forest holders and tourism industry in the upper areas will have to bear the costs of limiting their economic activities in the watershed protection areas while they are compensated as much as possible. Among these, the farmers raising livestocks and the tourism industry were opposed to the introduction of a new law which regulates their economic activities in the upper regions. The forest owners were not active in the policy formulation process.

Yeo-Chang Youn and Jaekyong Chun 119 WHAT DO WE KNOW ABOUT WATERSHED MANAGEMENT?

In order to well inform the stakeholders about the problem of water quality and its relation to land use, questions like the following should be understood by the stakeholders:

¥ What effects has the choice of forest species on the quantity and quality of water in the river? ¥ What effects has forest acreage on the quantity and quality of water in the river? ¥ What effects has forest treatment on the quantity and quality of water in the river?

Unfortunately, the information necessary to answer the above questions is not readily available in many cases including the Han River case.

HOW ARE THE DECISIONS REGARDING THE CONTROL OF WATER QUALITY- QUANTITY MADE?

The decision-making process in water conservation policy involved negotiations and compromises among the stakeholders. The negotiations were moderated by the government and non-government organizations since the gap between the interests of the upper and lower regions seemed too far apart. In the process of negotiations, local governments in the upper and lower regions actively presented the interests of their residents and industries while the central government played the role of an intermediary. Their political powers were well exerted in various ways including the law-making processes in the national parliament to secure the environmental justice of watershed protection policy. But there is still a remaining question of whether the minority’s interests were adequately presented or protected in the policy-making process. We are not sure that the information on the facts, costs and benefits of the new water conservation policy was provided and available to all the stakeholders equally.

HOW WAS THE WATER CONSERVATION PARTNERSHIP ESTABLISHED?

The economic loss to residents in the upper regions is compensated by an income transfer programme of which the fund is created from user fees collected from tap water users of the lower regions. The residents of the lower regions pay 100 won per tonne of water consumed as user fee. The residents and landowners in the upper regions are compensated in the form of subsidy.

HOW IS THE WATER CONSERVATION POLICY EVALUATED?

The water quality in the river is monitored by the Ministry of Environment continuously and reported to the public periodically. The income transfer programm is audited by legal identities such as the national parliament and the central government. The public can participate in the process of distribution of funds among the upper communities and the mass media is readily available for reporting of any wrong doings in the process. The success factors for the watershed conservation policy include:

¥ willingness and ability to pay by the beneficiaries of the new policy; ¥ opportunities for participation of the stakeholders in the decision-making; ¥ compromises among the interest groups; ¥ monitoring of policy implementation by the stakeholders’ representatives; ¥ evaluation and revising of the policy if side-effects occur.

CONCLUSION

In the case of the Han River, the conflicts of interest among the stakeholders can be resolved through the establishment of a partnership among themselves. Here the roles of government and non-governments organization are important in such arrangement of social relations. The political process is critical for success in interregional water conservation partnership. In the case of the Han River’s water conservation policy, the environmental justice as the base of the legal system has been somewhat realized in the partnership. The effectiveness of the policy instrument is determined not only by the participation of the stakeholders but also by a sound understanding of the facts. We do not yet know much about the effect of forest management on water conservation. This lack of information makes it difficult for the water users to pay for the watershed protection function of forests.

120 Inter-regional partnership for watershed conservation in Korea Biodiversity resources, economic 15 values and conservation in China

Shi Zuomin*

ABSTRACT

Biodiversity resources in China are very rich. Characteristics of biodiversity resources in China at gene, species and ecosystem levels are briefly introduced. Direct utilization value, indirect utilization value and potential utilization value of biodiversity resources in China are evaluated generally. Measures that have been adopted for biodiversity resources conservation in China are reviewed in terms of law and policy, management, conservation and sustainable utilization, scientific research and international cooperation.

INTRODUCTION

Biodiversity resources have been eroding dramatically because of the following reasons: loss and fragmentation of habitats, overutilization, environmental pollution, signalization of varieties used in agriculture and forestry, invasion of exotic species, global climate change, construction of dams and reservoirs, and other natural disasters. But biodiversity resources have direct and potential significant economic, social and ecological values. So conservation of biodiversity resources has become one of the hot spots globally. China is one of the countries with abundant biodiversity resources and is the largest developing country in the world. Conservation of biodiversity resources has important significance for China, and the world.

CHARACTERISTICS OF BIODIVERSITY RESOURCES IN CHINA

A vast territory, old geological history, various landforms, climate and soil types have formed complex and various habitats and determined the abundant biodiversity resources in China. The biodiversity has the following characteristics.

Abundant species resources

There are more than 30 000 higher plant species in China, less only to Brazil and Columbia by world-wide comparison. In Asia, the number of species in China is highest. It accounts for about 10 percent of the total species number in the world (Table 1).

Many endemic and species

Specific geological and historical conditions have resulted in many relic and new genera and/or species endemic to China (Table 2). The former such as Ailuropda melanoleuca, Lipotes vexillifer, Metasequoia glyptostroboides, Ginkgo biloba, Cathaya argyrophylla and Cycas panzhihuaensis are all called living fossils. There are about 17 300 endemic higher plant species. They account for about 57 percent of the total higher plant species in China.

* Institute of Forest Ecology, Environment and Protection, Chinese Academy of Forestry, Beijing, China; E-mail: [email protected]

121 Table 1. Species number in China and in the world Species number Species number Type Percentage in China in the world Mammals 499 4 181 11.9 Birds 1 186 9 040 13.1 Reptiles 376 63 000 5.9 Amphibians 274 4 010 7.4 Fish 2 804 21 400 13.1 Insects 40 000 751 000 5.3 Higher plants 30 000 285 750 10.5 Fungi 8 000 69 000 11.6 Bacteria 500 3 000 16.7 Virus 400 5 000 8.0 Algae 5 000 40 000 12.5

Table 2. Some animal and plant species (or genera) endemic to China Number of known Number of endemic Type Percentage species (or genera) species (or genera) Mammals 581 species 110 species 18.9 Birds 1244 species 98 species 7.9 Retiles 376 species 25 species 6.7 Amphibians 284 species 30 species 10.6 Fish 3862 species 404 species 10.5 Bryophyta 494 genera 13 genera 2.0 Ferns 224 genera 6 genera 2.3 Gymnosperma 34 genera 10 genera 29.4 Angiosperma 3123 genera 246 genera 7.5

Old flora and fauna

Most parts of China became land at the end of the Mesozoic period and were not affected by continental glacier in the Quaternary glacial period. Thus old and relic species of the Cretaceous and Tertiary periods have been preserved all over the country in different degrees. For example, there are seven families of pine and fir in the world now, and China has six of them. There are many old or original families and genera of angiosperma in China such as Liriodendron, Magnolia, Manglietia, Michelia, Altingia, Distyliopsis, Exbucklandia, Rhodoleia, Theaceae, Lauraceae, Illiciaceae, Schisandraceae, Calycanthaceae, Trochodendraceae, Tetracentraceae and Bretschneideraceae. The origin of the fauna of terrestrial vertebrates can also be traced to the Hipparion fauna of Pliocene of the Tertiary period. The fauna north of Qinling belongs to the Palearctic realm and that south of the Changjiang River belongs to the Oriental realm. The current flora and fauna in China also have close relationships to the flora and fauna in the tropical area. Many tropical families and genera are distributed in the south of China. For example, Nepenthaceae, Dipterocarpaceae, Daphniphyllaceae, Rhoipteleaceae and Ditiscaceae are common old families in the paleotropical area. Dibamidae, Varanidae, Irenidae, Artaidae, Trogonidae, Eurylaimidae, Psittacidae, Bucerotidae, Pteropidae, Tupaidae, Lorisidae, Hylobatidae, Tragulidae and Elephontidae derive from the tropical area. Additionally, many monotypic genera and oligotypic genera in the flora and fauna of China also reflect their old characteristics.

Plentiful genetic resources

Genetic diversity is very vast in China. The plentiful animal, plant and microbial species are valuable pools of genetic diversity. Genetic diversity of cultivated plants is very large. It includes economic crop, fruit tree, vegetable, grazing grass, flower, medicine and timber species. For example, there are more than 1000 economic tree species found in China, including Ziziphus spp., Castanea mollissima, Camellia spp., Vernicia spp. and Toxicodendron vernicifluurn that are specific to China. China is even the original and distributional centre of wild and cutivated fruit tree species; the number of cultivated fruit tree species in China is the most in the world, such as Malus spp., Pyrus spp., Prunus spp., Diospyros spp., Actinidia spp., Citrus sinensis, Litchi

122 Biodiversity resources, economic values and conservation in China chinensis, Dimocarpus spp., Eriobotrya spp. and Myrica spp. China is one of the original areas of Oryza sativa and the original place of Glycine max. China also has more than 11 000 medical plant species and 4215 grazing grass species. As for animals, China has the most varieties and categories of domestic animals in the world. According to the current statistics, there are 1938 varieties and categories of domestic animals in China, including endemic economic animals and domestic insects.

Various ecosystem types

China has all the ecosystem types that occur in the northern hemisphere, including forest, grassland, desert, wetland, coast and marine, and farmland ecosystems. From north to south, the main forest ecosystem types are cold temperate coniferous forest, temperate coniferous and broad-leaved mixed forests, warm temperate deciduous broad-leaved and coniferous forests, subtropical evergreen broad-leaved and coniferous forests, and tropical monsoon and rain forests. Grassland ecosystem can be divided into three main types, viz. temperate grassland, high and cold grassland, and mountain grassland. Desert ecosystem can be divided into four main types, viz. small tree desert, shrub desert, subshrub and small subshrub deserts, and high and cold deserts. Wetland ecosystem includes mainly lake, river and marsh. Coast and marine ecosystem can be divided into beach, estuary, coast, wetland, mangrove forest, coral reef, island and ocean ecosystems. Farmland ecosystem is even more plentiful and diverse.

ECONOMIC VALUES OF BIODIVERSITY RESOURCES IN CHINA

Biodiversity resources have historical, present and future economic and social values and this plays an important role in poverty reduction, especially in rural areas. But, because there are many uncertainties in their exact values, we can now only evaluate them generally. Generally, economic values of biodiversity resources can be divided into direct utilization, indirect utilization and potential utilization values. Direct utilization values include direct utilization values of biodiversity resources products and materials for processing other products; indirect utilization values include the values of organic matter production, CO2 sequestration, O2 production, cycling and storage of nutrient matter, water and soil conservation, water resources retention and reduction of environmental pollutants; potential utilization values include potential option value and potential reserve value.

Direct utilization value

¥ Economic values of direct products and processing materials. Based on the national statistical data, economic values of biodiversity resources in terms of forestry, agriculture, stockbreeding, fishery, industrial draw materials and consumptive utilization in 1993 were calculated generally as RMB33.57x109, RMB358.21x109, RMB137.01x109, RMB51.80x109, RMB438.78x109 and RMB126.0x109 respectively. ¥ Service value. This value includes tourism, scientific and cultural values, and utilization value of livestock power. Their values in 1993 were RMB710x109, RMB2.88x109 and RMB70x109 respectively.

Indirect utilization value

¥ Value of organic production. It means the economic value of primary productivity and biomass of various ecosystems. The value of organic matter production of terrestrial ecosystem in 1995 was RMB23.3x1012.

¥ Value of CO2 sequestration and O2 production. The methods of afforestation cost and carbon tax were used for calculating the economic value of CO2 sequestration of terrestrial ecosystem in 1995. The 12 result was RMB3.27x10 . The value of O2 production of terrestrial ecosystem in 1995 was 12 RMB3.11x10 , calculated by the methods of afforestation cost and industrial producing O2 shadow price. ¥ Value of cycling and storage of nutrient matter. Based on the approximate calculation for the annual uptake and total storage of important nutrient matter such as nitrogen, phosphorus and potassium, its economic value was calculated by the average price of fertilizer. The result showed that the indirect economic value of nutrient matter fixation during its cycling of terrestrial ecosystem was RMB324x109 per year.

Shi Zuomin 123 ¥ Value of water and soil conservation. The value was calculated in the following three parts: reducing loss of surface soil, reducing loss of soil fertility and alleviating disaster of alluvial mud and sand. The values of reducing losses of surface soil, soil organic matter and soil inorganic nutrient matter, and alleviating of alluvial mud and sand of terrestrial ecosystem per year were RMB3.89x109, RMB202.53x109, RMB6.42x1012 and RMB12.27x109 respectively. The total annual value of terrestrial ecosystem for reducing soil erosion was RMB6.64x1012. ¥ Value of water resource retention. The value has been evaluated mainly for forest ecosystem. It was about RMB271.28x109 per year. ¥ Value of reduction of environmental pollutants. The value has been calculated just for forest ecosystem. 9 9 Its value for SO2 absorption was RMB9.70x10 and for dirt removal was RMB390x10 .

Potential utilization value

¥ Potential option value. The value has been evaluated by the method of willing insurance payment. It was RMB89.3x109. ¥ Potential reserve value. Potential option species only account for a small part of the total potential species; potential reserve value should be larger that the value of potential option value. According to the calculation, the value of potential reserve was RMB134x109.

CONSERVATION MEASURES FOR BIODIVERSITY RESOURCES IN CHINA

The Chinese Government always pays attention to biodiversity conservation and has gained great achievements in the country. Currently, the following has been carried out:

Making of laws, systems and policies

¥ law: constitution, laws, administrative regulations, local regulations and rules; ¥ system: environmental impact assessment system, natural reserve system and license system; ¥ policy: payment for utilization of natural resources, sustainable utilization of biological resources, financial and tax subsidies, compensation for ecoenvironment.

Management measures

¥ institution establishment: some administrative institutions for biodiversity have been established in the relevant management departments of the state council and relevant institutions have also been established in local governments; ¥ dissemination and education: news, reports, films and television programmes, exhibitions, memorial activities of special festivals and education of young people; ¥ training: training courses or workshops mainly for the staffs of basic management departments.

Protection and sustainable utilization measures

¥ protection: establishment of more than 900 reserves, 700 scenic and famous areas, 500 forest parks, 200 zoos, 150 arboreta and some seed and gene pools; ¥ sustainable utilization: breeding and cultivation of wild animals and plants, ecotourism and eco- construction.

Scientific research

¥ Biodiversity listing: Ecosystem listing includes China’s vegetation, forest, grassland, lake, marsh, etc. Species listing includes China’s flora, economic plants, economic animals, birds, red plant book, red animal book, etc. Genetic resources listing includes collection of seed resources such as seed of crop, vegetable and grazing grass, and livestock species. ¥ Studies on conservation theories and techniques: Studies focus on the basic theories on conservation biology and the artificial breeding techniques for specific species such as Davidia involucrata and Ailuropda melanoleuca.

124 Biodiversity resources, economic values and conservation in China ¥ Monitoring and information system: Ecological stations and monitoring sites established include 64 ecological stations of the Chinese Academy of Sciences (CAS) in different ecosystem types, 13 ecological stations of the State Forestry Administration (SFA) in different forest types, ecoenvironmental monitoring centre, wetland resources monitoring centre and wild animal and plant resources monitoring centre of the SFA, monitoring network of the State Environment Protection Administration(SEPA), State Ocean Administration (SOA) and the Ministry of Agriculture (MOA). Information systems including the biodiversity information systems of the CAS and relevant information systems of the SFA, SEPA, MOA and SOA have also been set up. ¥ Publishing books and journals on biodiversity: More than 400 relevant books have been published in the past 20 years including tens of national journals on nature conservation and biodiversity and over a hundred journals on biological science, agricultural science and forestry.

International cooperation

¥ implementation of international conventions such as the Biodiversity Convention, Ramsar Convention and CITES Convention; ¥ multilateral cooperation and cooperation with government and non-government organizations such as World Bank, UNDP, UNEP, UNESCO, WWF, IUCN and Wetland International; ¥ bilateral cooperation such as with Japan and Australia on migration birds, with the U.S. and Germany on the giant panda, and with Russia on natural reserves and forest fire; ¥ relative civil cooperation.

CONCLUSION

China is one of the countries with numerous and varied ecosystem types, species resources and genetic resources in the world. The biodiversity resources have vast economic values and play an important role in poverty reduction, especially in the rural areas. Many activities in different ways of conserving biodiversity resources have been conducted and prominent achievements have been gained in the country. But because of China’s fast economic development, large population, and some irrational traditional lifestyles, more work on biodiversity resources conservation should be done in the future.

BIBLIOGRAPHY

Biodiversity Committee of Chinese Academy of Sciences. 1994. Principles and methodologies of biodiversity studies. Beijing, Chinese Science and Technology Press. Chen Lingzhi. 1993. China biodiversity—current situation and their conservation strategies. Beijing, Science Press. Editing Committee of Country Study Report of Biodiversity in China. 1998. Country study report of biodiversity in China. Beijing, Chinese Environmental Science Press. Liu Shirong, Jiang Youxu & Shi Zuomin. 1998. A study on the biological diversity in warm temperate forests in China. Beijing, Chinese Science and Technology Press.

Shi Zuomin 125

The role of forestry in poverty reduction, biodiversity conservation 16 and Clean Development Mechanism in Viet Nam Trieu Van Hung*

ABSTRACT

In Viet Nam the forest area was 10.9 million ha in the year 2000, covering 33.2 percent of the county’s total physical area. Following a long period of forest degradation the situation has begun to stabilize after 1995. But the share of this sector in the national economy is not high and its trend is going down. Nevertheless, the sector plays an important role for more than 24 million people living in or around forests, especially the 8.5 million people of the ethnic minorities. The role of non-timber forest products (NTFPs) is very important for rural households, creating economic opportunities for communities, particularly for the poor in high mountainous and remote areas. Viet Nam is one of the most important centres of biodiversity with a very high potential of non-timber forest products. With the policy of sustainable development, the Forest Science Institute of Viet Nam is strengthening its capability in research and development, focusing not only in wood production, but also in stable/reasonable utilization of forest resources, biodiversity conservation and application of Clean Development Mechanism.

FOREST RESOURCES

Viet Nam has a total area of 32.89 million ha. The forest area was 10.92 million ha in the year 2000. Forests cover 33.2 percent of the land, of which natural forests occupy 86.52 percent and plantations 13.48 percent. There is a total woodstock of 751.5 million square meters and 8.4 billion bamboo stamps. Before 1995, the natural forest was badly damaged. The number of high economic value trees and non-timber forest products was reduced remarkably. Reasons for forest loss were rapid increase of population, the need for economic development, shifting cultivation, uncontrolled migration and establishment of new economic areas. The forestry management mechanism is not effective and does not meet the purpose of forest protection and development; for example, there is a lack of effective mechanism to implement a sound conversion of forested land into agricultural land or other purposes. The motivation for forest protection and development is still weak. The changes in the forest area through the years are shown in Table 1 (below):

Table 1: Forested area in Viet Nam, 1943–2000 Unit: 1000 ha Year Natural forest Plantation forest Total Forest cover (%) 2000 9 444 1 471 10 916 33.2 1995 8 252 1 050 9 305 28.2 1990 8 430 745 9 175 27.8 1985 9 308 584 9 892 30.1 1980 10 486 422 10 908 32.1 1976 11 077 92 11 169 33.8 1943 14 300 0 14 300 43.0

* Forest Science Institute of Viet Nam, Hanoi, Viet Nam; E-mail: [email protected]

127 FOREST PRODUCTION

Since 1995, in line with the economic restructuring of the country, Viet Nam forestry has been developing smoothly with some changes and a shift in focus from utilization to conservation and development of the forest. The trend is reflected in the conversions of (i) the natural forest to plantation and development of forest industries, (ii) governmental and state forestry into social forestry with multi-organizations including the involvement of the private sector, (iii) centralized mechanism into decentralized mechanism; and (iv) economic purpose, domestic forestry market to a multi-purpose international market based on sustainable use of forest. Besides meeting the domestic requirements, forestry has seen its export value increasing steadily:

Year 1986 1990 1995 2000 Export value (million US$) 71.6 126.5 153.9 200.0

Although the export value is increasing, the percentage of forestry production in the forestryÐagricultureÐ fishery sector is going down:

Year 1986 1990 1995 1999 Value rate (%) 11.78 7.57 5.08 4.61

Compared with the total national economy, the value rate of forestry production is very small with a falling trend:

Year 1995 1998 1999 2000 2001 Value rate (%) 1.22 1.0 0.99 0.93 0.87

Forestry production is concentrated mainly in logging and forest products processing, which from 1985 to 1999, took up 72.72Ð79.6 percent of all forestry activities, forest plantation and forest tending 13.05Ð17.88 percent, and other activities 3.85Ð12.96 percent only. In order to protect and develop the forest, the government has laid down a policy to limit logging:

Year 1990 1995 2000 2003 Logging (1000 m3) 1081 617 300 250

Although the forestry sector contributes only a very small portion to the national economy in Viet Nam and its direct economic value is not high, it plays an important role in the people’s livelihood, especially in forested and rural areas.

