PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM NIGEL SIZER WORLD RESOURCES INSTITU PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM NIGEL SIZER WORLD RESOURCES INSTITUTE SEPTEMBER 1996 KATHLEEN COURRIER PUBLICATIONS DIRECTOR BROOKS BELFORD MARKETING MANAGER HYACINTH BILLINGS PRODUCTION MANAGER NIGEL SIZER COVER PHOTO Each World Resources Report represents a timely, scholarly treatment of a and responds to the guidance of advisory panels and expert reviewers. Unless subject of public concern. WRI takes responsibility for choosing the study topics otherwise stated, however, all the interpretation and findings set forth in WRI and guaranteeing its authors and researchers freedom of inquiry. It also solicits publications are those of the authors. Copyright © 1996 World Resources Institute. All rights reserved. ISBN 1-56973-103-9 Library of Congress Catalog Card No. 96-061230 Printed in the United States of America on Recycled Paper. WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM CONTENTS Acknowledgments IV 2.2 The Moratorium on New Concessions Foreword and Other Major Donor Initiatives 34 2.3 Guyana's Forest Law 35 Summary and Recommendations for Policy-makers, Civil Society, and the 2.4 Barama's Experience in Guyana 37 International Community 2.5 Other Foreign Holders of I.I Policy Overview: Logging Concessions 43 Forests and Guyana's National Interest 2.6 Recent Requests for New Logging Concessions 44 1.2 A Proposed Policy Framework. 2.7 Revenues from Logging in Guyana 46 1.3 Challenges to and Opportunities for Profit without Plunder 5 2.8 Lessons from Commercial Log Production by Amerindians in Guyana 50 1.4 Recommendations for Action: Realizing the Potential of Guyana's Forests 15 2.9 Lessons in Tourism Development from Belize and Costa Rica and Community-led 1.4.1 Overview of Recommendations 15 Tourism in Ecuador 53 1.4.2 Reform of Land Allocation and Land Use Planning 15 2.10 The Value of Non-timber Forest Products ... 54 1.4.3 Reduce the Damage and Increase the Revenues from Logging 18 2.11 Lessons from Community 1.4.4 Build Sustainable Communities, Development Based on Forest Especially around Non-Timber Values 22 Resources in Mexico and Brazil 55 1.4.5 Institutional Restructuring, Training, and Education 27 2.12 Guyana's International Commitments to 1.4.6 Make Foreign Assistance More Effective 29 Forest Development and Conservation 58 Background and Analysis. 33 About the Author. 61 2.1 Timber Production Trends in Guyana 33 Notes. 63 WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM ACKNOWLEDGMENTS rior to giving the many acknowledgments Mohamed, Doorga Persaud, Clive Thomas, Joshua due we must stress that those listed below do Ramsammy, Charles Greenwood, Debbie Pnot necessarily, by their inclusion here, Davenport, and Gordon Streeb. endorse the findings presented in the report which are the sole responsibility of World Resources Internationally, valuable review comments and Institute and the author. criticism came from Helena Landazuri at the Inter-American Development Bank; David Cassells, Many people in Guyana and elsewhere helped to Lorene Flaming, and Phillip Hazelton of the World make this research possible. At the Guyana Forestry Bank; Roberto Samanez of the United Nations Food Commission, the Acting Commissioner Clayton and Agriculture Organization; John Palmer; Hall provided considerable input, valuable Conservation International's Richard Rice; Thomas comment, insight, and constructive criticism Lovejoy at the Smithsonian Institution; Rachel throughout. Of the Forestry Commission staff, Crossley; and Vicente Molinos. Natasha Landell-Mills and Sophie Higman (now with the Overseas Development Administration - At World Resources Institute, Marta Miranda ODA) collected background statistics and reviewed provided much input as the leading research the analysis. The ODA also provided useful input assistant for the report. Kenton Miller, Walt Reid, through Chris Turnbull and Ian Stuart. In Guyana's Robert Repetto, Jonathan Lash, Paige Brown, Trish Office of the President, Navin Chandarpal, Adviser White, William Visser, Nels Johnson, Bruce to the President on Science, Technology, and Cabarle, Owen Lynch, Donna Wise, Chip Barber, Environment, and Andrew Bishop, the Land-Use Laura Lee Dooley, Shirley Geer, Marsha Mogowski, Coordinator, were of great help. Dina Sperling, and Nina Tanner Robbins all gave much needed support during different parts of the Others in Guyana who provided useful information process. Kathleen Courrier, as usual, did a and criticism were Henry Tschinkel, Director of the wonderful job of editing. Hyacinth Billings Iwokrama International Rain Forest