PROCEEDINGS OF THE WORKSHOP

FORESTS FOR POVERTYREDUCTION:

Opportunities with Clean Development Mechanism,Environmental Services and Biodiversity

27–29 August 2003Seoul, Korea

RAP PUBLICATION 2004/22

RAP PUBLICATION 2004/22

PROCEEDINGS OF THE WORKSHOP

FORESTS FOR POVERTYREDUCTION:

Opportunities with Clean Development Mechanism,Environmental Services and Biodiversity

27–29 August 2003Seoul, Korea

EditorsH.C. Sim, S. Appanah and Y.C. Youn

Jointly organized by

Seoul National UniversityAsia Pacific Association of Forestry Research Institutions

Forestry Research Support Programme for Asia and the PacificKorea Forest Economics Society

Northeast Asia Forest Forum

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONSREGIONAL OFFICE FOR ASIA AND THE PACIFIC

Bangkok, 2004

The designations employed and the presentation of material in this publication do not imply the expressionof any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nationsconcerning the legal status of any country, territory, city or area or of its authorities, or concerning thedelimitation of its frontiers or boundaries.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmittedin any form or by any means, electronic, mechanical, photocopying or otherwise, without the permission ofthe copyright owner. Applications for such permission, with a statement of the purpose and extent of thereproduction, should be addressed to the Senior Forestry Officer, Food and Agriculture Organization of theUnited 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. DurstSenior Forestry OfficerFAO Regional Office for Asia and the Pacific39 Phra Atit RoadBangkok 10200ThailandTel: (66-2) 697 4000Fax: (66-2) 697 4445Email: Patrick.Durst@fao.org

FOREWORD

One of the Millennium Development Goals aims at cutting extreme poverty and hunger worldwide in halfby 2015. This declaration has transformed the way development assistance is conducted. In this context, therole of forests and forestry in poverty reduction and food security is gaining currency. In earlier studies anddiscussions, community forestry or social forestry was proclaimed to have great potential for reducing povertyand food insecurity. Promising as they may be, these apparently have their limits too. So, how can forestersincrease 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 serieson 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 Mechanismestablished under the Kyoto Protocol of the U.N. Framework Convention on Climate Change is beginningto 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 andprocedures 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 unableto convert these resources into monetary wealth. Fortunately, there is a ray of hope already visible in thecase of ecological services. It does not take much convincing to convert provision of drinking water, floodmitigation, and other tangible services into financial payments. Albeit, there are still disputes about the formulae– 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 contributionof forests to poverty reduction strategies. The theme is highly relevant both to forest sector policy-makersand practitioners in developed and developing countries. A summary of the recommendations of the plenarysession 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 organizingthis critical meeting – it will certainly make an impact, and provide the basis for further collaboration onforestry initiatives for poverty reduction in the region.

He Changchui M.A. Abdul RazakAssistant Director-General and Regional Representative Director-General,for Asia and the Pacific Forest Research Institute MalaysiaFood and Agriculture Organization Chairman, Asia Pacific Association ofof the United Nations Forestry Research Institutions

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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 Secretariatfor the compilation and proofreading of the manuscripts. We are thankful to the organizing committee forthe tremendous amount of effort and time spent in organizing this successful workshop. The financial andin-kind contributions of the various organizations, FORSPA–FAO, Seoul National University, Korea ForestEconomics Society, the Northeast Asia Forest Forum, Korea Forest Service and Yuhan-Kimberly, have madethis workshop possible and are gratefully acknowledged. We owe our most sincere thanks to the various invitedspeakers and participants for their active participation and invaluable contributions during this workshop. Manyof them have edited their presentations to meet our editing requirements for the publishing of this proceedings.

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CONTENTS

FOREWORD iii

ACKNOWLEDGEMENTS iv

1 Welcome address 1Don-Koo Lee

2 Introduction — beyond community forestry 3S. Appanah

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

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

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

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

7 Market mechanisms and assessment methods for environmental services from privateforests in Australia 49Rodney 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 61Rodel D. Lasco and Florencia B. Pulhin

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

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

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

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

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

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

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

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

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

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

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

20 Biodiversity for poverty alleviation in Indonesia 157Suhardi

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

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

23 Outputs and recommendations of group discussions173

24 List of participants175

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1 Welcome address

Don-Koo Lee*

Dato’ Dr Abdul Razak, Director-General of the Forest Research Institute of Malaysia (FRIM) as well as Presidentof the Asia Pacific Association of Forestry Research Institutions (APAFRI), Dr Appanah from FAO, ProfessorNagata Shin from the University of Tokyo, Ms Fiona Chandler from ICRAF, Dr Rebugio from the Universityof Philippines at Laos Banõs, Dr Suhardi from the Gajah Mada University, Professor Youn Yeo Chang fromthe Seoul National University, distinguished and honorable participants, ladies and gentlemen, I bid you alla warm welcome to Korea and this Workshop.

I am so pleased that the Seoul National University and the Northeast Asian Forest Forum are hostingthe International Workshop on “Forests for Poverty Reduction: Opportunities with Clean DevelopmentMechanism (CDM), Environmental Services and Biodiversity,” and I would like to extend my sincereappreciation to all the participants for taking their time to attend this meeting, especially speakers and moderatorsfor 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, energyand biomass. Forests are also a major carbon sink that mitigates climate change. In other words, forests arethe source of life and play an important role in the preservation of our fragile environment. In the past, wehave been working mainly on the rehabilitation of degraded forest land, but it has often been ignored bythe poor rural communities. It is realized that the rural poor can also play a more effective role in forestprotection and conservation of biodiversity while they benefit from the forest resources which they haveprotected.

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 canbe directed to benefit rural populations as well as ecological services and biodiversity conservation. Withoutimproving the living standard of the forest communities, it will be nearly impossible to stop the deteriorationof forests and deforestation in this Asian region. For this reason, it is specially meaningful to hold this Workshopto identify valuable opportunities in CDM, carbon markets and related forest services that can be convertedto benefit rural populations.

I sincerely hope that today’s Workshop will provide a forum for countries to identify the approachesand strategies for reducing rural poverty as well as to understand the current knowledge and developmentsof 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 andYuhan-Kimberly for sponsoring this Workshop and to all others who have contributed to make this Workshoppossible and successful.

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

1

2 Introduction — beyondcommunity forestry

S. Appanah*

Our tragedy with forestry began the day we started using market forces to make management decisions. Thearguments then looked straightforward. Which will bring more wealth–selling the timber and saving the moneyin a bank, or leaving the timber stand to grow some more? Such a procedure, generally in practice amongowners of private forest lots in temperate countries, was thoughtlessly transplanted into the tropics. Althoughthe conditions in tropical countries differed substantially, forests being mostly state-owned, and their valuesgoing considerably beyond that of timber, it nevertheless captured the minds of the policy-makers who readilypromoted 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 recognizethat while forests are a source of timber with market value, their values go far beyond, into influencing localand regional climate, protecting soil, providing potable water and mitigating floods to mention a few. Overand 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 noenthusiasm to do so–we would have done the same even if we had all the information on the true valuesof forests as well as all the cautionary notes.

What single predominant factor propelled us along this direction? Before the colonization of manytropical countries, forests were mainly “owned” by the local villages or forest communities. Colonialgovernments transferred the forestlands from the communities to national control, under the jurisdiction ofgovernment agencies. Starting in the mid-1960s, when tropical timbers began to enter the international timbertrade 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’snatural forests declined from 150 million ha in the 1950s to 90 million ha in 1990 with aggressive loggingpolicies. However, government income from timber tariffs and royalties never exceeded 0.1 percent of thegovernment’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-connectedindividuals at highly subsidized rates. Short-term leases, inappropriate technologies, and undervaluation ofresources 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 heightenedthe extent of erosion, flooding, poorer agriculture and unprecedented forest fires. But perhaps the most seriousconsequence 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 arenot 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 areno 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, forestersare 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 promise–it is far less expensive to

* FAO Regional Office for Asia and the Pacific, Bangkok, Thailand; E-mail: Simmathiri.Appanah@fao.org

3

empower local communities to protect and benefit from the forests they have traditionally depended on. Thiswas 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 earningsfrom forestry. Besides community forestry, what else is there or can be done? Perhaps the best lead into thediscussions 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 industrieshave succeeded in creating economic growth in countries such as Finland, while they failed miserably inmost tropical countries. His analysis clearly shows that in many tropical countries, there is a good correlationbetween high poverty and low relative forest area. A vicious cycle may be present here – the higher populationdensity at low-income levels can become overdependent on forest goods and services, thereby acceleratingdeforestation and degradation. Poorer forest environment can increase poverty. But the real problem is whythe industrial model based on forestry could take off in countries like Finland, but have stuttered and sentcountries in the tropics backwards. In the past, there was the tendency to explain away these problems withexplanations such as the “horizontal expansion of the different forms of agriculture, since it is responsiblefor 85 percent of deforestation.” But these days, many experts are much more prepared to admit the truthfor 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 relationshipof the forest and the rich or the elite. In plainer words, it is corruption – the factor behind the continueddecline 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 arenot prepared to give up on forestry, and are continuously seeking for solutions. They believe the processis an aggregate of several changes, including good governance, democratization, decentralization and greaterparticipation in the decision-making activities. They are convinced that there are many approaches possibleand deserve investigation.

What approaches are available? A number of cases were presented for Clean Development Mechanismand carbon credits (e.g. M. Satyanarayana, Chapter 5; P. Kant, Chapter 6). Payments for afforestation andreforestation activities to mitigate climate change offer a potential. Many NGOs have begun to persuadeindustries from developed countries to subsidize tree-planting activities of poor communities. While the potentialis 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 abigger impact. Contributing to the field are studies such as the one by R. Lasco and F.B. Pulhin (Chapter8) who examined how much carbon is found in various tropical forest ecosystems. These studies would formthe foundation upon which to calculate the payments, and so the methodologies developed to measure carbonwould prove valuable.

But researchers usually like tests and trials–these give deeper insights into what works and why. Justthat is being tested out by F.J.C. Chandler (Chapter 4) with a RUPES (Rewarding Upland Poor for EnvironmentalServices) project. The argument is that upland communities have to forgo opportunities if prevented fromcutting 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 simpleand appealing, but when converted to a field situation, it can be nightmarish. Who in the upland communitiesshould benefit, and how much? Don’t be surprised if here too the beneficiaries are large landowners andconcessionaires with the muscle and the organization. The RUPES project will be looking into the contractualarrangements, who should be rewarded, and by how much. For once, we will have scientifically credibleinformation 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 gainingcurrency, one big obstacle remains. That is how to assess the environmental services, what kind of marketmechanisms 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. Inthis nascent area, experience is critical, and would provide valuable guidance for other environmental paymentschemes.

Environmental services are generally easier to perceive, and therefore making payments for them usuallymore convincing. But how can one pay communities that are playing a role in biodiversity conservation. Thattakes a stretch. Nevertheless, T. Ravishankar (Chapter 11) bravely explores the difficult question, “What isbiodiversity worth to developing countries?” He uses the “productive-use value, consumptive-use value, andindirect or intrinsic value” approach. Admittedly, there is no uniform currency for biodiversity valuation, andit is highly location-specific, and some aspects will remain outside the economic frontier. Nevertheless, theapproaches are beginning to provide a basis to handle the field. Others like Z.M. Shi (Chapter 15) go beyondto 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 inthe woods.

There again, much of what has been discussed may seem to be mere rhetoric but for the actualdemonstrated 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 thinkthat 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 environmentalfunctions and long-term elements of resource management. Special arrangements such as governmentintervention are needed.

Finally, it must be said that the day we began to use market mechanisms to make decisions aboutforest management will remain a cursed one. The question now is how to manage the situation and live witheconomics. We cannot deny the need to use the valuation system, and should make good use of it as muchas possible. We, however, cannot allow it to overpower every decision we make. There are decisions thatrequire moral and ethical judgments over monetary ones. As we have learned all along, bureaucrats will resisttransfer of assets to the village communities. But the process is beginning to gain momentum. If we are intopoverty alleviation, that would indeed be the first rule – 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 exploredas well, and need to be pursued. This has been the subject of the workshop. But as always, we will haveto return to the issue of corruption that was raised at the start. All our efforts will not work without goodinstitutions, supporting policies and legislation that can be enforced to ensure people are protected and notdenied access to resources that are rightfully theirs. More mechanisms have to be found to return the foreststo those who own it. Community forestry and harnessing other opportunities that go with forestry offer agood starting point.

S. Appanah 5

3 Poverty reduction by tropical forests: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) andHuman Development Index as national poverty measures are regressed with relative forest area as a dependantvariable, and with population density, Corruption Perception Index and some other independent variablesin 35–83 tropical countries covering 70–95 percent of the total tropical forest area. It was found that thetwo poverty variables were strongly correlated with the relative forest area. It was deduced that high populationdensity at low income levels advances forest degradation, deforestation and desertification. The deterioratedforest 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 undervaluesthe tropical forest. Therefore, the opportunity cost of sustainable forestry remains artificially too high andis expanding deforestation with corruption and some other causes underlying the local visible agents ofdeforestation. The widely prevailing corruption in the tropics is blocking the effectiveness of both the governmentpolicies and the market means, which are the only ways to control the allocation, production and distributionof forest products and services. Finland never had any wide scale corruption and it has therefore had lessgovernment and market failures than the tropical countries. In Finland increasing exports of forest productshave made forestry more profitable and agricultural fields more productive and they have in this way reducedpoverty on a national scale. In the tropics increasing exports have advanced deforestation with minimal impactsin poverty reduction. Finland, Costa Rica, Republic of Korea, Sweden and Japan all have transited intosustainable 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 endowmentsas a balanced mix. Therefore, poverty reduction on a national scale by the tropical forests will remain asrhetoric for the time being. It may become a viable option only in a couple of decades with reducing corruptionand 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 withforests; 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 2015as the first of the eight goals in its Declaration. The UN Secretary-General announced to the UN GeneralAssembly 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 recognizedthat the halving of poverty and the attainment of the other related goals can be achieved only through strongerpartnership among all development actors and especially through increased action by rich countries (UNDP2003, p. 27).

* Seoul National University, Seoul, Korea; E-mail: MattPalo@snu.ac.kr

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 nationaldevelopment agencies. UNDP (2003) has contributed on the follow-up and instruments on how to end humanpoverty since 1990 by publishing its Human Development Index annually. The latest report introduces a penetratinganalysis 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 reporteleven 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 Bank2003). The Asian Development Bank (2001) joined the effort with its poverty reduction agenda. Also FAOhas adopted an agenda (FAO/DFID 2001), how forests can reduce poverty, with some later ramifications (FAO2003). “Forests in poverty reduction strategies: capturing the potential” (Oksanen et al. 2003) is just onetitle 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 northernlatitude. Finland has an area of 338 000 km2 (of which 10 percent is of inland waters) and a population of5 million; thus the population density is 17 persons km-2. Only Iceland as a whole country has such a northernlocation. Sweden lies next westwards from Finland, but 83 percent of the population lives more south ofthe 60th latitude. In those peripheral locations there traditionally were not available so many options to survivethan on the more southern latitudes.

Therefore, the Icelanders have been fishing and processing fish, while the Finns have primarily, inthe past, been growing and processing timber. With those means the two nations have successfully participatedin 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 naturalresources, 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 forestproducts exports. Finland has clearly the highest value of forest products exports per capita and the highestshare of the value of the total commodity exports among the eight major exporters of forest products in theworld (Figure 1). Forestry and forest products industry have played a key role in reducing poverty in Finlandsince the latter half of the 19th century. Traditionally, farm forestry has played a dominating role in timbersupply in Finland. Therefore, timber stumpage markets have been more competitive than in most other countriesand consequently, both the stumpage and wage incomes have had more equal geographic and functionaldistributions than in the other sectors (Palo and Uusivuori 1999, Palo 2003).

Figure 1. Forest industry exports per capita and the share of total exportsin eight leading exporting countries (source: Paperinfo)

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

Forest Industry Exports per Capita and the Share ofTotal Exports in 2001

Finland

Sweden

Canada

Austria

Norway

Germany

France

USA

Forest industry exportsEUR per caita

Forest industry exports/total exports, %

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

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” byJack Westoby (1962) aimed to create welfare/eradicate poverty by developing forestry and forest industriesas growth poles for entire economies via a number of linkage effects. This theoretical framework served asguidelines for FAO forestry development projects for about 15 to 20 years with weak success (Figure 2, Westoby1978, 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. (Paloet al. 1999, Palo & Lehto 2000a)

This paper aims to respond to this question and the most essential question raised in the title. Thefirst purpose is to describe the concept of poverty and its linkage with tropical forests. The second is to analysethe undervaluation and deforestation of tropical forests by corruption. The third is to analyse privatizationand 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 byforests. 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, afterall, a new rhetoric or slogan, rather than a viable option, to cover the failures by the IGOs, NGOs and thevarious 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 developmentprojects.

The paper is restricted to study the linkages between poverty and all kinds of natural forests in 35–83 tropical countries at the national level. The number of countries in each analysis depended on the availabilityof data. The aim was to cover as many countries and as large an area as possible. In fact, in this way wecan capture most of the poor people (World Bank 2001) and 70–95 percent of the total tropical forest areain 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 peoplewith low monetary incomes. About 1.2 billion people out of 6 billion live on less than US$1 a day. A halfof all the six billion people on this earth live on less than US$2 a day. A clear reduction in the number ofpeople 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 moreby including the multiple aspects of nutrition and food, health and education, empowerment of people andfreedom of choice. Furthermore concepts like sustainable livelihoods and five-capital approaches have beenintroduced. The latter are composed of natural, human, social (political), cultural (physical) and financialcapital. 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, thatin 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 andempowerment. 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 HumanDevelopment Index by UNDP, which is composed as a simple average of life expectancy, education and GDPper capita indexes (UNDP 2003).

A case study on poverty and deforestation in Cameroon was conducted by Ekoko (1996). He also analysedthe concept of poverty. His conclusion was that poverty does not necessarily lead to deforestation, and propertyrights for the poor not necessarily to forest conservation. However, these case study findings lack any powerfor generalization.

Angelsen and Wunder (2003) analysed the varying concepts of poverty. After a multiple of conceptsthey arrived at a definition of poverty as a subjective well-being. Their one conclusion was that at the endof the day, what matters is a person’s own subjective assessment of well-being. Another conclusion on thedifferent concepts was that ultimately the choice of the poverty indicator is dependent on the research contextand goals, budget, duration and the specific need for comparative analyses.

Accordingly, there exist a number of poverty concepts available for our analysis. We are restrictedin 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 shallnot 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 numberof more multidimensional concepts, which we shall discuss to some extent only in the context of policyinstruments applied in Finland.

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

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 = randomyear 1970–1991; data sources: FAO FORIS 1995, NBER 1994)

GDP per capita(USD, log scale)

t-10

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

t-10

Guinea

Burundi

SomaliaNiger

Kenya Cape Verde

Haiti

Pakistan

Ethiopia

MaliChad

SudanAngola

BotswanaNamibia

Indonesia

Guinea-BissaPapua New Gu

Peru

Malaysia

Colombia Puerto Rico

Jamaica

BangladeshNigeria

GambiaRwandaBurkina Faso

El Salvador

IndiaTogoZimbabwe

Tanzania

MyanmarMalawi

PhilippinesNepal

Singapore UgandaSierra LeoneCentral Afr

ParaguayZambia

GabonVenezuela Brazil

NicaraguaTrinidad & T

EcuadorPanama Guatemala

Benin

MexicoBolivia

Congo Dem. R

Sri LankaThailand

Dominican ReCameroonSenegal GhanaLiberia

HondurasCosta Rica

MadagascarMozambique

Cote d'Ivoir

10.00

1.00

0.10Fore

st ar

ea/n

on-fo

rest

area

(log

scale

)t

800070006000

50004000

3000

2000

1000

1

10

100

1000

POVERTY AND TROPICAL FORESTS

It makes also a difference which forest concept to apply in relation to poverty (Palo 1999, Angelsen andWunder 2003). Here we shall use the concept of natural forests, which covers all kinds of other tree formationsbut plantation forests. Accordingly, rain forests, moist, semi-moist, semi-arid, arid, montane and cloud forestsin 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 huntedin them for game, foraged for fruits and nuts and gathered for fuel. Our relationship with our habitat wasessentially no different than that of any other animal. The development of settled agriculture economies to replacethose 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 ofthe tropical world, income poor but eventually consumption rich as long as the population densities are nottoo high in relation with the carrying capacity of the forest habitat. This refers to a situation of some importancestill 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 tropicalcountries relative forest area increased along with an increase in income per capita (Figure 3). But whenforest areas are declining or deforestation is taking place in all of these countries, it is more rational to viewthe process from the opposite direction: at the national level increasing income poverty is reducing forestarea. Population density is another independent variable applied in this simple model: also with increasingpopulation density the relative forest area is reduced. Income poverty and population density jointly explain24 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 bythe World Bank (2001): opportunity or its close counterpart, the Human Development Index (HDI) by UNDP.

Matti Palo 11

Figure 4. Relative forest area as a function of population density and Human Development Index in 83tropical countries. Weighted adjusted R square = 0.43. (data sources as in Figure 3 & UNDP1998)

Human DevelopmentIndex(log scale)

1995

GambiaBurundi

Sierra LeoneBurkina Faso

EquatEcuado St. Kitts _N

Dominican ReSt. Vincent

Bhutan

CambodiaTrinidad & TGuinea

Rep. LaosNicaragua GuatemalaSri Lanka

Cote d'IvoirGuinea

MozambiqueEl Salvador

Antigua & BHondurasThailand

MyanmarGhana

Cameroon PhilippinesVietnamCongo Dem. R

BeninZambia

Central Afr

Jamaica

Panama

Zimbabwe

Senegal UgandaIndia

Tanzania

Nepal

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

1990

Mauritania

Niger

Djibouti Haiti

Guinea-Bissa

BruneiBelize

GuyanaSuriname

BrazilPapua New Gu

Dominica

IndonesiaColombiaVenezuela Malaysia

PeruGabon

BoliviaParaguay

Bahamas

Congo

Botswana Togo

ChadMaliKenya

PakistanCape Verde

BangladeshAngolaSudan

NigeriaMadagascar

SingaporeMalawi

St. Lucia

Namibia

Mexico

GrenadaCuba

Costa Rica

Ethiopia

10.000

1.000

0.100

0.010

Fore

st a

rea/

non-

fore

st a

rea

(log

scale

)19

95

1.00.90.8

0.70.6

0.5

0.4

0.3

1

10

100

1000

0.2

HDI is a simple average of indexes on life expectancy at birth, combined adult literacy and school enrolmentas 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 (Figure4). HDI and population density jointly explained 43 percent of the variation of relative forest area. It is highlyinteresting that by replacing GDP per capita by HDI the degree of determination (the adjusted R square) wasdoubled. A wider poverty concept, “opportunity”/Human Development Index had a double explanation effectin comparison with the income poverty concept. Also of special interest in this model is that it gives us apan-tropical explanation over the three tropical continents.

Among 17 tropical Asian countries an even more fitting outcome from this kind of modelling wasreceived (Figure 5). HDI and population density jointly explained 69 percent of the variation of relative forestarea. The higher degree of determination in Asia than in the pan-tropics may be due to more homogenousecological and cultural conditions in Asia than in the rest of the tropics. From our previous studies we knowthat 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 variablemodels were unexpectedly high in comparison with our previous studies.