FORESTRY AND POVERTY REDUCTION

In 2002 the total population of Viet Nam was about 82 million people, of which more than 24 million people were living in or around forested areas. Over 8.5 million people come from the ethnic minorities. Although a rapid change is taking place in the economy and society at this moment, wood, fuelwood and non-timber forest products still play an important role in the livelihood of the ethnic minorities. According to the Administration Unit, Viet Nam has 61 provinces with approximately 10 500 communes, of which 57.1 percent are at mountainous, upland and remote areas. There are 1175 communes in deprived conditions. These are the poorest people and their livelihood depends on forests; nevertheless this group impacts strongly on the forest resources and forest degradation. The Vietnamese Government has long encouraged the participation of the people in forestry activities for poverty reduction. In implementing forest and land allocation, thousands of farmer households have received long-term forest lands and rights to do business by themselves on the allocated land. Many national programmes have been carried out with good results, including:

¥ Programme 327 “Regreening denuded lands and bare hills”: From 1993 to 1998, it has allocated 1.6 million ha forest to farmer households, established new plantations of 638 500 ha and undertaken forest tending, protection and regeneration of 748 100 ha.

128 The role of forestry in poverty reduction, biodiversity conservation and Clean Development Mechanism in Viet Nam ¥ Programme 661 “New forest plantations of 5 million ha.”: This is a continuing of Programme 327 from the years 1998Ð2010 with its objective to set up 5 million ha of new plantations of forest. After 4 years of implementation with the support of the local people, it has newly planted about 200 000 ha involving forest tending, protection and annual regeneration. The forest cover has increased by 2 percent. ¥ Fixed cultivation and settlement programme: It has contributed actively to a stable life of the high mountain people. After 20 years of implementation, there are 1185 communes belonging to 26 provinces with altogether 1.9 million people participating in the whole country. In many fixed cultivation and settlement areas, production development has created some concentrated forestry production zones such as bamboo plantation in Thanh Hoa with more than 20 thousand ha. In Yen Bai province, there are thousands of hectares of planted Cinnamomum trees. This has assisted over 132 000 households with more than 800 000 people having a stable living, and established many forest farms at new habitation areas. ¥ Programme 135 “Poverty reduction in socio-economic development” has been implemented in 2235 poor communes. Every year, the number of poor households has been declining by 1.5Ð2 percent. (28 000Ð30 000 households/year), creating 1.4 million jobs where the stabilization and development of forestry and agriculture are linked to products consumption.

FORESTRY AND BIODIVERSITY CONSERVATION

Viet Nam’s National Action Plan on Biodiversity was developed in 1995 by the former Ministry of Forestry in cooperation with the State Committee of Sciences and some international organizations such as the WWF, UNDP and IUCN. With the implementation of the Biodiversity Action Plan, investment in biodiversity has been improved, up to 1998 mainly on reforestation at 72 percent, buffer zone development 16.1 percent, biodiversity conservation 6.14 percent, and scientific research and basic investigation 2 percent. The special-use forest system was established over a total area of about 2.1 million ha, including 17 national parks, 47 national reserves, 13 habitat/species areas and 18 land/seascape areas. With more than 12 000 plant species and 7000 animal species, Viet Nam is one of the important centres of biodiversity in the world. The potential of non-timber forest products (NTFPs) is very high. However, although NTFPs have been properly exploited, their sustainable management is still limited. Strengthening public awareness is one of the important achievements in improving biodiversity conservation and integration of forestry, biodiversity conservation and environment protection. In reforestation and forest enrichment, using indigenous tree species has been given more attention. Currently, there are more than 30 species, including rare, endangered species in use for plantation. In forestry, the importance of NTFPs to rural households and upland areas in Viet Nam cannot be underestimated, especially for the poor and remote households. NTFPs can create economic opportunities for these communities, with simple technologies in collecting, planting and preprocessing. For example, households in Bac Ha district of Lao Cai province have begun to grow Amomum aromaticum, harvesting an average of 200Ð300 kg of fruit per year, in some cases, as much as 500Ð1000 kg, equivalent to 20Ð30 million VND, which is 10Ð20 times higher than rice cultivation on the same area (Nguyen 2001).

Table 2. NTFPs harvested from 1995 to 1999 Product Unit (trees) 1995 1996 1997 1998 1999 Bamboo Thousand stems 67 026 720 858 174 189 172 649 171 000 Neohouzeaua dullooa Thousand stems 108 500 104 779 105 175 248 310 150 000 Phyllostachys spp. Mllion stems 15 600 24 664 2 649 12 197 100 000 Rattan Tonnes 28 500 25 975 25 639 80 097 65 700 Pine resin Tonnes 5 350 1 348 6 387 6 777 7 182 Anise fruits Tonnes 1 870 6 672 9 896 9 500 5 000 Cinnamon Tonnes 7 790 3 658 3 954 2 100 2 900 Bamboo shoots Tonnes 32 500 30 887 13 789 Source: MARD, Ha (2001).

Trieu Van Hung 129 FORESTRY AND CDM IN VIET NAM

After the seminar on “Opportunities and Perspectives for Implementation of Clean Development Mechanism in AsiaÐPacific Countries” in Hanoi, 1999, CDM awareness has improved in Viet Nam. The practicality of CDM can be seen in its relationship to forestry issues. The potential of forestry CDM in Viet Nam is at the policy level in the orientation of forestry development in areas such as protection of existing forested areas, forest restoration, land rehabilitation, social forestry and commercial plantations for paper and pulp, timber and other products. The National Five Million-Hectares Reforestation Programme holds an opportunity for CDM application with different types of projects: forest protection (watershed management, sand-dune stabilization, soil and water conservation); special-use forests (national parks, nature reserves, recreation forest); large-scale industrial/ production forests (pulp and paper, particleboard, sawn-log plantations); community/farm-level plantations (majority). As an example, the on-going project of the Research Centre for Forest Tree Improvement of the Forest Science Institute of Viet Nam , founded by the International Greenhouse Partnership Office (IGPO), is being implemented within the CDM framework. By using improved and selected seed sources of Acacia auriculiformis and Eucalyptus terreticornis for plantation at 1600 ha y-1, the growth yield increases of 15Ð20 percent mean -1 -1 a carbon sequestration of 6000 tonnes y equivalent to 22 000 tonnes CO2 y more than by using normal seed sources of the same species. More important is the raising of CDM awareness in forestry.

ISSUES THAT NEED TO BE SOLVED IN FORESTRY FOR POVERTY REDUCTION, BIODIVERSITY CONSERVATION AND CLEAN DEVELOPMENT MECHANISM

1. Enhancing awareness of the relationship between forestry, poverty reduction and biodiversity conservation In forested areas, the division of labour is lower than that in other areas; therefore enhancement of the awareness of the role of forest for the local people is very important. To ensure sustainable socio-economic development, forest protection and development are basic conditions for long-term benefit. The need for poverty reduction, economic development and forest resource protection must be considered in harmony with Clean Development Mechanism. There are no two opposite issues.

2. Stable land-use planning In general, the Government of Viet Nam pays great attention to land-use planning. However, in practice the feasibility and effectiveness of land-use planning projects do not meet the requirements of sustainable development. There has been no clear definition of stable forestry for each region with three types of forests: production forest, protection forest and special-use forest. Therefore planning needs to be done initiatively and based on a need for economic restructuring in each region. Planning has to be made according to intersector approach to ensure a balanced and feasible implementation.

3. Reasonable resource utilization This is a need to develop effective production models like agricultureÐforestry and agricultureÐforestryÐfishery farming systems, where appropriate technologies can be applied. Selecting crop structure, animals and farming techniques suited to the physical conditions and characteristics of each region (for example, cultivation on sloping land) must be linked to marketability to ensure high and sustainable effectiveness. In addition, new technical advances and traditional indigenous knowledge of each community should be combined for best results.

4. Socio-economic and policy issues Forest and land allocation policy has helped many farmer households to establish some effective production models. However, there are some problems such as improper distribution of settlements in the planning process, and poor economic and production states in some households. Policies for the three types of forest, protection forest, special-use forest and production forest, are not well defined with the benefits for the forest owners not clearly shown. In general, there is still lack of a sound forestry policy system to motivate active participation of the people in forest protection and development.

5. Forestry research In order to strengthen the role of forestry in poverty reduction, biodiversity conservation and application of Clean Development Mechanism, some questions need to be answered and constraints addressed for forestry research in Viet Nam. They include:

130 The role of forestry in poverty reduction, biodiversity conservation and Clean Development Mechanism in Viet Nam ¥ Access to new information and technology, international integration and partnerships, new research fields (ecotourism, CDM, carbon trade, forest certification) and society awareness of forest multi-values. ¥ Lack of human resources, facilities and equipment; lack of finance, technology and research experience; lack of management mechanism of research such as planning, monitoring and evaluation; and lack of information, extension and dissemination of research results. ¥ Specific objectives of forestry research in Viet Nam in the coming years need to be developed to set the research priority to 2010, to enhance research capacities and networks, to improve the effectiveness of forestry research and improve the linkages between research and extension for forest managers, forest users and policy-makers. ¥ Specific themes that need to be examined: Ð basic investigations of the physical, economic and social conditions to select suitable tree species for planting; evaluation of the forest resources; and determining the promising species to produce commodities including non-timber forest products; investigating and evaluating the traditional indigenous knowledge of the communities and marketing possibility of the main products including the NTFPs; Ð studies on seed improvement, propagation, farming technique, products processing, and preservation technique aimed at raising productivity and economic effectiveness; Ð developing and establishing models towards good production, high effectiveness and sustainability (combined with ecotourism), agroforestry models for various zones such as ethnic minority areas; Ð studies on the management of the three types of forest: protection forest, production forest and special- use forest; formulating policies to attract the participation of farmers in forestry activities, policies to benefit forest owners, on tax, investment and credit; Ð strengthening forestry extension services in suitable forms to various target groups. ¥ Tasks of the Forest Science Institute of Viet Nam: Ð To undertake research in line with the priorities and issues mentioned above, linking research to practice within the national programmes on poverty eradication, especially in mountainous and remote areas. Ð In technology transfer, there is a need to establish pilot models at important zones, produce extension documents with background information and form suitable for farmers and organize training and technology transfer to farmers. Ð To meet the requirements of forestry development, it is necessary to strengthen the capacity building of the FSIV such as training and education of the staff, as well as development of an international cooperation and information network.

BIBLIOGRAPHY

General Statistical Office. 2000. Statistical data of Viet Nam agriculture, forestry and fishery, 1975Ð2000. pp. 7Ð10. Hanoi. Ha, C.C. 2001. Mot vai y kien ve che bien lam dac san. Thong tin chuyen de Khoa hoc Cong nghe va Kinh te. Trung tam thong tin, Bo Nong nghiep va Phat trien Nong thon. So 1 nam 2001. (Some ideas on processing NTFPs in Viet Nam). MARD. Hanoi. Ha, C.C., De Beer, J. & Tran, Q.T. 2000. Non-timber forest products subsector analysis Ð Viet Nam. Hanoi.43 pp. MARD. 2001a. Forestry development strategy of Viet Nam 2001Ð2010. Hanoi. 75 pp. MARD. 2001b. Lam nghiep Viet Nam 1945-2000 (Viet Nam Forestry 1945Ð2000). Hanoi, Agricultural Publishing House. MARD. 2001c. Master plan for agricultural research in Viet Nam. UNDP/FAO VIE 98/019.08. Hanoi. MARD. 2001d. 5 million ha reforestation programme. Hanoi. 15 pp. Morris, J. 2002. Report on an indigenous knowledge study in Ba Be. NTFP Project Ð Phase I. Hanoi. Nguyen, V.T. 2001. Quan ly va bao ve nguon cay thuoc tren nui da voi o Viet Nam. Thong tin chuyen de Khoa hoc cong nghe va Kinh te. Trung tam thong tin, Bo Nong nghiep va Phat trien Nong thon. MARD. Hanoi. Nguyen, V.T. 2002. Potential and current situation of medical plant resources in Viet Nam. Hanoi. Trieu, V.H., Nguyen, X.Q. & Hoang, C. 2002. Ky thuat trong mot so loai cay dac san rung. (Technical plating of some species for NTFPs). Hanoi, Agricultural Publishing House. 184 pp.

Trieu Van Hung 131

A policy review on watershed protection and poverty alleviation 17 by the Grain for Green Programme in China Li Zhiyong*

ABSTRACT

The rapid development of the Chinese economy is still confronted with constraints from deteriorating environment and rural poverty issues. It has become a significant policy option in maintaining the high growth, efficiency and sound development of the Chinese economy to rehabilitate forest resources, improve ecological conditions, increase farmers’ incomes in a coordinated development of population, resources and environment. The Grain for Green Programme, as a CDM activity of Chinese style, launched on trial in 1999 and implemented in 2002 across the country, is the biggest land-use transition, watershed management and poverty alleviation programme involving the largest population in Chinese history and across the globe. It covers 25 provinces/ regions/cities over 1600 counties, involving 15 million households and 60 million farmers. Hence the Grain for Tree policy has a significant bearing on the ecological protection and poverty alleviation of the farmers in the soil erosion- and water erosion-prone regions. A review and assessment of the backgrounds, essentials, effects, problems and trends in the Grain for Tree policy are of great significance for both China and the other developing countries in the world in their efforts to combat the deteriorating environment and alleviate poverty.

POLICY SETTING

Ecological improvement and poverty alleviation make demands on the Grain for Tree policy

China is a big mountainous agricultural country. In the past five decades vast forest lands and grasslands have been reclaimed into farmlands due to pressure arising from increasing population and grain demand. This practice has aggravated soil and water erosion and land desertification. There are more than 6 million ha of farmland with a slope of over 25 degrees in China. The annual volume of silt flowing into the Yangtze River and Yellow River reaches over 2 billion tonnes, among which two-thirds come from sloped farmlands. The findings of the Second National Remote Sensing Inventory on Soil and Water Erosion released in 2002 indicate that the area prone to soil and water erosion in China accounts for 37.5 percent of the national territory and the annual volume of soil erosion reaches over 5 billion tonnes. In addition, China is suffering from a serious shortage of water resources, with per capita share of water resources reaching merely 2000 tonnes. It has become one of the 13 water-poor countries in the world. Although China’s poverty reduction policy has helped the 220 million poverty-stricken population solve the problem of food and shelter, currently a rural population of 30 million is still well below the poverty line.

* Research Institute of Forestry Policy and Information, Chinese Academy of Forestry, Beijing, China; E-mail: [email protected]

133 Economic development and a good harvest of grain have offered policy support for the Grain for Green Programme

China’s enhanced economic strength offers a sound economic basis for it to map out and implement the Grain for Green Programme. Since the policy of reform and opening up was initiated in 1978, China has maintained a sustained and rapid economic development for over two decades. Its GDP in 2002 exceeded RMB1 trillion for the first time, with a remarkable growth in its overall national strength and fiscal revenue, thus making it possible for the government to contribute certain financial and material resources to ecological improvement for such programmes as the Grain for Green Programme. Consecutively good harvests of grain offer favourable conditions for the implementation of the Grain for Tree policy. First of all the policy would not produce a great impact on national grain security because of the abundant storage of grain. Since 1995 China has experienced consecutive years of good harvest, with the grain output exceeding 500 billion kg for three consecutive years (1996, 1998 and 1999), thus giving rise to a situation where supply exceeds demand in a successive and structural manner. If 14.67 million ha of farmland were to be converted into forest land and grassland by the year 2010 and 2250 kg ha-1 y-1 and 1500 kg ha-1 y-1 of grain were to be subsidized for the Yangtze River catchment and southern region as well as the Yellow River catchment and northern region respectively, the grain subsidies in peak years would amount to 23.37 billion kg, taking up merely 4.7 percent of the average grain output nationwide during the 9th Five- Year-Plan period. Secondly, sloped farmland has a low grain yield, which would not have a great bearing on the national grain output. Sloped farmland is mostly impoverished land with poor water supply and fertility, serious soil and water erosion threats as well as low and unstable yield. A farmland with a slope of over 15 degrees produces on average only 1770 kg of grain per hectare. Even if all of the 14.67 million ha of sloped farmlands and sandificated farmlands were converted into forests according to the plan, only 26 billion kg of grain would be reduced annually across the country, taking up only 5.2 percent of the average grain output nationwide during the 9th Five-Year-Plan period. It is obvious that conversion of sloped farmlands and sandificated farmlands into forests would not produce a significant impact on the equilibrium of supply and demand for grain nationwide.

POLICY ESSENTIALS

In order to ensure the successful implementation of the Grain for Green Programme, the Chinese Government has issued the Regulation of Grain for Green in 2002 and has adopted a range of innovative and operational policy measures with Chinese characteristics.

Grain and cash subsidy policy

Criteria for grain subsidy: 2250 kg of grain are subsidized annually for each hectare of converted farmland in the Yangtze River catchment and southern region and 1500 kg of grain are subsidized annually for each hectare of converted farmland in the Yellow River catchment and northern region. Criteria for cash subsidy: RMB300 are subsidized annually for each hectare of converted farmland. The duration for grain and cash subsidies: subsidy for conversion of farmland into grassland is valid for two years, subsidy for conversion of farmland into economic forest is valid for five years and subsidy for conversion of farmland into ecological protection forest is temporarily valid for eight years. The cost for grain subsidy is borne by the national revenue. During the period of grain and cash subsidies farmers must continue their afforestation efforts under the unified leadership of the county or township government in barren hills where conditions permit after they have converted their existing farmlands into forests.

Subsidy policy for seeds and seedlings as well as afforestation cost

Subsidies for seeds and seedlings as well as afforestation cost for the Grain for Green Programme and barren hills are borne by the government, calculated in terms of RMB750 per ha. The sloped farmlands which have not been contracted out to individual households and fallow sloped farmlands would not be eligible for grain and cash subsidies, but can be afforested as barren hills. Subsidies are given for afforestation costs that are used only for seeds and seedlings, and the lands are closed for regeneration and maintenance instead of for other purposes.

134 A policy review on watershed protection and poverty alleviation by the Grain for Green Programme in China Preferential taxation policy

If the converted farmland is subject to agricultural tax and grain subsidy reaches the previous annual yield, grain subsidy would be handed out to farmers after the agricultural tax has been deducted by the state as of the year when the conversion programme is implemented. If the grain subsidy does not reach the previous annual yield, agricultural tax would be deducted accordingly and in a reasonable manner. If the converted farmland is not subject to agricultural tax, agricultural tax must not be deducted from the grain subsidy regardless of the previous annual yield. For the counties where the Grain for Green Programme is implemented, the drop in collection of the agricultural tax would be subsidized properly by the national revenue in the form of transfer payment.

