Forest Financing in

Bangladesh

RATAN KUMAR MAZUMDER

Deputy Chief Conservator of Forests Bangladesh Forest Department

rtnmzmdr@gmail.com

Location of Bangladesh in the region

Physiographic map

General Information

• Area 147570 Sq Km

• Geographical Location between 20o34� and 26o38� North Latitude and between 88o01� and 92o41� East Longitude.

• Population 151.41 million.

• Predominately tropical climate

• Temperature Monsoon Avg. Max. 31.5o C and Avg. Min. 25.5o C.

• In winter Avg. Max. 26.5o C Avg. Min. 13.9o C

• Annual Rainfall Max. 3000mm and Min. 1500mm

• Relative Humidity varies from 73 to 86%.

Hill ForestSal Forest

Natural mangroveMangrove Plantation

Distribution of Forest

Global Ecological Zones of

Bangladesh (including NFA tracts)

Forest Types & AreasNational Forest Assessment 2005-2007

Forest area as a percentage of

total land area of the countries

FOREST FINANCING IN BANGLADESH

• Organized forest management started in

Bangladesh in the latter half of the nineteenth

century with creation of Forest Department by the British rulers.

• Collection of tolls from the forest produces through

toll stations established on the main rivers was the main economic activity in forestry at that time.

• In 1871, Forest Department raised teak nursery obtaining seeds from Burma (Now Myanmar) and in

the following year 8 acres of plantation was created

at Rampahar of Kaptai at a cost of Rs. 68 per acre.

• Till nineteen hundred and seventies forest was one of the major revenue earning sectors of the government. In those days financing in forest sector did not appear as a major problem as demand for finance was reasonably small.

• Now a days, as the emphasis has been shifted to conservation than revenue earning in forest sector this sector gradually losing its importance to national planners in getting resource allocation.

• Most of the important fields of forestry and the forest sector as a whole, has been suffering seriously owing to inadequate financing.

FOREST FINANCING IN BANGLADESH

• Government used to meet bulk of the demand for finance.

• Financial supplement to support forestry programs in

previous days e.g. the ‘Taungya’ system of plantation

development.

• Taungya system was first introduced in 1912 for

establishment of plantation in the Chittagong Hill Tracts by

the Forest Department to supplement the cost of plantation.

• In taungya system, forest plantation are established in

government land by local tribal community. The

government provides planting materials and tools whereas,

community members provide their labour.

FOREST FINANCING IN BANGLADESH

• Necessity of large scale financial support

was felt in 1950s with the establishment

of forest based industries vis a vis

massive felling in the natural forest

followed by afforestation of cleared

areas.

FOREST FINANCING IN BANGLADESH

• Remarkable official Development Assistance (ODA) in the country to support forestry programs were available only after independence of Bangladesh in 1971.

• Pioneer international financial organizations those came up to support forestry sector in the country were the World Bank, SIDA, ADB, UNDP and FAO.

• Ford Foundation, USAID, EU, UNESCO, DFID, ODA, CFC and GEF have also been the potential source of foreign finance in forestry sector of Bangladesh.

FOREST FINANCING IN BANGLADESH

FOREST FINANCING IN BANGLADESH

DPA = Development Project Aid

• Forestry Sector Master Plan (1995 to 2015) published in 1995 presented an investment program of 80,000 million BDT (Equivalent to USD 1958.86 million) for the fulfillment of National Forest Policy, 1994 objectives.

• One of the major targets of National Forest Policy, 1994 was to bring 20% land of the country under tree cover by the year 2015.

• In the last sixteen years (1995-96 to 2010-11) a total amount of 14920.1 million BDT (equivalent to USD 267 million) has been invested in Forestry Sector Development Budget, which is only about 13.6% of the Forestry Sector Master Plan requirement.

FOREST FINANCING IN BANGLADESH

• Out of National Annual Development Program (ADP) of 3,438,980 million BDT (Equivalent to USD 60796 million) Forestry Sector received an allocation of only 18535.7 million BDT (equivalent to USD 360 million) which is only 0.6 % of National ADP.

• Although National ADP has been increased over the years (1991 to 2011), ADP in Forestry Sector has been declined significantly. Forestry Sector ADP allocation has been gradually declined and reached to BDT 3310.6 million (equivalent to USD 44 million) in last 5 year period (2006-2011) from BDT 4530.3 million (equivalent to USD 114 million) in first five year period (1991-1996).