We were able to control the above outcomes from two independent variable modelling with a sevenindependent 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 povertyvariable of HDI was statistically highly significant (under 1 percent risk) and with an expected sign: the morepoverty, the less relative forest. The other socio-economic variables were GNP/land area, external trade/GDPand 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 thathigh poverty and low relative forest area at the national level are strongly statistically correlated. We may

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

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

Human DevelopmentIndex(log scale)

1995

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

1990

Pakistan

IndiaSingapore

NepalVietnamPhilippinesMyanmar

Sri LankaBhutan

Cambodia

Thailand

Laos

Malaysia

Indonesia

Papua New Gu

Brunei

Bangladesh

1.00

0.10Fore

st ar

ea/n

on-fo

rest

area

(log

scale

)19

95

1.00.9

0.8

0.7

0.6

0.5

0.4

0.310

100

1000

have here a vicious cycle as described by Dasgupta (1995). Higher population density at low level of incomeconsumes 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 forestand so on. This may be true especially under African and South Asian conditions. These countries representabout 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, usedto say that this statement is equally true if an individual soldier is regarded as a cause of war. The localeconomic agents are striving for subsistence or profit maximization, but they are primarily reacting to theeconomic incentives by the national governments and international markets. Accordingly, real causes ofdeforestation are the policy, economic, institutional, distributional and demographic factors underlying theselocal factors (Uusivuori et al. 2002).

“In the humid tropics the horizontal expansion of the different forms of agriculture (and animalhusbandry) constitutes the most important direct overall factor, since it is responsible for nearly 85 percentof deforestation“ (Lanly 2003, p. 79). The former head of the FAO Forest Resources Division in this citationfails to realize that the high opportunity cost of sustainable forest management is to a great extent due tothe prevailing administrative underpricing of standing timber (Repetto and Gillis 1988, Treue 1994, Angelsenand Wunder 2003).

The artificially low value of natural tropical forest facilitates much wider clearing of forest for agriculturethan would be the case under competitive market pricing of standing timber. Adopting local visible forestclearing agents as causes of deforestation is consequently a biased interpretation. Lanly (2003, p. 78) doesreport that the annual average tropical deforestation was estimated as 11 million ha in 1980, but he fails toreport that it was estimated as 14 million ha in 2000 (www.fao.org). Otherwise, however, he is reportingtrends from 1980 to 2000 by transfers between land cover classes and also distribution of deforestation in2000 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 Forestryin the middle of the 19th century supported the closing of open access to forests. Industrialization in WesternEurope increased simultaneously the demand for forest products and raised the stumpage prices under clearand strong property rights and also labour incomes from forestry for the farm forest owners. Also the numerouslandless people could benefit work incomes from forestry. Under poorly developed financing institutions ofthat time this forestry income had a key role in raising agricultural productivity. In Finland shifting cultivationand 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 productivityprovided 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 consideringthe undervaluation of forest and especially the standing timber.

UNDERVALUATION BY CORRUPTION

Tropical deforestation is a complex, dynamic, multisector and multilevel phenomenon. The visible direct localactors 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 coercionapplied 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 maybe called direct causes of deforestation. Profit maximization and survival are representative examples of suchgoals. In a brief way, we may state that tropical deforestation is continuing in a non-decreasing pace, becausefor such economic agents deforestation is more beneficial than maintaining natural forest cover or practisingsustainable forest management. A low monetary value of natural forest is a key factor making the opportunitycost of forestry high.

Most tropical forests are owned by the state, in one way or another. The state has had the prevailingtendency to apply administrative pricing of standing timber or stumpage pricing at lower levels than thecompetitive price levels (Repetto and Gillis 1988, Treue 1994, Angelsen and Wunder 2003). In this way, thehigh opportunity cost of sustainable management of natural tropical forests is, at least partially, artificiallymade. We may ask why? After more than half a century of forestry development projects by the FAO, theWorld 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 getcompetitive 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 profitsof 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 (Kasa1999). 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 publicofficials, kickbacks in public procurements, or embezzlement of public funds (Lamsdorf 2001). TransparencyInternational (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 PerceptionIndex) 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 jointlyexplain 35 percent of the variation of relative forest area in 34 tropical countries. Corruption seems to bemore rampant in poorer tropical countries.

We made also more integrated regression modelling with relative forest area as a dependent variableand with nine independent variables. Four ecological variables controlled the variable ecological conditionsamong countries. Corruption and four other economic variables were considered as underlying causes ofdeforestation. The nine independent variables explained 96 percent of the variation of relative forest areain 29 tropical countries with 69 percent of total natural tropical forest area. Corruption Perception Index had

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

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

GNP/capita(USD, log scale)

1990

Corruption PerceptionsIndex(High=0, Low=10; log scale)

2001

ZimbabweUganda

Dominican Re GhanaHonduras

NicaraguaGuatemalaSenegalZambiaEcuador

Cameroon

Brazil

Venezuela Malaysia PeruColombia

IndonesiaPanama

Trinidad & TMexico

Bolivia

BotswanaCosta Rica

ThailandNamibia

Philippines Tanzania Malawi

India

El SalvadorNigeria

PakistanKenyaBangladesh

2.0

Fore

st ar

ea/n

on-fo

rest

area

(log s

cale)

1955

40003500

30002500

20001500

1000

500

1

2

6

1.6

1.2

0.8

0.4

54

3

7

the highest elasticity among the five economic variables: a 10 percent decrease in corruption would increaserelative forest area by 6 percent (Palo and Lehto 2003b).

We have only two principal means on how to control allocation, production and distribution of tropicalforest resources in order to satisfy human wants for various forest goods and services: the public and privatemeans (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 blockboth of these means by creating government failures and market failures (Wibe and Jones 1992, Bass andHearne 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).

Figure 7. The two control systems of production, distribution andconsumption of forest goods and services: the public meansand the private means (Palo et al. 2001)

Our conclusion here states that combating corruption would be a key to revalue tropical natural forestsat 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 costof sustainable forest management and in this way save more forest also for poverty reduction. This transitioncould be an important initial process in the reduction of poverty by tropical forests. Surprisingly, in a greatnumber 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 forestproduct, timber (cf. Angelsen and Wunder 2003), is excluded.

An increased activity has lately taken place in the front of reducing or eradicating corruption (oftencovered by the term of “illegal logging”) in forestry (e.g. FAO 2001, Landell-Mills et al. 2002). A wide agendamay 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 wouldbe 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 negativeconsequences 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 manytropical countries the system of public regulations and fees has been done by purpose into a complex onein order to facilitate more frequent points for corruption (cf. Smith and Scherr 2002, Angelsen and Wunder2003).

Using forest resources

Public means

Political process

Laws, plans, budgets

Public wants

Private means

Markets, contracts, traditions

Pricing process

Private wants

Human wants– wood– biodiversity– carbon stocks– water– wildlife– range– wilderness– aesthetics and others– TOURISM

Matti Palo 15

Third, as a medium-term instrument adapt assessment of competitiveness of stumpage pricing in amarket driven process of forest certification. This measure would create an incentive with external marketand NGO pressures to neglect the administrative pricing system (Palo 2000).

Fourth, another medium-term instrument would be to improve forest research, statistics and forestmonitoring systems in order to have valid, reliable, transparent and timely follow-up of the changes in forestecosystems, 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 corruptionand deforestation as well as mobilizing a large-scale poverty eradication in the tropics. An integrated approachin 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 amongthe 102 and 133 countries included in the report (www.transparency.org). By reviewing the historical evolutionof 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 100–200 years ago (Albion 1926, Pinchot 1949).

When Finland had in the past practically no corruption, it was possible to avoid the worst governmentand market failures. In fact, these failures block the effectiveness of the two control systems, public and privatemeans (Figure 7), in allocation, production and distribution of forest goods and services in the contemporarytropical countries.

Next, we introduce some of the policy reforms we consider as necessary in order to eliminate corruptionand 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 thetropics means more poverty (Figures 3–5). Most likely, slowing down deforestation would be beneficial forpoverty eradication. However, according to our analysis (Figures 6–7), in order to slow down deforestation,first corruption has to be combated. Our long-term policy proposal above to combat corruption was privatizationand decentralization of state forests.

The Clean Development Mechanism CDM of the Kyoto Protocol identifies reforestation and afforestationas relevant forestry measures for application. Prevention of deforestation projects is not presently eligibleunder CDM. Via CDM new funding from industrialized countries to tropical forestry is feasible, when theProtocol will become ratified. Some local poverty reduction in this way may be a viable option, but no large-scalepoverty 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 andafforestation open access to forests has to be closed by property rights (Figure 8). Along with economicdevelopment, until a certain threshold point of time, natural forests will continue to decrease. In the caseof 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 givethe profit-making motivation to the property rights holders and they start to plant more trees.

Figure 8. From deforestation to transition via markets—a model (Palo2000)

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

Plantationforest (%)

Natural forest (%)

Natural + Plantationforest (%)

Price of standing timberor fuelwood (USD)

Forest area/total land area (%)

Deflated StumpagePrice (USD)

0

100

Economic development

Matti Palo 17

The efficient property rights structure is universal, exclusive, transferable and enforceable. Universalitymeans that all resources are privately owned. Exclusivity refers to a situation where all benefits and costsaccrue only to the owner. Transferability means that property rights are transferable from one owner to anotheron a voluntary basis. Enforceability refers, finally, to a situation where property rights are secure from involuntaryseizure 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 findsome empirical support for the key role of the private property rights (Figure 9). Here a U-shape distributionof countries can be observed. If Ireland is considered as the bottom of this U-shape, above and right fromit there lie 19 countries. Among them only Brunei and Canada practise socialistic forestry. In the other 17countries private forest ownership is prevailing. We found further empirical evidence of the existence of thisU-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 thepast. In Finland the Great Land Reform (Isojako) was mobilized in the 1770s and it lasted about 150 yearsto cover all of the country. The aim was to delineate private fields and forests out of the state domain andthe commons both in the terrain and in the official files. As a consequence already by the middle of the 19thcentury private forest ownership began to dominate in Finland.

A poor country has not perhaps adequate funding available to cover the transaction costs needed forthis kind of land reform. Here exists a vital option for the ODA and other external funding. Transaction costsare composed of costs accruing from closing of open access and marketing costs. Ex ante costs of closingaccess derive from defining the property rights in the terrain and in the official files. Ex post costs of closingaccess, on the other hand, are due to protecting the property rights. Marketing costs are composed of marketingintelligence, buyer identification, marking of trees, tendering and business negotiations, scaling of timberand making the exchanges (Coase 1937, Zhang 2000).

Major problems may be encountered in implementation of this kind of land reforms. First of all, thepolitical 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 experiencesfrom Latin America indicate (Laarman 1996). Accordingly, first corruption must be eradicated to a workablelevel 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 forestfrom the state, on which terms, under which schedule, under which kind of implementing organization, andunder 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 countrieswith economies in transition nearly everywhere but not in Russia (FAO 1997, Zhang 2000). Some privatizationof plantation forests has also taken place in such countries as New Zealand, the United Kingdom, Republicof South Africa and Australia. If privatization and decentralization are based on economic theory, then theextent of market external effects, externalities, is decisive on how far and how to proceed (Bass and Hearne1997).

The forests without remarkable externalities fit best for private property rights. Forests with localexternalities such as local watershed, landscape or biodiversity impacts fit best to be decentralized to localcommunities. 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 forestsin this situation is not considered as socialistic forestry. The degree of privatizing socialistic forestry dependsthus on the context of the environmental and socio-economic conditions of the country concerned. A dogmaticideological neo-liberal orientation should be avoided. Rather an optimum mix of markets and policies shouldbe strived for (Figure 7, Stieglitz 2003, Palo et al. 2001).

Decentralization of forests from the national government to the local governments or communitieshas been practised lately on an expanding scale (Landell-Mills and Ford 1999, FAO 2003). It may be a stepforward from a socialistic forestry system in the way that open access is easier to close down, when the localcommunity is motivated to watch and implement it. A major risk in decentralization under corruption is todecentralize, 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 formore than a century but from 1925 to 1996 under some state regulation. In recent years this market has beenfully 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 percentof community forests also for a long time provide cases, which indicate, that decentralization in this waycannot always be successful (cf. Angelsen and Wunder 2003).

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

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The competitive forest holding market plays an important role for the intensification of forestmanagement, because it shortens the time horizon of investments with otherwise long maturation times (inFinland 60–150 years). When tending of a seedling stand or pruning of standing trees is accomplished, theowner can take the increased value of the holding either by selling the holding or in the form of increasedvalue of the holding as a collateral, while borrowing money. The system of allocating only use rights to thelocal people, but the government remaining the owner of land, such as implemented in plantation forestsin China (Zhang 2000), suffers from the same reason. Accordingly, community forestry seems to miss onekey 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 newoptions, but may be rather time consuming in order to safeguard expected results on any larger scale. Firstcorruption has to be reduced, land reforms carried out and a number of market supporting juristic and informationinfrastructure created. Implementation of such projects can provide labour income and with some use rightsand also some sales income, but the full arsenal of the market system, which has eradicated poverty in Finlandin a national scale, is still missing in the tropics. Next, we shall take a closer look at the evolution of thissystem in Finland.

FIVE-CAPITAL APPROACH IN FINLAND

Without a continuous economic growth any major poverty reduction is not feasible. However, a delicate issueremains on how the welfare would trickle down to the poor? “Sometimes growth helps the poor, sometimesnot. There are policies that in the long run may enhance growth and reduce poverty, such as enhancing educationopportunities…” The countries in East Asia have promoted simultaneously growth and equity. Therefore, theyprovide 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 voluntaryaction by the elite class. The poor have to take the economic and political power in order to change the incomedistribution to reduce poverty. The idea of sustainable livelihoods and the five-capital/assets approach (Hyden1998, Angelsen and Wunder 2003) may be helpful to understand the operation of this process. The frameworkfor 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. Makingprogress 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 timesin the 85 years since final independence (the volume index of GNP/capita 0.4 in 1917 and 5.8 in 2002, when1938=1: personal communication by Riitta Hjerppe, University of Helsinki). In the early 20th century Finlandwas 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 thewhole 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 civilsociety NGOs.

Finland has created this wealth primarily with the key role of exporting forest products. Even Nokiabegan as a pulp and paper company in 1870. In 1984 it sold out all its forests as well as pulp and papermills and changed its strategy towards electronics and mobile phones. The share of forest products from thevalue of all the commodity exports varied in Finland between 70 and 90 percent from 1920 to 1960. Afterwardsthe share declined (Figure 1) due to diversification of the economy, although the volume of forest productsexports 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 onthis strategy of export-lead growth. Westoby‘s (1962) theory of forest industries in the attack ofunderdevelopment has found strong empirical support in Finland (Wardle 2003), but it is difficult to findany tropical country with similar development. Of course, forest industrialization in Finland started towardsthe end of the 19th century, when no globalized forest industry corporations existed. The technology wasthen also relatively simple. It was possible for the corporations not only to process timber, but also startmanufacturing the machinery needed in timber processing and logging as well as to expand into relatedconsultancy, 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. Privatefamilies own 61 percent of the total forest area and private corporations 9 percent. Accordingly, a total privateownership of forest area covers 70 percent of the national forest area. The state has 25 percent and the remaining5 percent is owned primarily by communes and the church parishes. However, the private families make up85 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 until2030 (METLA 2003, www.metla.fi).

The share of family ownership of forests has been increasing over the long-term, also due to severalland reforms favouring farmer ownership, which prevailed until recently. Urbanization and ownership transitionthrough 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 inthe 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 beensurviving strongly and has been supporting the well-being of forest sector workers. Accordingly, the poorin Finland have been able during about a century to capture enough social and political capital for reductionof poverty from forest resources.

The farmers started simultaneously with their political mobilization to reap also economic power byestablishing the Farmers Union, MTK, and a number of cooperatives in processing food and forest productsand in retailing. The labour established even somewhat earlier various labour unions and also cooperativesin processing and retailing. Both kinds of unions are surviving very strongly as well as the main part of thecooperative movement. For example, family forest owners are the main owners of M-Real forest productcorporation, which by turnover is the third largest in Finland and fourth largest in Europe. Human capitalbuilding jointly with social and political capital building helped the poor reap a remarkable share of economicpower in a century in Finland.

The natural forest capital increasingly in the hands of farmers in Finland for a century also facilitatedan increase in agricultural productivity as explained above. Increasing income flows both from forestry andagriculture facilitated creation of two primarily farmer-based banking systems: a saving bank system and acooperative banking system. Both were established as local banks but eventually they created two strongcentral banks to coordinate their financial operations. In this remarkably successful way the poor were ableto create easier access to financial capital. The two systems were essential ones in reducing poverty untilthe 1960s, when processing industries and services along with urbanization surpassed employment in the primaryindustries.

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 clearprivate property rights and absence of corruption, absence of major government and market failures, haveexisted 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 increaseddeforestation (Palo and Lehto 2000). No “invisible hand” in the form of increasing real stumpage prices asa market-based brake has appeared along with advancing deforestation (Figures 2, 8, 10). When the valueof the decreasing remaining tropical forests has not been increasing, no financial incentive for intensificationof sustainable forest management has appeared. Additionally, too often the financial capitals have flowedabroad or to luxury goods by the elites benefiting from timber exploitations, instead of investments in domesticforest plantations or timber processing.

The FAO transited from export-led or import-substituting forest industrialization paradigm towardscommunity and social forestry in the later part of the 1970s and 1980s, as did also the World Bank (Palo1988). The mission of community and social forestry was to attack economic underdevelopment /povertynot through the top-down as in the Westobian approach but through the bottom-up strategy. So far, we havenot seen any remarkable large-scale poverty reduction via community and social forestry. Why? Maybe nointegrated theoretical framework supporting them has been developed far enough. Theory at its best is verypractical: 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 guidedby theories, but often in an implicit way.

Poverty reduction on a large scale by the tropical forests, we believe, will stay as rhetoric as longas no integrated theory exists to indicate the operational steps to be followed. “Sustainable livelihoods approachcombined 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?

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 radicalengagement 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 afitting approach for UNDP experts and consultants.

In fact, UNDP (2003) was supporting this approach and has been quite radical already for 13 yearsby publishing most sensitive national data about the progress of human welfare. What about agencies thathave been more concerned with tropical forests, such as FAO, the World Bank and ITTO? No similar publishingof national progress in sustainable forest management or forest-based development has taken place. Maybethe 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 fora large-scale reduction of poverty by the tropical forests. I wrote an article “No sustainable forestry withoutadequate privatization” (Palo 1997), where I introduced and defined the term “socialistic forestry”. As aconclusion of this analysis I may revise that title to read as follows: “No large-scale poverty reduction bythe tropical forests without large-scale devolution of socialistic forestry”.

Why have the IGOs and NGOs presently adopted the rhetoric of poverty reduction? For decades globaland other international politics have failed in stopping deforestation (Figure 2). There is a good reason tocover this failure by introducing a new rhetoric as has happened already since the 1960s by shifting fromforest-based industrialization to community and social forestry. Another potential explanation is that whenthe rhetoric is up-to-date (according to the UN Millennium Development Declaration), the agency has betterchances to get more external financing for forestry development projects of various kinds with a povertyhat.

We may conclude here, that poverty reduction by the tropical forests will remains as rhetoric at leastfor some decades to come, if no radical change in the strategies and their implementation take place. Wehave indicated in this paper with empirical evidence, that decreasing forest area and increasing poverty arestrongly correlated, especially in the 17 tropical Asian countries (Figures 4–5). Our scientific scenarios showa continuous decline of tropical forests at least until the 2020s (Figure 2). During the same time 29–44 percentof 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 maybe lost by the 2020s (Figure 10, Palo and Lehto 2003c). When most of the poor reside in tropical Africaand tropical Asia, these scenarios undermine seriously the ambitious goals of poverty reduction by the UNand its family members.

Matti Palo 21

Figure10. Declining natural forest area in tropical Africa 1960– 2050. Inthe scenarios until 2050 the solid lines indicate low and hightrend scenarios and the squares with broken lines low andhigh regression model-based scenarios (Palo and Lehto 2003b)

We may have another conclusion as good news: a visible rhetoric plays a positive role in the worldpolitics. 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 worldpolitical agenda, but it is not a sufficient advancement. Under continuous deforestation and socialistic forestryno real advancement in a large-scale reduction of poverty is registered. What makes the bad news? Afterchanging the rhetoric each decade, from forest-based industrialization to community forestry, to social forestryand to poverty reduction, an impression is given to the media and the public at large, that each rhetoric/agendahas been effectively implemented. This paper serves the purpose of mobilizing an evaluation of theaccomplishments of these varying agendas.

However, in order to avoid too pessimistic a view, it may be worthwhile to introduce some other positivecountry cases. Costa Rica may today be the only tropical country which has been able to stop deforestation– with 2 million ha of remaining forest, which cover 38 percent of the land area of 51 000 km2 and a populationdensity of 77 inhabitants km-2. The Republic of Korea provides another interesting case with 6 million haof forest, which covers 63 percent of the land area of 98 000 km2 and a population density of 471 inhabitantskm-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 forestsin remarkable degrees (FAO 2003).

In fact, this combination of both high forest cover and population density makes Korea a unique caseamong 197 countries in the world (Palo 2000). Costa Rica and Korea exhibit illustrative cases along withFinland of the effectiveness of land reforms, privatization of forests, economic growth and advancementsin democratization and removal of corruption (www.transparency.org) in support of sustainable forestmanagement. 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 povertyby tropical forests.

Malaysia in tropical Asia, and especially Peninsular Malaysia, provides an illustrative case, on howlarge-scale deforestation of natural forests into rubber and oil palm plantations has created sustainabledevelopment 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, relativelylow corruption, and the income distribution policy in favour of the poor have been other factors in advancingsustainable development. However, maintaining of socialistic forestry has undermined intensification insustainable forest management. As a consequence, some options in poverty reduction by forestry have beenmissed. But Malaysia is still distinguished in the advancement of poverty reduction in comparison with theneighbouring countries, e.g. Indonesia and the Philippines (UNDP 2003, p.198). In both these countries rampantcorruption and unstable governments have undermined, not only the past but also, the future prospects ofpoverty reduction by the tropical forests.

It is interesting that Costa Rica, the Republic of Korea, Sweden and Japan have applied, to a greatextent, a similar five-capital approach as we have described above in the illustration of the evolution ofsustainable forestry and poverty reduction by forestry in Finland. No doubt, more of both theoretical andapplied research are needed in support of poverty reduction by the tropical forests (cf. Angelsen and Wunder2003). On the other hand, no more research findings are needed in order to change the implementation strategiesand policy instruments with their effective implementation of national and international agencies active inthis front. A viable option to transit from rhetoric in effective reduction of poverty by the tropical forestsis already described in this paper.