Guarantee policy for forest tenure

The government is implementing a policy of “those who convert sloped farmlands into forests and manage the forests would benefit from them”. It adheres to the mechanism of contractual operation by individuals with a combination of responsibility, power and interests. Following the implementation of the Grain for Green Programme, farmers’ tenure to tree crops established on converted farmland and barren hills must be guaranteed. Farmers are entitled by law to go through procedures for changes in land use and be provided with certificates of tenure to tree crops by the People’s Government above county level. The contracting-out duration would extend to 50 years after farmers have established plantations on farmlands and barren hills. Farmers are entitled by law to inherit and transfer the contract and extend it upon expiration in conformity with relevant laws and regulations.

An ecological protection forest-biased policy

The proportion of ecological protection forest must not be lower than 80 percent when counties are regarded as accounting units. Only seeds and seedlings and afforestation subsidies, rather than grain and cash subsidies, are provided for the economic forest established by exceeding the prescribed proportion.

POLICY ACHIEVEMENTS

During 1999Ð2002, 7.7 million ha of farmland were converted into forest nationwide, including 3.72 million ha of farmland-turned forest and 3.98 million ha of plantations established on barren hills. In 2002 alone the Grain for Green Programme involved 5.162 billion kg of grain and RMB458 million, from which 10.31 million farmer households benefited. Implementation of the Grain for Green Programme has altered the traditional farming practices of the Chinese farmers, achieved agricultural restructuring, increased the farmers’ incomes, improved the ecoenvironment and promoted the local economic development and poverty reduction process in poverty-stricken areas. Some achievements have been made in the grain for ecology programme and the deteriorating ecological conditions in some programme areas have been improved to varying degrees. The implementation of the Grain for Green Programme has also alleviated soil and water erosion and land sandification. The serious soil and water erosion in some southern areas, where trials of the Programme were first undertaken, has been mitigated, with water in some river catchments turning clear and the ecoenvironment improved. Some relevant industries like tourism and animal husbandry have been boosted and local economies further developed. The area proned to soil and water erosion in the Grain for Green Programme area in Tianshui City, Gansu Province, has been reduced from the previous 314.3 km2 to 90.74 km2, a drop of 71.1 percent, and the forest and grass cover has risen from 14.5 percent to 41.8 percent. Over 90 percent of the farmer households under survey contend that the ecoenvironment in the vicinity of the village has been improved or will be able to be improved following the implementation of the Programme. Remarkable social benefits have been achieved in opening the granaries to relieve the poor, and the farmers’ poverty reduction process has been accelerated. Over one-third of farmer households in most programme provinces (or regions) are involved in the conversion of farmlands into forests. Some farmers engaged in the conversion programme have obtained not only a reliable supply of grain but also increased their income by engaging in diverse economic undertakings and sideline production. The Grain for Green Programme is also the largest project for poverty alleviation. The rural households that convert their farmlands can be directly subsidized with grain and cash, and the poor rural households, especially those from ecologically deteriorating areas, benefit more than the rich rural households. Among the 180 pilot counties covered by the Programme across the country in 2000, 104 counties were poverty counties

Li Zhiyong 135 by national standard, taking up 57.8 percent of the total. Among the 333 000 rural people of Minhe County in Qinghai Province, there are about 100 000 under absolute poverty with an annual income of less than RMB625. The poverty in Minhe County was mainly caused by ecological deterioration, which had resulted in no crop harvest for consecutive years, and thus no grain ration for rural households. Under the Programme, this county has converted 8000 ha of cropland. The cash and grain subsidies provided by the Programme have immediately released the hunger problem of these rural poor. The agricultural industry structure has been readjusted effectively and the rural economy has further developed. The Grain for Green Programme has helped to change the traditional way of extensive cultivation with little harvest and to readjust the inappropriate land-use structure. Since the Programme started, government agencies at all levels have prompted the development of farmland infrastructure, captive breeding, green food, forest ecotourism, and green industry. Thus an economy with specific characteristics has been boosted which also facilitated a shift from agricultural production to tree crop production, stockbreeding and other secondary and tertiary industries. The rural industrial structure has been adjusted appropriately and farmers’ economic income has been increased. The Grain for Green Programme at Longhui County in Hunan Province adopted a model of combining forestry with medicinal plants so that water and soil have been well conserved while achieving a high economic value. An output value of RMB60 000 per ha can be secured when the medicinal plants mature. The county has established a total area of 1200 ha of medicinal plants, which will bring an income of RMB72 million for local farmers four years from now. The policy of conversion of cropland to forests policy has received extensive support and participation by local farmers, and has become the largest and most successful community forestry project. Since its pilot phase started in 1999, the Grain for Green Programme has covered altogether 25 provinces (autonomous regions and municipalities) which include more than 1600 counties, 20 000 plus towns and townships, more than 100 000 villages, over 15 million rural households and more than 60 million farmers. The programme has already become the largest participatory community forest project in China. The design of the Programme was transparent and open, and therefore won extensive support and participation by the rural households. The Luding County in Sichuan Province assigned the task of converting 2667 ha of cropland down to 10 towns and townships, 50 villages, 9909 households and 18 301 plots: such a well-organized forest programme was unprecedented. According to the survey of one hundred households that converted their croplands, about 94 percent of them signed contracts with the village, around 93 percent acknowledged that the village had revealed information on converted area and cash and grain subsidies of each household, and about 89 percent agreed that the information was accurate.

POLICY CONSTRAINTS

The Grain for Green Programme is a new policy in China. There have been some difficulties and problems with the policy that jeopardized the effective implementation of the policy and the fulfillment of the policy goal.

The policy inconsistent and unstable

Firstly, local governments and farmers fear that there will be changes to the Grain for Green Programme. In order to fully benefit from the preferential policy at an early stage, they competed with each other to convert their croplands and also converted more than what was planned in the Programme. Secondly, although it was stated very clearly in the policy that “people who convert their croplands should plant trees, and those who manage the forests should benefit”, it has remained to be an issue of great concern as to how farmers could reap economic benefit from the trees especially those ecological forests that were established under the Programme when the subsidy ends. Thirdly, the forest management and utilization policy eight years after the Grain for Green Programme is unclear. Also constrained by the logging quota, the rural households that converted their croplands and other planting units lost interest in establishing ecological forests. All these have hampered the timely achievement of the policy’s ecological goal.

Watershed management not emphasized

The main objective for the Grain for Green Programme is to increase vegetation cover, bring water and soil erosion under control, and improve the ecosystem through providing grain for green in return. Therefore the Programme should cover sources of big rivers, river banks, steep slope cultivation areas around lakes and reservoirs, and sandy cultivation areas that are severely threatened by sandstorms. There are some problems emerging during the implementation of the Programme so far. Firstly, the focus of ecosystem restoration is

136 A policy review on watershed protection and poverty alleviation by the Grain for Green Programme in China not prominent in general. In some areas, the conversion task was designated on an equal benefit sharing basis; therefore the distribution of conversion areas was segmented and the Programme was not able to bring large areas of degraded land under control. Secondly, some ecologically fragile areas and key areas of ecological importance were not assigned with conversion tasks or with very few tasks; thus the watersheds along some big rivers were not harnessed as priority areas. This breaches the principle of putting key ecological areas in the first place.

POLICY RECOMMENDATIONS

Aiming at the problems emerging during the implementation of the Grain for Green Programme, there will be need for further improvement of the policy in three areas in the future given that the current policy is implemented effectively by the central and local governments. The proposed improvement will contribute to the long-term effectiveness of the policy, the realization of watershed management, poverty alleviation and the achievement of the economic development target. The rural industrial structure needs to be further adjusted and optimized in order to ensure the long- term effectiveness of the conversion of cropland to forests policy. Firstly, the land-use structure needs to be readjusted to change the traditional way of extensive cultivation with little harvest. Grain production on steep slope cultivation land that has low yields because of deteriorating natural conditions should be further reduced. Instead, trees and pasture grass should be established to increase land-use efficiency. Likewise, grain production can be replaced by growing fruit trees, medicinal plants and other tree crops, so as to readjust the internal structure of the planting business. In areas that have tourism resources, forest ecotourism should be developed with local characteristics. Secondly, farmland infrastructure needs to be further developed to improve grain productivity. At the same time the conversion of cropland is taking place, rural households that participated in the programme should be left with a certain amount of farmland for subsistence. Grain productivity in those reserved farmland should be greatly increased through technological improvement and intensified management. Thirdly, the growing of high quality and new variety of products such as fruit trees should be promoted to increase the farmers’ incomes. Fourthly, the traditional way of grazing should be improved and captive breeding should be promoted. Livestock species should also be restructured and the integration of captive breeding, half grazing and half breeding, and grazing during summer and breeding during winter should be adopted to effectively protect natural pasture and forests. Fifthly, township enterprises should be promoted to release the reliance of local farmers on land resources. Township enterprises of forest industry, tourism industry and processing industry in the areas covered by the Programme should be greatly developed to increase the farmers’ incomes. Rural energy structure needs to be further improved for the effective conservation of forests established under the conversion programme. The strategy of concerted economic and environmental development should be followed to integrate rural energy development into the conversion programme and to release the energy reliance of local farmers on the newly established forests. Based on the overall objectives of energy and environmental development and through integrated planning, the resources need to be allocated rationally, fuelwood forests need to be established, and renewable energy industry needs to be developed. Supportive economic policies should be adopted to enhance the development of rural energy such as methane supply, energy-saving kitchen range, and small-scale hydroelectricity projects. A rational energy consumption system with multiple energy sources supplementing one another should be established and an organizational structure and service system for rural energy consumption needs to be completed. Therefore energy use for rural livelihoods and the issue of rural energy can be solved comprehensively and systematically, with the ecological environment being protected and concerted development of economy, environment and society being achieved. The development of small townships should be boosted to encourage ecological immigration and to release the pressure of population and agriculture in water and soil erosion areas. The conflict between population and land has become more prominent since the Grain for Green Programme was implemented. Although the policy requires grain subsidy being provided by the national government, such subsidy is limited to certain time frame. If follow-up measures are not well considered, once the subsidy is stopped, farmers will resume cultivation on even steeper slopes for survival. This will lead to more severe ecological deterioration. Therefore, the conversion of croplands to forests should be linked to ecological immigration. By doing this, not only the ecological environment can be harnessed and improved, but the newly established forests in the key ecologically fragile areas can also be well maintained. Ecological immigration should be carried out together with the development of small townships, the creation of employment opportunities and new skills training in order to improve the adaptability of the immigrants. The investment on ecological immigration should be mainly from the central and local governments. It is also possible for the national or local governments to establish a special fund for ecological immigration within the ecological programmes such as the Grain for Green Programme.

Li Zhiyong 137 BIBLIOGRAPHY

Feng Guoqiang. 2001. Conversion of cropland to forests/grassland and suggestions on the policies of west China economy development. Forestry Economy 2001 (01): 50Ð55. Ministry of Water Resources of the Peoples’s Republic of China. 2002. The Second National Remote- Sensing investigation data of soil and water loss. (available at www.chinawater.com.cn) Programme Team. 2002. Study on forestry strategy of sustainable development in China (strategy volume). Beijing, China Forestry Publishing House. 949 pp. State Council of the People’s Republic of China. 2002. Order of State Council of the People’s Republic of China (367th): Regulations on conversion of cropland to forests/grassland (available at www.people.com.cn) State Forestry Administration of the Peoples’ Republic of China. 2002. China forestry development report (2002). Beijing, China Forestry Publishing House. 104 pp. Zhang Lixiao & He Ying. 2002. Valid evaluation and analysis on the policies of conversion of cropland to forests/grassland in west China economy development. Forestry Science 2002(01): 130Ð135. Zhou Shengxian. 2002. Historic change of forestry in China. Beijing, China Forestry Publishing House. 304 pp.

138 A policy review on watershed protection and poverty alleviation by the Grain for Green Programme in China Forest resources of Bangladesh with reference to conservation of 18 biodiversity and wildlife in particular for poverty alleviation M.M. Rahman*

ABSTRACT

The loss of biodiversity has been taking place since humans first learned to harvest natural resources and to manage the land to increase its productivity. Depletion of natural resources and rapid loss of biodiversity have occurred over time to meet the basic needs of the growing population. Bangladesh is far behind in raising public awareness of the ecological, economic and sociocultural value of biodiversity and promoting local community participation in its sustainable conservation and management programmes. Biodiversity being a major source of food, fibre, fuel, fodder and other useful things needs adequate attention and increased knowledge for its conservation and wise use in a sustainable manner. Sustainable management and conservation of ecospecific biodiversity through the poor people’s active participation can contribute substantially to poverty alleviation in the context of environmental conservation. Poverty alleviation programmes should be aimed at creating common property management such as common forestry, common horticulture, common fruit gardens and community-based common wildlife management for conserving biodiversity.

INTRODUCTION

Country profile

Bangladesh has a population of about 131.6 million, with a very low per capita gross national product (GNP) of US$370 (World Bank 2000). Bangladesh has a comparatively low natural resource base, but a high growth rate of population with almost half of the population below fifteen years of age. Most of the people are among the poorest in the world, and depend mainly on the natural resource base for their livelihood. But now the resource base is under serious threat, as many natural resources are either being overexploited or used suboptimally. Besides the effects of anthropogenic stresses, the low ‘land-man’ ratio in the country is often further threatened by natural hazards. Thus, for the survival of Bangladesh’s dense population, it is essential to have environmental planning and management that conserve and sustain the ecosystems that support their livelihoods. The high population density, low economic growth, lack of institutional infrastructure, an intensive dependence on agriculture and agricultural products, geographical settings, and various other factors, all contribute to make the country weak in its economic development and quality of life. Table 1 is a summary of the social, economic and environmental indicators in Bangladesh from 1981 to 1995.

* Bangladesh Forest Research Institute, Chittagong, Bangladesh; E-mail: [email protected]

139 Table 1. Statistics of the social, economic and environmental indicators in Bangladesh from 1981 to 1995 Indicator 1981 1991 1995 Population (millions) 89.9 111.5 119.8 Land area (km2) 144 000 147 570 147 570 Forest (%) 15.0 12.8 12.7 Agriculture (%) 60.5 55.1 52.1 Urban population as % of total population 15.2 17.2 22.0 Population below poverty level (%) 73.0 47.0 45.8 Life expectancy at birth (years) 55.0 56.0 58.0 Literacy rate (%) 23.8 32.4 37.2 Source: Bangladesh Bureau of Statistics (1979, 1997 and 1998).

Quality of life in Bangladesh

Population

Bangladesh has a population of 131.6 million in 2001, and with more than 830 persons km-2 it is the most densely populated country in the world. Population growth is identified as perhaps the most serious problem inhibiting the sustainable use of resources. Increases in development or productivity are eroded by population growth. At present over 50 percent of the population in Bangladesh are below 15 years of age. Hence in the next 10 years, there will be a dramatic rise in demand for employment, but opportunities in agriculture appear to be limited, and other sectors are not creating sufficient new jobs. The demand for land is enormous, because of the population density, and the very low land-man ratio intensifies the competition for the very limited land resources for different uses. Conversion of the vast population to a productive human resource remains the greatest development challenge.

Poverty

It is estimated that more than 40 percent of the population regularly consume less than the absolute critical minimum of 1800 kilocalories per day. These 50 million people are amongst the poorest in the world by any standard of development. Furthermore, it has been estimated that the number of absolute poor has risen significantly. The poverty of these deprived people is deep rooted, pervasive and multi-faceted, relating not just to the absence of reliable incomes and productive assets, but also to food, safe water, sanitation, education, shelter, inequities, injustice and lack of power. These deprived people are also extremely vulnerable to disaster and disease. The challenges posed by this massive poverty are enormous for a country with accelerating environmental degradation of an overpopulated land base. The human development indicators for Bangladesh are also staggeringly low. Bangladesh has an adult literacy rate of 37 percent, life expectancy of 58 years and population below poverty level of 45 percent. Urban slum dwellers now account for some 15 percent of the population and this is still growing by 6 percent per year.

STATUS OF FORESTS

According to the Department of Environment, Bangladesh, 24 percent of its land area was forested in 1947. This has been reduced to only 6.5 percent in 1980 as estimated by the World Resources Institute1. The reduction of forest cover in Bangladesh between 1947 and 1980 is thus estimated to be 75 percent. The neighbouring countries in South and Southeast Asia are relatively better off in this respect. The proportion of land area with closed forest in Nepal is 13 percent, in India 16 percent, in Sri Lanka 26 percent, in Bhutan 45 percent and in Myanmar 47 percent. The proportion of area under closed forest would be only 5.8 percent of the total area of Bangladesh in 1991 (Figure 1) with an estimated annual deforestation rate of 8000 ha. The actual proportion is likely to be lower as the extraction of forest resources has increased in recent years.

1 The figure for the forest cover in Bangladesh appears to vary, depending on the source. The Bangladesh Bureau of Statistics has reported a figure of 12.7 percent for 1995 (Table 1), and the Forest Department a figure of 17.8 percent (Table 7).

140 Forest resources of Bangladesh with reference to conservation of biodiversity and wildlife in particular for poverty alleviation 50% 47% 45% 45%

40%

35%

30% 26% 25%

20% 16% 15% Forests as % of land area 13%

10% 6% 5% 3%

0% Bangladesh Bhutan India Nepal Sri Lanka Myanmar Pakistan Countries Figure 1. Status of closed forests, 1991.

Ecological harmony necessitates a certain balance between resource endowment and population. Viewed in this context, the situation in Bangladesh is extremely critical. Based on the forestry figure of 1980 and population figure of 1980Ð90, per capita availability of closed forests is estimated to be 1.4 ha in Bhutan and 0.8 ha in Myanmar. In Nepal, 10 persons are endowed with one hectare of forest on the average whereas it is 17 persons in India, but 125 persons in Bangladesh have to share one hectare of closed forest.

The area of Bangladesh is about 147 570 km2. Except for the hilly regions in the northeast and the southeast, the country consists of low, flat and fertile land with a network of rivers flowing to the Bay of Bengal. The forests comprise 17 percent of the total area of the country. Of this, the Forest Department manages about 10 percent and off-forest land covered by trees is about 7 percent. In recent decades, there has been a great decline in forest resources. Only 7.7 percent of the total areas of Bangladesh are under close tree cover (Tables 2 and 3).

Table 2. Land use in Bangladesh Land classification Area (million ha) Percent Land under cultivation 9.12 63.33 Land under national forests 1.32 9.51 Unclassed state forests 0.74 5.14 Khas forest land 0.03 0.21 Village/homestead forests 0.27 1.87 Land under tea garden 0.11 0.76 Cultivable/uncultivable land 0.35 2.43 Land under rural & urban houses 0.63 4.38 Land under ponds 0.13 0.90 Land constantly under water 1.64 11.47 Total 14.39 100.00 Source: Anonymous (1982).

M.M. Rahman 141 Table 3. Forest land and tree cover as percentage of total land of Bangladesh Total forest area Percent of total land Classification (million ha) Total area Tree cover Hill forest land 1.38 9.6 2.3 Littoral forest land 0.65 4.5 3.2 Plains (sal) forests 0.11 0.7 0.3 Total state forest land 2.14 14.8 5.8 Village forests/homestead 0.27 1.9 1.9 All 2.41 16.7 7.7 Source: Anonymous (1982).

There are three major natural forest types in Bangladesh (Kamaluddin and Shamsuddin 1977). These are semi-evergreen forest occurring on the eastern hills, deciduous sal (Shorea robusta) forest on the central and northwestern terraces and the mangroves littoral forest facing the Bay of Bengal (Figure 2). Additionally, there are human raised village forests all over the country which cover an area of 1.87 percent, but are highly productive. Besides, fresh water swamp forest occurs in low-lying areas of Sylhet and also in depressions within semi-evergreen forest. Recently several authors have discussed various forest types of Bangladesh (Chaffey and Sandom 1985, Das 1990, Khan and Alam 1996, Siddiqi 2001).