FOREST FINANCING IN BANGLADESH

• Development Project Aid (DPA) in Forestry

Sector has also been declined to only 12

million USD in last five year period (2006-

2011) as compared to earlier periods from 77

million USD in the five year period of 1991-96

and 323 million USD in the five year period of

1996-2001, whereas National DPA has been

increased from 5478 million USD in first five

year period (1991-96) to 7184 million USD in

the last five year period (2006-11).

FOREST FINANCING IN BANGLADESH

Comparative picture of National ADP vs DPA

Comparative picture of ADP vs DPA in Forestry Sector

Year

Forestry Sector Dev. Budget

ADP In Million

USD

DPA In Million

USD

1991-96 114 77

1996-2001 108 67

2001-06 93 47

2006-11 44 12

Total 359 203

Year

National Dev. Budget

ADP In Million

USD

DPA In Million

USD

1991-96 11681 5478

1996-2001 14990 6207

2001-06 15507 5517

2006-11 18619 7184

Total 60796 24386

Year% of Forestry Sector

ADP/National ADP

1991-96 0.975

1996-2001 0.72

2001-06 0.599

2006-11 0.236

Forestry Sector ADP

ratio with National ADP

has also been declined

from 0.975% in the

period of 1991-96 to

mere 0.236% in the

period of 2006-11.

FOREST FINANCING IN BANGLADESH

Analysis of Forest Financing Situation in Bangladesh

• Overall financing in the forestry sector of Bangladesh has been decreasing gradually and alarmingly in last two decades. Now, financing in this sector is in a very precarious condition. Thissector is gradually getting low priority to the national planners as well as failing to get due attention of overseas donors.

• After the Rio convention held in 1991, tremendous awareness regarding climate change has been developed around the Globe. That, Bangladesh is one of the worst victim of climate change and this country has taken leadership role among most vulnerable countries of the world in a joint effort to combat climate change is recognized by the world community.

• That, deforestation and forest degradation is responsible for nearly 18% emission of GHGs and thereby global warming is also recognized. Ironically,

• This has not been reflected at all in forest financing scenario of Bangladesh, rather it has been getting declined gradually.

contd.

• Those assistance came up in comparatively easier terms and procedures with

bilateral negotiations among the govt. and the donors only after recommendations

by the donor agency experts who used to assess the actual amount and type of

needs of assistance through field level verifications.

• Access to those assistance were comparatively easy.

• Now a days, with lot of institutions and mediators coming up access to international

assistance has become very difficult for developing countries like ours.

• As compared to fund release, too much supervision and accountability to too many

authorities, actual implementation of work in the field has become cumbersome

now a days.

• In the changed situation since lot many other fields has come up to compete for

assistance with forestry, scope of fund access has also been reduced.

In 1980s and 1990s forestry sector used to get external aid mainly from ADB and World Bank

for social forestry, coastal afforestation, afforestation in hill forest and plain

land forests, capacity building infrastructure development, forest inventory,

management plan preparation and training etc. remarkable development

could be achieved in the forestry sector at that time with those assistance.

Way Forward

• One most important supplementary financing mechanism has been developed in Bangladesh in the form of Tree Farming Fund (TFF).

• This fund is created out of 10% of sale proceeds of social forestry harvest that kept separate for the development of plantation in the following rotation by the social forestry beneficiaries. This fund is operated by a committee of SF beneficiaries made under SF Rules 2004.

• From 2001 an amount of BDT 347.296 million have so far been deposited in different TFFs throughout the country. TFF made a huge impact in sustainable management of social forestry plantation as it has reduced the dependence on external financing.

• Recently the Govt. of Bangladesh issued a circular for sharing 50% income out of royalty from NTFP harvest from Sundarban Reserved Forest (SRF) with Forest dependant people living around the SRF. The operation modality of sharing is in process.This is also expected to help conserve the SRF.

• International communities are expected to come up with positive intention for saving the rest of the threatened natural forest resources still left in the country and development of forestry sector as a whole through REDD+ mechanism and other support programs.

• Most recently a new initiative has been undertaken by FAO to support capacity development and policy reform and capacity building of Ministry of Environment and Forest of Bangladesh.

• Govt. planners are expected to come up with positive intention to support the development of forestry sector in the country to fulfill the target of VISION 2021 to increase the forest cover of the country up to 20% of its total land area by 2020.