ACKNOWLEDGEMENTS

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

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

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

4 Making markets for forest communities:linking communities, markets andconservation in the Asia-Pacificregion—The RUPES projectF.J.C. Chandler*

ABSTRACT

Current thinking is that market oriented approaches to forest management are going to provide an efficientmechanism for promoting and financing forest protection and sustainable forest management. However, linkedwith the continuing degradation of forest ecosystems in the tropics is the issue of poverty. In Asia, nearlyone quarter of the absolute poor (some 250 million people) eke out a meager existence in upland areas andmost depend directly on a mixture of agriculture and forest resources for their livelihoods. They live in contextswhere their natural resource base is rapidly deteriorating. Many upland and mountain communities in Asiamanage landscapes that provide environmental services to outside beneficiaries, but without sharing in thebenefits of those services. Clear opportunities are now emerging in this respect. However, the current successesin environmental transfer payments have only benefited large landowners and concessionaires. In additionthere is a danger that some types of transfer payment mechanisms that are currently evolving are being designedand 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 theenvironmental services that they provide. The RUPES Programme will build working models of best practices forsuccessful environmental transfer agreements adapted to the Asian context. The programme will look at whom therewards should go to, who will pay the rewards, how and in what form they would be collected and what amountor form is appropriate. This paper provides the rationale for the RUPES project and how it has and will contributeto 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 asbeing able to provide an efficient mechanism for promoting and financing forest protection and sustainableforest management (Landell-Mills and Porras 2002). It is often the failure of markets along with policy andinstitutional failures that causes deforestation and environmental service loss. Market and policy failures meanthat forest products are undervalued in the market place while for forest services providing public good valuesthere is usually no market place at all (Richards and Moura-Costa 1999). It is presumed that the market willensure that beneficiaries of the services provided by forests pay the land managers for adopting land managementpractices that deliver the desired services.

The total value of forests to human kind is not insignificant. There are both use and non-use valuesof forests that can directly and indirectly benefit people. Forests provide livelihoods (direct-use values) bothat present and, for many forest users, provide a buffer in times of hardship and so act as a “bank” whenthere 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 cultureand society (existence value). As often happens the more valuable the benefits from forests, the greater the competitionfor control, and in competitive environments it is the poorer and marginalized groups who become vulnerable. Andconversely the continuing loss of forest ecosystems—especially in the tropics—is linked to rural poverty.

*The World Agroforestry Centre, Bogor, Indonesia; E-mail: f.chandler@cgiar.org

25

Among the vast multitude of the poor in Asia, the populations that have been most affected by theprocess of marginalization are those living in the uplands, namely in the hills and mountainous areas whichcover 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 forestresources for their livelihoods.

The benefits of national and local investments in economic development have tended to bypass mostof the poor upland people because the composition of development initiatives and/or their products are oftenirrelevant or inaccessible to the upland communities. Being far away and disconnected from administrativeand economic power centres means that the political, social, economic and ecological niches occupied bythem are not central to national development concerns or priorities. Hence their development needs and aspirationsare 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 externalitiesof the development process. This may be due to the loss of their production base to land acquisition fordevelopment projects or to migration from the lowlands or the appropriation of natural resources (includingforest and water) by national and non-local interests. The lack of security of tenure over livelihood resourceshas 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 withinsufficient 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. Thevulnerability of poor areas and poor people to different livelihood shocks and stresses was never seriouslyconsidered, resulting in inadequate measures to safeguard these people. Years of continuous neglect and therecent crises (financial, El-Nino, La-Nina, political insurgency) have created a sense of helplessness in theuplands. There is a major challenge to help restore the lost self-confidence of these people in their own abilitiesto 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 inupland areas is not justified exclusively by humanitarian concern for these marginalized populations. Manyupland and mountain communities in Asia manage landscapes that provide environmental services to outsidebeneficiaries, but without sharing in the benefits of those services. The services include clean and abundantwater supplies from watersheds, biodiversity protection, landscape beauty as a core element of ecotourismand 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 paymentshave only benefited large landowners and concessionaires. In addition there is a danger that some types oftransfer payment mechanism that are currently evolving are being designed and implemented to the disadvantageof the upland poor. They may actually exacerbate the displacement of poor people from the uplands, and increasetheir poverty. This is potentially true for carbon sequestration. There are also risks that the concerns of nationaland global societies about biodiversity protection, and about the hydrological services of watersheds, may negativelyaffect 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 transferpayments 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 undertakenin the coming years.

THE RUPES PROJECT

There are many initiatives across the world to develop new markets and economic instruments to buy andsell 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 notreadily 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) haveslopes 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 forAgriculture and Development (IFAD) designed a project to develop appropriate methods for rewarding thepoor upland communities for the environmental services that they provide.

ICRAF has taken on the role of coordinating a consortium of partners interested in participating inrewarding upland poor for environmental services they provide (RUPES). These include such organizationsas the Center for International Forestry Research (CIFOR), World Resources Institute (WRI), World ConservationUnion (IUCN), Winrock International, Conservation International (CI), the Ford Foundation, The NatureConservancy (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 supportingenvironmental conservation at local and global levels. The purpose of undertaking the project is to createthe basis for applying proven institutional mechanisms that will recognize and reward poor upland communitiesfor the environmental services they provide.

To achieve this, project activities will be aimed at creating the knowledge to direct rewards to uplandcommunities. New methods for environmental transfer payments to upland communities will be tested andmonitored through action research. These methods will ensure that the transaction costs for these activitiesare competitive and that there is full community involvement in the decision-making process. The programmewill 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); experienceand potential for the Philippines (Herminia A. Francisco), the setting in development assistance for Philippineupland 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 variousissues associated with linking poor, upland communities, markets and protection of forest ecosystem services.

REWARDING THE UPLAND POOR FOR ENVIRONMENTAL SERVICES: A REVIEWOF 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 transferseither within their own country or towards other countries, including developing nations. All these mechanismshave been designed to provide rewards to farmers for environmental services and the study done for the RUPESworkshop focused on those that seemed to target upland farmers. In as much as not all the schemes had povertyalleviation as their objective, they did have some social orientation and so could be targeted to reach poorupland 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 linkedwith interventions aimed at making sure that the rural population benefit from conservation activitiesand 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 areusually funded out of public expenditures, including levies on environmentally harmful activities, localtaxes, and international development funding. In some cases they are also financed or co-financed byprivate donors and NGOs.

2. Contractual rewards for environmentally friendly agriculture and forestry. This includes several typesof instruments in which environmentally beneficial practices are defined and rewards are proposed totheir 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 institutionaldevelopment needed for their design and implementation, and the costs involved in the process. Theycan 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 payfor requested changes or even for the certification of existing beneficial environmental practices. Thiscan be done through public aid, through NGO funding, or through private companies marketing ecolabeledproducts purchased from the poor. Finally, the whole process depends on the credibility and accountabilityof 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 touristsare brought to a natural area in conditions that are aimed to benefit environmental conservation and thewelfare of local people.

Like in all other RUPES instruments, ecotourism, to be sustainable and to succeed in actuallyreaching the poor, must be based on a proper institutional framework. Adequate institutions and fundsare also needed to provide capacity building to local players in the form of training, marketing supportand seed financing when needed. Finally, ecotourism projects need to ensure that there is a dialogue betweenthe stakeholders to avoid harmful conflicts and set up a participatory monitoring and evaluation systemmanaged by the stakeholders. Ecotourism can be subject to ecolabeling to guarantee consumers and otherstakeholders that it actually meets a number of social and environmental conditions. But this brings inthe 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 andother stakeholders in exchange for the conservation and provision of genetic resources that can be usedcommercially by the agriculture, pharmaceutical or biotechnology industries. However, there are a numberof 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 privatecompanies as a “bonus”. The involvement of public institutions, especially international ones, can alsohelp 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 thecreation of a new crop variety or drug is made in high-tech developed countries laboratories, the shareof the benefit going to the suppliers of the raw genetic information will always remain small—unlessthey can access that technology. Hence technology transfer and capacity building should be key componentsof any genetic resources benefit-sharing project.

5. Trade in emissions permits includes watershed conservation strategies based on waste emissions tradeand, more recently, carbon trade. Direct trade of waste emissions in watershed was found to be difficultto implement in developing countries due to the institutional conditions required to establish and regulatesuch a market—too many occasions of fraud would be possible. Levies and funds from industrial pollutersor users of water can, however, be used for funding community-based natural resources managementprojects.

This mechanism remains weak for a number of other reasons. First, the funds available are notthat great yet. For the moment, the market seems rather experimental and based on the goodwill andimage strategy of companies, and their anticipation of the market. If this market fails to materialize andif countries and private companies can continue emitting carbon without any clear sanction or benefitsin case of emission offset, they might lose interest in this type of project. Another worrying element isthe number of projects and countries that are offering carbon credits or planning to develop some. Whencompared to the actual low requirements of carbon emissions reductions, this means that supply couldbecome so abundant that prices will fall. This means that the future of such projects will depend a loton 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 effectiveimplementation of RUPES mechanisms is very narrow. All the mechanisms reviewed here require a fair amountof institutional development, and hence need funding for capacity building, if they have to actually reachthe poor and effectively promote environmental conservation. This is bad news since the funds available forsuch 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 termsof funding available and that they can be effective RUPES whenever they are implemented by the privatesector 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 socialenvironmental costs or benefits of a particular practice. The involvement of private companies often resultin a greater efficiency under the condition that their activities are closely monitored and complemented byNGOs representing all stakeholders, and ensuring that the benefits of these mechanisms actually reach thepoor.

The last and first lesson of this review is that these mechanisms in most cases have little chance tobe 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 penaltiesshould be the first step before starting to design and implement RUPES mechanisms. The effectiveness ofremoving them rather than trying to implement complicated RUPES mechanisms with limited resources needsto be assessed. In many cases, it is likely that removing the penalties will provide a more effective way ofmeeting environmental conservation and poverty alleviation objectives than any of the RUPES mechanisms.

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

The paper discusses the various forms of environmental service “payments” that have been implemented throughthe 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 fortheir 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 constructionof 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 bythe upland communities, and the potential for the implementation of RUPES initiatives. The sites chosenrepresent varying socio-economic, environmental and political conditions to capture the diversity in uplandsituations.

The paper strongly emphasizes the need to look at payments from two perspectives: payments to theproviders (upland poor) of the environment services (SUPPLY-SIDE) and payments from the beneficiariesof the environmental services (DEMAND-SIDE). It makes the point that current RUPES document seemsto negate the demand-side aspect, which is equally important in sustaining efforts to support the supply-sidepayment. These two aspects though would require different strategies and may involve different collaboratorsbut 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 addressedin 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 forestdegradation and upland poverty. The government has initiated and implemented programmes, and policy reformswere adopted to address the problem. The country has also been the recipient of substantial developmentassistance of loans and grants from international funding agencies in support of sustainable forest managementand poverty reduction. Although there were some successes, upland development assistance has been shortof 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 enoughto achieve sustainable forest management and poverty reduction. As indicated in the programme/projectsreviewed, 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 devolutionand decentralization of resource management through unnecessary bureaucratic requirements.

3. Ineffective policy implementation contributes to deforestation. Ineffective policy implementation hadbeen attributed to lack of understanding, inconsistent interpretation, constant policy changes due to changein 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 resourcesand the benefits therefrom could serve as an incentive to and make various stakeholders appreciate theneed for resource protection and conservation.

5. Good environmental governance is key to effective forest management as it promotes transparencyand accountability, hence could effectively address the systemic graft and corruption prevailing in theforest sector.

F.J.C. Chandler 29

ASSESSING THE LIVELIHOOD BENEFITS TO LOCAL COMMUNITIES FROM THEPROFAFOR CARBON SEQUESTRATION PROJECT, ECUADOR (PRESENTED BYM. MILNE AND P. ARROYO, CIFOR, INDONESIA)

The Clean Development Mechanism (CDM), under Article 12 of the Kyoto Protocol, is one of three “flexibilitymechanisms” available to industrialized countries (Annex 1 countries) to meet their emission reduction targetsand also contribute to sustainable development of non-Annex 1 countries. A pilot phase called “ActivitiesImplemented Jointly” (AIJ) was initiated to explore ways of implementing CDM-like projects andinstitutionalizing, 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, andsimultaneously contribute to long-term sustainable rural development.

This study assesses the actual and potential livelihood impacts of PROFAFOR, a carbon sequestrationproject in Ecuador, in the knowledge that the AIJ phase projects did not have a sustainable developmentrequirement, but that this was an opportunity to explore the livelihood opportunities and risks of LULUCFprojects. For PROFAFOR, addressing the livelihood needs of contracted communities will help to increasethe 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 byPROFAFOR have, to differing degrees, increased the financial, environmental, human, social and physicalcapital of project participants. In most cases, the subsidy had been used for paying local wages and foodfor the community members in establishing the plantations and the surplus funds had either been used forcommunity or individual needs. Since the project prohibits the grazing of livestock and agricultural activitiesin 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 plantationarea or diversify on-farm activities. Many of the surveyed community members were experiencing reducedincome from livestock and agricultural activities and hence needed the project subsidy to establish the plantationsto 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 inthe future. Community projections of the importance of forestry activities, particularly in terms of contributionto 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 plantationsto diversify their income base whilst others were expecting timber revenues to become the major incomesource for the community.

Given decreasing returns from other on-farm activities, the project contracts for 15 to 20 years representa potentially profitable investment for the surveyed communities, particularly to those with plantations ofexotic species. Fire, harsh climatic conditions, pests and diseases, and access to markets were noted as themajor risks to the profitability of the plantations. However, under the new 99-year contracts, only communitiesinterested in both financial and environmental benefits are likely to gain. As a purely financial investmentthe 99-year contracts are likely to be unprofitable, especially if the opportunity cost of the land increasesin the future. Community members would be better off establishing plantations under other schemes, wherecontract conditions are more flexible.

Recommendations

Forest carbon projects have multi-stakeholders and multi-objectives. To ensure that all objectives are metand that no stakeholder is made worse off, it is important to identify potential trade-offs and conflicts ofinterest at the start of the project. In the two case studies, the community members were not expected toreceive 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 thatare 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 underthe 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 levelthat may impact on the goals of the project.

Since forest carbon projects have a longer time frame than most development projects, project designersneed to provide adequate incentives to stakeholders to ensure their long-term commitment and enter intocollaborative and flexible partnerships with communities. For poorer communities with limited land, inflexiblelong-term contracts are likely to have adverse livelihood impacts, and may also be counter productive toachieving the carbon sequestration goals.

Most forest carbon projects have invested in long-term benefits to communities, either through supportingcommunity plantation activities or supporting local enterprises. In doing so, project managers will need toensure that the community members receive adequate training and information on both the production andthe marketing side, to develop profitable and sustainable enterprises. If community ventures do not generateadequate 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 RUPESmechanisms is how to make sure that the rewards effectively reach the upland poor. This is all the moredifficult since upland communities are remote, isolated, and usually lack institutions able to represent themin a democratic and effective way. There are three main types of institutions that have been found to channelenvironmental rewards to the poor.

The first is government, whether at national, regional or local level. They usually take part in thecoordination 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—includinginternational, national and community or local level ones—have increasingly been relied upon to deliver benefitsto the rural poor through their capacity, representatively and legitimately. Finally, a number of mechanisms relyon 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 maintypes have been identified. The first is direct financial rewards such as subsidies given in exchange of theimplementation of a particular land-use change. The second is rewards in kind, like the case in many communitydevelopment projects providing infrastructure, training or other material benefits or services to the uplandpoor. 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 theenvironmental service and the rewards with some sanctions exists, usually in the form of a contract. Thisis the case of targeted agro-environmental subsidies in Europe and the USA, and is also the case of mostecolabelling schemes, as well as some bioprospecting schemes. However, these schemes require a sophisticatedinstitutional 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 andevaluation system to ensure that the poverty alleviation and environmental targets are met. Schemes that arebased on a contract usually have such evaluations in order to check that the contracts are respected. Mechanismsthat 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 successfulenvironmental transfer agreements adapted to the Asian context. It will conduct targeted action research ata number of sites across the region to examine and explore what the environmental services are and howcan they be measured. Mechanisms to anticipate and prepare for changes to environmental services will alsobe considered as part of the programme.

The programme will look at whom the rewards should go to, who will pay the rewards, how and inwhat form they would be collected and what amount or form is appropriate. The action research will defineappropriate methods with the beneficiaries for best practice in environmental transfer payments. It will providesimple, practical examples of how innovative, institutional arrangements and reward mechanisms can be appliedto 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 withenvironmental transfer payments. Networking at global, regional and national levels will be another key elementof 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 experienceand lessons for institutionalization leading to wider applications throughout relevant situations in Asia. Thefirst year of the programme focused on reviewing past experiences and initiatives to assist in the planningand establishment of the criteria for the selection of the action research sites. Initial sites were identifiedin the first year; however, it was recognized that further investigation and solicitation are needed so as toensure a diversity of sites are included. Efforts were made to firm up the organizational and institutionalcollaboration for the RUPES Programme to set in place a firm foundation for the set of activities that willbe 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 ofinteractions, conversations, discussions, etc., more formal indication of probable sites was received throughthe completion of 31 in-depth, comprehensive questionnaires. These in turn were honed down and developedinto 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 secondin Nepal.

The Ikalahan Ancestral Domain includes the Kalahan Reserve and totals approximately 58 000 ha ofmountain lands between 550 and 1717 m above sea-level on the island of Luzon in the Philippines. The reservehas been under the legal control of the Ikalahan community, represented by its People’s Organization, theKalahan Educational Foundation, Inc., since 1974. The Philippine Government in 1999 approved the AncestralDomain Claims.

The Domain provides both water for drinking and irrigation systems and has a proportion of the landin production forests as well as agriculture. About 20 000 persons live within the Ancestral Domain of whomat least 90% belong to the Ikalahan and another 5% belong to other tribes of indigenous people, primarilythe 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 watershedprotection functions of the reserve and the Ancestral Domain and test payments for these services. The buyerof the carbon is still to be determined although there is some certainty that the managers of the irrigationsystems will provide the payment for the Ikalahan community’s efforts in protecting the watershed. In additionthere is the possibility of using payments from ecotourism efforts to bolster the biodiversity conservationin the reserve.

The Kulekhani watershed is located in the Makwanpur district, approximately 50 km southwest ofKathmandu in Nepal. At an altitude of between 1400 and 2300 m this watershed has a total area of 12 496ha and has a total population of 43 003 with the majority of the inhabitants being disadvantaged ethnic groupsand low caste people (Dalits).

Water from the Kulekhani River and its tributaries is the source of power for two hydropower plantslocated downstream of this watershed. In their work with RUPES, Winrock International will work with localcommunities 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 whatpreconditions are necessary and constraints to consider in implementing these services. The project will worktowards strengthening the capacity of local institutions to implement transfer payments through appropriateinstitutional arrangements, agreements, and monitoring and enforcement mechanisms, and then compile anddisseminate best practices and lessons learned from these projects to raise awareness at all levels on howthe transfer of payments in delivering environmental services can benefit upland communities in Nepal andother Asian countries.

Nine additional sites are just completing their project proposals. These sites are in Indonesia (6) andthe 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) thatare included in the RUPES portfolio but are there purely for sharing of information and knowledge (e.g. nofunds 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 underwayto facilitate the understanding and implementation of RUPES. These include an institutional study in Indonesiathat will help to understand and shape social, political, legal and economic environments to become moresupportive 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 theseservices and the upland communities that generate them, it is necessary to be explicit in defining what thefunctions are, and how they can be measured and monitored. The typology aims to decompose the broadconcept 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 environmentalservices market. The assessment will follow a framework of environmental services typology that has beendeveloped 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, supportersand obstructers.

To facilitate any transfer of benefits from environmental payments, it will be necessary to understandat each of the action research sites, what the environmental services are, who provides them, and how theyare generating benefits. Threats to these services that cause changes across various spatial and temporal scaleswill need to be assessed to facilitate the development of appropriate land management schemes and thecorresponding environmental reward mechanisms that will benefit the upland poor. RUPES is currentlyundertaking a scoping study to make recommendations on the design of an appropriate information systemthat will support the needs of the RUPES sites, enable both local and independent monitoring of the welfareof 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 inventoryand 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 ofthe RUPES action research sites (Indonesia, the Philippines and Nepal) in order to guide an appropriateinformation 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 potentialto addressing important aspects of poverty in Viet Nam uplands through rewarding the upland poor forenvironmental services they provide. The conclusion of this study in late 2003 will result in the nominationof potential RUPES testing sites in that country.

There has already been a RUPES “kick off” workshop in Yunnan Province, China, which brought togetherover 25 participants from a range of organizations in both the governmental and the NGO sectors to discussChina’s Sloping Lands Conversion Programme and the feasibility, roles and action plan for initiating oneor 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 theRUPES 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 grantto ICRAF is conducting a nine-day workshop in September for invited participants (including, but not limitedto, site personnel at RUPES action research sites who can influence decisions on their site project) to sharetheir experiences and add to their knowledge on environmental transfer payments and the poor. The workshopwill be a combination of theoretical knowledge on the basic principles of rewarding upland poor forenvironmental services they provide interwoven with case studies relating experiences and the extent to whichrewards 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 environmentalreward transfers as a tool for promoting effective and sustained environmental management while at the sametime increasing benefit flows to poor upland communities. The main result will be a deeper and more practicalunderstanding of how to formulate such arrangements, their viability and potential for replication. This initiativewill serve as an intellectual focal point for collection and analysis of experience derived for these innovativeapproaches.

Experience and analysis will feed directly into government planning for environmental managementand poverty alleviation in the uplands of selected countries and present opportunities for IFAD to becomethe 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 ofsecure land tenure, development assistance such as credit, market infrastructure, improved/expanded extensionservices, 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 tooffset arrangements, offers the most immediate potential opportunity for the upland poor to generate a capitalbase on which to grow economically. As more experience is gained and analysed in this and other environmentalservice 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 constrainefforts 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 themmay be among the important impacts of the project.

Expanding the influence on the global poverty and environment agenda. The global climate agendahas been largely driven by global environmental issues, with little recognition of the tight linkages betweenenvironmental degradation and poverty. The international agencies and developed country governments drivingthe efforts in climate change mitigation are often focused on this limited objective, without adequatelyconsidering how their actions may negatively impinge upon the poor. They are not always adequately cognizantof how, with careful attention, their actions and investments in environmental mitigation could also bettercontribute to meeting the objective of eradicating poverty.

The RUPES project will be a mechanism to acquire the necessary knowledge base to influence theglobal poverty and environment agenda. The programme will provide a flow of scientifically credible knowledgeand pragmatic, tested solutions that enables it to confidently influence the entire direction of climate changeinvestments. (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. TheEconomics Unit, IUCN – The World Conservation Union.

Landell-Mills, N. & Porras, I.T. 2002. Silver bullet or fools’ gold? A global review of markets for forestenvironmental services and their impact on the poor. London, IIED.

Richards, M. & Moura-Costa, P. 1999. Can tropical forestry be made profitable by ‘internalising theexternalities’? ODI Natural Resources Papers.