Figure 2. Major natural forest types of Bangladesh

STATUS OF BIODIVERSITY IN BANGLADESH

Once Bangladesh had rich species diversity. The natural forests were virtually undisturbed and used to support a heterogeneous vegetation. Due to the raising of plantations with single crops following the harvesting of the natural forests and the introduction of exotic species in some areas, the floral diversity has been reduced over a greater part of the country. A rich heterogeneous flora is ideal habitat for wildlife. Reduction in floral diversity has caused damage to animal habitat, existence and abundance.

142 Forest resources of Bangladesh with reference to conservation of biodiversity and wildlife in particular for poverty alleviation Biodiversity research initiatives in Bangladesh

A number of projects having biodiversity components are being implemented in Bangladesh. Some of the noteworthy ones are described below:

National Conservation Strategy (NCS)

The idea for a National Conservation Strategy (NCS) emerged in September 1986. Its primary goal was the sustainable use of natural resources. The National Conservation Strategy Implementation Project I (1994Ð 1999) was a five-year project implemented by the Ministry of Environment and Forest (MoEF), with financial and technical support from NORAD and IUCN. Through this NCS Phase 1, one major programme was implemented in four distinct ecosystems—tropical and mangrove forest areas, St. Martin’s Island, Tangour Haor and Barind Tract. The main objectives of all these activities is conservation of biodiversity.

Coastal and Wetland Biodiversity Management

Bangladesh has completed a Pre-Investment Feasibility (PRIF) study in the “Coastal and Wetland Biodiversity Management Project” funded by the Global Environmental Facility (GEF). It was a preparatory initiative to develop a project proposal to implement a reserve, and a multiple-use management programme for the protection, sustainable management, and integration of at least three-priority biodiversity sites in Bangladesh. The primary focus was to integrate conservation and development, in order to protect and manage the priority areas in a sustainable way. The duration of the project was 15 December 1997 to 31 December 1999. The Project Brief and the outcome of the said PRIF study project have already been approved by the Project Steering Committee, and subsequently accepted by the GEF. The product of the follow-up project entitled “Coastal and Wetland Biodiversity Management in Cox’s Bazar and Hakaluki Haor (BGD1991G31)” has also been prepared, and approved by the GEF council for funding. This project is under process of execution by the Government of Bangladesh.

Integrated Coastal Zone Management (ICZM)

In December 2000 the Minister of Water Resources announced the Government’s intention to develop an ICZM policy. Among other objectives, the ICZM policy will attempt to rationalize and coordinate more effectively a number of environment and development initiatives taking place in the coastal zone. A number of donors, including the World Bank and the Netherlands Government, will be supporting the development of the policy over the coming years.

National Biodiversity Strategy and Action Plan

The GEF headquarters has already approved the project document; the project is under execution.

Conservation and management of medicinal plants

A project on the conservation and management of biodiversity of medicinal plants for their sustainable utilization will be executed in Rangamati Hill district. This project is in the process of final approval by the GEF. The specific objectives of the project are:

¥ development of an inventory of medicinal plants in the project area; ¥ documentation of traditional uses by the local people; ¥ conservation of medicinal plants and their ecosystem; ¥ capacity building of concerned agencies in the sustainable use of the medicinal plants.

Sustainable Environment Management Programme (SEMP)

The SEMP is the response evolved from the concerns, needs and actions identified through the National Environment Management Action Plan (NEMAP) process. It focuses on community-based resource management in wetlands. In the NEMAP several major priority areas of environmental concern were identified, and the SEMP has been designed to address these priorities. The programme consists of 26 components on five major themes, and is implemented by 22 organizations from the government, non-government organizations (NGOs) and private sector. The community-based “Haor and Floodplain Resource Management Project” is being

M.M. Rahman 143 implemented by the IUCN with the Ministry of Environment and Forest, in two well-defined degraded areas of haor and floodplain ecosystems. The major focus of the programme is to involve community people in the planning and implementation of activities for the management of natural resources that maintain biodiversity and human well-being.

Management of Aquatic Ecosystem through Community Husbandry (MACH)

The natural resources in the floodplains and wetlands throughout Bangladesh are in decline. Thus, to conserve these resources the Government of Bangladesh and the United States of America have jointly developed a programme called MACH. An agreement to implement this programme was signed in May 1998. Its goal is to ensure the sustainable productivity of all wetland resources such as water, fish, plant and wildlife over an entire wetland ecosystem.

Sundarbans Biodiversity Conservation Programme

The Asian Development Bank funded the project “Biodiversity Conservation in the Sundarbans Reserved Forest.” The objective of the project was to establish a effective system for the participatory and sustainable management of the ecosystem of the Sundarbans Reserved Forest. The scope of the project included biodiversity conservation, sustainable resource management, community development, participatory resources management programme, development of ecotourism infrastructure, and establishing a new multisectoral management agency that will work for an integrated conservation and development approach.

Forest Resources Management Project

The World Bank funded a programme on “Forest Resources Management Project” in 1992. The primary objective of the project was to establish and maintain a forest management system that was fully responsive to the economic, environmental and social goals of the country; and to improve the productivity of government- owned forests in order to meet the country’s wood and energy needs as much as possible while still protecting the environment.

Biodiversity survey in 13 protected areas

A biological survey study was conducted in 13 protected areas by the Bangladesh Centre for Advanced Studies, in collaboration with the Forest Department. The survey was conducted to assess the biological resources available in the designated areas. The potential value of each protected area was evaluated through determination of the species present, the relative abundance of the species and the species diversity. The critical habitats in each of the protected areas were identified for protecting the threatened species, and also for developing protective area management plans.

Floral diversity

The vegetation of Bangladesh has been discussed under forest types. But the species include mainly those which are of commercial importance. The greater bulk of plant species for Bangladesh are yet to be recorded for different forest types. It is believed that 5000 species of angiospermic plants occur is Bangladesh. There are 750Ð800 tree species including indigenous, exotic and naturalized ones. The number of shrubs and woody climbers is 1500Ð2000 species and the remaining are herbs. Bangladesh has approximately 15 percent tree, 35 percent shrub and woody climber, and 50 percent herb species (M.K. Alam, personal communication, 2002).

Faunal diversity

Bangladesh shares similar ecological conditions with the neighbouring countries. So it is unlikely to have ecologically adapted species, especially of higher groups of plants and animals. Biodiversity has three components: species, genetic and ecosystem. Considering the available information and time constraint only species diversity in relation to habitat will be discussed. With forests disappearing rare wildlife and biological diversity has also been reduced quite rapidly. Many species have gone totally extinct, and some wildlife species have also been severely affected because of the shrinking forests.

144 Forest resources of Bangladesh with reference to conservation of biodiversity and wildlife in particular for poverty alleviation Causes for depletion of wildlife diversity

Till to end of the 19th century, wildlife was holding ground over a sizable area of Bangladesh (Husain 1974). All the forest types and village groves had a rich fauna. According to Husain (1992) at least 18 species of vertebrate animals became extinct during the last century from their natural habitats in Bangladesh (Table 4). Still species diversity is quite good (Table 5) although the population status of important species is unsatisfactory. However, information on the high diversity of invertebrate animals is insufficient owing to the lack of studies and limited resource personnel. Nevertheless, the author has identified 12 species of wildlife as extinct in Bangladesh (Table 6). There are presently 22 species of amphibians, 109 species of reptiles, 628 species of birds including migratory ones, and 110 species of mammals. A sharp decline of wildlife has taken place for various reasons such as:

Ð indiscriminate hunting; Ð poaching of animals; Ð export of animals; Ð habitat destruction; Ð lack of people’s awareness; Ð poor management of protected areas and reserved forests; Ð lack of a plan for compatible forest and wildlife management; Ð inefficient implementation of law for wildlife conservation; Ð natural calamities like flooding, tidal surge, etc.

Table 4. Animal species extinct from Bangladesh during the last century Wildlife class English name Scientific name Mammalia Great one-horned rhinoceros Rhinoceros unicornis Lesser one-horned/Javan rhinoceros Rhinoceros sondaicus Asiatic two-horned rhinoceros Didermocerus sumatrensis Blue bull/nilgai Boselaphus tragocamelus Wild buffalo Bubalus bubalis Gaur Bos gaurus Banteng Bos banteng Swamp deer/barasingha Cervus duvauceli Marbled cat Canis lupus Hog deer Axis porcinus Wolf Canis lupus Golden cat Felis temmincki Aves Pinkheaded duck Rhodonessa caryophyllacea Greater adjutant Leptoptilos dubius King/black vulture Sarcogyps calvus Bengal florican Euphodotis bengalensis Burmese peafowl Pavo muticus Reptilia Marsh crocodile Crocodylia palustris Source: Husain (1992).

Table 5. Status of inland and resident vertebrates (species diversity) of Bangladesh Total No. Threatened Group of living Extinct Critically Endangered Vulnerable Total species endangered Amphibians 22 0035 8 Reptiles 109 1 12 24 22 58 Birds 388* 2 19 18 4 41 Mammals 110 10 21 13 6 40 Total 629 13 52 48 38 147 Source: IUCN (2000). * Excluding migratory birds.

M.M. Rahman 145 Table 6. Animal species extinct from Bangladesh at present Wildlife class English name Scientific name Mammalia Great one-horned rhinoceros Rhinoceros unicornis Lesser one-horned/Javan rhinoceros Rhinoceros sondaicus Asiatic two-horned rhinoceros Didermocerus sumatrensis Blue bull/nilgai Boselaphus tragocamelus Wild buffalo Bubalus bubalis Gaur Bos gaurus Banteng Bos banteng Swamp deer/barasingha Cervus duvauceli Marbled cat Canis lupus Aves Pinkheaded duck Rhodonessa caryophyllacea Common peafowl Pavo cristatus Reptilia Marsh crocodile Crocodylia palustris Source: Rahman (2002, unpublished).

PROTECTED AREAS FOR WILDLIFE MANAGEMENT

Protected areas (PAs) of Bangladesh

Owing to the growing human population and agriculture expansion, there is heavy pressure on forest and forest resources. A good number of species are endangered and threatened. They are also likely to be extinct unless adequate measures are immediately taken. Merely declaring and demarcating some places as protected areas will not serve the purpose. To save wildlife fauna we have in all ten wildlife sanctuaries, six national parks and one game reserve (Table 7), However, the management of PAs is improper for conservation and improvement of wildlife fauna. Socio-economic impact of the surrounding population is too great for the management of the PAs. Scientific and socio-economic studies must be undertaken to address the problem.

Table 7. Protected areas for wildlife conservation under the management of the Forest Department Name of protected IUCN Area Year of National category area category (ha) notification Bhawal National park V 5 022 1982 Himchan National park V 1 729 1980 Lawachara National park V 1 250 1996 Madhupur National park V 8 436 1982 Kaptai National park V 5 465 1999 Ramsagar National park Unassigned 52 1974 Nijhum Dwee Wildlife sanctuary Unassigned 16 352 2001 Chunati Wildlife sanctuary IV 7 764 1986 Pablakhali Wildlife sanctuary IV 42 087 1983 Rema-Kalenga Wildlife sanctuary IV 1 095 1981 Sundarbans East Wildlife sanctuary X 31 227 1996 Sundarbans South Wildlife sanctuary X 36 970 1996 Sundarbans West Wildlife sanctuary X 71 502 1996 Char Kukri Mukri Wildlife sanctuary Unassigned 40 1981 Hazarikhil Wildlife sanctuary Proposed 2 903 1967 Rampahar-Sitapahar Wildlife sanctuary Proposed 3 026 – Hail Haor Wildlife sanctuary Proposed 1 427 1983 Teknaf Game reserve VII 11 615 1983 Total land area of the country—147 570 km2 Total forest area of the country—26 300 km2 Total area of PAs—2406 km2 Percent of PAs (on the basis of the area of the country)—1.63% Percent of PAs (on the basis of the total forest area of the country)—9.14%.

146 Forest resources of Bangladesh with reference to conservation of biodiversity and wildlife in particular for poverty alleviation ECOTOURISM: TOOLS FOR POVERTY ALLEVIATION

Ecotourism is a sustainable form of land use which contributes to environmental conservation while providing accrued socio-economic benefits to the indigenous people through the non-consumptive uses and indirect values of the natural biological resources. The goal of ecotourism is to promote an environmentally friendly business and to generate local income. In reality, ecotourism is an economically viable industry at the national and local levels. The forest of Bangladesh is a peculiar type of ecosystem because of its interesting environmental conditions. It offers a wide range of outdoor recreational opportunities. These opportunities may include power boating, canoeing, fishing, collection of invertebrates like mollusks and crustaceans, picnicking, swimming, bird watching, wildlife observation, photography on wildlife, nature education and others. Naturally, some forest areas can attract a large member of tourists and be a source of earnings through national and overseas tourism. In various countries, tourism in the forestry environment has been developed. It is important to note that the preservation of mangroves and some hill forests can be compatible to ecotourism if well planned. With this in view, the Bangladesh Forest Department can develop tourism facilities in mangrove and hill forest areas. The strategy of the Forest Department’s tourism and recreation initiative will be to adopt a higher publicity profile, to strengthen its forest development efforts and to gain new constituencies in forest conservation. For instance, to develop Nijhum Dweep as a tourist spot the Forest Department will endeavour the following:

¥ Develop the Nijhum Dweep Wildlife Sanctuary as a visitors’ destination on a limited scale. A sanctuary office will be built there to serve both as office and visitor centre. ¥ Develop facilities in areas designated as converging points for visitors. Such areas are the Division Office, the Central Nursery, and destination areas for visitors to witness designated forest operations. ¥ Invite visitors to visit well-established forest plantations and also to witness forest nursery operations, planting, harvesting, and other forest operations to make them aware of the various field activities of the Forest Department. ¥ Develop promotional materials highlighting the Department’s forest development activities and accomplishments in the coastal territory. Videos of the Department’s field activities, especially in plantation development, will be produced, distributed and shown to local audiences and sent to international aid agencies. Conservation slogans will be echoed through posters, postcards, maps, brochures and souvenir items to be disseminated to local visitors and commercial establishments. An internet web-site will be set up by the Department so that its programmes can be disseminated much faster to the intended clients on the web.

Unless the poor forest dwellers can increase their income, it is difficult to get their active support and involvement in forest and wildlife conservation. The income of the people can be improved through further development of ecotourism all over the country. The rich fauna and floral biodiversity and also beauty of nature like in the Dulhazara Safari Park will definitely attract local and foreign tourists.

BIBLIOGRAPHY

Anonymous. 1982. Forest resources of Bangladesh. Forest Department, Project UNDP/FAO.BDG/19/017. Bangladesh Bureau of Statistics. 1979, 1994, 1997 and 1998. Statistical yearbooks of Bangladesh. Dhaka, Bangladesh. Bureau of Statistics, Ministry of Planning. Chaffey, D.R. & Sandom, S.H. 1985. Sundarbans Forest Inventory Project, Bangladesh. A glossary of vernacular plant names and a field key to the trees. UK Overseas Development Administration. 23 pp. Das, D.K. 1990. List of Bangladesh village tree species. Chittagong, Bangladesh, Forest Research Institute. 11 pp. (mimeo) Husain, K.Z. 1974. An introduction to the wildlife of Bangladesh. Dhaka, Book Promotion Press. 78 pp. Husain, K.Z. 1992. Wildlife preservation in Bangladesh. Wildlife Newsletter, pp. 5Ð10. Wildlife Society of Bangladesh No. 4. IUCN. 2000. Red list of threatened animals of Bangladesh. Bangladesh, IUCN, The World Conservation Union. 54 pp. Kamaluddin, A.F.M. & Shamsuddin, S.D. 1977. Spatial distribution of forest species in Bangladesh and their exploitation and utilization. Proceedings of the Bangladesh First National Conference on Forestry, pp. 193Ð196. Dhaka, Bangladesh, Forest Department.

M.M. Rahman 147 Khan, M.S. & Alam, M.K. 1996. Homestead flora of Bangladesh. Dhaka, Bangladesh, Bangladesh Agricultural Research Council (BARC). 275 pp. Rahman, M.M. 2002. Scientific report submitted to the Ministry of Environment and Forest, Bangladesh Secretariat, Dhaka. (unpublished) Siddiqi, N.A. 2001. Mangrove forestry in Bangladesh. Chittagong, Bangladesh, Institute of Forestry & Environmental Science, University of Chittagong. 201 pp. World Bank. 2000. World development report, 2000, 2001. New York, World Bank, Oxford University Press, Inc.

148 Forest resources of Bangladesh with reference to conservation of biodiversity and wildlife in particular for poverty alleviation Poverty reduction and forestry sector: towards the sustainable 19 management of natural resources Lic Vuthy*

ABSTRACT

Forests are crucial for socio-economic improvement and poverty alleviation in Cambodia. They not only provide food and raw materials, but also serve an important life support function by generating oxygen and regulating fresh water through preserving watersheds. As part of Cambodia’s approach to using, protecting and managing forests for sustainable development, uses and threats need to be weighed against each other and managed appropriately. In Cambodia natural resources are in danger of being overexploited. The Royal Government of Cambodia has taken important steps in mitigating threats to forest through increased community management and good governance. The greatest challenge is lack of human resources and finances for implementing these forest protection measures. Sustainable management of forest resources ensures that commercial forest operations are carried out efficiently; preserves soil; identifies and protects sites of high traditional, historical and archaeological value; maintains the logging productivity of those sites designated for logging in perpetuity; identifies, maintains and protects a broad range of natural habitats with potential scientific and ecological values; protects water resources; allows continued exploitation of non-timber forest resources in a way that permits continued productivity with respect to these resources; ensures that forest activities are carried out in a safe and legal manner; allows existing recreational uses as appropriate and minimizes the adverse effects of forest operations on people and environment. A possible solution to dealing with development and preservation of forests is through Special Management Areas for special purposes such as watershed or soil conservation, wildlife or biodiversity conservation, preservation of seed sources, historical or cultural sites, and areas to be retained in their pristine state and those supporting community livelihoods. The Royal Government of Cambodia and many international agencies have recognized the significance of Cambodia’s tropical forest, and are showing increased interest in conducting activities that reduce forest degradation or depletion. Many activities currently being undertaken are concentrating on the important links between forests and sustainable development, while at the same time encouraging the protection of representative components of Cambodia’s forests through a system of protected areas. These approaches will help to ensure the ability of Cambodia to use, protect and manage the forests for sustainable development and prosperity into the future.

INTRODUCTION

Among the ASEAN countries Cambodia is one of the most important sources of tropical hardwood forests, which are a significant renewable natural resource. These forests not only assume an important role in protecting the environment, but are also of critical importance to the socio-economic development of these countries. The management and harvesting of forest resources in a sustainable manner to provide current as well as future needs is an important goal of the Cambodia Government. In order to achieve this goal, however, increased attention must be focused on forest management, especially on forest harvesting practices and poverty reduction. The sustainability of forests will be affected dramatically if proper logging guidelines are not developed, understood and enforced.

* Forest and Wildlifes Research Institute, Phnom Penh, Cambodia; E-mail: [email protected]

149 Forests have significant roles in the development of Cambodia’s agriculture, socio-economic, environmental and tourist sectors Ð especially in the subsistence of local communities. Forests also provide a major source of fuel and building materials for the local populations. Cambodian forests contain substantial biological resources, including valuable plant and wildlife species such as birds, reptiles and mammals, which are among the richest in biological diversity among the countries in the region. Sustainable management in forest use and development is one of the crucial constraints that countries around the world are facing. Among the ASEAN countries, forest criteria and indicators are being developed and used. Each country needs to find a way to prevent its own forest from being destroyed. In Europe, countries are encouraged to implement Forest Certification to help manage and develop forest sustainably. Forest Certification is one of the models with which country members can help one another to curb illegal logging and wood market. Cambodia may choose this method to minimize forest destruction.

BACKGROUND

Revenue

In 1970 forest cover was about 13.5 million ha (73 percent of the total land area); however, a study by the FAO in 1997 showed that forest cover is approximately 10.5 million ha (58 percent). The main reasons for deforestation are:

¥ population increase, requiring more land for agriculture and housing; ¥ booming timber demand for local and international markets.