Program; Toni managed the production supported by Samantha Williams, John Willems, and David Persaud of the Fields, and Maggie Powell desktopped expertly on a Forest Producers Association (all active in the local tight deadline. logging industry); Ivan Welch, former Coordinator of the National Forestry Action Program; S.K. Finally, we would like to thank Guyana's Head of Loong, S.K. Chan, and K.T. Chung of The Barama State, Dr. Cheddi Jagan for asking the difficult Company; and Janette Forte of the Amerindian questions that inspired us to prepare this report for Research Unit at the University of Guyana. Others use in the policy reform process that he is leading. who gave information and ideas were George Walcott, Jocelyn Dow, Frank Alphonso, Rayman N.S. WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM IV FOREWORD overnments in Suriname, Guyana, and negotiate more secure contracts, and prevent many other tropical countries are under massive environmental damage. G intense pressure to make quick cash by selling their forest resources to foreign firms. Just to the west of Suriname is Guyana, a nation with about 14 million hectares of potentially In 1993, Suriname, its economy near collapse, loggable forests covering some three fourths of the took the desperate step of inviting foreign nation's total area. All told, these forests could investors to explore possibilities for establishing generate perhaps US$10-20 billion in raw log sales multi-million hectare logging concessions in the for a country with a per capita income of US$800. country's interior. By mid-1994, at least five After reading Backs to the Wall in Suriname, proposals were on the table and in negotiation Guyana's President, Dr. Cheddi Jagan, invited for forest resources that had barely been WRI to help him find ways to reform forest inventoried or evaluated. policy in Guyana. President Jagan was particularly interested in how Guyana could reap If those contracts had gone through, some 25 to revenue from its forests without destroying 40 percent of Suriname's land area could have them. In Profit without Plunder, Nigel Sizer tries been logged under conditions that would have to answer that question. been an economic and environmental disaster Dr. Sizer identifies seven key actions that could both for Suriname and for the world. Fortunately, help Guyana sustainably manage its forests: the crisis was averted, thanks in part to a WRI report—Backs to the Wall in Suriname: Forest • Define the permanent forest estate. This should Policy in a Country in Crisis—by WRI Senior include production forest for timber harvesting, Associate Nigel Sizer and Richard Rice, director biodiversity hotspots in need of protection, of economic policy at Conservation International. forests for community management, and The report laid out pragmatic ways for Suriname protection forests on steep slopes and other to put teeth in its forest-concession policy, fragile environments. WRI: PROFIT WITHOUT PLUNDER: REAPING REVENUE FROM GUYANA'S TROPICAL FORESTS WITHOUT DESTROYING THEM V • Maintain and extend the scope of the moratorium with marketing, basic finance, and administra- on major forest land-use decisions. In early 1995, tion could all help. Guyana's government effectively declared a three-year moratorium on new foreign and local • Ensure that forest sustainability issues are designed large-scale logging concessions to allow time for into structural adjustment programs. Components foreign assistance to strengthen the Forestry promoting foreign investment and tax reform Commission and for policy and legal reform. may need special emphasis. The moratorium should be extended in scope An important twist in this story is that the pending designation of new national parks and foreign loggers may not be making money in the resolution of outstanding Amerindian land Guyana. To date, one company's financial results claims. have been far below expectations, according to company executives. They claim that high • Better monitor the negative impacts of timber harvesting costs, a poorly trained workforce, and harvesting. Timber harvesting is increasing low timber stocks in the forest make operating rapidly, but there is little data on how it affects costs in Guyana high. Guyana's forests or people. Policy-makers need If such operations are unprofitable Guyana must such information if they are to make well-infor- look elsewhere for revenues. Promising options med decisions. include the development of tourism, non-timber forest products, and community and small • Standardize procedures for awarding concessions business development in the interior. and revise the forestry tax structure.