Scherr, S. & Martin, A. 2000. Developing commercial markets for environmental services of forests. KatoombaWorkshop 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 theEnvironmental 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

5 How forest producers and rural farmerscan benefit from the CleanDevelopment MechanismM. Satyanarayana*

ABSTRACT

This paper outlines how the Clean Development Mechanism in the context of Land Use, Land-Use Changeand Forestry (LULUCF) of the Kyoto Protocol (UNFCCC) benefits forest producers and rural communitiesin enhancing their livelihoods. It examines the potential of afforestation and reforestation activities to mitigateclimate 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 carbonmitigation projects is of importance to developing countries, particularly in the Asia-Pacific region. Whenthe Kyoto Protocol becomes fully operational, it is anticipated that the “carbon credits” will be bought andsold in a new environmental carbon trading market with the global potential of LULUCF activities estimatedat 50 MtC annually at $10 per tonne of carbon. The paper illustrates some pilot projects undertaken in variousparts of the world so that the developing countries in the Asia-Pacific region can learn from experienceselsewhere. An account is given of various steps involved in the development of a CDM project and the strategyfor operationalizing CDM in forestry sector. The paper also underlines the limitations and identifies the issuesto be addressed, and recommends a holistic approach to integrate carbon sequestration objectives with improvinglivelihoods 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 workingin land use and forestry sectors are becoming increasingly aware of the inclusion of these sectors in internationalpolicy 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 (throughdeforestation, decomposition, soil erosion, etc.)

The emergence of new opportunities for developing and attracting foreign investment into carbonmitigation projects is of importance to developing countries particularly in the Asia-Pacific region. Theseexciting 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 ClimateChange (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 wouldprevent adverse changes to the climate. The UNFCCC was agreed upon at the United Nations Conferenceon 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 knownas 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: smbathula@yahoo.com

35

Clean Development Mechanism

The Clean Development Mechanism (CDM) was established to assist Annex I Parties in complying with theemission 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. Thetwo key goals of the CDM are:

• to provide developed countries with flexibility for achieving their emission reduction targets, by allowingthem 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 firstcommitment period (2008–2012). Deforestation, forest, crop and grassland management projects do not qualifyunder the CDM at present though they may be included in a subsequent commitment period (beyond the year2012). The role of land use and forestry projects in the CDM beyond 2012 will be decided as part of thenegotiations on the second commitment period.

A framework known as CDM Executive Board (EB) (10 members) has been established for supervisingand 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, includingfor land-use projects. Operational entities, accredited by the executive board, review project proposals andverify and certify emission reductions from projects. The greenhouse gas benefits of each CDM project willbe measured according to internationally agreed methods and will be quantified in standard units, to be knownas “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” willbe bought and sold in a new environmental carbon trading market.

However, the governments still need to agree upon definitions and methodological issues such as settingbaselines, verifying additionality, leakage, non-permanence and accounting for socio-economic and environmentalimpacts (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 withthe provisions of the Kyoto Protocol with the expectation that there will be a growing demand for carbon creditonce the Protocol comes into operation and the developing countries need to position themselves to take benefitof carbon trading market. While many factors may influence the size and stability of the global market, it is expectedthat the market could be to the tune of several billion dollars a year. It may be mentioned here that total foreignaid 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 sustainableforestry, land restoration, energy efficiency and renewable energy projects. For a project developer, it mayoffer the additional input required to make a project financially viable and for a local farmer, it may providean 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 thesocio-economic development of rural areas. The CDM would provide a good opportunity to obtain externalfinancial support and technology (for high yields), to promote the commercial forestry strategy aimed at meetingthe domestic biomass demands as well as to reduce CO2 emissions and remove CO2 from atmosphere. Theglobal 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 ofafforestation or reforestation.

• Projects must result in real, measurable and long-term emission reductions as certified by the OperationalEntities (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 supportfor land-use activities that are not presently eligible under the CDM, for example conservation of existingforest resources.

Development of a CDM project

It includes various steps irrespective of whether the CDM projects are initiated by communities, NGOs oreven 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 boundariesb. define baseline scenario and additionalityc. set baseline emission level and crediting periodd. calculate baseline emissionse. calculate project emissionsf. adjust for leakageg. adjust for riskh. host country approvali. validation of project by the OEj. submission of validation reports and Project Design Document by the OEk. possible review by the CDM Executive Boardl. registration with the CDMm. project implementation and monitoringn. verification and certification by the OEo. possible review by CDM Executive Boardp. issue of CERs to project developers

Some of the pilot projects that have already been undertaken in various parts of the world are givenbelow to better understand the kind of projects that can be supported in afforestation and reforestation underthe 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 Programmebegan with an agreement to provide 18 000 t CO2 “prototype carbon credits” per year, at a price of US$2.7per t CO2 (US$10 per tC) to the International Automobile Federation. Companies, individuals or institutionswishing to offset greenhouse gas emissions can purchase carbon credits from the Fondo BioClimatico, a localtrust fund. These funds were used to provide farmers with carbon payments to cover the costs of establishingagroforestry 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 drawup 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 andenvironmental 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 participantsfrom 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, encouragescapacity 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 knowledgecan greatly benefit the CDM projects and communities. The use of traditional knowledge enhances the abilityof local communities to change and improve their resilience to adverse conditions. Communities can alsobenefit from innovative projects by learning new skills through training and learning by doing. The participatoryapproach 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 farmerswith holdings of about 2 ha have come together under a society and entered into a carbon sale agreementwith “Future Forests”, an international company based in UK. Under this, mango and tamarind plantationshave been raised over each 2 ha of land belonging to a small farmer and it is expected that 18 tC wouldbe fixed over 6 years. It has been agreed to sell the fixed carbon at the rate of $10/tC which providesINR8640. The amount is to be paid by the company to the farmer in five installments starting from the 2ndyear. The farmer would receive 50 percent of the amount, i.e. INR4320 in the 2nd year as the 1st installmentand 20 percent of the amount as 2nd installment in the 3rd year and the balance 30 percent in the remainingthree installments in the 4th, 5th and 6th year respectively. The farmers are able to get additional incomefor 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 providingdirect payment for environmental services, CO2 fixation, water quality, biodiversity and landscape beauty.As monetary incentives increase the attractiveness of forestry compared to environmentally damaging landuses, incentives are paid to land owners, following the signing of a contract to keep land under a specifieduse for at least 20 years. Farmers who sign up for these incentives hand over their environmental servicerights to the government, which in turn sells them to investors.

The institution coordinating these incentives is called FONAFIFO, a Forestry Financing Fund underthe 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 CostaRican Office for Joint Implementation (OCIC), which acts as a “one- stop-shop” for buying and sale of carboncredits known as Certified Tradable Offsets or CTOs. International investors purchase the CTOs developedeither by the government or individual developers from the OCIC. By centralizing carbon trading, the OCIClowers the transaction costs. The first batch of carbon credits (200 000 tonnes of carbon) was sold to a Norwegianconsortium at US$10/tC (US$2.70/tCO2), for a total of US$2 000 000.

Malaysian experiment

The Innoprise–FACE 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 objectiveis to rehabilitate 25 000 ha of degraded land and the total investment committed by the FACE Foundationamounts 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$0.95per t CO2). The planting phase will last for 25 years and forests will be maintained for 99 years. At the endof the first 60-year growth cycle, these forests will be exploited for timber, which belongs to the Sabah Foundationand 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 notbe eligible under the Kyoto Protocol, since the areas to be rehabilitated have a dense canopy cover and wouldalready be classed as forest. Appropriate definitions of forestry would have to be developed and adopted toenable 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 Norwayas 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, andthe carbon sequestration project in Uganda are some other examples where carbon offsets are to be suppliedthrough 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 outsidethe Protocol. Further, the carbon credits from afforestation and reforestation projects under the CDM thatcan be generated annually by an industrialized country cannot exceed one percent of that country’s base yearemissions as of 1990. This means that the total global market potential for afforestation and reforestationproject 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 transitionand other industrialized countries would dominate the global market because of the large number of allowancesand low prices at which they are expected to trade. Under this scenario, carbon credits from the CDM projectswould not be traded.

Another factor influencing the carbon trading is price. Estimates of the market price of a tonne ofcarbon 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, monitoringand risk management requirements and it will be difficult for smaller companies and community groups toaccess 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 organizesmaller 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 putin place to ensure information flow to the stakeholders, consistency of management regime, and financialand administrative systems for cost–benefit sharing amongst many small and marginal players. In order toinvolve smallholders/communities in the CDM projects, their land-use systems need to be recognized by the sustainabledevelopment 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 theemerging carbon market. Clarifying issues such as land tenure and access to and control of resources willbe 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 andevaluators should therefore include social heterogeneity in their project analysis and review. Project participantsshould 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 benefitsthough carbon conservation activities such as biodiversity conservation, ecotourism, etc. which may offersome of the highest livelihood benefits rather than afforestation.

There is concern that only a few larger developing countries which have adequate infrastructure andinstitutional arrangements to handle large projects may be benefited and the majority of the poorer developingcountries, where the private sector is unlikely to pay any attention, may not be in a position to take advantageof the CDM in forestry. This can be addressed through using the Prototype Carbon Fund of the World Bankwhich may wish to spread its projects in poorer developing countries or by using the Overseas DevelopmentAssistance (ODA) to help poorer developing countries build the national capacity to develop and promotethe 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 positivelyto forest conservation and also at the same time provide socio-economic and environmental benefits to ruralcommunities.

Environmentally sound and socially equitable climate change mitigation projects in the forestry andland-use sectors will require a strong enabling environment both at national and international levels. We shouldlearn from the mistakes of the past and adopt an integrated approach instead of a sectoral approach by integratingcarbon sequestration projects and activities into existing land-use planning, environment, development, andfinancial policy processes. The stakeholders, who include buyers, sellers, project developers, financialinstitutions and communities, can take steps to deliver environmentally sound and socially beneficial outcomesof climate change mitigation projects under the CDM of the Kyoto Protocol. It is important to adopt a holisticapproach to integrate carbon sequestration objectives into improving livelihoods to achieve the ultimate goalof sustainable development coupled with poverty eradication.

BIBLIOGRAPHY

Aukland, L., Moura-Costa, P., Bass, S., Huq, S., Landell-Mills, N., Tipper, R. & Carr, R. 2002. Layingthe foundations for clean development: preparing the land-use sector. A quick guide to the Clean DevelopmentMechanism. 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 andthe linkage between R&D and climate cooperation. CEPR Discussion Paper No. 3299. London, UnitedKingdom, 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 withMacGEM. ETE Working Paper 2001-18. Leuven, Belgium, Katholiekie Universiteit.

Jakeman, G., Heyhoe, E., Pant, H., Woffenden, K. & Fischer, B.S. 2001. The Kyoto Protocol. Economicimpacts under the terms of the Bonn Agreement. Canberra, Australia, Bureau of Agricultural and ResourceEconomics (ABARE).

Jotzo, F. & Michaelowa, A. 2001. Estimating the CDM market under the Bonn Agreement. HWWA DiscussionPaper 145. Hamburg, Germany, Hamburger Institute of International Economics (HWWA).

Kemfert, C. 2001. Economic impact assessment of the alternate climate policy strategies. Scientific Poolof 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 – Towards the integrated managementof carbon sequestration, the environment and sustainable livelihoods. Gland, Switzerland, IUCN.

40 How forest producers and rural farmers can benefit from the Clean Development Mechanism

6 Policy support for enhancing economicreturns from smallholder treeplantations using carbon credits andother forest valuesPromode Kant*

ABSTRACT

The developing countries have a very large number of small landholdings in which tree planting may fetchbetter economic returns to the owners. The expectation of the smallholder tree planter would be that his incomeshould be high, waiting period reasonable, access to market easy, the risks manageable and that his assetliquidity should not be lower than what it would be under agriculture. Enhancement of income would resultfrom production of more goods and services like carbon sequestration, soil and water conservation and aestheticservices that can start yielding early and increased demands and better prices for these products. Higherdemands for wood products would result from policies disfavoring wood substitution by high energy consumingproducts like cement, steel and aluminum. Policy interventions should result in creation of explicit demandsfor these goods and services, remove bottlenecks in meeting these demands, lead to easier financing for boththe 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 ofillegal felling and encroachments, higher allocations for research in control of forest diseases and fires andlowered premium on insurances. The problem of asset liquidity will have to be tackled by ensuring that thetax burden on transfer of landholding on account of tree wealth on the land does not increase and also byease 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 availabilityis low and consequently the number of small landholdings is very large, many of which are marginal landsof low agricultural productivity. Further, mismanagement of irrigation as well as excessive fertilizer andinsecticide application has laid waste a significant extent of agricultural lands, most of which belong tosmallholders who were not always adept at the use of the technologies. At the same time, with adoption ofnewer technologies by the bigger farmers, overall agricultural production has risen steeply in India in thepast two decades to the extent that enormous food surpluses have built up. With supply exceeding demandthe agriculture product prices are not keeping pace with the general inflation resulting in lowered returns to thesmallholder even as his cost of production continues to rise. Even in the case of lands of higher agricultural productivitymany smallholders are engaged in non-agricultural economic activities for their livelihood and would rather leavetheir 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 toplace their lands under tree cultivation, which does not require constant presence on their part leaving themfree to pursue other livelihood activities. But long gestations and accompanying risks, by way of damageby fire, insect attacks or diseases, policy changes and price fluctuations, render tree growing an economicallyunattractive proposition. The smallholder would be willing to invest in economic activities that increase hisincome, have low gestation, easy market access and manageable risks. Further, his assets should not get lockedfor 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: kantp@icfre.org;promodekant@yahoo.com

41

APPROACH

Trees provide valuable ecological goods and services like carbon sequestration, soil and water conservationand aesthetic services throughout their life time and if there is a market for these goods and services theowner need not wait for the long rotation period before realizing his profits from tree harvest. There couldbe an argument that if indeed these are such valuable goods and services that mankind is in need of, whyhave 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 individuallywith 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 notusing oak forests in their neighbourhood for firewood preferring to walk long distances to obtain it fromfar because they value the water conserved by the dense oak forests in the village streams. The sharp risein populations placing ever increasing demands on the finite natural resources of the earth has changed theenvironment far beyond what its elasticity permits. Had there been a market for these goods and servicesthe sharp increase in demand and limited supplies would have placed a high premium on them resulting ina more efficient demand management. A market is needed but inertia prevents a quick response to the changedsituation 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 policyinterventions should result in creation of explicit demands for these goods and services, remove bottlenecksin meeting these demands, provide a market place for the producers and consumers to meet, and lead to easierfinancing for both the producers and the purchasers to increase their capacities to produce more and to consumemore and thus create more trade opportunities.

Enhancement of income would result from production of more goods and services from the land andenhanced demands and better prices for these goods and services. Lowered wait for economic returns wouldcome from production of goods and services that can start yielding early. Risk lowering could come froma long-term certainty about the investment climate, higher allocations for research in control of forest diseasesand fires and lowered premium on insurances. The problems of asset liquidity will have to be tackled byensuring that the tax burden on transfer of landholding on account of tree wealth on the land does not increaseand also by ease of transfer of liabilities of continuance of ecological goods and services to the purchaserof the land.

The policies should also delineate clearly the sovereign functions of the state from the duties of thegrowers and the purchasers and result in reduction in transaction costs like devising standardized contractsand 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 orderto protect forests. Similar attempts have also been initiated in several other countries. This involved substitutionof 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 itssister bodies in the states on the use of wood in buildings except under certain conditions. This has loweredthe demand resulting in the prices of wood and other forest products remaining static compared to the generalinflationary trends in the economy. The globalization of trade and consequent opening of markets to importwood from other countries in Asia and Africa and also from New Zealand and Canada have increased thesupply of low-priced wood further depressing the demand for indigenous timber and disappointing smallgrowers who expected better prices from their long-term investments. A case in point is the surplus eucalyptproduction in the States of Haryana and Punjab in northern India. Planted in the mid-eighties when the priceswere rising, the maturing of these plantations saw lowered demands on account of substitution and increasedsupplies from other sources. With flattened prices the farmers had the option of waiting out the glut or harvestquickly to limit their losses. Many resorted to the latter and sought support prices through political channelsto transfer the losses to the state. When the move did not succeed on account of the inability of the stateto pay, farm forestry suffered its first serious blow.

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

42 Policy support for enhancing economic returns from smallholder tree plantations using carbon credits and otherforest 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 32.7percent in urban India (MoEF 1999). This, however, is not a simple case of substitution of one energysource by another but has close linkage to women’s health and education since in the villages andsmall towns of India a very large number of girls and young women spend several hours every dayto collect firewood and then use it in smoky inefficient wood stoves endangering their health. A policyof return to firewood would thus be acceptable only if the wood is gasified and supplied to the householdthrough pipes or cylinders. It is technically feasible though economically costly in the current stateof 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 tendedto protect forests in the watersheds of rivers and streams important to them. In recent years the role of forestsin sequestration and storage of carbon has been well documented and forests are now recognized as providinga significant opportunity for mitigation of global warming. The crucial importance of biodiversity for thesurvival and continued prosperity of human beings and the important role that forests play have also beenstudied in detail by scientist and generally accepted by the civil societies across the world. Ecotourism recognizesthe commercial value of aesthetics of forests and has developed them as major revenue earners in many countriesacross the world.

Water conservation

Global fresh water consumption doubles every 20 years. There is thus a huge ever increasing demand forfresh water and for quality drinkable water. Forests in the watersheds greatly influence the local water cycleand improve water quality. Dry season water availability in forest streams and wells in the catchments nearforests is considerably higher in well-forested watersheds. The increase in non-rainy season water availabilityand quality improvement due to afforestation of the watersheds is quantifiable. It should be possible for plantationowners to stake claim to the increase in water availability due to improved forests and negotiate for appropriatewater prices from the down-stream users for the additional water.

Water conservation services generated by the tree plantations are universally acknowledged as importantbut as yet no attempt has been made to establish quantitative links between the tree cover and the amountof water conserved. The increase in non-rainy season availability of water due to tree plantation in the catchmentis measurable in the water flow in streams and depth of water in the wells. The quantum of this increasewould 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 modelto be developed for all lands, species, spacing, age etc. This would require long-term commitment by forestryresearch 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 modelsdeveloped by research institutions for specific locations and species and to ensure that contributions of waterconservation 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 thingwould of course be for the users to pay. This may, however, not work in developing societies like India wherewater supply is seen as a duty of the government and users are willing to pay only a small part of the distributioncosts involved. The subsidies involved in providing this service are enormous and it would be naïve to expecta change in this situation in a hurry. So it would be necessary for the government to pay for the water conservationcaused by the plantations in the beginning and then gradually reduce subsidies to transfer the burden to theuser.

Related to this is the issue of the amount payable for the additional water made available. This wouldbe best calculated on the basis of the current cost of taking water to the site. This would make the amountpayable 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 ofdevelopment of new markets.

Promode Kant 43

Soil conservation

Siltation of ponds and small water bodies is a serious problem for rural communities and governments spendlarge sums every year to desilt these. Regeneration and protection of watershed forests decrease soil erosionsignificantly. This decrease in soil erosion is quantifiable and economic benefits from reduced siltation canbe calculated. Soil conservation services by planting trees offer a parallel to the water conservation. But unlikewater this service should be paid for by the state or the community because quantification of benefits accruedto the individual beneficiaries would be nearly impossible. Measurement of soil losses prevented would requiremodelling on the same lines as that suggested for water conservation above and similar steps would be requiredto 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 underconsideration 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 achievementsof the smallholder would reduce the task of the state to that extent and the state would owe, but not payin cash, the cost that it would have incurred in making the same achievement. What it owes it would pay in termsof services it would provide to the smallholders by way of measurement, verification and certification of carbonsequestered 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 monetaryvalues 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 sequestrationbecomes significant and one could expect first flow of funds as early as the third year. Further, since cleandevelopment mechanism (CDM) is an international commitment governed by a protocol, the domestic policychanges are unlikely to trouble the potential investors.

Additionality

The carbon sequestered would become eligible for carbon credits if the issues of additionality, leakage preventionand biodiversity conservation are adequately addressed. An ongoing or planned tree plantation project or activityby any agency is not an eligible activity under CDM. For a project to qualify for CDM it will have to bea 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 togreater sequestration and/or efficiency. Developing or adopting new institutional arrangements and capacitybuilding activities to overcome institutional barriers for expansion or for bringing in greater efficiency inplanting can introduce the institutional additionality. The last criterion of financial additionality could be achievedby enhanced investments over and above those planned earlier.

The concept of additionality essentially requires that the carbon sequestered should be additional tothe amount that would have been sequestered in the absence of the project. It should pose little problem becauseof the very fact that the smallholders are setting up plantations on their lands currently under other uses withexpectation of earning from carbon credits should itself establish the fact of additionality. However, it wouldstill require certification from a national body like the national CDM board which would in turn base it uponthe 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. Leakageis changes in emissions and removals of greenhouse gases outside the accounting system that result fromactivities 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). Unlessspecific attention is paid to avoid or compensate, all these types of leakage, particularly the first three, canoccur 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 whodepend upon the community or public resources. Leakage prevention may offer serious problems becausesmallholders often depend upon their lands for meeting their fuel needs and if they cannot depend upon themany longer on account of plantation raised on their land they can be expected to meet their demand frompublic resources in the neighbourhood. The likely leakage on account of the planters’ self-consumption activitiesshould, therefore, be accounted for.

44 Policy support for enhancing economic returns from smallholder tree plantations using carbon credits and otherforest values

Measurement and certification

Who should measure the carbon sequestered, the planter or the state? And who should certify it? Is it a sovereignfunction of the state or should it lie in the domain of the owner? This issue has two aspects, the capacityto measure and the international credibility of the process. The methods of measurement of these goods andservices available today are neither credible nor cost effective. Research is required to be undertaken forcreating such credible and cost-effective measurement methods.

Smallholders may not have the technical capacity to measure and, even if it is possible to developsuch a capacity, the costs to individuals would be too high. Also measurements by the seller of the goodswould lack credibility and independent verification would be necessary. The Good Practices Guidelines forthe Land Use, Land-Use Change and Forestry (LULUCF) prepared by the United Nations Framework Conventionfor Climate Change (UNFCCC) is expected to lay down the acceptable practices for verification and the countrieswill 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 likelystrategy among them would be to source carbon credits both through trade as well as direct investments inafforestation and reforestation activities. Their involvement would mean easy access to both capital and thelatest 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 canbe expected to be interested only in large-scale afforestation activities. These utilities would naturally gravitatetowards countries where large landholdings are available for afforestation and it would require effort to makethem interested in smallholders. This could happen if smallholdings could be organized in neighbourhoodclusters, form legal units without transfer of land ownership for the purpose of afforestation and be boundby a single contract with the investing party. There is a law in India that permits cooperatives to be formedby landowners that serves the purpose but has the handicap of creating unnecessary bureaucratic proceduresbecause the secretary of the cooperative has to be a functionary of the government who carries with himpowers that can effectively veto the decision-making powers of the members. This hurdle would have to beaddressed by the government. Also the state would be required to create an authority in an existing organizationlike the Forest Department to make efforts to organize the smallholders interested in afforestation in clustersand facilitate negotiations between them and the investing parties.

Forming organizations to enhance collective bargaining power and reducedundercutting

In new ventures of this kind with a high degree of scientific, technological and business uncertainties, andlack of clarity in policy it is necessary for the small ventures to form networks to enhance their bargainingpower in the emerging markets. Network is a voluntary and cooperative arrangement between individualsor institutions to carry out jointly certain specified activities for the purpose of direct exchange of relevanttechnologies, 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 networksare (a) focus on specific issue, (b) a well-defined manner of cooperation among members, and (c) a distinctmembership. 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 (IUFRO1998).

In the beginning the state will have to take the responsibility of helping create such networks andthis can best be done by equipping one of its existing departments like the Forest Department with the necessaryexpertise and authority.