The export of wood and non-timber forest products has been changing from year to year; 41 574 m3 of semi-wood products and 38 tonnes of non-timber forest products were exported in year 2001 (Department of Forestry and Wildlife (DFW) 2001). The majority of the local villagers depend on non-timber forest products (NTFPs) for their livelihood subsistence and timber for house construction. Cambodian hardwoods have been exported to Thailand, Malaysia and Viet Nam for re-export. Raw material like resin is only exported to Viet Nam so far. Although forest still covers 58 percent of the country area, to some extent, these forests are degraded due to selective cutting of healthier trees rather than the sick or unhealthy ones. Having seen this unsustainable exploitation of forest resource, the DFW has cooperated with the World Bank and the Asian Development Bank to establish several projects including:

¥ forest policy reform; ¥ Forest Concession Management Unit; ¥ logging control and verification; ¥ Legal Council Assignment.

Land clearing

Although forests were destroyed for agriculture during the Khmer Rouge regime (1974Ð1979), forests continued to be destroyed in the war that followed to expose Khmer Rouge guerrillas who hid in the mountains and forested areas. Since many farmers could not return to their former paddy fields due to the guerrillas and land-mines, new areas of land were cleared for agricultural production (Chan Sarun 1997). As the post-war population in Cambodia increased rapidly, more and more forested areas were cleared for firewood and to make way for rice paddies. Slash and burn is a very common technique since logging “dead” wood is legal in Cambodia. Deliberately lit forest fires can be seen burning frequently in the national parks in Cambodia, including Kirirom and Bokor. Sections along the new road to the Koh Kong in the Cardamom Mountains are being slashed and burnt to make way for new homes, agricultural plots and building materials for homes and the new road. Crop cultivation is also common in Cambodia, and farmers commonly cut down forest areas to serve as new plantation regions. This can been seen in the forests of Bokor National Park where banana farmers bordering the park clear the forests to move the plantations between regions.

150 Poverty reduction and forestry sector: towards the sustainable management of natural resources Reserves

Angkor Wat and its surrounding forests were established as a National Park in 1925—the first ever in Southeast Asia. Before 1957, about one-third of the country was classified into 173 forest reserves and six wildlife sanctuaries. These accounted for 3.9 and 2.2 million hectares of Cambodian territory respectively (Ashwell 1996). The forest and wildlife reserves for production were designed to sustainably exploit timber and non- timber forest products (Kol. Touch, Former Forestry Director, 1970, personal communication, 1993Ð94). Hunting and non-timber forest product (NTFP) collection were allowed only in the buffer zone areas or in production forest areas. Forest rangers would stop any people entering the forest reserves who possessed hunting equipment such as snares or traps. The lighting of forest fires was also very strictly controlled (Chan Sarun, personal communication). Since 95 percent of the Khmer people believe in Buddhism, pagodas have played a crucial role in wildlife and forest protection—especially in rural areas (pers. observation). Water pools surrounded by small forests are built at most pagodas and serve to sustain local wildlife populations, including fish and amphibians. The forests around pagodas are also used to supply local firewood.

Forest concessions

Tree species conservation is of major concern to the forest sector. Cambodia has forest concession areas that allow supervised logging. The concessionaire is responsible and accountable for protection and maintenance of productivity in the production zone within the forest concession area (DFW 2000). DANIDA has been working closely with the Royal Government of Cambodia (Department of Forestry and Wildlife) to maintain endemic commercial tree species (Cambodia Tree Seed Project/DANIDA, 2001). DANIDA’s goal is to protect forests though collaboration with the Department of Forestry and Wildlife (DFW) in forest concession areas, and with the Ministry of Environment (MoE) under the Royal-Decree Protected Areas. For the long-term sustainable use of forests and wildlife within the DFW forest jurisdiction areas, the DFW has endorsed that wherever forests are indigenous and valuable to the economy and regional ecology, forest concessions should be cancelled. Cambodia has a relatively long history of supplying NTFPs and construction timbers to neighbouring countries such as Thailand, Viet Nam, China and Japan. Cambodia continues to provide timber to local, regional, and international markets Ð legally and illegally.

FOREST MANAGEMENT

Policies

In order to cope with forest destruction, the Royal Government of Cambodia has implemented management policies as follows:

¥ Act (Prakas) No. 03 Pr.K. Dated 28 April 1995. Forest Policy (Government Guideline for Forest Reform Policy); ¥ Act No. 02 S.Pr.K. Dated 26 December 1996. Ban on timber (round and sawn) export; ¥ Letters to the Prime Ministers of Lao PDR, Thailand and Viet Nam. Dated 26 December 1996. Log ban cooperation with neighboring countries; ¥ Joint Declaration of MAFF and the Military. No. 582 MAFF/12H.S.TH. Dated 05 February 1997. Anti- illegal logging; ¥ Royal Government Declaration No. 17 S.S.R. Dated 29 April 1997. Export and non-export timber, and export gate determination.

In order to provide the foundation for achieving sustainable forest management, the Cambodian Code of Practice for Forest Harvesting was prepared in 1997 with technical assistance from the World Bank Project on Forest Concession Management in cooperation with FORTECH, a forest-consulting firm. The Code of Practice is a legal instrument for achieving sustainable forest management on forest concession lands. Its primary purpose is to prescribe harvesting practices that protect the environment, conserve biodiversity and promote forest development consistent with the principles of sustainable development. The Code of Practice also provides guidance for protecting sites of cultural significance, maintaining forest regenerative capacity, improving the economic and social contributions of forestry, and ensuring the health and safety of forest workers. The initial development of the Code was completed in mid-1999 and distributed to forest concessionaires and other relevant stakeholders.

Lic Vuthy 151 The Cambodia Code of Practice was developed in the following series of stages:

¥ a preliminary assessment of existing technical guidelines; ¥ the development of a code based on experiences of other countries in the region and FAO guidelines; ¥ field surveys in the forest harvesting areas of forest concessions; ¥ the organization of workshops, and discussions with forest concessionaires.

The Code of Practice provides prescriptive guidelines for harvesting operations that include:

¥ harvest planning; ¥ construction associated with logging operations; ¥ timber felling and extraction; ¥ log landing operations; ¥ transportation; ¥ the effects of weather constraints on logging; ¥ camp hygiene; ¥ stabilization of logged areas; ¥ training; ¥ supervision of operations; ¥ equipment and safety; ¥ harvesting assessments.

A selective logging system has been developed to manage the country’s dipterocarp forests. Practices that are included in this selective logging system include:

¥ tree marking, the practice of marking the trees that will be left as residuals to compose future crop trees, and the trees that will be harvested for the manufacture of plywood and other wood products; ¥ timber harvesting, in which the volume of timber that may be harvested within production young growth forests is determined by an allowable, cut formula; ¥ residual inventory, the field evaluation of marked residual trees left after logging; ¥ forest stand improvement, the post-logging practice composed of refining and liberating components to improve the growth, quality and composition of the growing residual stock; and effective forest protection.

Forest harvesting

Subsequent to adopting the Code of Practice, the Ministry of Agriculture, Forestry and Fisheries (MAFF) has initiated several programmes to facilitate its implementation by:

¥ increasing awareness among forest concessionaires and other stakeholders with respect to understanding the benefits of the Code, and the implementation of harvesting operations in accordance with the Code to ensure sustainable forest management in forest concessions; ¥ strengthening political support from provincial governors and relevant Ministries, particularly in the preparation and adoption of a Sub-Decree on Forest Concession Management that includes provisions to increase local community participation in activities to protect and manage forests in compliance with the Code; ¥ training by field forest officers for logging operation planners, logging supervisors, and forest machine and chainsaw operators; ¥ preparing technical guidelines for implementing the Code, including guidelines providing directives on forest concession management planning systems, inventories associated with the forest management cycle, biodiversity conservation in managed forests, issues associated with social forestry, timber theft management, forest engineering, environmental impact assessments, special management areas, the selection of suitable systems of silviculture, and forest improvement; ¥ forest reservation and reforestation systems for the management of wildlife habitats, water catchment protection and forest monitoring; ¥ preparing a forest concession management planning manual in order to provide the foundation for implementing the Code’s basic regulations and guidelines in a consistent manner;

152 Poverty reduction and forestry sector: towards the sustainable management of natural resources ¥ establishing a forest concession management and control pilot project funded through a World Bank Learning and Innovation Loan that will be providing technical assistance for developing comprehensive forest concession management plans, including environmental and social impact analyses consistent with international standards; ¥ conducting harvesting assessments of forest concessionaires in compliance with the Code at the closure of annual harvesting operations on 31 December of each year.

The initial results of implementing the Code of Practice for Forest Harvesting in Cambodia indicate that there have been several immediate benefits, particularly the increased understanding of sustainable forest management practices by those who plan and supervise logging operations, as well as by forest machine and chainsaw operators.

Law

The DFW has been using the Forestry Kret-Chbap No. 35 for forest management since 1998. The new Law on Forestry was ratified in August 2002. The Law clearly defines the rights of use of NTFPs for the local people either outside or inside forest concession areas. The Community Forestry Law is in the consultation phase with government and private forest sectors such as the Cambodia Timber Industry Association (CTIA). The law allows more forestry rights to local communes for their use of timber and non-timber forest products. Moreover, local commune members will have more rights to manage the forests of their own communes, either natural or plantation forests.

FORESTRY REFORM

Community forestry management

Reforestation efforts are following the Royal Government of Cambodia’s policy to reform the forestry sector at provincial levels. Trees have been planted in 8325 ha of state areas and the DFW has a five-year rehabilitation strategy for 250 000 ha of degraded land. This strategy includes planting state tree farms, developing commercial tree plantations in degraded areas and encouraging individuals and the private sector to participate in agroforestry and community forestry. To ensure the supply of fast growth seedlings, seed quality and sources need to be considered. Natural seed-trees (mother trees) are in great demand and protected areas should be enforced wherever these seed- trees occur. Part of forest concessions may be allocated to protected areas if necessary. Through the DANIDA Tree Seed Project (Cambodia Tree Seed Project Workshop, 2001), the DFW has distributed 2 million seedlings through cooperating with a number of NGOs and students. The DFW has been cooperating with national and international agencies to develop community forestry programmes, to develop and improve human resources and to encourage the local people to participate in sustainable forest management and in forest protection. Also, national and international agencies and donor agencies have supported and actively participated in encouraging community forestry practices.

Forest policy implementation

In July 1996 the Royal Government of Cambodia established a Secretariat of National Committee for Forest Policy Reform. The Secretariat, which was established under a World Bank loan, has reviewed and identified four main forestry issues to be addressed:

¥ forest policy reform; ¥ forest concession management; ¥ logging control and verification; and ¥ legal council assignment.

Implementing the new Law on Forestry has been started since early 2003. The DFW/MAFF is leading the implementation. It is hoped that full enforcement of the new Law would be in the year 2004.

Lic Vuthy 153 Law enforcement

In order to effectively eliminate illegal forest activities the Royal Government of Cambodia has been developing and implementing a number of policies and regulations, including:

¥ Forest Policy Platform of the 2nd term for 1998Ð2003. Five-year government plans on forestry sector; ¥ Regulation No.0213.CH. Dated 06 January 1999. Action strategies to cope with illegal logging activities; ¥ Prakas No.01 Pr.K. Dated 25 January 1999. Forest management and elimination of illegal activities in forestry sector; ¥ Prakas No.06 Pr.K. Dated 27 September 1999. Elimination of illegal land encroachment.

Patrols need to be conducted in both towns and within forest areas. Provincial foresters often work in forest regions, especially along the international borders. However, they lack the financial support to investigate and act on illegal logging activities. Insufficient equipment and financial support have caused difficulty in coping with illegal activities in the jungle. Moreover, rogue military based in the remote areas get involved in the illegal activities. In 2002 there were about 800 staff members in the DFW and about 1000 forestry staff members countrywide. In general, the capacity of the DFW staff is limited and there is insufficient training provided to do the work—this is further affected by the lack of funds for forestry operations.

Communities and forests

The local people collect NTFPs and timber both in and around protected forest areas for local subsistence including:

¥ resins used for sealing boats; ¥ rattan, bamboo and nypa (wild) palm leaves for building houses; ¥ reeds, berries and mushrooms for eating; ¥ barks, mushrooms and berries for medicine; ¥ wood for fuel and charcoal production.

The new Law on Forestry allows the local ethnic minority consumption of natural resources. However, some NTFPs such as rattan and bamboo are occasionally harvested for commercial purpose.

FORESTS AND PROTECTED AREAS

Forest protection and conservation

Forest protection/protected areas may offer a significant contribution to sustain forest development. Communities depend on forests for many resources, including water, NTFPs, timber and wildlife. Forest protection areas play a very important role as sources of tree pollination and animal refuge to the adjacent forest areas. The Department of Forestry and Wildlife, under the guidance of the Ministry of Agriculture, Forestry and Fisheries, has been concerned very much with sustainable forest and wildlife management. Community-based management of the Mondulkiri Protected Forest and Transboundary Conservation is being considered in the allocation of the area as a forest preserve for production. The ITTO considers the site as a sole area for long-term forest management in northeast Cambodia along the Viet Nam border in cooperation with the Vietnamese government (Gasana & Sun Hean, in press). The WWF Cambodia receives financial funding for a two-year (2003Ð2004) project to develop the area for sustainable use based on ecotourism (Goodman et al. 2003). The area contains large waterbirds such as crane and raptor (meat eating bird), lots of small streams where luxury tree species are found, and large mammals such as water buffalo, elephant, tiger and deer. Many species of reptiles including turtle and monitor lizard can be encountered within the area. NTFPs such as rattan and wild fruit tree also occur in this area.

Forestry and water catchments

The provinces surrounding the Cardamom Mountains (Koh Kong, Kampong Chhnang and Pausat) rely heavily on the forest for resources. In addition, the Cardamom Mountain range is a crucial water catchment in Cambodia and affects the Tonle Sap. Cambodian people depend on the fish protein from the Tonle Sap Lake and fish

154 Poverty reduction and forestry sector: towards the sustainable management of natural resources from Tonle Sap is exported every year. Deforestation can lead to increased sedimentation in waterways, and cause sedimentation in the Tonle Sap. Attention needs to be paid to forests and protected areas as essential water resource regulators.

Wildlife conservation

Cambodia has seven national parks, ten wildlife sanctuaries, three protected landscapes and four multiple- use areas. On 25 January 2000, the Prime Minister of Cambodia officially inaugurated the Phnom Tamao Zoological Park, Wildlife Rescue Centre (1200 ha). The Phnom Tamao Zoological Park is also used as a breeding- release centre and will be a captive breeding centre in the future. An area of 12 650 ha in Banteay Meanchey Province has been designated as a crane conservation area. These designations have a significant effect on biodiversity conservation aspects, both in situ and ex situ. People near and around the zoo and sanctuaries have been aware of conservation and sustainable development within their own communities. Moreover, the Phnom Tamao area, which had once been cleared, has now become reforested both naturally and artificially. CITES held a four-day regional meeting on the International Treaty on Trade in Endangered Plant and Wildlife Species in Phnom Penh from 21 to 24 February 2000, to discuss and find appropriate solutions to CITES in the Asian region. Restriction on wildlife export has been improved since Cambodia became a CITES member. Government agencies such as the Customs are aware of strict control of the trade in wildlife.

Achievements

After ten years effort by the Department of Forestry and Wildlife and improvement of the internal political situation, the Cambodian government has become aware of the importance of biodiversity conservation. The Central Cardamom Mountain area of 330 923 ha was declared a Forest Protection and Water Catchment Site in 2001. Among others the Central Cardamom Protection Forest might be proposed to be a World Heritage Site (DFW; CI; and Tim Wong, IUCN, personal communication.). Ang Tra Peang Thmor, the Crane Sanctuary, also was designated by the MAFF to be protected. At the moment the Sanctuary is getting financial support from the Wildlife Conservation Society and small support also from the Crane International Foundation. The other two proposed forest protected areas are the Mondulkiri and Preah Vihear sites. These two are in the process of submission for final declaration from the cabinet of the Prime Minister.

CONCLUSION

Forests are crucial for socio-economic improvement and poverty alleviation in Cambodia. They not only provide food and raw materials, but also serve as an important life support function by generating oxygen and regulating fresh water through preserving watersheds. As part of Cambodia’s approach to using, protecting and managing forests for sustainable development, uses and threats need to be weighed up against each other and managed appropriately. Cambodia has achieved some progress in this direction. However, natural resources are in danger of being privatized and overexploited. The Royal Government of Cambodia has taken important steps in mitigating threats to forests through increased community management and good governance. The greatest challenge is lack of human resources and financial funding for implementing these forest protection measures. Sustainable management of forest resources ensures that commercial forest operations are carried out efficiently to preserve soil value; identify and protect sites of high traditional, historical and archaeological values; maintain the logging productivity of those sites designated for logging over many cutting cycles; identify, maintain and protect a broad range of natural habitats with potential scientific and ecological values; protect water resources; allow continued exploitation of non-timber forest resources in a way that permits continued productivity with respect to these resources; ensure that forest activities are carried out in a safe and legal manner; allow existing recreational uses as appropriate; and minimize the adverse effects of forest operations on people and environment (DFW 2000). A possible solution to dealing with development and preservation of forests is through special management areas. The objective is to recognize the unique value of select forest resources within the forest concession area and designate them as special management areas excluded from commercial logging and annual allowable cut. The principal types of special management area include watershed or soil conservation; wildlife or biodiversity conservation; preservation of seed sources; historical or cultural sites; areas to be retained in their pristine state and those supporting community livelihoods (DFW 2000). The Royal Government of Cambodia and many international agencies, including ASOF (Asian Senior on Forestry), have recognized the significance of Cambodia’s tropical forest, and are showing increased interest

Lic Vuthy 155 in conducting activities that reduce forest degradation or depletion. Lots of activities currently being undertaken are concentrating on the important links between forests and sustainable development, at the same time encouraging the protection of representative components of Cambodia’s forests through a system of protected areas. These approaches will help to ensure the ability of Cambodia to use, protect and manage forests for sustainable development and prosperity into the future.

RECOMMENDATIONS (STRATEGIES FOR BETTER MANAGEMENT)

Since some work has been done both on paper and on the ground, the immediate needs are as follows:

¥ increasing management activity on the ground rather than doing more work on paper; ¥ raising local people and national awareness on sustainable use of forests and development; ¥ getting long-term support from the government; ¥ upgrading human resources on sustainable use of forests; ¥ introducing CDM initiatives in Cambodia.

BIBLIOGRAPHY

Appanah, S. & Kleine, M. 2001. Auditing of sustainable forest management. ASEAN state of the environment report 2000. ASEAN Secretariat, Public Information Unit. Cambodia Tree Seed Project/DANIDA. 2001. Priority Tree Species Workshop, Phnom Penh, 2000. Chan Sarun. 1997. Prey r’hek (Torn forest). Department of Forestry and Wildlife. 1992. The collection of legislation on forestry. Department of Forestry and Wildlife. 1999. Code of practice for forest harvesting. Department of Forestry and Wildlife. 2000. Forest concession management planning manual. Department of Forestry and Wildlife. 2001. Journal Vol. 25: 28. Forest Alliance Bulletin. December 31, 2001. Global Witness. May 2000. The logging sound is noisier than government promise. Goodman, P., Convey, T. & Timmins, R. 2003. Sustainable use of natural resources by ecotourism development. Technical Report, WWF Cambodia. Sahlee, C. 2001. An overview of ASEAN protected area systems. ASEAN Biodiversity 1 (1 & 2): 27. Sahlee, C. & Blastique, T. 2001. Description and analysis of the protected area system in the Philippines. ASEAN Biodiversity 1 (1 & 2): 28Ð30. Sahlee, C. & Rambaldi, G. 2001. A review of the protected area system of Thailand. ASEAN Biodiversity 1(3): 36-41. Smith, J.D. (ed.). 2001. Biodiversity, the life of Cambodia. Cambodian biodiversity status report 2001. Phnom Penh, Cambodia, Cambodia Biodiversity Enabling Activity.

156 Poverty reduction and forestry sector: Towards the sustainable management of natural resources Biodiversity for poverty alleviation 20 in Indonesia

Suhardi*

ABSTRACT

Indonesia has one of the most diverse megadiversities in the world. Although its land area is only about 1.3 percent of the world’s, Indonesia has about 17 percent of all species. If the diversity in the sea is also included then Indonesia would be regarded as the greatest megadiverse region in the world. The 47 ecosystem types in Indonesia can be divided into seven biogeographic regions which are centered on the major island groups and include their surrounding seas. Despite its megadiversity, Indonesia has great problems with poverty. Poverty in Indonesia may be related to the destruction of the biodiversity since about 1.6 million ha of forests are destroyed annually. Every single species loss is believed to be followed by that of 10 to 30 other species. It is very important therefore to manage the biodiversity sustainably for the benefit of the people.

INTRODUCTION

Strategy to alleviate poverty

Management of biodiversity to alleviate poverty should be based on biogeographic regions or specific site conditions. Biogeographic regions in Indonesia are as follows:

¥ Java and Bali: rain forests; natural monsoon forests; montane forests, temperate herbaceous formation, limestone karst, fresh water swamp forests; and mangroves; ¥ Kalimantan including the Natuna and Anambas islands: lowland evergreen forests; montane forests; extensive mangroves; peat and fresh water swamp forests; and large heath forests; ¥ Sumatra and offshore islands: dipterocarp forests; peat swamp forests; mangroves; montane rain forests; natural pine forests; ¥ Sulawesi and offshore islands including Sulu: montane rain forests; lowland rain forests; karst limestone, swamp forests; and mangroves; ¥ Nusa Tenggara: monsoon forests and extensive grasslands; natural sandalwood forests; and some montane rain forests; ¥ Maluku: lowland and montane forests; mangroves; and fresh water swamps; ¥ Irian: monsoon forests; savanna woodlands; tropical rain forests; lower montane forests; mangrove forests; upper montane forests; alpine heath land, fresh water swamp forests; peat swamp forests; limestone, grassland and beach forests.

Rifai (1983) (cited by Tri Sunarto (1988)) said that about 28 000 plant species are present in the whole of Indonesia but only about 6000 have been utilized in Indonesia, viz. ¥ for ornaments about 1100 species; ¥ medicinal plants about 940 species; ¥ fruits about 400 species;

* Faculty of Forestry, Gadjah Mada University, Yogyakarta, Indonesia; E-mail: [email protected]

157 ¥ vegetables about 340 species; ¥ tannin about 228 species; ¥ timber about 267 species; ¥ spices about 54 species.

There are so many species that need to be explored in the interest of world biodiversity but the problems in Indonesia are serious, for example illegal logging destroys about 1.6 million ha of forests per year. Even in the national park in Central Kalimantan, at Gunung Leuser in north Sumatra and Aceh, forest degradation is taking place. It has been said that the loss of one species of tree will be followed by that of 10Ð30 other species such as insect and mamalia species and other types of plants. The Government of Indonesia limits the supply to about 6 million m3 of logs per year for the wood industries in Indonesia although the demand of the timber industries (excluding pulp and paper) is about 50 million m3 per year. About 1.5 percent of the wood industries in south Kalimantan and only about 30 percent in Jambi Sumatra and 39 percent in east Kalimantan of these industries are still operating; east Kalimantan was the biggest timber producer in Indonesia until recently.

HOW TO SAVE THE BIODIVERSITY AND ALLEVIATE THE POVERTY IN INDONESIA?

Most of the destruction of biodiversity is due to several factors and one of the most important is that Indonesian people in fact depend on forest or biodiversity directly or indirectly for their needs such as food, clothing, medicine, education, culture and income. People should therefore be aware of the importance of biodiversity and how to sustain the biodiversity. Most people only understand that they will earn money from logging but in Indonesia wood or timber actually provides a minor income. During the Dutch colonial period the forests in Java were utilized for the purpose of the Dutch Government, for example in their conversion into monocultures of coffee, cocoa, sugar cane and teak. The conversion benefited the Dutch Government but not biodiversity or the local people. The problems of biodiversity became worse when the government, aiming for more income in a short period, started monoculture of Acacia mangium for their pulp industries without considering the need for biodiversity and for food, housing, clothing, health, culture and income. Integrated farming management is a tool for sustainable biodiversity and for it to succeed, monocultures should be implemented only in limited areas in Indonesia. Integrated farming management for sustainable biodiversity should profit all stakeholders in the short, medium and long terms. Several cases have shown that mixed planting of forest with crops would benefit all stakeholders, as in the case of home gardens of farmers where the area could supply all their needs. Teak forest dominates most of the forest areas in Java, mostly as monoculture. It has been suggested that integrated farming of teak could contribute to better biodiversity and nutrient availability, less risk of fire, and higher production of cattle, fruits, vegetables and other crops. There is also an increase in income for the farmer utilizing integrated farming of teak.

MANAGEMENT OF BIODIVERSITY BY INTEGRATED FARMING OF TEAK TO ALLEVIATE POVERTY

Teak has been planted widely in Java not only in state forests but also in the Hutan Rakyat. In PT Perhutani with a total area of about 1.5 million ha, most of the area is planted with teak and pine. Hutan Rakyat with an area of about 42 965 521 ha is planted with several trees including teak, mahogany and also food crops. Teak forest is usually utilized by the timber companies but in fact the people living near the forest and other communities should utilize more of it for their needs. The teak forest especially should be designed to support such needs, with food as the first priority. Food is very important as the population in Java is the most dense in the country. Teak can be planted with food crops such as ganyong, garut (arrow root), sweet potatoes, cassava and corn. Table1 below shows the forest and non-wood products excluding food products from a teak dominated forest in Gunung Kidul area of Yogyakarta.

158 Biodiversity for poverty alleviation in Indonesia Table 1. Products from the teak forest community in Gunung Kidul area in year 2000/2001 Value ( Rp ) Product Volume (US$1 = Rp 8 800) Bamboo 2 857 802 poles 8 573 406 000 Charcoal 10 935 tonnes 5 467 500 000 Fire wood 2 294 082 stapels 573 520 500 Teak 69 359 400 m3 62 423 460 000 Non-teak 4 400 m3 190 000 000 Log 289 591 m3 86 877 300 000 Honey 237 558 litres 11 877 900 Silk 91.250 kg (cocoon) 167 118 750 860 Source: Dinas Kehutanan Gunung Kidul, 2000/2001. Note: Bamboo, 1 pole = Rp3000; Charcoal, 1 kg = Rp5000; Fire wood, 1 unit = Rp3500; Teak log, 1 m3 = Rp900 000; Non-teak log, 1 m3 = Rp725 000; Honey, 1 liter = Rp50 000; Silk, 1 kg = Rp20 000.

Table 2 shows a comparison between a monoculture of teak and a mixed forest of Dalbergia latifolia. The heteroculture or mixed teak forest could contribute better to soil fertility than the monoculture of teak. P contents of root and leaves in the mixed forest are 1.23 percent and 1.21 percent respectively compared with only 1.21 percent and 1.20 percent in the teak forest. Available P in the soil is also higher in the heteroculture which is 0.0226 ppm compared with only 0.0134 ppm in the monoculture. Organic matter too is much higher in the heteroculture of teak than monocultures (4.51 vs. 1.51 percent respectively). This means that the former condition is better for soil microorganisms.

Table 2. Analysis of P, organic matter content and litter layer thickness Monoculture Heteroculture Analysis of teak of teak P content of root (%) 1.213 1.233 P content of leaves (%) 1.197 1.207 P available (ppm) 0.0134 0.0226 Organic matter content (%) 1.51 4.5133 Litter layer (cm) 1.227 1.600 Source: Suhardi (1990).

Mixed teak forest with Dalbergia latifolia could reduce fire problems. Humidity increases but the microtemperature wind velocity decreases. The data below show fire damage to forests in Indonesia: 1982Ð1983: about 3 200 000 ha 1987: about 66 000 ha 1994: about 500 000 ha 1997Ð1998: about 10 000 000 ha

BIODIVERSITY FOR FOOD PRODUCTION

Many species can grow well under teak which provide food, cosmetics and medicine. An example is ganyong (Canna edulis) which is a source of carbohydrates, capsule filter, cure for stomach ache and others. Food production can be developed not only after Tumpang Sari which lasts only about two years but for the whole forest rotation. Dioscera allata (uwi) and Dioscera hispida (gadung) are among the approximately 35 species that could thrive under teak forest after fire and they are sources of food, medicine, fertilizer, cattle feed and also vegetable (Adriyanti 1994). Several food crops even form synergism with teak in providing nitrogen and land cover. Examples are Dalbergia latofolia, Acacia arabica, Clitoria ternatea, otok-otok, tekik, Leucaena lecocephala and Acacia villosa (Sumardi and Winastuti 1993).

Suhardi 159 Tumpang Sari, which involves teak planting for two years, was introduced in Java, Indonesia, in 1883 when the population was still only 20 million; it has since then increased, by 2003, to more than 100 million. Therefore it is very important that land under teak forest is utilized as a source of food, medicine, vegetable and cattle feed; at the same time this cultivation can increase the productivity of the teak. The biggest forest area is under Perum Perhutani in Java, where the population has become the biggest in the country and utilizing the land under the teak forest has become urgent while conserving the water status of the forests. Soybean for food industries has also been planted in trials in the teak forest. The results showed that the local variety is better than other exotic species (Team Peneliti Tumpang Sari UGM 1974b). Arachis hypogaea was also tested after two years Tumpang Sari to increase the benefit of teak forest for the whole rotation. By using Rhizobium inoculation the trials gave better production of A. hypogaea (Winastuti 1993) The trails to increase food production involve not only increasing the area under cultivation but also planting different plant varieties. For rice, for example, varieties such as C-4 , IR 127, Gama 318, O 56, IR 661-1-170-1-3; IR 1545-339, IR 1614-330-1 and galur IRRI have been tested (Team Peneliti Tumpang Sari UGM 1974a). Total volume in 3 ha is 100.1791 m3. Therefore volume per ha is 33.3930 m3 or 3.33 m3ha-1y-1. At Rp500 000 m-3 the estimate value is Rp 1 650 000 ha-1y-1.

Table 3. Total volume of tree species in each plot (plot size 100 m x 30 m) at Bubung Village (m3y-1). Type/species I II III IV V VI VII VIII IX X Acacia 2.058 0.0575 00000000 Teak 0.941 4.9859 4.6456 0.7378 0 35.002 1.7660 6.4715 0.4270 0.2907 Mahagony 6.2953 1.8248 0.8728 0.0063 0 0 7.0604 1.6065 1.9147 9.3306 Paraserianthes 1.4000 0 0 0 0.1435 6.4781 0.9184 2.4731 0 0 falcataria Artocarpus 0 0.1242 0.2071 0000000 integer Coconut 0.2480 000000000 Bamboo0.30.80.30000000 Others 00000.4923 00000 11.2423 7.7924 6.0255 0.7441 0.6358 41.4801 9.7448 10.5511 2.3417 9.6213

Table 4 shows that the average number of trees per ha is about 174. However, for a 15-ha teak forest interplanted with other crops with cattle rearing (Tables 5 and 6), the average number of tees per ha is 481 with an additional value of Rp32 624 000 per year.

Table 4. Number of tree species in each plot (100 m x 30 m) Type/species I II III IV V VI VII VIII IX X Acacia 3 1 0 0 0 00000 Teak 5 63 127 44 0 42 9 40 10 1 Mahogany 18 14 53 3 0 0 21 9 10 3 P. falcataria 20 000131800 A. integer 01 30300000 Coconut 10 00000000 Bamboo 3 8 3 0 0 00000 Others 0 0 0 0 1 00000 Total 32 87 186 47 4 55 31 57 20 4 523 in 3 ha or average of 174 trees per ha

Table 5. Total product or income per year of 15-ha plot of fruit trees, vegetables, tuber (yam group), medicinal plants and cattle Type of non-wood product Total value in Rp Average per ha Fruit 263 400 000 17 560 000 Vegetables 126 360 000 8 424 000 Yam group (tubers) 600 000 40 000 Medicinal plant 5 000 000 333 334 Cattle 94 000 000 6 266 667 Total 489 360 000 32 624 000

160 Biodiversity for poverty alleviation in Indonesia From the above, it is clear that planting teak in combination with other timber and non-timber crops would bring better returns than planting teak alone. Higher income would also come from the lower cost of maintenance. For the monoculture of teak, the maintenance cost is about Rp2 000 000 per ha but that of the heteroculture of cassava with teak is only Rp400 000 per ha (report from Inhutani V Kotabumi).

FRUITS AND ESTATE CROPS

Planting fruits and estate crops among teak could give more income (Table 6), and also earlier income which would help most of the farmers and companies concentrate on their activities. There is also better chance to get credit from the bank.

Table 6. Total income from fruit and estate crops planted with teak in a 15-ha plot Total product Price per kg Total value Type of tree Number of trees (kg) (Rp) (Rp) Cacao 3500 8 000 12 000 115 200 000 Clove 100 200 50 000 10 000 000 Coconut 600 18 000 500 9 000 000 Coffea 200 200 6 000 1 200 000 Rambutan 400 20 000 2 000 40 000 000 Parkia spp. 200 20 000 2 000 40 000 000 Gnetum gnemon 500 5 000 3 000 15 000 000 Durio zibethinus 25 1 500 5 000 7 500 000 Pepper 1500 750 30 000 22 500 000 Mango 200 2 000 1 500 3 000 000 Total 7225 75 650 263 400 000 Per ha 481.6 17 560 000

In addition to allowing more trees per ha and bringing better income, the heteroculture provides better shading from the trees for better growth to the non-timber crops as can be seen from the nutrient distribution in Table 2. What needs to be developed?

¥ formal and informal education to the local community on the proper crop combination and establishment of home industries; ¥ more simple and appropriate technology, and local management; ¥ more credit from the bank.

MANAGEMENT OF BIODIVERSITY BY INTEGRATED PLANTING OF OIL PALM WITH DIPTEROCARPS

In Indonesia, there is also the conversion of large areas of forest into oil palm estates. The government and also most of the farmers are interested in planting oil palm due to the higher income from oil palm and thus also higher revenue for the government. As a result, oil palm estates have been established wherever the palms could be planted. Trials have shown that the growth of timber, especially of dipterocarps, is excellent and gives so little competition to oil palm production. The cost of management of dipterocarps in oil palm estate is cheaper than that of planting timber alone as plantation. Oil palm also plays a role as shading for the dipterocarps. Integrated oil palm estates can also act as a source of biodiversity, food and also medicinal plants.

BIODIVERSITY IN RUBBER PLANTATION

More than 600 000 ha of rubber plantations in Sumatra have matured and need to be replanted. Planting dipterocarps under rubber should be considered. If rubber is planted together with dipterocarps as shade trees then the farmers would have the two benefits of rubber and wood. There would be wood supply for the industries and the world could get more oxygen and more carbon would be fixed. Planting dipterocarps under rubber would therefore bring more income to farmers, and more biodiversity and probably better conservation of water and wildlife.

Suhardi 161 MANAGEMENT OF BIODIVERSITY UNDER SECONDARY FOREST

There are several issues that need to be clarified with more research to show that if secondary forest is not too much disturbed by illegal logging then the biodiversity will return. Certainly some plant species can grow well and faster, and some species of fauna can only thrive, under undisturbed conditions. However, how much the biodiversity is affected by the degree of forest disturbance has yet to be demonstrated.

CONCLUSION

¥ Teak forest planted in combination with non-wood crops suitable for food production and animal husbandry can alleviate poverty. ¥ Integrated farming of teak increases nutrient availability, reduces fire risk, increases income for the farmers and companies, and enhances food production. ¥ In areas with acidic soils, more diversity could be developed under oil palm and rubber, especially where the main trees are dipterocarps. ¥ While little is known about the fragility of biodiversity in a disturbed secondary forest, it is still important to protect this forest from illegal logging.

BIBLIOGRAPHY

Adriayanti, D.T. 1994. Deskripsi jenis tanaman pioner pada lahan bekas kebakaran dihutan jati. KPH Madiun, Fak. Kehutanan, UGM. 57 pp. Rifai, M.A. 1993. Plasma nutfah. Erosi genetika dan usaha pelestarian tumbuhan obat Indonesia. Bio Indonesia 9: 15Ð28. Suhardi. 1990. Konkurensi akar dan tajuk dari hutan jati campur di BKPH Kedungbrubus. KPH Saradan Lap Penelitian DPP UGM /10123/M/03/01. 26 pp. Sumardi & Winastuti. 1993. Identifikasi agen-agen penambat nitrogen dalam hutan jati. Penelitian DPP UGM. UGM /85/M/09/01, Fak. Kehutanan. 19 pp. Team Peneliti Tumpang Sari UGM. 1974a. Usaha penyempurnaan tanaman Tumpang Sari di wilayah hutan jati. Progress Report I/1974. Perum Perhutani/Dirjen, Kehutanan/Deptan, Fak. Kehutanan, UGM. 31 pp. Team Peneliti Tumpang Sari UGM. 1974b. Usaha penyempurnaan tanaman Tumpang Sari di wilayah hutan jati. Progress Report II/1974. Perum Perhutani/Dirjen Kehutanan/Deptan, Fak. Kehutanan, UGM. 15 pp. Winastuti, D.A. 1993. Intensifikasi kacang tanah (Arachis hypogaea) dengan inokulasi Rhizobium di bawah tegakan jati di Wanagama. DPP, UGM/85/M/09/01, 31 Des. 1992. 26 pp.

162 Biodiversity for poverty alleviation in Indonesia Nature conservation and biodiversity for poverty reduction – 21 case of Bhutan Lungten Norbu*

ABSTRACT

Forests and biodiversity in Bhutan play a significant role in the national and local economy of the country. Also, the protection of fragile watersheds by forests for soil protection and water discharge maintenance are critical to offset any negative impacts on settlement, agriculture and hydropower. Bhutan Vision 2020 expresses a need to balance economic development with cultural and environmental conservation. The Royal Government of Bhutan emphasizes that biodiversity and natural resource conservation do not constitute a constraint to development but also serve as opportunity for development and return of adequate benefits to the local people. The opportunities for nature conservation and biodiversity contributing to reducing poverty are great, but they will remain as ever a wishful list of opportunities if they are not converted to tangible benefits for the poor.

INTRODUCTION

Bhutan is one of the least developed countries with a population estimated at 700 000. Most people live in rural areas with settlements concentrated in the southern foothills and in the inner broad valleys while the northern parts remain virtually uninhabited. Land area suitable for agriculture is estimated to be about 8 percent and employs about 80 percent of the population (Dorjee 1995). The current population growth rate is 3.1 percent and it is likely to double by 2020 in view of improved medical services and health infrastructures (RGoB 2001). Bhutan is lucky in that there exists no big gap between the rich and poor due to its late entry to the development arena and because of its low population. Poverty assessment using a comprehensive set of indicators was not done; a rapid quality assessment done in 2000 shows that average income per person per day is as low as Nu.40 which is less than the equivalent of US$1 per person per day. The income figure is definitely incorrect as Bhutanese economy is subsistence and all household incomes cannot be accounted in the calculation. However, there is no room to be complacent. With the advent of development programmes and commercialization, there is growing trend of disparities between individuals/households in income earnings. The Planning Commission Report (RGoB 2000a) states that the household income is significantly less in rural areas (Nu.33) than in urban areas (Nu.70).