Biodiversity conservation

The international community and most national governments are deeply concerned about the threat to thebiodiversity of the earth. This concern is now being widely shared by the civil societies in general. It is exhibitedin 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 ensurebiodiversity conservation in their areas of operation. Their impact on biodiversity can be measured only toa limited degree in the current state of knowledge. Since the state would be expected to have kept beforeitself 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 incurredin making the same achievement. What it owes it can pay in terms of services it would provide to the smallholdersby way of measurement, verification and certification of carbon sequestered as discussed in the case of soilconservation above.

Aesthetics and ecotourism

Forests enhance aesthetics and may result in increased tourist traffic flows to existing tourism destinationsand may even create new destinations. Increased earnings could be quantified and shared in an appropriatemanner with those responsible for creating these aesthetic values. As in the case of the soil and biodiversityconservation the state allocates certain funds for promotion of tourism as an economic activity expectingto meet certain physical targets. The smallholders would achieve part of the target and the state would haveto spend an equivalent amount less in tourism promotion. It is this amount that the state would owe to thesmallholder planters. It may also not be paid directly but spent in providing services to the smallholder tofacilitate 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 liquidityis affected. One is that the contracts entered by the planter for providing carbon credits and other ecologicalservices may not be transferable to the purchaser of the assets. The other is that the taxation on assets transferredby sale may be charged on not only the value of the land but also the value of the new assets of the treesand the carbon sequestered and thus the increased taxation at the time of asset transfer may become so highas to inhibit transfer. The first problem could be addressed by designing the contract format for carbon creditsand ecological services to have an inbuilt provision for a composite ownership transfer that would transferthe ownership of land with all the attendant liabilities for servicing the contract conditions. The second issueof taxation on asset transfer has already been tackled in India where on transfer of lands by sale the valueof 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 organicallyover long periods of time through errors and course corrections. This organic growth can also be speededup 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. Productionoptimization would require research to establish ecologically sound models for optimizing the product mixto give greatest economic satisfaction to the planters for all biogeographic zones and plantation sizes. Researchis 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 theseresults.

The smallholders would be able to enter the market with greater confidence if they have access todata on the true economic values of the goods and services that they produce. There is a general lack ofa wide base of knowledge for these products and, therefore, research on economic valuation of all these goodsand services and their various combinations is an urgent requirement. Related to this, and perhaps even moreimportant, is the field of research on how leakage, additionality and rotation effect the monitory benefitsto 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 createan enabling environment to begin with. This calls for a thorough research in this field. Further, in the caseof these goods, it would also be necessary to establish who, and to what extent, are the producers and towhat extent they can demand payment for services rendered by them. Research would also be necessary toestablish 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 otherforest values

Risk coverage

Trees, being long-term crops, are exposed to a variety of risks like thefts, pests, fires, diseases, floods, droughtsand 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 isthus a need to have a comprehensive risk management strategy to minimize the losses and to cover the lossesby appropriate insurance instruments. There is also a need to understand the sharing of responsibility betweenthe state and individuals in reducing the risks. For example, fire in smallholder plantation is most likely tocome from outside sources over which the individual owner may have little control. He can only be expectedto take fire control measures like removal of incendiary material from his plantation and to lay and maintainfirelines around the plantation. Similarly, theft prevention is a law and order problem and should lie withinthe sovereign duties of the state. The state should not only make efforts to reduce the instances of theft butalso pay for insurance cover against theft.

On the other hand, the risks against diseases and pest attacks, droughts, floods and cyclones and dropin demand on account of changes in consumer preferences should lie in the domain of the grower and heshould pay for the insurance cover against these risks.

Investment in science and technology to provide information about potential impacts and make betterevaluation of risks is the responsibility of the state. Such an approach would encourage a larger number ofentrepreneurs 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-terminvestments. But since growing of long-term tree crops is in the interest of the society on account of theenvironmental benefits it should be the state’s endeavour to encourage those who may invest in longer-rotationcrops. This could be tackled by giving subsidies linked to length of the rotation to reflect the environmentalvalue of the enterprise. Subsidies are a standard tool of economic and fiscal policies of the state given specificallyfor promoting a particular course of action or for employing specific factors of production. Differential grantsmay also aim at promoting a particular form of forestry like planting native species, bringing larger areasunder 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 cropswith rotation longer than 25 years the minimum support price will, however, benefit only the harvester ofthe 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 beyondan 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 byexpanding the product base by incorporating in its fold the environmental goods and services like carbonsequestration, fossil fuel replacement, water conservation, soil conservation, biodiversity conservation andenhanced aesthetics. But the market for these new goods and services has to be developed through the toolof 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 servicesgenerated 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 treecrops; and

• enabling networking among smallholders to enhance their collective bargaining powers and reduceundercutting.

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: economicperspectives. 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 ClimateChange (IPCC), pp. 10–19. 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 Forumon 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. 117–119. Netherlands Bureau for EconomicPolicy Analysis, The Hague.

MoEF. 1999. National Forestry Action Programme – 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. 580pp.

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 otherforest values

7 Market mechanisms and assessmentmethods for environmental servicesfrom private forests in AustraliaRodney 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 someregions of Australia there have been considerable land and water degradation and loss of biodiversity andother environmental services. The role of forests and trees in mitigating these environmental impacts hasbeen recognized for some time. Governments have implemented a variety of incentive arrangements to encourageprivate landowners to retain existing forest, replace forests on areas cleared for agriculture and effectivelyintegrate trees with current farming systems. While landowners can make financial profits from the sale ofwood 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 asmarket goods. Allowing forest owners to realize financial returns for the supply of environmental benefitscould result in improved environmental outcomes and a more sustainable mix of land uses. Australianorganizations have been early movers in developing institutional arrangements for trading carbon creditsfrom 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 andrevegetation. We conclude that developing markets for environmental services can provide a basis for harnessingprivate capital for environmental repair and for more efficient investment of government funds to achievebroader environmental outcomes and to efficiently quantify the benefits of investment. Marketing environmentalservices needs to be underpinned by a scientifically credible system for assessment and monitoring of theservices. Experience gained through pilot schemes for trading, monitoring and reporting is important in creatingconfidence 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 agriculturalcrops and livestock and utilization of forests and other natural resources particularly in regional areas. Australiahas experienced considerable environmental degradation of vegetation, land and water resources since thearrival of European settlers just over 200 years ago. These problems are now widely recognized and theircauses are largely understood.

Governments at all levels have invested considerable public funds in attempting to reverse decliningtrends in the condition of natural resources. These programmes have been successful to some extent, particularlyin generating awareness of the scale and extent of environmental problems and in changing attitudes to landand consideration of alternative land management practices. The challenge ahead is to build on this awarenessand implement wider reaching changes in land management that will result in more sustainable use of naturalresources.

* Bureau of Rural Sciences; ** State Forests of NSW; *** Department of Agriculture, Fisheries and Forestry;Canberra, Australia; E-mail: Rodney.Keenan@brs.gov.au

49

Quantifying and marketing environmental services produced from trees and forests could provide abasis for active retention and management of native ecosystems and greater incorporation of trees into landmanagement systems. In this paper we briefly describe the Australian environment and land managementproblems, outline the Australian experience with quantifying and marketing environmental services, focusing oncarbon, 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 19million is concentrated largely in cities in the east and south around the coast. Australia has the lowestprecipitation and run-off of any continent. Climate is highly variable with temperature across a range fromtropical to cool temperate and rainfall ranging from per-humid to arid. Rainfall varies considerably from yearto year as a result of events such as the El-Nino Southern Oscillation (ENSO), a two- to five-year sequencethat causes below-normal rainfall and drought in much of eastern Australia. The geology is generally ancientand heavily weathered; there are uplifted areas forming mountain ranges over 2000 m in altitude and veryproductive 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 evolutionof a distinct flora and fauna. Humans have been in the Australian landscape for millennia. Aborigines havebeen in Australia for at least 40 000 and perhaps over 60 000 years and developed a strong spiritual affinityand attachment to the land. Their extensive use of fire shaped the Australian landscape and the consequencesof 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 upland and often clearing forest and woodland vegetation for grazing and cropping. Clearing of land for agricultureaccelerated in the early part of the 20th century and further increased with the development of heavy machineryand population growth following World War II. Significant areas of forest and woodland are still being clearedfor grazing and cropping, particularly in northern Australia. Sixty-one percent of the land area is under someform 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 andstructure vary considerably with the diversity of climate, geology, landform and disturbance history. Forestcover is dominated by trees from three main genera, Eucalyptus, Acacia and Callitris. Most forests are open(50–70 percent canopy cover) or woodland in structure. The total native forest area (defined as land withactual or potential tree cover greater than 20 percent canopy cover and 2 m in height) is now about 162 millionha (National Forest Inventory 2003). Timber harvesting has occurred since the first days of European settlementand forests provide a diverse range of products. About 13 million ha of native forest are used for wood productionand the remainder for other commercial purposes such as grazing and for conservation and recreation. Onehundred and eight million hectares of native forest (including lower canopy cover woodlands) are under privateownership or leasehold management and wood from private forests makes a significant contribution to woodsupply in a number of regions (Ryan et al. 2002). Plantations have been established since the 1920s and thetotal area of plantations is now 1.5 million ha (Wood et al. 2001) and they supply over 50 percent of thecurrent 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 degradationof land and water systems (Hamblin 2001). About 50 000 km of streams have been degraded by sand andsilt deposition, mainly in southeast Australia. Clearance of native vegetation has resulted in mobilization ofancient salt stores and rising water-tables resulting in salt-affected river and land systems. Impacts of salinitycan take 15 to 150 years to develop depending on soil type and regional hydrology. Up to 20 000 km ofinland waters could be salt-affected by 2050 with high salt concentrations making river water unsuitable fordrinking or irrigation and having significant impacts on stream biota and riparian vegetation. Land can becomesalt-affected through rising water-tables leaving it marginal or unsuitable for agricultural production. About 5.7 millionha in agricultural regions are currently affected or at potential risk from salinity and 2 million ha of native remnantvegetation could be adversely impacted (NLWRA 2001). Salinity also affects infrastructure (e.g. roads, pipes andhouse 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 ofAustralia’s mammals since European settlement. The number of threatened bird, reptile, frog and fish speciesis 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 unsustainableland management practices has created a national requirement to protect existing vegetation and re-establishtree cover in many parts of the landscape. However, there is a growing recognition that trees do not necessarilyhave positive outcomes in every situation and the notion that “any tree, anywhere” is automatically a goodthing is increasing being questioned (Alexandra and Campbell 2002). Increasing the area of commercial timberplantations 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, zoningor 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 theserights are changed through government action there is often a demand for compensation from existing ownersand 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 ruralland management community and maintained or expanded woody vegetation cover to address environmentalproblems. For example, the Landcare Movement (http://www.landcareaustralia.com.au) has promotedparticipation of rural landowners in networks of local groups to exchange information on sustainable landmanagement 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 groupswill 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 extensionprogrammes across a range of disciplines and in supporting community action.

More emphasis recently has been placed on developing ways to mobilize private capital to addressenvironmental problems and alternative approaches that more efficiently allocate government resources toachieve environmental outcomes or to facilitate public-private partnerships that involve a mix of commercialand environmental outcomes.

MARKET-BASED MECHANISMS FOR FOREST ENVIRONMENTAL SERVICES

‘Market-based’ mechanisms are an alternative approach to achieving desired environmental goals at lowercost 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 environmentalservices are government, voluntary private sources, or regulated private investment (Binning et al. 2002).

Quantifying and marketing environmental services can result in improved land management whileallowing for private benefits (this could include the sale of wood, or carbon) to accrue to private investorsat the lowest cost and allow for efficient allocation of government funds to achieve environmental benefitsthat 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 resourcemanagement activities delivering public and private benefits;

• insurance type underwriting arrangements where there is a perceived risk of changing to moreenvironmentally sensitive land management practices that increase costs.

Market-based approaches can also create greater public and land manager awareness of previouslyunpriced 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 differentenvironmental “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 gasemissions. Under Article 3.3 greenhouse gas emissions and removals due to afforestation, reforestation anddeforestation can be used to meet emission reduction targets. Because the total area that might be convertedto plantations is limited, increased carbon storage in forest plantations is generally regarded as a part of transitionalstrategy 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. Ideallyinvestment in carbon credits would be directed at locations where environmental benefits are maximized rather thanin 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 emissionstrading market (Hinchy et al. 1998, Tulpulé et al. 1998, AGO 1999a, b, c, d). The potential for carbon creditsfrom plantations to compete against alternative abatement options will depend on the cost of generatingplantation-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 governmentpolicies, risk factors and transaction costs associated with selling carbon credits.

Australia led the development and implementation of institutional and legal mechanisms aimed atallowing efficient trade in carbon credits. NSW State Forests has been particularly active. After negotiationof the Kyoto Protocol, this state-owned forest management agency decided to become an innovator in thearea of climate change business opportunities. As a learning exercise, a financial trade was undertaken withPacific Power (also a state-owned corporation) purchasing the rights to carbon being sequestered in 1000 haof newly planted forests, initially for one year, and subsequently for ten years. Concurrently, another tradewas set up with Delta Electricity, where the right of State Forests to grow trees on land owned by Deltawas exchanged for the rights to the carbon sequestered during the rotation. These trades were based onindependent verification, including confirmation that the land was non-forested at the time of plantationestablishment 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 Governmentwould be beneficial to the further legal recognition of carbon offsets and future establishment of carbon offsettrading. Accordingly, the NSW Parliament passed the Carbon Rights Legislation Amendment Act in November1998. This Act includes amendments to the Conveyancing Act, the Electricity (Pacific Power) Act, the EnergyServices Corporations Act and the Forestry Act.

Under this arrangement NSW State Forests has designed investment packages combining carbonsequestration and timber production. In February 2000, the Tokyo Electric Power Company signed a contractfor the carbon rights to 40 000 ha of new plantations over the next decade (Brand 1999). Plantation growersin other states, such as North Forest Products in Tasmania, the Western Australia Department of Conservationand Land Management, and Greenfield Resources Options and the Queensland Government have entered intoarrangement for plantation carbon rights with petroleum producers or energy generators. The use of carbon sequestrationcredits 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 Governmentproviding a subsidy of A$600 per hectare to small-scale plantation growers in return for the rights to carbonsequestered in the plantations. This has been an effective way for the government to foster plantation developmentfor regional development or environmental benefits and reduce the transaction costs associated with carbonmeasurement in small-scale plantings.

In 1999 the Sydney Futures Exchange developed a new carbon sequestration product in new forestsestablished since 1990. The SFE decided not to proceed with the development of this product for commercialreasons 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 KyotoProtocol. Trading carbon sequestration credits (CSCs) could help companies manage future permit price uncertaintiesby enabling them to trade future credits at a price agreed at the time of trade. Suppliers of carbon to the marketwere to use an agreed standard and adhere to the conditions of a carbon deed. This deed included requirementsfor 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 purchasesor agreements with the owners of high quality habitats. For example, a private forest reserve programmeestablished under the Tasmanian Regional Forest Agreement has a target of 100 000 ha of private forestsreserved through the programme. The programme is spending $A30 million to place voluntary covenants ormanagement agreements over properties containing priority forest types required for protection. An alternativeapproach is being adopted in the State of Victoria. Called “Bushtender”, landholders are invited to put forwardtenders for the provision of alternative management approaches that will provide improved biodiversityconservation, for example, fencing and habitat protection rehabilitation activities, in native vegetation at agiven price. Potential benefits are assessed using the “biodiversity benefits index” described below. Successfultenderers are chosen based on an assessment of benefits and price and they enter into a management agreementwith 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 incompletelyunderstood. Trading arrangements to mitigate these problems have therefore been limited. In some catchments (suchas the Hunter River, north of Sydney) salinity can be treated as a point source and emission “cap-and-trade” arrangementshave been implemented to reduce salinity inputs to streams. Across larger catchments, such as the Murray Darlinglocations 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 vegetationby 2050 to halt the spread of dryland salinity and keep stream salinity to levels where water is suitable for agriculturalirrigation 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 investedin commercial projects without violating competitive neutrality principles. By purchasing the salinity mitigationbenefits of targeted plantations, public funds can be employed to provide a totally new income stream andthus increase the internal rates of return for low rainfall forestry without directly subsidizing the privateinvestment in wood production.

Using existing and developing salinity hazard mapping, it is possible to quantify to a known levelof certainty the impact of plantations on mean annual flow and salt load to deliver a flow weighted salinityeffect 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).

Figure 1. A conceptual model to illustrate how improvements incommercial forestry and environmental credits can togethercreate profitable plantation investments in lower-rainfallenvironments. Relationships and notional values of IRR areindicative to illustrate trends and aid discussion (C. Harwood,CSIRO, pers. comm. 2002)

environmental credits

value-added processing

optimised harvesting and transport systems

optimised silviculture

genetically improved planting stock

standard practice

increasing productivity

Internal rateof return (%)

10

8

6

Annual rainfall (mm)500 600 700

Acceptablereturn on investment

More profitable investment

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 trialsalinity control credits in the development of a response to dryland salinity in the Macquarie catchment ofthe Murray-Darling Basin. In this as in many other salt affected catchments, the salinity impact of land clearingoccurs downstream of the clearing activity. There is therefore little incentive for the landowners responsiblefor the clearing to revegetate. The opportunity costs in lost production as well as the capital costs associatedwith 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 variouslandholders to plant and manage native forest on their land. The landholders are paid an annual annuity whichis characterized as a “salinity control credit” based on the transpiration level of the planted forest. Thistranspiration 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 adverselyaffected 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 inthe future to reconcile this right with the need to maintain transpiration for salinity control. A pooled approachas 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 frameworkto underpin sustainable land-use change for commercial and environmental outcomes. This toolbox willoptimize commercial outcomes in low to medium (500–800 mm) rainfall forestry by assisting speciesselection, location in the landscape, plantation management and product decisions and assessment ofenvironmental values.

2. The NSW Government Environmental Services Scheme. Under this scheme, 25 landholders have beenselected to take part. Staffs from the Department of Infrastructure, Planning and Natural Resources, StateForests and NSW Agriculture are working closely with these landholders to implement land-use changesaimed at integrating the production of environmental services into more traditional rural production. Theland-use changes on the properties involved are funded through an investment of $2 million from theSalinity Strategy’s Environmental Services Investment Fund. The aim of the Environmental Services Schemeis to look at some of the practical issues that will arise in the development of a market to support theenvironmental services produced on-farm. These include the costs associated with including environmentalservices within rural production, how to define and create ownership of the services produced, and thetype of financial, contractual and incentive arrangements necessary. The scheme will allow the governmentto work with landholders to identify the practical requirements for environmental service markets andincentive 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 Territorygovernments will jointly fund $5 million for 10 natural resource management projects under the firstround of the National Market Based Instruments (MBI) Pilots Programme. The projects will investigateways to use innovative financial arrangements to encourage better land and water management and toreduce salinity in irrigation-based agriculture. Pilots are expected to begin operating in June 2003 andbe completed in mid-2005. For example, one pilot project is a scheme where irrigators can choose themost cost-effective way to manage salinity levels in a river catchment. To ensure salinity levels do notincrease, a cap or target is set for the whole irrigation area. The cap or target can be achieved by undertakingactivities to reduce salinity levels or by purchasing credits from other landholders who can achieve thesame results more cheaply. The Goulburn-Broken Catchment Management Authority in Victoria isimplementing a project to extend the auction approach successfully trialled in the Bushtender programmeto include salinity, water quality, water quantity and biodiversity. It will consider how intervention inthe landscape can cause multiple outcomes. Planting trees, for example, may reduce accessions togroundwater-tables (the cause of dryland salinity) and buffer nutrients from surface water, but trees alsoreduce the flow of surface water, which can adversely affect water quality in streams. This pilot alsointends 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 importantin generating potentially tradable environmental services. Where possible, the impact of these changes wouldideally be measured directly, e.g. the creation of an increased carbon sink through tree planting. In manyinstances, 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 individualinputs as in reducing recharge for salinity management, or where the impacts are not evident until long afterthe original action is taken as in the case of improving habitat for biodiversity. In these cases it is necessaryto 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 catchmentor 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 differentinvestment alternatives.

Because environmental services are often not “delivered” for some time into the future, systems arerequired for prediction of potential outcomes (these are usually computer models or tables of values generatedfrom 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 areasonably sound scientific base for quantifying carbon stocks in forest types and there is a strong relationshipbetween traditional forest inventory variables and carbon stock. Guidelines for national accounting forgreenhouse 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 implementationof the Kyoto Protocol (including CDM projects) is currently in development. Forest inventory has generallyfocused on obtaining estimates of timber volume in the bole of the tree. Carbon generally makes up about50 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 alogistic (sigmoidal) curve, with initial emissions from soils following establishment, slow initial growth, morerapid accumulation after the site is occupied followed by a decline as the trees mature. Changes in carbonstocks in vegetation and soil removed or affected by plantation establishment need to be accounted. Reductionin 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 forpredicting likely changes in both biomass and soil carbon associated with a number of land-use changes atthe property scale. The principal focus of the model is on changes from herbaceous (cropping, pasture) towoody 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 carbonper hectare, 10 years after the land-use change. Many land-use changes take a considerably longer time toreach a new quasi-equilibrium carbon storage level. A graph of predicted carbon changes over 40 years isalso provided to indicate the longer-term benefits.

Few, if any, countries currently perform all measurements required for carbon accounting in forestsroutinely, particularly soil inventories (Watson et al. 2000). Most countries are likely to adopt a combinationof modelling and direct measurement as part of their accounting system. Besides plantation projects developedunder joint implementation or the CDM, other issues need to be addressed. For example, a project wouldneed to demonstrate that increased carbon storage resulting from the project is additional to that which wouldoccur 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 bythe Department of Natural Resources and Environment (Victoria) is one approach to quantifying the biodiversityvalue of a site and how a site value could vary from a change in land management. The methodology hasbeen further developed for application to revegetation (Oliver and Parkes 2003). The biodiversity benefitsindex is calculated on the basis of three surrogate measures:

• Vegetation condition – 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 benchmarkrepresenting the average characteristics of the mature native vegetation type/s predicted to have occupiedthe site prior to agricultural development. It describes the degree to which critical habitat componentsand other resources needed by indigenous plants and animals are present at the site. Predicted changesto vegetation condition due to land-use change are also estimated and included in the index.

• Conservation significance – this is important for estimating the biodiversity value of a site in a regionalcontext. Some sites may represent elements of biodiversity that are common in the landscape, othersmay represent elements that are now rare. Conservation significance recognises the amount of eachelement now in the landscape compared with a time prior to agricultural development, as well as thelikelihood of the element persisting. Predicted changes to conservation significance are also includedin the index.

• Landscape context – this is the third surrogate and recognises that the biodiversity value of an areaof vegetation will vary depending on where the site is located in the wider landscape. Small sitessurrounded by a “sea” of agriculture or distant from natural refuge areas will have poor landscapecontext compared with sites surrounded by a mixture of agriculture and natural systems or close tolarge 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 followingland-use change. Application of the index to the ESS sites will require that vegetation benchmarks are developedfor each relevant vegetation type. This will be carried out using a rapid expert panel based system, pendingmore comprehensive data becoming available.