NATURAL RESOURCES AND BIODIVERSITY

Lying in the lap of the young and growing mountain range of the Eastern Himalayas, Bhutan is endowed with rich natural resources. Forests, representing the biological resources, the ecosystems and the diversity of plants and animals, cover 2 904 500 ha, corresponding to about 72 percent of the land area. For Bhutan, keeping a large part of forests intact is important to protect its fragile watersheds and farmlands for sustaining the well-being of the people. Realizing this, the government in its policy has given high priority to conservation functions of forests over its economic functions and has endorsed a policy to maintain 60 percent of the land under forest cover for all times. About 34 percent of the country is set aside as protected areas represented by four national parks, four wildlife sanctuaries and one nature reserve located across the country (Table 1). The varied flora and fauna include 7500 species of vascular plants, 700 species of birds and 165 species

* Renewable Natural Resources Research, Bhutan; E-mail: [email protected]

163 of mammals (RGoB 2003). Bhutan forests are internationally significant for their rich biodiversities and Bhutan has been recognized as one of the 10 “hotspots” in the world. Forests and biodiversity in Bhutan play a significant role in the national and local economy of the country. According to the Master Plan for Forestry Development (MoA 1991), the average allowable cut (AAC) is estimated at around 1.2 million cubic meters per annum from an operable area of 902 000 ha. Forestry contributes about 11 percent towards the Gross Domestic Product and generates 3 percent government revenue through royalty collection and sales of wood and wood products. Logs, sawntimber, veneer and other non- wood products account for 20 percent of the exports. It is estimated that about 25 000 people are employed in the forestry sector, mainly in non-monetized fuelwood collection (MoA 1991, World Bank 1997). Also, the protection of fragile watersheds by forests for soil protection and water discharge maintenance is critical to offset any negative impact of settlement, agriculture and hydropower. More important, forests are sources of livelihood for 85 percent of the population as they provide food, wood, fodder, fuelwood, leaf-litter and other non-wood forest products. The well-being of the local people is directly linked to how well forest resources are conserved and managed for all times.

Table 1. Protected area system Protected area Area ( km2) Ecosystem representation Royal Manas National Park 1000 Subtropical forest, habitat for tiger, elephant, leopard and golden langur Jigmi Dorji National Park 4200 Habital for takin, snow leopard, blue sheep, rare plant species Jigmi Singye Wangchuck 1400 Pristine upland broadleaf forest, habitat for clouded National Park leopard and tiger Bomdeling Wildlife Sanctuary 1300 Upland broadleaf forest, winter roosting area of black-neck crane Thrumsingla National Park 768 Old growth fir forest with rhododendrons, habitat for red panda, tragopan and monal pheasant Sakten Wildlife Sanctuary 650 Pristine mixed coniferous forests, highest number of rhododendron plant species Phibsoo Wildlife Sanctuary 278 Natural sal forest, habitat for spotted deer Toorsa Strict Nature Reserve 644 Pristine temperate forest Khaling Wildlife Sanctuary 273 Temperate forests, only habitat for pigmy hog Source: RGoB (2003).

CLEAN DEVELOPMENT MECHANISM (CDM) INITIATIVES IN BHUTAN

With improvement in the economy, urbanization is growing steadily which results in problems such as traffic congestion, sewage disposal and ruralÐurban migration. Vehicle emission-testing programme is being developed and standards established while waste disposal management system is in its initial stage confined to establishment of landfill for disposing solid waste. Due to ruralÐurban migration, the expanding urban population is exerting pressure on natural resources. The land available for urban growth is limited by topography and government policies to maintain the present forest cover and restriction to land conversion. Bhutanese economy is estimated to be expanding (approximately by 6.5 percent in 1994) and the traditional sector (agriculture, livestock and forestry) roughly contributing 40 percent to the GDP while the modern sector (mining, construction and electricity) grew to about 30 percent of the GDP and the manufacturing industries increased to 20 percent. Clean Development Mechanism (CDM) is one of the flexibility mechanisms authorized in the Kyoto Protocol 1997 as follow-up to the 1992 United Nations Framework Convention on Climate Change (UNFCCC). Bhutan is fully committed to the UNFCCC objectives and prepared to fulfill its obligations. Despite its new initiative in this aspect, Bhutan has built its capacity. To implement an appropriate and effective response, priorities such as improvement of databases in all ministries, devising of robust policies for sustainable development, meeting national imperatives as well as global environmental issues and studies on impacts of climate change were identified (RGoB 2000b). A menu of mitigation options identified relevant to Bhutan are (RGoB 2000b):

¥ Renewable energy technology options Ð Although mainly dependent on hydropower, which is a relatively clean source of energy, it is expensive due to extension of grid to scattered settlements. In this connection, it is worthwhile to explore mini- hydels, solar and biomass gasifiers. ¥ Improved technology to reduce fuelwood consumption Ð A majority of Bhutanese use wood for cooking and heating purposes. Improved stoves are introduced to reduce fuelwood consumption and air pollution. Electric heaters are being introduced but they are expensive and beyond the reach of the average household.

164 Nature conservation and biodiversity for poverty reduction—case of Bhutan ¥ Introduction of fuel-efficient vehicles Ð

The present vehicles are not fuel-efficient and they are major sources of CO2 emission. Monitoring systems to check emissions are in place and import of reconditioned cars is banned.

OPPORTUNITIES WITH CDM, ENVIRONMENTAL SERVICES AND BIODIVERSITY FOR POVERTY REDUCTION

Bhutan Vision 2020 expresses a need to balance economic development with cultural and environmental conservation. The Royal Government of Bhutan emphasizes that biodiversity and natural resource conservation do not constitute a constraint to development but instead serve as opportunity for development and return of adequate benefits to the local people. The existing policy and legal frameworks with respect to forest, conservation, biodiversity and land provide supportive bases for management, control and use of the natural resources through involvement of the local people and communities (Table 2). As a large part of the country is virtually under “conservation”, a number of opportunities exist to reduce poverty based on the natural resources and biodiversity values.

Table 2. Legal framework supporting peoples’ participation in management and use of natural resources and biodiversity Framework People concerns addressed Land Act 1998 Land entitlement, grazing land and compensation for crops Forest and Nature Conservation Act 1995 Protected areas, soil and water conservation, people participation in community and private forestry Social Forestry Rules 2000 Implementation criteria and formalities: community forestry and people participation Biodiversity Act 2003 Use of natural resources and biodiversity, patenting and ownership

CARBON TRADING

Due to low industrialization, Bhutan has relatively insignificant emission of Green House Gases (GHG) by world standards but it will definitely increase with population growth and advent of economic development (RGoB 2000a). There is general lack of clarity on the contribution that forests make towards poverty alleviation resulting in unappreciation of the globally emerging trend such as carbon trading that could bring immense benefits for the poor. For instance, farmers could trade carbon credits with companies for trees grown on private land or in community forestry and for intact natural forests existing due to community efforts in their forest plantation and conservation.

ECOTOURISM AND NATURE-BASED TOURISM

In Bhutan, tourism is increasingly being seen as one of the major opportunities for economic diversification. At the same time, Bhutan does not wish to compromise the fast economic return of tourism with erosion of cultural heritage and biodiversity. Thus the policy of high return and low impact tourism targets rich individuals and countries in order to limit the ill-effects of tourism on physical and cultural environments. Ecotourism and nature-based tourism are increasingly becoming popular with the people living in the industrialized countries. Thus Bhutan, endowed with bountiful nature and rich-unique culture and tradition, has a big potential to benefit from this growing market. The plan of establishing ecotourism or agrotourism (FSD 2002) based on ecologically friendly, culturally acceptable and economically viable principles should be implemented involving all stakeholders including the local people from where concrete benefits should go to local communities as compensations for restricted use of local resources in promoting tourism.

NON-TIMBER FOREST PRODUCTS (NTFPs)

Recent studies show that non-timber forest products (NTFPs) are indispensable at the household level for medicine, food, cash and employment. Also, a substantial amount of revenue is brought into the country through export of NTFPs. Bhutan Trade Statistics (1991Ð1999) indicate the export value of NTFPs to range from Nu.14.29 million to Nu.44.04 million. The most important NTFPs that are exported are bamboo, cane, chirata (Swertia chirata), pipla (Piper spp.), rosin and turpentine oil (from Pinus roxbhurghii), lemon grass oil (Cympopagum flexuosus), mushrooms, incense sticks and hand-made papers. Non-timber forest products (NTFPs) such as medicinal plants, mushrooms, bamboo and local handicrafts constitute a growing market worldwide as scarcity for such niche products increases. There is a growing demand

Lungten Norbu 165 for ecological nature-based products offering attractive prices mainly in industrialized countries. The rich forests of Bhutan will provide a wide range of these NTFPs with benefits to both conservation and development efforts. NTFPs can be managed sustainably by the local people under the Community-Based Natural Resource Management Programme (CBNRM). The CBNRM is becoming a popular concept and mechanism to manage natural resources such as NTFPs in Bhutan. CBNRM would enhance the rural economy while natural resources are conserved, managed and marketed through community empowerment and participation. Research initiatives such as bringing chirata (Swertia chirata), masutake (Tricholoma masutake) and Cordyceps sinenis under CBNRM initiatives are underway. Community-based management and product development are under consideration for other important NTFPs such as bamboo, lemon grass, pasture grazing and water through rural enterprises projects.

BIOPROSPECTING

The rich biodiversity and its relatively unexplored current status represent a big potential for bioprospecting in Bhutan. Bioprospecting is a growing endeavour that involves search for new genes or chemicals of great value. The local people use different plants and animal products for medicine, dyes, spices and aromatics. If carefully undertaken, bioprospecting may offer an opportunity for substantial economic benefits. However, patenting and ownership of the products should be carefully considered so that benefits also go to the local people for their efforts and pains they have taken to preserve the valuable resources and indigenous knowledge (IK) on their uses that lead to the development of the useful commercial products. The recently approved all Biodiversity Act 2003 protects farmers’ rights and guarantees equitable benefit sharing from the use of such resources.

HYDROPOWER

Agriculture and hydropower are two pillars of the Bhutanese economy. But because of the rugged terrain, dependence of economic development solely on agriculture is hard to imagine. Bhutan is rich in water resources and hydroelectricity projects are built to generate electric power. The surplus power is exported to India, generating about 40 percent of the government revenue. Therefore, to sustain hydropower generation, keeping intact the forest and environment close to nature is a crucial task which in turn will need the cooperation of the local communities to optimize the use of forest resources. Ploughing back part of the revenue from electricity to improve the living conditions of the local people staying within the hydropower catchments would help sustain both power generation while human communities and plant/animal communities prosper side by side.

WATER RESOURCES

Water resources are abundant in Bhutan and this represents a growing economic value. The continuous availability and quality of water depend on proper ecosystem management. Promoting community forest management and putting a price tag on the intangible services from forests such as water and recreation and sharing these benefits with the rural communities are some of the potential areas that would enhance rural income.

CONCLUSION

The opportunities for nature conservation and biodiversity to contribute to reducing poverty in Bhutan are great as they are being recognized and valued by foresters, researchers, environmentalists and development workers. They will remain as ever a wishful list of opportunities if they are not converted to tangible benefits for the poor people.

BIBLIOGRAPHY

Dorjee, K. 1995. An analysis of comparative advantages and development policy options in Bhutanese agriculture. Swiss Federal Institute of Technology, Zurich. (Ph.D. thesis) FSD. 2002. Biodiversity action plan. Thimphu, Department of Forest. MoA. 1991. Master plan for forestry development. Main report. Thimphu, Department of Forest. RGoB. 2000a. Poverty assessment and analysis report: a rapid assessment. Thimphu, Planning Commission. RGoB. 2000b. Initial national communication. Thimphu, National Environment Commission. RGoB. 2001. Statistical year-book of Bhutan 2001. Thimphu, CSO, Planning Commission. RGOB. 2003. Vision and strategy for the Nature Conservation Division. Thimphu, Department of Forest, MoA. World Bank. 1997. Mid-term review, Third Forestry Development Project. Washington DC, USA.

166 Nature conservation and biodiversity for poverty reduction—case of Bhutan Opportunities in using the conservation of biodiversity to 22 alleviate poverty in Thailand Suchitra Changtragoon*

ABSTRACT

Improving the living status of disadvantaged rural people is one of the main policies of the Government of Thailand, which is firstly to decrease their expenditure, secondly to increase their income, and lastly to enhance their economic opportunities. Most of the rural people in Thailand rely on agriculture and forests for their living. In this paper the prospects of alleviating their poverty based on biodiversity conservation through ecotourism management and food banks from forest community establishment as well as forest plantations for medicinal and natural product investment are proposed. The opportunity of future benefits from Clean Development Mechanism (CDM) contribution in Thailand is also discussed.

BIODIVERSITY AS THE SOURCE OF ECOTOURISM BENEFITS

Natural forests are the source of biodiversity which can provide income and benefits to rural people through ecotourism. At present ecotourism involves travelling to natural areas with specific objectives of studying, admiring and enjoying the scenery and its wild plants and animals while conserving the biological diversity and natural condition of the environment as well as improving the welfare of the local people. This is in line with the world conservation movement, and also with the policy and planning of the National Park, Wildlife and Plant Conservation Department of Thailand for natural resources and biodiversity conservation and sustainable development with people participation. USAID (1995) has identified ecotourism as an enterprise with potential positive contributions to the conservation of endangered biological resources. Contributions of ecotourism include raising local awareness about the value of biological resources, increasing local participation in the benefits of biodiversity conservation (through new sources of jobs and income), and generating revenues toward conservation of biologically rich areas (Anonymous 2002). Wood (2002) pointed out that ecotourism is a growing niche market within the larger travel industry, with the potential of being an important sustainable development tool. With billions of dollars in annual sales, ecotourism is a real industry that seeks to take advantage of market trends. At the same time, it frequently operates quite differently from other segments of the tourism industry, because ecotourism is defined by its sustainable development results: conserving natural areas, educating visitors about sustainability and benefiting local people. Chettamart (2003) mentioned in his paper concerning ecotourism resources and management in Thailand that the current Government of Thailand is keen on tourism development, as stressed by the Prime Minister Thaksin Shinawatra in his official declaration of the government policies to the National Assembly in early 2001. The Prime Minister said that the tourism industry could very well be the country’s substantial income earner and, in turn, could help to solve its current economic problems. He then pledged to increase the diverse forms of tourism and to upgrade the quality of all tourism products, targeting ecotourism, health tourism, nature tourism and services to ensure their long-term competitiveness with other countries. He also stated that new tourist sites must be developed and promoted. Communities must be able to play a greater role in tourism management (Emphandhu 2002).

* Forest Genetic Engineering Division, National Park, Wildlife and Plant Conservation Department, Bangkok, Thailand; Email: [email protected]

167 The Tourist Authority of Thailand (TAT) has run a campaign “Unseen Thailand” to promote the exploration of 54 unseen places including nature-based ecotourism spots in Thailand, in addition to the previous “Amazing Thailand” campaign. This input is one way to distribute income to the local people who rely on natural forest and so far is a very successful project. The National Park, Wildlife and Plant Conservation Department has also encouraged people participation in nature-based ecotourism by training the local people, youths and students who rely on the natural forest to act as ecotourism guides, conversant in both Thai and English. This project is also very successful and is ongoing since the local people and the young generation can get income as tour guides as well as cultivate awareness on natural forest conservation and its value (Changtragoon 2003). There are 1385 nature destinations for ecotourism in Thailand (Saetharuk 2001). Most of them are located in national parks and protected areas. In Thailand there are 319 protected areas comprising 145 national parks, 53 wildlife sanctuaries, 52 non-hunting areas and 69 forest parks (Chettamart 2003). Income from the entrance fees and accommodations for the ecotourists visiting the national parks in Thailand has increased gradually from 1993 to 1999, and steeply thereafter as shown in Figure 1. It is a normal practice that five percent of the income from these fees go to a community fund. The people living near or inside the natural forest derive additional income by providing accommodations, meals, drinking water, food, traditional cultural entertainment and guided tours for the ecotourists. Some communities can manage ecotourism on their own, some get income through ecotourism companies. However, a problem still remains in the proper management of the local people’s participation and a fair distribution of income for their involvement.

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0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Year Figure 1. Income from entrance fees to national parks managed for ecotourism in Thailand during 1993–2002

BIODIVERSITY AS A SOURCE OF FOOD BANK AND ECONOMIC INVESTMENT ON MEDICINAL PLANTS AND NATURAL PRODUCTS

Most of the local people in Thailand rely on forest products as sources of food, medicine plants and other uses. It is estimated that about 80 percent of at least 18 000 forest trees and plants in Thailand are medicinal plants. Bhumibhamon and Kamkong (1997) reported that 242 multipurpose tree species are edible and are being consumed by the local people. At least 300 plant species are aroma trees (Kamkong 2002). At present, medicinal plants and their application are very popular in Thailand. Both government and non-government organizations are encouraging rural people to establish medicinal plants in their gardens and communities for their own use. Besides, under the campaign of the Government of Thailand on “one (tambom) district one product”, medicinal plants and natural products are also sources of their additional income. On a broader scale, at least 80 private companies and a number of hospitals in Thailand have invested in medicinal plants as sources of local medicines and natural products for local consumption and export. Figures 2 and 3 show the business trends of medicinal plants and spices for export from 1995 to 2001. The decline in the recent years may be due to the economic crisis and shortage of materials. Because of the high demand for plant materials in this business, it is known that some of the materials have come from harvesting of medical plants and trees in the natural forests.

168 Opportunities of using the conservation of diversity to alleviate poverty in Thailand 35000

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Therefore, there should be a proper plan for the conservation and sustainable utilization of plants for medicine and as a source of local food bank through the establishment of plantations and management of forest communities. Investment on plantations of medicinal and aroma as well as spice plants to supply the medicinal and natural products business is encouraged for the local people. The Government of Thailand has also identified 2512 forest communities (Table 1) as sources for the production of food and medicinal plants as well as natural products and to increase their income. To maintain these sources in a sustainable way, one example is the project on the exploration of biodiversity through local people participation which has been planned to start in October this year stretching to 2007 by the Ministry of National Resources and Environment. By this means local people from 4088 districts of 70 provinces in an areas of 164 018.78 km2 will know the status of plants and forest trees as well as the wildlife stock in their communities and can manage these resources with the assistance of experts to conserve and utilize the biodiversity more efficiently and sustainably (National Resources and Environment 2003).

Table 1. Numbers and areas of approved forest communities in Thailand Location Number of communities Number of projects Area (ha) Central 402 382 13 709.76 North 761 735 57 720.96 South 265 260 4 367.84 Northeast 1084 926 43 367.68 Total 2512 2303 119 166.24

Suchitra Changtragoon 169 POLICY AND PLANNING ON CLEAN DEVELOPMENT MECHANISM (CDM) IN THAILAND

Thailand ratified the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol on 28 December 1994 and 28 August 2002 respectively. According to the Thai cabinet resolution on 10 September 2002, every governmental department involved with CDM activities has been assigned to initiate projects and activities related to CDM, firstly to decrease consumption to reduce air pollution and gas release that cause green house effect, and secondly to sequester carbon by increasing and sustaining green areas by reforestation and afforestation. In the case of developed countries that would like to participate in carbon credit projects in Thailand, every CDM project proposal has to be submitted to the cabinet for approval, case by case (Policy and Planning of Natural Resources and Environment 2003). Actually, the Royal Forest Department and the National Park, Wildlife and Plant Conservation Department of Thailand have continually implemented reforestation and afforestation to enrich the green area (Table 2) as well as encouraged the private sector and local people to invest in forest plantations for wood and fiber production since several years ago, before the CDM of the Kyoto Protocol was set up. Getting the local people and private companies to invest in forest plantations to benefit from the CDM projects may take some time due to their lack of understanding and information of CDM contribution and also their unclear comprehension of CDM regulations and management from the Kyoto Protocol. However, this year the Government of Thailand has planned to initiate the incentive project on setting up sustainable green zones in towns and communities as botanical and community gardens by reducing land property tax for the local people who use their own lands for this purpose.