Salinity

The contribution of a particular property and the effects of land-use change on stream salinity is a complexinteraction of local and regional hydrological processes. In NSW, the approach used to estimate salinitymitigation 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. Meanannual streamflow and salt loads, calculated for the reference period 1975 to 1995, are distributed acrosstheir contributing area based on the major factors affecting hydrological behaviour such as land use, topographicposition, salt storage and discharge potential (the last two parameters defining salt hazard). Every uniquecombination of land use, topographic index and salinity hazard is defined in terms of its contribution to totalwater and salt yields. With these values known, it is then possible to predict the consequence of a land useanywhere in the catchment on flow and salt yield. The salinity benefits index model is used in conjunctionwith a spatially based platform called the Land-Use Options Simulator (LUOS). The Options Simulator isa 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 fullyscalable and capable of switching scale or area of interest, so individual properties or whole catchments canbe assessed. It has been developed to require no previous GIS experience, and to minimize training timefor operators.

The salinity benefits model estimates the impact of land-use changes at a site on the average annualstreamflow and salt load exported from the catchment in which the site is located. By calculating the ratioof salt load to streamflow for existing conditions and for post-land-use change conditions, the model calculatesa 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 betweencatchments (which may have significantly different stream salinities), the change is expressed as a percentageof 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 salinitygives a positive (beneficial) value, and an increase gives a negative (detrimental) value. The results can befurther 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 thesize of the catchment at the reference point. A given land-use change at a site will have a greater percentageimpact on the streamflows and salt load exports from a small catchment than from a large one. Amongstother things, this means that raw SBI values calculated at different reference points are not comparable (theymay be reasonably comparable where catchments at each reference point are of about the same areas, butnot where the catchment areas differ markedly). In order to allow for comparisons to be made between siteswhich are located within the same valley, or between sites located in different valleys (state scale), the rawSBI 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 themagnitude and the sign of the index can change.

DISCUSSION

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

Transaction costs

Transaction costs are part of any business arrangement and are incurred in matching buyers to sellers, negotiatingcosts and finalizing contracts. They include advertising, tender assessment and the costs of estimating, verifyingand certifying the service delivered. Depending on the nature of the market, transaction costs can be borneby 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 fortrading environmental credits, the volume of trading and the degree of certainty required by the purchaserof the service or benefit. In the case of the carbon traded in the CDM, other costs, such as the adaptationlevy 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. Institutionalrisks include changes in government policy, or shifts in the price of services. For example, forest growerswho sell carbon credits in one market, may have to purchase them in another when they intend to harvestfor timber. There are also risks related to shifts in government policies such as pricing and allocation policiesfor 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. Riskcan result from asymmetric information. For example, sellers of organically grown produce may not finda 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 environmentalpolicy. Lack of accountability for how money has been spent and what has been achieved on the ground orin environmental outcomes has resulted in a lack of confidence in environmental programmes. This may explainthe interest in volunteer programmes, where volunteers can at least monitor their efforts and those of othercommunity participants.

The capacity of landowners to deliver the intended environmental services from existing forest orrevegetation will vary. When the processes are well described, management requirements are well-understoodand the manager has appropriate experience, then the risk of non-delivery may be low. Carbon stocks andbiodiversity habitat can be monitored through a visual inspection to ensure the trees are still in place andwell-managed, with less frequent measurement to compare with original projections. For services such asdryland salinity mitigation, the processes are not well-understood and the results may not become apparentfor a considerable time after the investment is made. In some cases, unless large-scale land-use change isachieved, the impact may not be detectable. It may be that government investors in these services have toaccept some uncertainty in achieving a single outcome. This uncertainty might be balanced by investing inschemes with multiple outcomes.

The level of risk might be reflected in the payment arrangement, with payments made as the serviceis delivered over time. This will depend on the requirements of the landowner and the initial cost of settingup to deliver the service. In some cases, such as revegetation, upfront costs can be substantial and unlessfinance is made available to cover these they can be a significant impediment to adopting alternative landuses.

Risks can be covered in a sales contract, but this may add to transaction costs. For instance, a buyermay want compensation for the lack of delivery of a service if a fire or other natural event occurs or if regulationschange. Financial risks can be hedged if other commercial products such as wood are produced. Risks couldalso be managed through the formation of “pool managers” who keep a certain proportion of the service “inreserve” 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 andenvironmental implications of large-scale revegetation programmes such as plantation-based carbon-offsetsprojects (Bass et al. 2000). These include impeding or removing access to land for traditional uses and sourcesof livelihood for rural communities, and the inability of small community-based projects to compete in themarket with large-scale reforestation activities. In Australia, communities are reacting to the rapid expansionof plantations onto agricultural land, and perceived impacts on community structure and employment (Williamset al. 2003). Individual countries are best placed to assess whether prospective projects for purchasingenvironmental 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-basedprojects

Concerns have been raised about the potential impacts of afforestation on water yield and quality andbiodiversity. For example, higher water utilization by trees may have unintended consequences such as reductionin downstream water flows and decreased aquifer recharge (MDBC 2003, Vertessy 2003). There is considerabledebate in Australia about how public policy can achieve more sustainable land management through forestationof the lower rainfall salinized catchments to reduce salt accession into rivers and the containment of futureplantation development in the higher rainfall areas to maximize high quality dilution flows to salinizedcatchments. This will require careful planning of plantation location based on a sound understanding of landscapetopography, soils and hydrology.

Biodiversity conservation values of commercial plantation projects can be moderated by using nativespecies 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 ageclasses 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 achieveenvironmental policy objectives depending on the value of the resource and the potential number of suppliersof the environmental good or service. Market-based approaches to funding environmental services from forestscan 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 ofthe service and transaction costs.

1. Developing markets for environmental services can provide a basis for more efficient investment ofgovernment funds to achieve broader environmental outcomes and to efficiently quantify the benefitsof investment.

2. Markets for environmental services can provide a basis for private investment where private benefits canbe 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 rightsfor landowners.

4. Marketing environmental services needs to be underpinned by a scientifically credible system for assessmentand monitoring of the service.

5. This system should be relatively low cost and provide a standard approach for quantifying services acrossdifferent types of environments and management jurisdictions.

6. Policy design needs to be system wide and not ad hoc. It needs market mechanisms that reveal informationand 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 appropriatepolitical 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

Alexandra, J. & Campbell, A. 2002. Plantations and sustainability science – the environmental and politicalsettings. Australian Forestry 66(1): 12–19.

AGO. 1999a. National emissions trading: establishing the boundaries. Discussion paper No. 1. Canberra,Australian Greenhouse Office. 48 pp.

AGO. 1999b, National emissions trading: issuing the permits. Discussion paper No. 2. Canberra, Commonwealthof Australia. 68 pp.

AGO. 1999c, National emissions trading: crediting the carbon. Discussion paper No. 3. Canberra,Commonwealth of Australia. 60 pp.

AGO. 1999d, National emissions trading: designing the market. Discussion paper No. 4. Canberra,Commonwealth of Australia. 56 pp.

Aretino, B., Holland, P., Matysek, A. & Peterson, D. 2001. Cost sharing for biodiversity conservation.Staff Research Paper. Melbourne, Australia, Productivity Commission. 52 pp.

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Bardsley, P., Chaudhri, V. & Stoneham, G. 2002. New directions in environmental policy. Paper presentedto AARES Annual Symposium, Canberra. (available at http://www.agric.uwa.edu.au/ARE/AARES/)

Bass, S., Dubois, O., Moura-Costa, P., Pinard, M., Tipper, R. & Wilson, C. 2000. Rural livelihoods andcarbon management: an issue paper. UK, DFID, Forestry Research Programme Project R7374. 67 pp.

Binning, C., Baker, B., Meharg, S., Cork, S. & Kearns, A. 2002. Making farm forestry pay—markets forecosystem services. Publication 02/005. Canberra, Rural Industries Research and Development Corporation.64 pp.

Brand, D. 2000. The combined challenge of forestry and terrestrial carbon management. In B. Krishnapillay,et al., eds. Forests and society: the role of research: XXI IUFRO World Congress, Vol. 1: 558–564. Vienna,IUFRO.

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Dent, D.L., Lawrie, K.C. & Munday, T.J. 1999. Running down the salt in Australia. 1. A multi-disciplinaryapproach. The Land (Ghent) 3(3):179–198.

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 salinitymodule. NSW Department of Infrastructure, Planning and Natural Resources, internal report. 22 pp.

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Keenan, R.J., Lamb, D., Parrotta, J. & Kikkawa, J. 1999. Ecosystem management in tropical timberplantations: satisfying economic, conservation and social objectives. Journal of Sustainable Forestry 9:117–134.

Lindenmayer, D.B., Hobbs, R.J., et al. 2002. Plantation forests and biodiversity conservation. AustralianForestry 66: 62-66.

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land-use changes in inland areas of NSW. Version 2.0– background, user notes, assumptions and preliminarymodel testing. State Forests of NSW website. (in press)

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

8 Carbon budgets of tropical forestecosystems in Southeast Asia:implications for climate changeRodel D. Lasco* and Florencia B. Pulhin**

ABSTRACT

Terrestrial ecosystems have an important role to play in the global carbon (C) cycle. Tropical forests in SoutheastAsia are constantly changing as a result of harvesting and conversion to other land covers. In the last fewyears, 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 resultin at least a 50 percent decline in C density of the forest. On the other hand, complete deforestation (conversionto grassland and annual crops) leads to C densities of generally less than 40 Mg ha-1. Conversion to treeplantations and other woody perennial crops also reduces C density to less than 50 percent of the original C inthe 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 estimatedthat about 60 Pg1 C is exchanged between terrestrial ecosystems and the atmosphere every year, with a netterrestrial uptake of 0.7 ± 1.0 Pg C (Schimell et al. 1995). The world’s tropical forests, which cover 17.6M 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 1.6Pg 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 throughconservation 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 isalso estimated that forestation, agroforestry, regeneration and avoided deforestation activities have the potentialto sequester 7.50, 2.03, 3.8–7.7, and 3.3–5.8 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 changeand management activities on the C budgets of forest ecosystems in the tropics. For example, one of themajor research needs identified in the Second Assessment Report of the IPCC is how different silviculturaland other management practices would affect the C dynamics in forests (Brown et al. 1996). In the last fewyears, research on C stocks and dynamics in forest ecosystems in Southeast Asia has intensified and newdata have been generated (Lasco and Pulhin 2000, Murdiyarso 2000, Lasco et al. 2001, Lasco 2002). Thispaper attempts to review the available information on C budgets of forest ecosystems in Southeast Asia inresponse 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: rlasco@laguna.net

**Forestry Development Center, College of Forestry and Natural Resources, University of the Philippines, College,4031 Laguna, Philippines; E-mail: enfor@laguna.net

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 SoutheastAsia was no exception. In fact, tropical deforestation is the dominant change in land use in the tropics (Lugoand Brown 1992). Deforestation rates in tropical Asia were estimated to be 2.0 M ha in 1980 and 3.9M ha in 1981–1990 (Brown 1993). In Southeast Asia, the 1990 annual deforestation rate was about 2.6M ha y-1 (Table 1).

Table 1. 1990 annual deforestation estimates for countries inSoutheast Asia (from Trexler and Haugen 1994)

Country Deforestation (ha)Indonesia 800 000Laos 200 000Malaysia 275 000Myanmar 600 000Philippines 200 000Thailand 300 000Viet Nam 200 000Total 2 575 000

There exist varying estimates of the rates of deforestation for each country, partly because of differenttime frames and sources of data. This is illustrated in the case of the Philippines where deforestation rateshave fluctuated in the last 100 years with an average of about 150 000 ha y-1 (Table 2). The forest area inThailand declined from 28.03 M ha to 13.35 M ha between 1961 and 1993 (Boonpragob 1998), an averageloss 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 1992–93 (ALGAS 1998 as cited by Macandog 2000). Theinitial National Communication of Indonesia estimated the rate of forest conversion at about800 000 y-1 (State Ministry for Environment 1999); other estimates place it at 1 M ha in the early 1990sand 721 000 ha in 1994 (Macandog 2000).

Table 2. Deforestation rates in the Philippines in the 20th centuryPeriod Years Forest lost (ha) Rate (ha y-1)1900–1934 35 4 000 000 114 2861935–1988 54 9 700 000 179 6301989–1996 8 1 200 000 150 000Mean 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 responsiblefor the formation of secondary forests (Kummer 1992). Since 1900, the Philippines has lost about 15 M haof tropical forests. It can be presumed that these were first converted to secondary forests before being totallydenuded.

Secondary forests could be converted to the following land uses: upland farms, pasture areas, brushlandsand tree plantations. Conversion to upland farms is typically done by farmers who follow at the heels ofloggers. Logged-over areas are easy to clear because the largest trees have been removed and logging roadsprovide easy access. Upland farms may revert back to secondary forests through fallow. Forest fallows aremore often associated with indigenous peoples. Several indigenous fallow systems have been documentedin the Philippines (Hanunos of Mindoro Tagbanua of Palawan, etc.). However, upland farms of migrant farmershardly, 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 ismore likely that pasture areas were former upland farms. When abandoned, pasture areas remain grasslandsbecause of very poor soils and regular burning. If fire is controlled, studies and observations have shownthat 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 grasslandareas. However, if disturbance ceases, they revert back to secondary forests. Finally, secondary forests couldalso be converted to tree plantations. This is not allowed anymore at present, but could have been significantin 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 pasturesand 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,41–54 Pg C and 43 Pg C are found in vegetation and soils respectively (Dixon et al. 1994). Annual C fluxfrom 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 besequestered in above-ground biomass of the technically suitable present forest lands in Asia is estimated tobe about 15 Pg or an average of 88 Mg C ha-1 (Iverson et al. 1993). Another study showed that SoutheastAsian countries have the potential to sequester 9.0 Pg to 21.0 Pg of C from 1995 to 2050 in 66 M ha throughforest regeneration, farm forestry and plantation development (Table 3).

Table 3. Potential C sequestration of regeneration, farm forestry and plantation development activities in SoutheastAsia (from Trexler and Haugen 1994)

CountryRegeneration Farm forestry Plantation Total C stored (Tg C)

(000’ha) (000’ha) (000’ha) (000’ha) Low HighIndonesia 20 000 5 000 10 000 35 000 5 400 14 000Laos 10 000 1 000 2 000 13 000 530 1 000Malaysia 6 000 500 400 6 900 1 000 1 900Myanmar 13 000 1 000 500 14 500 390 950Philippines 5 000 3 000 1 000 9 000 840 1 600Thailand 4 000 4 000 1 000 9 000 170 630Viet Nam 8 000 0 4 000 12 000 620 1 300Total 66 000 14 500 18 900 99 400 8 950 21 380

CARBON BUDGETS FOLLOWING LOGGING OPERATIONS IN NATURALFORESTS

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 was144 Mg ha-1 of actual biomass, and 148 Mg ha-1 in soils (up to 100 cm) which corresponds to total estimatesof 42 and 43 Pg respectively, for the whole continent. It was noted that C densities and pools in vegetationand soil varied widely by ecofloristic zone and country. Actual biomass C densities range from less than 50to more than 360 Mg C ha-1 with most forests having 100–200 Mg C ha-1. The higher biomass is in Borneoand Irian Jaya (Indonesia) while there was lower biomass C in forests in India and Thailand. C densitiesin 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 landsin 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, Palmet al. (1986), as reported by Houghton (1991), found out that forests in tropical Asia have C density of 40–250 Mg ha-1 and 50–120 Mg ha-1 in vegetation and soils respectively (Table 4). Brown et al. (1991) reportedthat Southeast Asian forests have a biomass range of 50–430 Mg ha-1 (25–215 Mg C ha-1) and >350–400Mg ha-1 (175–200 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 byHoughton (1991))

Carbon pool Tropical moist forest Tropical seasonal forest Tropical dry forestVegetation (Mg ha-1)High biomass 250 150 60Low biomas 135 90 40Soils (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 largelybased on the use of allometric equations to estimate tree biomass (e.g. equations from Brown (1997)). Indonesianforests 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

Forest typeBiomass density C density

Source(Mg ha-1) (Mg C ha-1)

Primary humid evergreen 600–650 300–325 Murdiyarso and Wasrin 1995Montane 450–700 225–350 Murdiyarso and Wasrin 1995Lower montane 505 253 Murdiyarso and Wasrin 1995Lowland dipterocarp 322 161 Murdiyarso and Wasrin 1995Swamp forest 500 250 Murdiyarso and Wasrin 1995Mangrove 130 65 Murdiyarso and Wasrin 1995Natural forest 254 Noordwijk et al. 2000Undisturbed forest 390 Hairiah and Sitompul 2000

On the other hand, recent studies report that Philippine natural forests contain 86–201 Mg C ha-1 (Table6). The IPCC Revised Guidelines (IPCC 1996) estimates that old-growth forests in the Philippines contain370–520 Mg ha-1 of above-ground biomass equivalent to about 185–260 Mg C ha-1 at 50 percent C content.

Table 6. Biomass and C density of natural forests in the Philippines

Forest typeBiomass density C density

Source(Mg ha-1) (Mg C ha-1)

Old growth forests 446 201 Lasco et al. 1999Mossy forest 419 189 Lasco et al. 2000Mangrove forest 409 184 Lasco et al. 2000Pine 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 (Table7). A similar data set for Thailand is presented in Table 8. These C data are used in the national GHG inventoryreports 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 55Above-ground biomass (Mg ha-1) 337 266 126 160 200C 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 dataTropical evergreen forest (EGF) 358 179 Ogawa et al. 1965Mixed deciduous forest (MDF) 311 156 Ogawa et al. 1965Dry dipterocarp forest (DDF) 126 63 Ogawa et al. 1965Pine forest (PF) 162 81 Sabhasri 1978Mangrove 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 maturelowland forests have above-ground biomass and root density of 431 and 43 Mg ha-1 respectively, equivalentto 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)DipterocarpSuperior 0.831 260 100 360 299Good 1.116 220 100 320 357Moderate 1.466 190 100 190 425HillPartly exploited 1.268 160 100 260 330Disturbed 1.714 130 100 230 390Poor edaphic and upper hill 0.701 130 90 220 154Swamp 0.815 100 780 880 717Mangrove 0.150 130 320 450 68Total 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 tropicalhardwoods. Logging activities are therefore dominant in many countries. As discussed earlier, logging operationis primarily responsible for the conversion of primary forests to secondary forests. Destructive logging andsubsequent agricultural conversion have vastly depleted natural forests and left millions of hectares of degradedlands in each country. Some countries, notably Thailand and the Philippines, have banned logging operationsin primary forests.

In general, logging leads to a reduction of C stocks in the forest as biomass is reduced by the extractionof wood. C is released upon the decomposition or burning of slash and litter. However, regenerating treessequester C back to biomass over time. In general, the biomass and C density of tropical forests in Asia declineby 22–67 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 afterlogging (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 declineof C density after logging. However, measurements have been taken in logged-over forests which could becompared to primary forests in those countries. In Indonesia, estimates of C density of logged-over forestsrange from 38 to 75 percent of the original forest cover (Table 11).

Table 11. Carbon density after logging of Indonesian forests

Source AGB C density (Mg ha-1) % of

Undisturbed Logged original CHairiah and Sitompul 2000 390 148.2 38Noorwijk et al. 2000 254 150 59Murdiyarso and Wasrin 1995 325 245 75

As can be gleaned from above, logging is typically a very destructive practice. In Malaysia, extracting8–15 trees (80 m3; ca. 22 Mg C ha-1) damaged as many as 50 percent of the remaining trees (Putz and Pinard1993). Out of the initial 348 Mg C ha-1, 95 Mg C ha-1 are transformed to necromass, which eventually releasesits C via decomposition. In the Philippines, for every tree cut greater than 75 cm dbh, 1.5 and 2.6 trees aredamaged 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 directionalfelling 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 conductedin Sabah, Malaysia, as reported by Pinard and Putz (1997, 1996). The rest of this section is based on theirreports.

The biomass and C density are very similar before logging operations (Table 12). About one year afterlogging, 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 conventionallogging. In terms of logging damage, in RIL about 27 percent of trees >10 cm dbh were damaged and about19 percent were dead within the first year after logging. In contrast, in conventional logging, about 54 percentwere damaged and about 46 percent died. Expectedly, there was 86 Mg C ha-1 less necromass in RIL comparedto 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 2–6 years because of high mortalityrates and decay of logging debris. Following stabilization of mortality rates, biomass accumulation will begreater in RIL areas. Indeed, they will become net sinks in fewer years than conventional logging. Modellingshowed 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 loggingTrees > 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 monthsafter logging; for coarse roots, three months after logging. Means (Mg ha-1) presented with SD and Nnoted parenthetically. For trees, vines, and butt root mass, SD describes variation among logging unitsand does not incorporate errors in biomass equations

Conventional logging RILTrees > 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 unitsand does not incorporate error in biomass equations

Conventional logging units RIL units50% 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 thatdirectly track the change in C budget through the deforestation process. However, there are studies that havequantified 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 cultivationareas is less than 40 Mg C ha-1 (Table 15). In the Philippines, grassland and crop lands contain 3.1 to 13.1Mg 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 availablefor Southeast Asia. In general, many studies have shown that continuously cultivated systems have lowerSOC than adjacent forests (Lugo and Brown 1993). However, pasture areas can accumulate as much C inthe 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 perennialcrops. This land-use change is expected to reduce C stocks. There are no studies that directly measure thechange of C stocks as a result of this change through time. However, by comparing the C stocks of the resultingland use with the C stocks of a natural forest, we can have an idea of the magnitude of change. This kindof 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 7–51 percent lowerthan natural forests (Table 16). Similarly, another study in Indonesia showed that agroforestry and plantationfarms had C stocks that are 4–66 percent lower than that of an undisturbed forest (Table 17). These dataalso show how C stocks vary with the age of rubber plantation, with older rubber agroforests having almostseven 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

Land coverAGB carbon density

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

CategoryCarbon density % of

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 7Natural 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 6Natural forest 325

Table 17. C stocks of agroforestry and plantation farms in Jambi and Lampung, Indonesia (C density data fromSitompul and Hairiah 2000)

Land use C density (Mg C ha-1) % of undisturbed ForestUndisturbed rain forest 390Opening for agriculture:

With burning 257.4 66Without burning 81.9 21Mature agroforest (rubber jungle) 104 275-y-old rubber 15.6 4Oil palm plantation 62.4 16Coffee mixed garden 18 5

In a lowland peneplein in Indonesia, rubber and oil palm plantations were estimated to contain 36–46 percent of the C of the natural forest (Table 18) while various land-cover types in Indonesia were estimatedto contain 14–63 percent of the C density of a natural forest (Table 19). These land-cover types are brieflydescribed 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)

Land-use systemMaximum age Time averaged C stock % of

(y) (Mg ha-1) natural forestNatural forest 120 254Rubber agroforests 40 116 46Rubber agroforests with 30 103 41selected planting materialRubber monoculture 25 97 38Oil 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

Land coverC density % of

Source of data(Mg C ha-1) natural forest*

Rubber jungle 35.5 14 Praetyo et al. 2000Home gardens 70–80 20** Sitompul and Hairiah 2000Oil palm (30 y) 40.3 16 Tjitrosemito and Mawardi 2000Cinnamon 77 30 Gintings 2000

87 34 Gintings 2000A. mangium 159 63 Siregar et al. 1998Natural 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 3–45 percent of the C ofa natural dipterocarp forest (Table 20). On the other hand, a mature coconut plantation in Leyte Provincecontains 86 Mg C ha-1 in above-ground biomass (Lasco et al. 1999), which is about 43 percent of a naturalforest in the same area (259 Mg C ha-1; Lasco et al. 2001).

Table 20. C density of tree plantations in Mindanao, PhilippinesSpecies Age AGB C density % of

(y) Mg ha-1 Mg C ha-1 dipterocarp forestAlbizia falcataria 1 4 69.5 31.28 26A. falcataria 2 5 75.6 34.02 28A. falcataria 3 7 96.4 43.38 36

7 8.1 3.65 3A. falcataria 4 9 108.2 48.69 41

9 28.7 12.92 11Gmelina arborea 1 7 85.7 38.57 32G. arborea 2 9 87.4 39.33 33G. arborea 3 9 120.7 54.32 45Dipterocarp* 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 agroforestryexist 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 naturalforests in the country. A coconut-based multistorey system in Mt. Makiling has a C density in AGB of 39Mg 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 Suson1999)

Years Mean dry wt. ofC in Biomass

Annual rate of Cunder above-ground biomass % leaves accumulationfallow (tonnes ha-1)

(tonnes ha-1)(tonnes ha-1y-1)

1 4.3 d 36.5 2.2 2.22 16.1 cd 13.8 8.1 5.93 17.6 cd 8.9 8.8 0.74 36.4 bc 7.4 18.2 9.45 53.8 ab 5.3 26.9 8.76 63.6 a 6.1 31.8 4.9

Mean 32 16 5.3Means 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 convertingnatural 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 varieddepending 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 Mgha-1). In north Lampung, the biomass declined from 161 Mg ha-1 to 46 Mg ha-1 because of burning (Hairaihet 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. Noordwijket al. (2000) reported C accumulation rate of 2.5 Mg C ha-1y-1 in natural fallows (secondary forests), agroforestsand 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 firstIndonesian national communication to the UN Framework Convention on Climate Change (UNFCCC). It rangesfrom 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)

Land-use type Species/forest typeAnnual growth rate Annual C accumulation

(Mg ha-1) (Mg C ha-1y-1)Forest plantation Tectona grandis 3.90 1.95(Java) Pinus merkusii 6.93 3.47

Swietenia spp. 7.97 3.99Paraserianthes falcataria 19.07 9.54Rimba 4.3 2.15

Timber estate Acacia spp. 25.00 12.50(outside Java) Paraserianthes falcataria 19.07 9.54

Dipterocarp 5.78 2.89Reforestation Pinus merkusii 6.93 3.47

Tectona grandis 2.41 1.21Acacia spp. 25.00 12.50Eucalyptus spp. 14.00 7.00Others 6.82 3.41

Other forests Production forest 1.61 0.81Conversion forest 2.11 1.06Protection + conversion forest 2.78 1.39Others 2.22 1.11

Afforestation Pinus spp. 6.93 3.47Acacia spp. 25.00 12.50Eucalyptus spp. 14.00 7.00Paraserianthes falcataria 19.07 9.54Others 4.30 2.15

Estate Hevea brasiliensis 12.00 6.00Coconut 15.00 7.50Oil palm 10.00 5.00Others 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 (Table23). In the Philippines, commercial tree plantations of fast-growing species sequestered C at the rate of 0.50–7.82 Mg C ha-1 y-1 (Table 24). The next section also presents estimates of C density and rate of sequestrationof reforestation/afforestation species .

Table 23. Rate of biomass and C accumulation (in kg) of a 7-y-old cinnamonplantation in Indonesia (Gintings 2000)

Tree Root Biomass Total R/S C density MAIIn Blui Tinggi1 18.94 91.58 110.52 20.7 49.73 7.102 15.05 59.36 74.41 25.4 33.48 4.783 18.72 67.17 85.89 27.9 38.65 5.524 19.32 58.85 78.17 32.8 35.18 5.035 18.42 70.98 89.4 26.0 40.23 5.75In Bukit Suban1 10.8 45.54 56.34 23.7 25.35 3.622 12.03 72.61 84.64 16.6 38.09 5.443 13.23 88.03 101.26 15.0 45.57 6.514 7.01 62.81 69.82 11.2 31.42 4.495 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

Species Age (y)Biomass MAI C MAI(Mg ha-1y-1) (Mg C ha-1y-1)

Albizia falcataria 1 4 20.20 7.82A. falcataria 2 5 11.20 6.80A. falcataria 3 7 8.40 6.20

7 2.20 0.52A. falcataria 4 9 5.30 5.41

9 3.70 1.44Gmelina arborea 1 7 11.30 5.51G. arborea 2 9 10.50 4.37G. arborea 3 9 9.60 6.04Sweitenia macrophylla 16 19.60 7.33Natural 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 isa significant pool. It has the longest residence time among organic C pools in the forest (Lugo and Brown1993). However, the exact effect of land-use change on SOC is largely unknown in tropical forests, speciallythe rates and direction of change. Below are the available data in the Southeast Asian region, mainly fromIndonesia and some from the Philippines.

In north Lampung, Indonesia, the total LUDOX fraction of SOC was reduced by 70–80 percent underdegrading situations (burnt Imperata; sugarcane with burning; forest plantation with bulldozer for land clearing)in the top soil (0–5 cm), 8–10 years after converting the forest without effort of maintaining SOM (Murdiyarsoet al. 1996). The methods of forest conversion also has big impact on SOM: slash-and-burn practices on forestplantation reduced total LUDOX fraction about 50 percent which may be due to washing away of the SOMduring high intensity rainfall. On the other hand, clearing the forest using bulldozer reduced LUDOX fractionby about 70 percent.

Planting fast-growing species like P. falcataria increased LUDOX fraction at 0–5 cm by about fivetimes higher than forested area. However, a mixed plantation of P. falcataria and A. magium reduced totalLUDOX fraction up to 50 percent compared to forest. In the Rantau Pandan site, a newly developed cinnamonplantation reduced SOM by 30 percent while cassava plots increased SOM. In the Sitiung site, Imperata grasswith 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 naturalforest (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)

Land useOrganic C C density

% (Mg ha-1)Mineral soil, dipterocarp forest, LOA0–10 cm 2.6 2610–20 cm 1.0 10Mineral soil, dipterocarp forest, buffer zone0–10 cm 7.0 7010–20 cm 1.3 13Mineral soil, Shorea polyandra 25 year old plantation0–10 cm 2.4 2410–20 cm 1.2 12Mineral soil, dipterocarp forest, seriously damaged0–10 cm 1.8 1810–20 cm 1.1 11Mineral soil, Eucalyptus deglupta, 2-y-old plantation, sandy and acid soil0–10 cm 1.7 1710–20 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 significantnet sources of CO2, accounting for 1.6 Pg y-1 out of the total anthropogenic emissions of 6.3 Pg y-1 (Houghtonet al. 1996, Watson et al. 2000). The preceding discussion shows how logging activities, deforestation andland-use change affect the C stocks of tropical forests in SE Asia. Lowering of C stocks in terrestrial ecosystemsmeans 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 naturalforests being lost. If the land is not reforested, these losses become permanent addition to the CO2 concentrationin the atmosphere. Logging also results in a loss of about 50 percent of C stocks. However, the C could bereabsorbed if the forests are allowed to regenerate. The biomass may not reach the level of the primary forestif there is overcutting or premature cutting. Conversion of natural forests to plantations will also increaseC emissions as the forest is cleared. The C could also be reabsorbed as plantation crops grow. However, theC 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 thefirst 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 Article12. Essentially, the CDM allows Annex 1 (developed) countries to meet their carbon reduction quota via activitiesin developing countries (non-Annex 1 countries). Two forestry activities are allowed under the first commitmentperiod: reforestation and afforestation. The CDM provides a way for developing countries to be more activelyinvolved in the mitigation of GHG in the atmosphere, short of actual reduction commitments. But perhapsmore importantly in the short term, developing countries stand to benefit from the CDM through investmentinflow and technology transfer that will support their respective sustainable development agenda (Frumhoffet al. 1998).

The CDM offers an opportunity for SE countries with wide areas of barren lands to generate resourcesfor 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 itdecide to participate. There are anywhere from 2 to 9 M ha of denuded and degraded upland areas that needimmediate rehabilitation (Lasco and Pulhin 2000). These areas were former tropical forests but are now mainlygrasslands, 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 areliving 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, watershedrehabilitation, biodiversity conservation, etc.

CONCLUSION

On the basis of the foregoing review of C budgets with harvesting and land-cover change, the followingconclusions 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 needsto be done. It has to be noted that many research results are found in “grey literature”. In addition, manyof 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.

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Rodel D. Lasco and Florencia B. Pulhin 75

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

BACKGROUND

The forestry sector plays an important role in Nepal’s economic development and ecological stability becauseabout 40 percent of the total land is forested. The poorest of the poor people of the country live in and aroundthe forest land. Forestry contributes significantly by its protective, regulative, and productive functions. Nepal’srural economy depends basically on forestry because the farming system of the country is forest based. TheAgriculture Perspective Plan has indicated that three hectares of forest are needed to cultivate one hectareof 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 treesto supply forest products to the growing population. The protective functions of forest include protectingthe land/soil from degradation due to rain, wind and radiation, and protecting the flora and fauna fromoverexploitation. 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 absorbedby forest belts. The production functions of forest include a number of economic goods and services. Thegoods are fuelwood used as energy for cooking, poles and timber for housing, furniture, and posts; and thebulk 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: ramesh_058@yahoo.com,shakya@flashmail.com

77

grasses, charcoal, essential oils, resins, gums, honey, katha, kutch, medicinal herbs, fruits, seeds, pulp andpaper, fibre, canes and bamboos also come from the forest. Services from the forests include conservationof 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 contribute40 percent total digestible nutrient (TDN) as a source of food to the livestock. Soil and watershed managementprogrammes provide technology for optimum land use as well as retain land productivity and ground waterrecharge. For tourism industry to flourish, development of the forestry sector is important. Management ofnational parks, wildlife reserves, conservation areas and plant resources contribute to the conservation ofbiodiversity and in improving the livelihoods of the people. About 18 percent of country’s area has beenput 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), butit contains 118 ecosystems, 75 vegetation types and 35 forest types, 5160 flowering plants (i.e. over 2 percentof flowering plants in the world), 6 percent of insects (4500 species, out of which 641 are butterfly speciesonly), 8 percent of birds (844 species), 4 percent of mammals (181 species), 100 species of reptiles, 43 speciesof amphibians and 185 species of fish (BPPN 1996).

Recently published forest statistics of the country indicate that the forest area is declining. Accordingto the Forest Resources of Nepal, 1999, out of the total land area of 14.72 million ha, forest covers about4.27 million ha (29.0 percent) and shrub covers 1.56 million ha (10.6 percent). Both forest and shrub togethercover 39.6 percent of the total land of the country. In comparing the new results with the Land ResourceMapping Project results from 1978/79, in the Terai, forest area has decreased at an annual rate of 1.3 percentfrom 1978/79 to 1990/1991. In hilly area, forest area has decreased at an annual rate of 2.3 percent from1978/79 to 1994, whereas forest and shrub together decreased at an annual rate of 0.2 percent. In the wholecountry, from 1978/79 to 1994 forest area has decreased at an annual rate of 1.7 percent. Most of the forestsare 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 48.7MWDR 4 237 800 1 192 400 28.2 442 000 10.4 38.6WDR 2 939 800 7 343 000 25.0 256 900 8.7 33.7CDR 2 741 000 916 600 33.5 233 800 8.5 42.0EDR 2 845 600 736 100 25.9 362 600 12.7 38.6Total 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 populationdepend on agriculture. The per capita GNP of the country in 1997 was US$220 (CBS 2001). The per capitaGDP 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 wascarried out in 1996), it is difficult to provide an accurate and up-to-date measure of the Ninth Plan’s progressin reducing poverty. Preliminary estimates made in the context of the mid-term review of the Ninth Plansuggest 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 andproductive 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 toinclude them in the country’s modernization process, these areas (except for mid-western Terai) have alsomade the least progress in terms of the level of improvement in Human Development Index (HDI) between1996 and 2000.

All rural households derive much of their household income from agriculture (including earnings aspaid 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 suggestiveof the fact that opportunities for non-agricultural employment are limited in rural areas; and with their loweducational achievements and skills, it is difficult for the poor to obtain higher-paying non-farm employmentand 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 pastdevelopment efforts have fallen behind to meet the expectations of poverty reduction. Poverty is more widespreadparticularly in rural areas, and deeper and more severe among women, ethnic groups and Dalits, and thoseliving in backward areas—mid- and the far-western and mountain areas. Poverty could not be reduced toa desired level due to the failure to achieve high and sustained broad-based economic growth particularlyin 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 essentialsocial and economic services and infrastructure to the poor and backward communities and areas; pooraccountability; economic malpractice; and poor monitoring of development programmes. The impact ofdevelopment on the deprived areas and communities has been limited. In the absence of effective policiesfor ensuring social and economic inclusiveness, the poor and deprived communities could not come to themainstream of the development process. In addition, the recent spells of violent activities and disorder havebadly slowed down development and service delivery by the government. They have also adversely affectedthe 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 objectivesof 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’sparticipation in activities related to soil and water conservation by giving priority to protecting the watersources 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 planningframework for the forestry sector. The long-term objectives of the Master Plan for the Forestry Sector includethe 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 comprehensiveframework of six primary and six supportive programmes to achieve its objectives.

• Primary Forestry Development Programmes:a. community and private forestryb. national and leasehold forestryc. wood-based industriesd. medicinal and aromatic plantse. soil conservation and watershed managementf. conservation of ecosystems and genetic resource

• Supportive Forestry Development Programmes:a. policy and legal reformsb. institutional reformsc. human resource developmentd. research and extensione. forest resource information system and management planningf. monitoring and evaluation

Ramesh Shakya 79

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

The National Planning Commission has incorporated the policies of the Master Plan for the ForestrySector (1989), into the Eighth Five-Year Plan (FY 1992/93–1996/97). 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 generalpeople in their day-to-day lives;

• to increase the productivity of forest to ensure the supply of raw materials to forest-based industrieswhich 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 andusers’ group-based community forestry programmes.

• Deprived sections of the society will be given preference when land is allocated for leasehold forestryso 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 (1997–2002) followed the Master Plan for the Forestry Sector in order tocontinue its main thrust of people’s participation in forest management practices. The main objective of theNinth Five-Year Plan is poverty alleviation through providing economic opportunities for poor people andencouraging 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 productsin community forests and to promote employment and income generating opportunities for poor and marginalfamilies.

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 forestmanagement 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 thatproductivity is increased and the forestry sector developed.

• Conservation of biodiversity, ecosystems, and genetic resources: Biodiversity conservation will receivehigh priority to ensure both security and a sustainable livelihood for millions of people living in theeastern Himalayan region. Tourism in protected areas will be regulated and kept within the carryingcapacity of the local ecosystems. Part of the income from tourism will be made available for communitydevelopment. 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 ecologicalprocesses 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 thedecisions and management plans of the users. Forests in the Terai and the Siwaliks of high economicand national importance will be managed and utilized by implementing management plans. Collaborativepartnership with the households living adjacent to such forests will be established. Especially in suitableparts of the Terai, the production, processing and marketing of non-wood forest products will beencouraged.

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 betaken up by blending forestry management with biodiversity conservation and community developmentactivities. Emphasis will be placed on integrated farming for strengthening soil conservation andwatershed management, for research, extension and agroforestry, and for other activities related tothe Forestry Sector Policy 2000. The principles of decentralization will be applied in the forestry sectorthrough 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 underprivilegedcommunities or to the underprivileged people within a community.

• The role of the private sector: Establishment of private forests, herbal farms, and wildlife ranchingon private land will be encouraged. Similarly, the establishment and development of forests on leaseholdgovernment 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 assistancefrom all concerned parties, including donor agencies and international financial institutions, to implementthe 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.

• ForestsAll forests except those designated otherwise are national forests. They are divided into the followingcategories: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 forestproducts or community established under current law (Forest Act 1993). Leasehold forest, therefore, is forestwhich is degraded, and without or with only scattered trees, and is handed over on a leasehold basis withcommunity consensus for raising a plantation and to nurture the forest and to utilize the forest products. Theannual rental is NRs.1000, NRs.1200 and NRs.1500 per hectare in the mountain, hills and Terai regionsrespectively. However, communities or groups of people living below the poverty line do not have to payany rental charges.

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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 threemain dimensions, namely longevity, knowledge or education and standard of living (Thapa 1995). So theHDI indicates that the living standard of the Nepalese is very low. The major cause of the poverty in Nepalis population growth, which is currently estimated at 2.3 percent per annum. The demand for basic needssuch as education, health and employment for the increasing population cannot be met by the country withits limited resources.

The National Planning Commission (NPC) has estimated that about 40 percent of the total populationwere absolutely poor. It measured poverty in terms of income required to supply the minimum food calorierequirement. The Living Standard Survey (LSS) of Nepal (CBS 1996) has per capita income as criterion todetermine the poverty. The LSS has determined 2124 calories as per day necessity, which is equivalent toNRs.2637 in monetory terms. Per capita annual expenditure is estimated at NRs.4404 including expenditureon non-food items. Based on this, the estimated population living below the poverty line is 43 percent. Outof this, 24.9 percent are poor and 17.1 percent estimated to be ultra-poor. The poverty situation in differentphysiographic regions and urban and rural areas is shown in Table 2.

Table 2. Population below the poverty line by geographical regions and ruraland urban areas

RegionPopulation below the poverty line %

Poor Ultra-poor TotalGeographicalMountains 29.3 26.7 56.0Hills 21.3 19.7 41.0Terai 28.7 13.3 42.0National Average 24.9 17.1Urban and rural areasUrban 13.2 9.8 23.0Rural 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(1992–1997) as one of the objectives of the Plan. During the commencement of the Plan, 49 percent of thepopulation were living below the poverty line. The Plan succeeded to bring down the poverty to 42 percentat the end of the Plan. The Ninth Plan (1997–2002) has considered poverty alleviation as the only principleobjective. It aims to bring down the poverty by 10 percent to 32 percent in the next 20 years. The main strategyof the Plan to reduce poverty is to improve the socio-economic conditions of the poor people by attaininghigh GDP and controlling high population growth. The Ninth Plan has been reviewed and the forestry sectorprogrammes 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 andmajor quantitative targets.

• The Community Forestry Development Programme (1 341 973 households, 12 540 users’ groups and955 358 ha of forests handed over) and the Leasehold Forestry Programme (10 500 households, 1600 groupsand 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 togetherwith income generation activities.

• The Forest Act 1993 has been revised to make users’ committees more accountable to the groupconstitution and the Operation Plan and user members.

• Biodiversity legislation on patent rights of forestry sources and intellectual property rights is in theprocess 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 isin the final stage.

• Buffer zone area delineation in Langtang, Makalu Barun, Royal Bardiya and Se-Phoksundo NationalPark area has already been initiated. Shivapuri Watershed and Wildlife Reserve has already been declareda National Park.

• All five buffer zone management plans were completed. However, only 7 management plans for nationalparks 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 handover the Leasehold Forestry Programme for the poorest group of people.

• No significant progress has been made in generating employment (4.1 million man-days) prescribedin the OMFP since no harvesting operation was carried out. The target could not be met in the preparationof 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 theprogress of the Ninth Five-Year Plan in various areas of cross-sectoral linkages such as developmentof 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 promotionof small cottage industries such as silk, tanning, vegetable ghee, dyes, rubber, spices and cosmeticsas well as that of the forestry sector’s contribution to the farming system as a whole and to the protectionof 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 forestresources 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 highforest within 15 years. The remaining 29 percent of forest shall be managed to make use of its intensiveproduction potentially and optimum land-use plan;

• to focus on the poor, women and the deprived group for their access to and control of forest resourcesthrough their active participation in planning, decision-making, implementation , monitoring and benefitsharing;

• to contribute to fulfilling the needs of forest products besides protecting the land and environmentto 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 deprivedgroup 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 intensivemanagement of community, government-managed leasehold forests together with the promotion andresearch 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 rolefor the development of the forestry sector. Policy revision, legal amendments, institutional and organizationalreforms are also aimed during the Tenth Plan period.

FORESTRY PROGRAMMES RELATED TO POVERTY REDUCTION IN THE TENTHFIVE-YEAR PLAN

Policy and programmes

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

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these, the concept of subgroup within forest user groups (FUG) will be introduced and promoted toensure increased access and control over forest resources by the poor, women and the marginalizedgroup 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 practicalgender 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 forestryprogramme shall be launched in more districts.

• The importance of the conservation of biodiversity and genetic resources shall be sensitized, and withthe involvement of the local people, conservation of biodiversity and its sustainable use shall be promotedin 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 promotedto reduce the work pressure of the government organizations and to effectively deliver services to usergroups. Front line staff, the poor, women and the deprived groups shall get priority in all capacitybuilding activities.

• Awareness programme in wild life conservation shall be promoted and domestication of some wildlife species will be allowed.

• Foreign Aid Policy for the Forestry Sector shall be finalized. All forestry sector programmes shallbe implemented in the programme approach. For effective implementation of the programme, policyreform, 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 alleviationand research and extension programmes in the Plan, are highlighted below:

• Programmea. National and leasehold forestry

Users’ group (below poverty line)Leasehold forest for ecotourismBiodiversity and genetic resourcesNational parks and reserves plan implementationBuffer zone management plan implementationNational parks managementReserves management

b. Research and extensionNatural forest managementPlantation and tree improvementAgroforestrySoil surveySocial and economic researchForest inventory and surveyPest 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-basedentrepreneurs 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 andwatershed management areas, buffer zones, conservation areas;

b. identification and handing over of forests to CFUGs, LFUGs, CFMG, RFG, CGs, buffer zonemanagement groups;

c. support to forest user groups (FUGs), collaborative forest management groups (CFMGs), leaseholdforest groups for the poor, religious forest groups (RFs) as well as private forest owners/groupsand forest-based entrepreneurs in planning, implementation and monitoring various forestrydevelopment activities;

d. creation of rural community infrastructure and related activities (community and household physicalcapital);

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 ruralpeople

• 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 managementcommittees/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). During1979 to 1996 a number of research projects (small and big, short term to long term) were conducted coveringvarious 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, specieselimination, spacing, mixed species plantation and nursery research on seed germination techniques, seedstorage techniques, quality seedling production, types of planting material and propagation techniques. Somethrusts 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 moreresearch work on such topics is needed to fulfill the increasing demand of forest products in a sustained way.

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Research work on socio-economic and utilization aspects were started at the end of the project period. Thesilvicultural research carried out during this period was in small trials and results obtained need to be verifiedthrough pilot plantations. In addition there are many other aspects of forestry research which need to be addressedfor the sustainable development of the forestry sector in Nepal.

The DFRS is responsible for carrying out forest inventory, preparation of forest and natural resourcemaps based on geographic information system (GIS) and remote sensing and preparation of management oroperational plans for community forests as well as national forests. The DFRS carries survey and inventoryof 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 managementa. 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 managementa. 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.