Table 2. Annual reforestation by objective Area (ha) From Item beginning 1997 1998 1999 2000 2001 to 1996 Afforestation by government budget 645 184 6 203 6 592 9 283 5 477 3 840 The reforestation campaign in 299 885 30 268 10 211 15 348 12 972 16 005 commemoration of the Royal Golden Jubilee By Forest Industry Organization (FIO) 27 025 0.00 0.00 59.24 710 0.00 By Thai Plywood Co., Ltd. 1 174 701 619 694 378 341 Reforestation according to Ministry’s regulations 12 564 234 971 1 337 1 478 1 914 Reforestation by concessionaire budget 20 869 651 898 40 54 138 Total 1 006 701 38 057 19 291 32 626 21 069 22 238

The carbon dioxide exchange characteristics and biomass of tropical tree species under various environmental conditions have been investigated. The results show that the gross carbon dioxide uptakes by deciduous forest and teak plantation were 86.65 and 59.83 tonnes ha-1y-1 respectively (Puangchit 2001). The carbon dioxide emission and sequestration from forest in 1990 and 1994 have been compared by Puangchit (1994) using secondary data on forest area and biomass. The results show that the net emission has been reduced in 1994 compared with 1990 (Table 3). These results may be improved by the reforestation programmes in Thailand. If this assumption is correct, the net carbon dioxide emission in Thailand may have dropped in recent years due to the increasing forest area as shown in Figure 4. Research on carbon sink on above- and below-ground biomass in different natural forest types and plantations is ongoing (Laengjame and Diloksampan, personal communication).

170 Opportunities of using the conservation of diversity to alleviate poverty in Thailand Table 3. Carbon dioxide emission and sequestration from forest, 1990 and 1994 (Gg) 1990 1994 Carbon sequestration Uptake from plantation –812.50 –17,457.26 Uptake from secondary forest –24,151.60 –21,644.34 Total –24,964.10 –39,101.60 Change in woody biomass Wood and fuelwood consumption +21,160.59 +40,180.51 Forest conversion Biomass burning on site +6,455.61 +13,650.78 Biomass burning off site +68,321.84 +14,508.08 Decay of timber biomass +6,946.28 +31,237.98 Total +81,723.73 +59,396.84 Total emission +102,884.32 +99,577.35 Net emission +77,920.22 +60,475.75

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Figure 4. Percentage of forest area in Thailand from 1988 to 2000

DISCUSSION AND CONCLUSION

Biodiversity can be used to provide benefits to the rural people which can be summarized as shown in Figure 5. However, proper management should be carried out to improve benefit sharing and distribute the opportunities to earn the new income for the rural people, so that their living standard will be upgraded. At the same time, the conservation of biodiversity should be managed properly and efficiently so that the forest resources can be maintained and used in a sustainable way. Concerning CDM, at this stage the potential for poverty reduction in terms of carbon credit contribution may take some time with respect to reforestation and afforestation in Thailand. However, the activities relating to CDM are ongoing and encouraged by the Thai Government, case by case. The input of CDM based on biodiversity from standing natural forests and green zones as well as public parks in developing countries deserve consideration.

Suchitra Changtragoon 171 CDM (Clean Development Mechanism) Ð Reforestation and afforestation Ð Plantations by community cooperation Ð Green zones Ð Input on proving biodiversity of natural forest as the source of carbon sink Ð Model of natural forest reduction affecting climate change

Food bank Ecotourism Medicinal plants Community based Natural products investment Ð Knowledge improvement Poverty alleviation Ð Management Ð Plantations of medicinal plants through biodiversity Ð Benefit sharing Ð Forest community Ð Promotion Ð Support

Figure 5. Opportunities for poverty alleviation through biodiversity conservation

ACKNOWLEDGMENTS

The author would like to express her appreciation to the Asia Pacific Association of Forestry Research Institutions (APAFRI) for the invitation and support of her presentation and participation in this workshop.

BIBLIOGRAPHY

Anonymous. 2002. Benefits of ecotourism. www.untamedpath.com Bhumibhamon, S. & Kamkong, A. 1997. Eatable multipurpose trees. Subcommittee on Research Coordinator of Forest Resources and Multipurpose Fast Growing Trees. Bangkok, Research Council of Thailand. 485 pp. (in Thai) Changtragoon, S. 2003. Project on administration and management of biodiversity of forest resources and wildlife for conservation and sustainable utilization development. National Park, Wildlife and Plant Conservation Department. 31 pp. (in Thai) Chettamart, S. 2003. Ecotourism resources and management in Thailand. Malaysia—Thailand Technology and Business Partnership Dialogue, 27Ð28 July, Langkawi, Malaysia. 16 pp. Emphadhu, D. 2002. Community-based tourism in protected areas. Research Team Meeting, Strategy for Facilitating Community-Based Tourism in Protected Areas under APEIS Project, 12Ð13 November 2003, Tokyo, Japan. Kamkong, A. 2002. Aroma multipurpose trees. Proceedings of Conference on Multipurpose Trees and Thai Culture. Volume 2, pp. 135Ð145. (in Thai) Ministry of Natural Resources and Environment. 2003. Survey of biodiversity in community level project. The Office of Ministry of Natural Resources and Environment, Ministry of Natural Resources and Environment. 38 pp. (in Thai) Policy and Planning of Natural Resources and Environment. 2003. Report on the meeting of the Subcommittee on Planning and Management of Community Environment. Policy and Planning of Natural Resources and Environment, 17 June 2003. 14 pp. (in Thai) Puangchit, L. 2001. Thailand’s national greenhouse gas inventory 1994, Forest sector: Chapter 6. Ministry of Science, Technology and Environment.118 pp. Puangchit, L. 2004. Carbon dioxide exchange characteristics and biomass of tropical tree species under various environmental conditions. Complete report presented to the Office of National Research Council, Thailand. 39 pp. Saetharuk, A. 2001. The natural park development for ecotourism. Thailand, Royal Forest Department. 218 pp. (in Thai)

172 Opportunities of using the conservation of diversity to alleviate poverty in Thailand Outputs and recommendations 23 of group discussions

GROUP DISCUSSIONS

What are the opportunities offered by global initiatives such as the CDM, environmental services and biodiversity that could benefit the poor? How can these opportunities be tapped to benefit the poor? What are the strategies, policies, mechanisms or procedures that must be put in place to tap these opportunities? The workshop has incorporated four group discussions during which the participants discussed several issues, trying to find answers to these and many other related questions. The issues that were discussed during the group discussions include:

¥ establishing an information clearing-house on the CDM in the Asia Pacific region, ¥ encouraging small CDM projects to aid poverty alleviation, ¥ institutional arrangements for mobilizing inputs from private industry in implementing the Convention on Biological Diversity (CBD), ¥ economic incentives for private investment in conservation.

The outputs and recommendations are as summarized below:

¥ It was generally agreed that there is a need to establish an information clearing-house on CDM in the Asia Pacific region. Ð The establishment of this information clearing-house could begin with establishing an informal network and seeking more formal government agreement. Ð A web site could be launched and to be maintained by contributions from focal points nominated by participating countries. Ð A regional network, such as APAFRI, could manage the web site and clearing-house with appropriate support from participating countries.

¥ The workshop generally concluded that enhancing carbon sequestration in forests and reducing fossil fuel demand, being a global responsibility, presented opportunities for small landowners of the developing countries of the region to increase their incomes. Ð Policies and guidelines, however, would need to be developed to enable the smallholders to utilize the opportunity. Ð As the smallholders are often poor people with few economic opportunities, and carbon sequestration alone may not significantly enhance their incomes, it would be necessary to integrate the CDM with other environmental goods and services to maximize their incomes and make tree growing an economically attractive option. Ð Tree growing with long gestation is particularly prone to high risks of fire, theft, insect attacks, diseases and natural disasters, as well as price fluctuations due to changing economic conditions and consumer preferences. It is necessary to develop appropriate risk management strategies involving risk evaluation, risk reduction and risk sharing between state and the tree growers, covering risks by appropriate insurance instruments.

173 Ð Measuring, verification and certification of carbon sequestration are costly processes involving scientific, technological and managerial skills beyond the reach of the small landholders. The governments would need to provide these services.

Ð Likewise, meeting the legal, procedural, methodological and technological requirements of the Kyoto Protocol related to the issues of leakage, additionally and biological diversity, would be beyond the capacity of the individual small landholders. The governments would need to assist to meet these requirements by laying out appropriate guidelines. Ð Appropriate research strategies should be developed in measurement and economic valuation of environmental goods and services produced by growing trees. Ð Governments should remove legal and fiscal barriers discouraging tree growing on private lands. Ð Governments should encourage networking and cooperation among smallholders to enhance their bargaining power and prevent undercutting. Ð Governments should define the role of the bureaucracy and adopt institutional reform with better accountability and transparency in CDM management.

¥ The workshop recommended that an institutional mechanism be developed at the regional level to attract private industry investment to support biodiversity conservation. Ð This could be in the form of an Asia Pacific Regional Biodiversity Fund that may be established to channel all private investments to ensure a flow of minimum sustained financing for biodiversity conservation in the region. Ð Such a fund could internalize, at least partially, some of the externalities, and reward countries for conserving biodiversity. Organizations such FAO-RAP and APAFRI may lead in establishing such fund. Ð Country studies would need to be conducted to assess private investment opportunities for biodiversity conservation. Ð It is also essential that structural and policy reforms at international, regional and national levels should be attempted to provide the institutional and policy environment that will facilitate private capital flows to biodiversity conservation in the region. Ð The national governments need to not only remove barriers but also provide incentives and encourage private investment in biodiversity. Ð Private industry should assume a good corporate citizenship role and develop and internalize codes of conduct conducive to sustainable development. Ð Sufficient safeguards should be put in place to ensure protection of intellectual property rights and the rights of indigenous people in particular. Ð Establishing of new institutional mechanism for private industry’s investment in biodiversity encompassing timber, energy, carbon sequestration, land and water conservation, in situ and ex situ conservation, and ecotourism as outputs will require the cooperation of private industry and governmental and non-governmental organizations with the support of international agencies. Ð It is necessary to build mechanisms to promote better coordination and cooperation between the private and public sectors to facilitate private investment in biodiversity conservation. Ð Private industry’s involvement can effectively complement other approaches to biodiversity conservation and will add value to make it an economic activity. Biodiversity conservation must start to pay for itself and the governments alone can no longer fund it.

¥ Governments should consider introducing tax-breaks or other tax incentives to attract private investments in conservation. Ð Governments should initiate public education programmes for environment awareness. Ð Clearly quantified environmental benefits will attract private investments. Ð Opportunities are to be identified of for public-private partnership. Ð Rights to services and land are to be secured.

174 Outputs and recommendations of group discussions 24 List of participants

Abdul Razak Mohd Ali Fiona Chandler Forest Research Institute Malaysia (FRIM) World Agroforestry Centre Kepong, 52109 Kuala Lumpur Bogor MALAYSIA INDONESIA Tel : 60-3-62797822 E-mail:[email protected] Fax: 60-3-62797855 E-mail: [email protected] Suchitra Changtragoon (Ms) National Park, Wildlife and Plant Conservation So-Eun Ahn Department Seoul National University 61 Phaholyothin Rd., Chatuchak Seoul Bangkok 10900 KOREA THAILAND Tel : 82-2-8804763 Tel : 66-2-5614249 ext.440 Fax: 82-2-8754763 Fax: 66-2-5769576 E-mail: [email protected] Simmathiri Appanah [email protected] FAO/RAP 39 Phra Athit Road Ki-Joo Han Bangkok 10200 Seoul National University THAILAND Seoul Tel : 66-2-6974136 KOREA Fax: 66-2-6974445 Tel : 82-2-8804763 E-mail: [email protected] Fax: 82-2-8754763 E-mail: [email protected] Daniel Baskaran Forest Research Institute Malaysia (FRIM) Rin-Won Joo Kepong, 52109 Kuala Lumpur Korea Forest Research Institute MALAYSIA Seoul Tel : 60-3-62797806 KOREA Fax: 60-3-62797856 Tel : 82-2-9612631 E-mail: [email protected] Fax: 82-2-9612639 E-mail: [email protected] Jun-Hee Cha Korea Forest Research Institute Promode Kant Seoul Indian Council of Forestry Research & Education KOREA New Forest, Dehradun 248006 Tel : 82-2-9612637 INDIA Fax: 82-2-9612639 Tel : 91-135-628614 E-mail: [email protected] Fax: 91-135-628571 E-mail: [email protected] [email protected]

175 Rodney Keenan Young-Hyun Kim Forest and Vegetation Sciences Seoul National University Bureau of Rural Sciences Seoul Dept. of Agriculture, Fisheries and Forestry KOREA P.O. Box 858, Canberra Act 2601 Tel : 82-2-8804763 AUSTRALIA Fax: 82-2-8754763 Tel : 61-0-2-62725582 E-mail: [email protected] Fax: 61-0-2-62723882 E-mail: [email protected] Rodel D. Lasco Environmental Forestry Programme (ENFOR) Dong-Jun Kim University of the Philippines Chungbuk National University College, 4031 Laguna KOREA PHILIPPINES Tel : 82-43-2613371 Tel : 63-49-5365314 Fax: 82-43-2725921 Fax: 63-49-5365314 E-mail: [email protected] E-Mail: [email protected] [email protected] Eui-Gyeong Kim Gyeongsang National University Don-Koo Lee Chinju Seoul National University KOREA Seoul Tel : 82-55-7515497 KOREA Fax: 82-55-7536015 Tel : 82-2-8804751 E-mail: [email protected] Fax: 82-2-8733560 E-mail: [email protected] In-Ae Kim Seoul National University Li Zhiyong Seoul Chinese Academy of Forestry KOREA Wan Shou Shan, Beijing 100091 Tel : 82-2-8804763 CHINA Fax: 82-2-8754763 Tel : 86-10-62888311 E-mail: [email protected] Fax: 86-10-62887192 E-mail: [email protected] Jong-Ho Kim National Forestry Cooperatives Federation Nagata Shin Seoul University of Tokyo KOREA Tokyo Tel : 82-2-34347114 JAPAN Fax: 82-2-34347169 Tel : 82-3-58415203 E-mail: [email protected] Fax: 82-3-58415437 E-mail: [email protected] Joon-Soon Kim Kangwon National University Nguyen Dinh Hai Chuncheon City Seoul National University Kangwon Seoul KOREA KOREA Tel : 82-33-2508338 Tel : 82-2-8804763 Fax: 82-33-2434484 Fax: 82-2-8754763 E-mail: [email protected] E-mail: [email protected]

Se-Bin Kim Young Ho Noh Chungnam National University Seoul National University Daejeon Seoul KOREA KOREA Tel : 82-42-8215748 Tel : 82-2-8804763 Fax: 82-42-8257850 Fax: 82-2-8754763 E-mail: [email protected] E-mail: [email protected]

176 List of participants Lungten Norbu T. Ravishankar Renewable Natural Resource Research Centre M.S. Swaminathan Research Foundation Western Region, Yusipang Field Research Center Department of Research & Development Services 7-5A-2/1, Gopalakrishna Street Ministry of Agriculture Ramaraoapet, Kainda-533004 P.O. Box 212, Thimpu INDIA BHUTAN Tel : 00-91-884-2377177 Tel : 975-2-321600 Fax: 00-91-884-2380095 Fax: 975-2-321601 E-mail: [email protected] E-mail: [email protected] Lucrecio Rebugio Matti Palo College of Forestry and Natural Resources Finish Forest Research Institute University of the Philippines Los Banos (UPLB) E-mail: [email protected] P.O. Box 132, Laguna 4031 PHILIPPINES Dong-Kyun Park Tel : 63-49-536-7446 Northeast Asia Forest Forum Fax: 63-49-536-7446 Seoul E-mail: [email protected] KOREA Tel : 82-2-960-6114 Percy E. Sajise Fax: 82-2-960-6005 International Plant Genetic Resources Institute E-mail: [email protected] Serdang 43400, Selangor MALAYSIA Chansamone Phongoudome Tel : 60-3-89423891 Forest Research Centre Fax: 60-3-89487655 National Agriculture and Forestry Institute E-mail: [email protected] Namsoung, Naxaithong District P.O. Box 7174, Vientiane Masabathula Satyanarayana LAO PDR Government of Orissa/Government of India Tel : 856-21-770892 20, Type-V, Lodhi Road Complex Fax: 856-21-770892 Lodhi Road E-mail: [email protected] New Delhi 110 003 [email protected] INDIA [email protected] Tel : 91-11-24691626 Fax: 91-11-24364624 Seema Purushothaman (Ms) E-mail: [email protected] Ashoka Trust for Research in Ecology and the Environment (ATREE) Hyun-Deok Seok 659, 5th ‘A’ Main road Hebbal Korea Rural Economics Institute Banglore 560024 KOREA INDIA Tel :82-2-32994192 Tel : 91-08-3530069 Fax:82-2-9600165 Fax: 90-08-3530070 E-mail: [email protected]

M. Mokhlesur Rahman Ramesh Shakya Bangladesh Forest Research Institute Forest Research Division P.O. Box 273 Department of Forest Research and Survey Sholashahar P.O. Box 3339, Babar Mahal Chittagong 4000 Kathmandu BANGLADESH NEPAL Tel : 880-31-681577 Tel : 977-1-220493 Fax: 880-31-681566 Fax: 977-1-220159 E-mail: [email protected] E-mail: [email protected] [email protected] [email protected]

List of participants 177 Hee-Kyung Shin Byung-Il Yoo Northeast Asia Forest Forum Korea Forest Research Institute Seoul Seoul KOREA KOREA Tel : 82-2-960-6114 Tel : 82-2-9612531 Fax: 82-2-960-6005 Fax: 82-2-9612530 E-mail: [email protected] E-mail: [email protected]

Shi Zuomin Kwang-Bae Yoon Chinese Academy of Forestry Konkuk University Wan Shou Shan, Beijing 100091 Chungju CHINA KOREA Tel : 86-10-62888308 Tel : 82-43-8403532 Fax: 86-10-62884972 E-mail: [email protected] E-mail: [email protected] Yeo-Chang Youn Sim Heok-Choh Seoul National University APAFRI Seoul c/o Forest Research Institute Malaysia KOREA Kepong, 52109 Kuala Lumpur Tel : 82-2-8804754 MALAYSIA Fax: 82-2-8754763 Tel : 60-3-62722516 E-mail: [email protected] Fax: 60-3-62773249 E-mail: [email protected] Yusof Sudo Hadi [email protected] Bogor Agricultural University (IPB) Gedung Rektorat Lt 2 Suhardi Kampus IPB, Dermaga Faculty of Forestry Bogor 16680 Gadjah Mada University INDONESIA Bulaksumur, Yogyakarta 55281. Tel : 62-251-621677 INDONESIA Fax: 62-251-621256 Tel : 62-274-901400/550541/545639 E-mail: [email protected] Fax: 62-274-901400 [email protected] E-mail: [email protected] Zhang Xiaoquan Trieu Van Hung Chinese Academy of Forestry Forest Science Institute of Viet Nam (FSIV) Wan Shou Shan, Beijing 100091 Dong Ngac-Tu Liem-Hanoi CHINA Hanoi Tel : 86-10-62889512 VIET NAM Fax: 86 10 62888840 Tel : 84-4-8344031, 8362258 E-mail: [email protected] Fax: 84-4-8389816 [email protected] E-mail: [email protected] [email protected]

Lic Vuthy Forest and Wildlife Research Institute Department of Forestry and Wildlife 40 Bvld. Preah Norodom Phnom Penh CAMBODIA Tel : 855-23-213612 Fax: 855-23-212201 E-mail: [email protected]

178 List of participants

What are the opportunities offered by global initiatives such as the Clean Development Mechanism (CDM), environmental services and biodiversity that could benefit the poor? How can these opportunities be tapped to benefit the poor? What are the strategies, policies, mechanisms or procedures that must be put in place to tap these opportunities? This publication is a compilation of presentations and discussions on these and other related issues during a workshop, held at the Seoul National University, Seoul, Korea, from 27 to 29 August 2003.

ISBN No: 974-7946-57-2