• Agroforestrya. 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 Improvementa. 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 DevelopmentProject;

b. reports on site–species 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 microfilmand CD ROM facilities;

b. half-yearly publication of the forestry journal, “Banko Janakari”, which contains research resultsof 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, forexample 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 WesternDevelopment Region and the Pakhribas Agricultural Center (PAC) in the Eastern Development Region hadconducted on-farm research in the past. These research activities were focused mostly on technical aspectsof forestry and very little on socio-economic aspects. As mentioned earlier, socio-economic research or studiesin the DFRS started only in mid-1990s. There is lack of statistics such as contribution of forestry to grossdomestic production (GDP), economic studies in various forest management practices and economic aspectsof 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 academicexercises. Certainly, there is a big gap in research with respect to technical, social, economic and culturalfields for implementation of forestry sectoral programmes related to poverty alleviation or reduction. Forthe successful implementation of the programmes and activities related to poverty reduction, additional relatedresearch should be carried out on pilot scale.

BIBLIOGRAPHY

BPPN. 1996. An assessment of the representation of the terrestrial ecosystems within the protected areassystem of Nepal. Biodiversity Profile Project, Nepal. Kathmandu, Nepal, Ministry of Forests and SoilConservation.

CBS. 1996. Nepal living standard survey report, main findings. Volume 2. Kathmandu, Nepal, Central Bureauof 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) 2002–2007. 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. 191–222. EC-FAO Partnership Programme, Rome 2000–2002.

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10 Strategy for the implementationof CDM and carbon trade inIndonesiaY.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 isabout 44 million ha. The Ministry of Forestry has set a target of rehabilitating 18 million ha of forest landin the next five years. Rehabilitation of forest land is a highly important activity; however, from previousexperience, this type of activity is difficult to implement, particularly with the never ending economic crisisand transition of decentralizing the governance. To benefit from the opportunity offered by environmentalservices, 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 andlocal governments simultaneously. The type of enabling incentive to be provided should include competitiveprice of carbon, low information expense, low transaction expense, long-term payment guarantee and a simplemechanism. To reduce the rate of tropical forest degradation, it is better to give enabling incentives for therehabilitation of secondary forests and implementing reduced impact logging.

BACKGROUND

For the study of global environmental problems, particularly those that also involve local ones, mapping theinfluence of a broad assemblage of actors is needed. For example, little is known about how local level institutionsor ordinary citizens are involved in global environmental policy processes and what motivates public demandsfor global environmental quality, especially for those pervasive environmental problems like global climatechange and sustainable development that require the attention and acquiescence of ordinary citizens (Auer2000). A variety of non-sovereign actors, including non-governmental organizations (NGOs), inter-governmentalorganizations (IGOs), market-oriented actors (e.g. transnational corporations), and knowledge-basedcommunities participate in solving global environmental problems (Litfin 1993, Kauffman 1997, Schreurs1997, McKormick 1999). Princen et al. (1994) state that global solutions require local approaches when globalenvironmental crisis results from both the aggregation of local resource decisions and from the impact ofthe global political economy on local communities. Moreover, to the extent that local approaches approximatethe 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 policyarrangements bearing on international environmental problems. The logic that sustainable development succeedsonly when local actors are key players throughout the policy process is averred in recent declarations bybilateral and multilateral aid agencies.

The demand of CDM and carbon trade compared with its potential supply is relatively small. On theother hand, the critical land in Indonesia is huge. Forest resources in Indonesia during the last three decadeshave 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: buce_w@indo.net.id; yshadi@indo.net.id

89

caused considerable damage to the environment. Interpretation of year 2000 Landsat image showed that forestand 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), 36.36million ha of Land Cover Group II (secondary forest, logged-over forest) and 16.37 million ha Land CoverGroup 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 reducinggreenhouse gas (GHG) emissions released to the atmosphere, and also to support sustainable developmentinitiatives within developing countries. These twin objectives reflect the need to coordinate action betweendifferently positioned developed and developing countries, which nevertheless share a common aim of reducingthe buildup of GHGs (Duncan et al. 1999).

The study on CDM for Land Use, Land-Use Change and Forestry (LULUCF) has identified the followingthree factors that may affect the size of the carbon market that can be absorbed by Indonesia (Ministry ofEnvironment 2003):

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

Internationally there will be rather complex rules and modalities in implementing forest carbon projectsunder CDM. The implementation of activities aimed to mitigate global GHG emissions is more cost-efficientin developing countries than in most of the industrialized world. The main reason is that many abatementopportunities are less expensive in developing countries. GHG emissions contribute equally to climate changeirrespective 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 emissionsreduction in developing countries towards domestic emission targets of industrialized countries (Dutschkeand Michaelowa 1998). On the contrary, the sink market under CDM has been restricted with a cap of 1percent. 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 theforestry sector contributes 28 Mt CO2 per year with a total revenue of about US$7 million per year. Thus32.5 million ha of land can be potentially included in the forest carbon projects and half of this is eligiblefor CDM projects (Ministry of Environment 2003). The price of carbon is too low; observed prices in thecurrent marketplace for permits that are likely to be CDM compliant are in the range of US$3 to US$8 pertonne CO2. Based on forest plantation of Pinus taeda (loblolly pine) in the southern US, the average costsof sequestering an additional tonne of carbon on land already intensively managed vary from US$4.18 toUS$181.27 and the average costs of sequestering an additional tonne of carbon on unstocked land rangesfrom US$0.74 to US$27.32 (Huang and Kronrad 2001). Ideally conservation of soil and water as main goalsfor the rehabilitation of land and forest activities are adequate enough an incentive for various parties, consideringthe long-term direct and indirect benefits. However, the need for quick and adequate earnings and lack ofincome for the community and also the existence of policy, market and institution failures have progressivelydecreased the area of critical land.

Efficiency and effectiveness of forest rehabilitation are too low, caused by not balancing the local factorsand a non-uniform incentive which is based solely on the efficacy of planting. Therefore the approach ofwatershed management, which emphasizes participatory management, coordination and perception adjustmentbefore 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 projectsIssue Indonesian contextDefinition of forest, afforestation Definition will influence the type of projects that will be eligible underand reforestation the CDM.Additionality: project activities Defined on a project-by-project case. It is very likely that without anyneed to be additional to the new initiative the national carbon stock will decrease. Thus any newbusiness 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 pastprogramme.

Leakage Locations and project types that may have low risk of leakage to bedefined. The potential for leakage varies with land-use competition. Asa result, the risk posed by leakage will vary with location. Guidelinesfor accounting for leakage to be provided.

Non-permanence This provides flexibility to the government or host country to use theCDM project lands for other activities.

Crediting period This may be relevant to PP34 where permits for forest activities relatedto environmental services are limited to 10 years. But this may discourageinvestors.

Source: Ministry of Environment (2003).

Structuring forest rehabilitation following the logical framework of watershed management andemphasizing the involvement of all stakeholders are crucial. In line with decentralization, the Ministry ofForestry needs to facilitate these efforts because of many local autonomous communities that must be coordinatedwith 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 fromthe planning through monitoring and evaluation stages. Societies represent the protagonist element whilegovernment acts as the element of authority of policy and facilitator. There are other parties, such as theacademic institutions, research and development agencies, and NGOs, which partake to support the efficacyof management of forest and land rehabilitation. Therefore this link between the local and global importancehas 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 Annexes1, 2 and 3. But we need to implement forest and land rehabilitation to make better use of Indonesia’s forestresources. 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 forestryis 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 MarrakechAccord

Category and project type Marrakesh Accord1. Conservation and forest This project type is not eligible according to the Marrakech Accord, as the areas

management: are already under forest cover.Protection forestEnrichment 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 JointImplementation (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 plantationCommunity forestSocial forestryAfforestationPrivate forestConversion of agriculture It may be classified as afforestation if the lands have been used as agricultureland to forest lands since 50 years ago.

3. Substitution of fossil fuelbased energy with biomassenergy:

Source: Ministry of Environment (2003).

These days development in Indonesia, especially in forestry development, is in a state of flux in almostall aspects. However, these changes generally are not strengthening the governmental and community rolein reducing forest damage. The problem in essence is not technical, but institutional. It is caused by divergenceof policy, different interests and also the capacity of the government to implement the policy relative to theproblems that are always expanding. Therefore forestry policy must strengthen the existing institutions. Inthe field, the results of this policy could be indicated by the increase in forest cover from rehabilitation andalso 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. Thiscould be triggered through various efforts, like appropriate economic incentive, guarantee of community/societyrights, local institutional reinforcement, and also reinforcement of the capacities of local governments whichare 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 ongovernmental initiatives, with little public participation. Limited access to exploitation of the forest by thelocal and traditional societies has generated a separate set of problems. The government has yet to identifyand 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 applyingproper 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 policyamong 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 atthe programme level. The external effects of afforestation are also very difficult to assess. Indonesian forestryis 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 theability and readiness of the implementers than the availability of funds. Enabling incentive has become soimportant and rehabilitation in most cases will fail without supporting activities (Faculty of Forestry IPB2001). Market mechanism should be used to motivate the private sector, which is profit oriented, to involvein rehabilitation while the execution of rehabilitation to provide benefits for the public would remain to bethe government’s obligation.

For commercial forest plantation development, the problem is not simply whether the activity isfinancially, socially and ecologically viable, but how the investor or the communities in and around the forestshould be involved. Should the local communities leave the area, or could they continue with their previousactivities? The fundamental issue is how the communities could rationally accept this new activity ofrehabilitation of forest and land. The “market situation” or more precisely an incentive structure, which shouldinclude transaction cost besides consideration of financial eligibility, could help. The biggest transaction costis 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 preparationand/or stipulating the organizer (especially by communities that stay in and around the forest), coordinationexpenses, and also expenses of monitoring and evaluation. All these expenses ought to be the responsibilityof the government. In applying CDM, attention is needed simultaneously on the production, social andenvironmental 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 morethan a cost-reduction tool for developed countries legitimizing many of the incidental secondary benefits thatmay or may not be consistent with a developing country (Duncan et al.1999). On the other hand, the forestand land in Indonesia need to be rehabilitated. For Indonesia, CDM-Carbon trade could become an incentiveas well as a disincentive. Tropical forest in Indonesia that has been degraded is about 36 million ha, but inthe CDM scheme this type of forest is ignored as potential carbon project. This might cause a disincentivefor rehabilitation to reduce deforestation of tropical rain forest.

Incentive in rehabilitating forest and land in principle is not limited to economic incentive, but coversvarious other instruments, especially law, policy and various social development instruments. In designingand implementing a new incentive, the whole context has to be considered, including its social and politicalaspects. There are at least three macro aspects which must be considered in the designing and implementationof incentives:

• Formal constraint: law, policy and ownership rights, for example, for tax or subsidy to rehabilitatethe forest and land; or legalizing and arranging the market for the products/services resulted fromrehabilitating 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 beliefsystem, inclusive of cultural norms, social agreements, mores, ethics, traditions and taboos. Communitiesbow 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 needsto 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 fieldby 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 themain factor that contributed to the efficacy of forest and land rehabilitation is not direct incentive, but enablingincentive, 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, dependson 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. Theperformance of forest and land rehabilitation in the field is still dependent on the central and local governmentswhich have yet to consider the weaknesses of indirect incentive, especially the enabling incentive, as a majorconstraint in the execution of forest and land rehabilitation. Direct incentive is still considered a primaryfactor, thus information about community condition related to enabling incentive has yet to become an importantingredient in the programme and projects of forest and land rehabilitation.

The selection of the rehabilitation site is determined by fund limitation of the government, probabilityof efficacy of rehabilitation and importance of the area. Execution of forest and land rehabilitation in everyprovince has different constraints and problems, which must be investigated more thoroughly when determiningthe site. The difficulty level and/or the efficacy level of the rehabilitation programme is basically determinedby two special circumstances, that is the critical level of the forest and land degradation and also the overallcondition 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 productionlevel and raw material needs. The forest resource is determined by the ratios of production forest area, protectionforest area and conservation forest area, and the acreage of remaining forest cover. The provinces in Indonesiacould be grouped into the following quadrants:

Forest resources small Forest resources hugeCritical level low Jakarta, Jogya, Bali, Jambi Papua, Aceh, Riau, Sumut, Sumbar, Bengkulu,

Kalteng, Sulsel, Gorontalo, Sulteng, MalutCritical 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 conditionsas classified above, so that incentive policy and other instruments can be implemented accordingly. In selectingthe location of rehabilitation within or in the administrative boundaries, the following must be taken intoconsideration:

• 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 shouldincorporate 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 internationalrelations theory. Policy Sciences 33: 155–180. 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 DevelopmentMechanism. http://www.wri.org/wri/. Washington, DC, World Resources Institute.

Dutschke, M. & Michaelowa, A. 1998. Creation and sharing of credits through the Clean DevelopmentMechanism under the Kyoto Protocol. Paper presented at the experts workshop “Dealing with Carbon Creditsafter Kyoto”, Callantsoog, the Netherlands, 28–29 May 1998.

Fakultas Kehutanan IPB. 2001. Sistem insentif untuk rehabilitasi hutan dan lahan. Laporan Internal. FakultasKehutanan IPB, Departemen Kehutanan.

Huang, C.H. & Kronrad, G.D. 2001. The cost of sequestering carbon on private forest lands. Forest Policyand Economics 2: 133–142. Elsevier Science B.V.

Kauffman, J.M. 1997. Domestic and international linkages in global environmental politics: a case studyof the Montreal Protocol. In M.A. Schreurs & E. Economy, eds. The internationalization of environmentalprotection, 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 stateand social power in global environmental politics, pp. 94–17. 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. 52–71. Washington, DC, CongressionalQuarterly 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. 217–236. 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. 134–161.Cambridge, Cambridge University Press.

Young, O. 1997. Global governance: toward a theory of decentralized world order. In O.Young, ed. Globalgovernance: drawing insights from the environmental experience, pp. 273–299. Cambridge, MIT Press.

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

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Y.S. Hadi and M.B. Saleh 97

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98 Strategy for the implementation of CDM and carbon trade in Indonesia

11 What is biodiversity worth todeveloping countries?

T. Ravishankar*

ABSTRACT

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

BIOLOGICAL DIVERSITY AND CULTURAL DIVERSITY

In the context of worthiness, biodiversity encompasses a range from terrestrial wild and domesticated plantgenetic resources to fresh water and marine living resources. The livelihoods of millions of farmers, fishermenand tribal communities in the developing countries are closely knit with the biodiversity components availablewithin their proximity. Rational management that meets the requirements of conservation of biodiversity andthe 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 biodiversityincludes edible and medicinal plants and plants used in culture, religion and material culture, land races andtraditional varieties and wild relatives of cultivated crops. Domesticated diversity includes the cultivated cropdiversity (Figure 1).

* M.S. Swaminathan Research Foundation, Ramaraopet, Kakinada 533004, India;E-mail: raviethnobotanist@rediffmiail.com

99

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 relationshipswith the surrounding vegetation. Such a close interaction prevails among various tribal communities throughoutthe world even today. The interaction has enabled a unique system of knowledge on the utilization andconservation 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 immensevalue to humankind. Biodiversity has provided many valuable genes in the development of crop plants thatare extensively cultivated today. It can equip humankind with several new chemicals for combating manyhuman ailments in future. We have examples that the ethnic knowledge has contributed to the bettermentof human life. A drug has been developed and marketed for retention of memory from the semi-aquatic herbBacopa 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 aspectsof plant biodiversity.

The very existence of cultural diversity is directly dependent on biological diversity. This traditionalecological knowledge of ethnic groups is not confined to mere sustenance only since the tribal communitiesdepend upon biological resources for their spiritual, religious and cultural needs too. The tribal communitiesunderstand 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 culturaldiversities should be considered as a unit for a meaningful conservation.

Sacred groves: Sacred groves are set-aside forests preserved with reverence in some developing countriesin the tropical region. In India it is believed that the local deity resides in the patch of forest protecting thevillage and the traditional communities living nearby. Hence a spiritual reason is attached to conserving thepatch of forest. This helps in water conservation and maintenance of microlevel water-table, which catersto 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 biomassfrom the sacred forest. Women are restricted from entering during the menstrual cycle. The old trees are preservedwith greater reverence. This system has helped in conserving keystone species.

Tree of EthnobotanyStudy on the utilization and conservation

practices of tribal communities

People Plants

Edible

Material culture

VeterinaryHuman medicine

Ethnobotany

Wild plantsCultivated

(Land races)

Cereals &minor millets

Pulses

Oil crops

Resins

Nuts

Fruits

Tubers

Corms

Gums

Leaves

Flowers

Rhizomes

Roots

Yams

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 manyplants are used for a single purpose although other parts of the plants may have potential utility values. Forexample, 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, Phyllanthusemblica, 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 forthousands of years. Members of the community possess knowledge on some common medicinal plants intheir locality. However, the elderly members possess a greater deal of knowledge on medicinal plants as wellas 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 gynecologicalproblems and for jaundice, Dodonaea viscosa used for headache, stomach pain and piles, and Wrightia tinctoriafor 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. Ulmusintegrifolius 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 waterand orally administered for peptic ulcer by Gonds and Kolams—three to four spoonfuls thrice a day for sevendays. Leaves ground into paste applied for leucoderma, by Gonds. Leaf paste applied on boils and blisters andtied on them till cured. Leaves warmed and tied over abscesses and tumours by Gonds and Kolams. Tenderseeds 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. Theirfarming practices give a real meaning to the word “sustainability”. Tribal communities, namely Irulas andMalayalis living in Tamil Nadu in India, have been cultivating the traditional cultivars and enhancing theirgenetic value by selecting healthy individual plants from the crop during every season. Their subsistencelife style, local diet habits and dependence on rain-fed irrigation have influenced them to cultivate and conservethe grains for consumption and as seed material for the coming season. By selection and conservation ofthese 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 andeconomically 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 areadepending on monsoon rain. The practice is such that the seeds of common millet, finger millet, grain andleaf amaranth, pulses and castor are mixed together and broadcasted. Primarily the common millet is harvestedfollowed 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 forboth 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 therebypreventing topsoil erosion. Secondly, the combination of crops with legumes uses nitrogen fixation, thus maintainingthe soil fertility. This helps the farmers to derive maximum benefits from their small landholdings. Hence this conceptof 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 inconserving the seed material of minor millets. The practice is such that every family in the community has to contributean amount of grain to the community granary maintained and managed by the chieftain of the hamlet. During importantoccasions like marriages, social events and festivals, and also in cases of need for daily consumption, the graincan be borrowed and paid back. This system has enabled the tribals to conserve the seed material even if the producein 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 sowingin the following season, healthy cobs or seeds are selected and stored every season thereby enhancing thegenetic potential of the crop. For example, healthy cobs are left in the field so as to allow them to dry tothe maximum to make sure that no moisture is left in the seeds. The selection of large and healthy seedsand also the selection based on the colour of the seeds (e.g. in the case of castor seeds) have also helpedthem select more viable seeds.

Storing: Seed material for sowing and the grains for consumption are preserved in traditional granaries madeup of bamboo coated with red soil and thatched with local grass and also in earthen pots. This indigenouspractice has saved many varieties of cereals, millets and legumes in Tamil Nadu in south India. Knowinglyor unknowingly this practice has enabled them to maintain, preserve and conserve the seed material. Thereason being, owing to free flow of air in and out of these indigenous granaries, the seeds could maintaintheir 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 forfurther crop improvement using the genetic variability present in the traditional cultivars, as these are resistantto various biotic and abiotic stresses.

TRADITIONAL KNOWLEDGE SYSTEMS AND THE CONSERVATION OF PLANTGENETIC RESOURCES

Policy decisions affecting the ecological balance of biodiversity should be taken through prior consultationof people inhabiting the areas. This is essential because the survival of any species depends on the survivalof its associated species and the ecological niche. The traditional way of living followed by tribal communitiesusing biodegradable components, when replaced by the ideas of policy-makers without consulting or takingtribals 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 housesare being replaced by reinforced concrete structures, which are alien to the tribals. This results in the lossof knowledge of the tribes in house-building using plant species. As the knowledge is lost, the tribal attitudetowards conserving the plants used for house building decreases. On the other hand, another tribal communitycalled Kadars uses the reed plant, Ochlandra travancorica, in house construction, weaving mats, making basketsand 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 varietiesof 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 Sorghum2. Konda mokka jonna Zea mays Maize or Indian corn3. Konda saama Panicum miliare Little millet4. Konda korra Setaria italica Italian millet5. Konda bontha Echinochloa colona

Echinochloa frumentacea Millet6. Konda sode Eleusine coracana Finger millet7. Konda kandhi Cajanus cajan

1. Thella kandhi There seems to be three varieties Red gram Note: Generally two2. Yerra kandhi cultivated by them; of white, red seeds are sown in a pit with 503. Nalla kandhi and black colour percent chance of survival.

8. Arisanda/alisanda Legume9. Konda budamalu Variety of Oryza sativa Paddy

10. Gongura Hibiscus sabdariffa Roselle plant11. Konda benda Hibiscus esculentus Okra12. Pandiri pandlu Lycopersicon sp. Tomato13. Vari Oryza sativa Paddy14. Thiveralu15. Dhamalu Mucuna utilis Seeds are edible, repeatedly

cooked and washed five timesand eaten, otherwise due totoxicity it might lead to insanity.

16. Dippalu Lagenaria ciseraria Bottle gourd17. Donki Lagenaria ciseraria Bottle gourd18. Boodida Gummadi Benincasa hispida

Gummadi Cucurbita maxima Pumpkin19. Bobbarlu Vigna sp. Legume20. 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 andplay a vital role in the microeconomics. These NTFPs are dwindling day by day because of the increaseddependency by local communities and overharvesting by commercial agencies. There is also a threat ofoverexploitation of seed material of a few species of NTFPs, which results in non-recruitment of these speciesand 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 unprecedentedpressure on the NTFPs. Hence the future management of plant biodiversity in the biodiversity rich developingcountries 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 NTFPsin developing countries. In order to develop policies for sustainable management of NTFPs there is a needfor 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 harvestingof NTFPs with provisions to implementation of the same guidelines. Policy guidelines on microlevel managementof NTFPs can be developed taking cognizance of the existing mechanisms or institutions like TRIFED, LAMPSand Girijan Cooperative Corporation (GCC) in India, which deal either as value-adding institutions or cooperativemechanism towards influencing the livelihoods of rural and tribal communities. The policy guidelines onmicrolevel management addressing the above issues can be developed in consultation with local communitiesand 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. Inour 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 marketlike other goods. For example, we know the value of air but there is no price. Hence, unless a price tag isattached to any resource, its value is not realized.

The natural resources need valuation because of few factors like missing market, the alternatives andalternative uses of the natural resources, uncertainty in demand and supply of the natural resources, to formulatepolicies for conservation of natural resources and finally to arrive at natural resource accounting using anyof the cost–benefit analysis (Kadekodi 2001).

The valuation of any natural resource should be from the ecosystem functions. Ecosystem has threedistinct characteristics in valuation, namely existence, intrinsic and option values. All species have rightto 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 thebiological resources that are not captured under use-values should also be considered. Thus the logical approachwill be to assign value to the ecosystem uses/functions as a whole, rather than its individual componentsthat constitute it (Kadekodi 2001).

Economic value of biodiversity

Biodiversity has ecological, intrinsic values besides representing a socio-economic and monetary asset. Thevalues 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 formalmarket 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 goodsthat 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 sometimesoutweighing 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 theNational 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 AgricultureOrganization of the United Nations, 16–19 December 2002, by R. Narayanakumar, Senior Scientist, ResearchCenter 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 ExampleDirect-use value Consumptive Variety of home-consumed forest products

Productive Plant breedingIndirect-use value Non-consumptive TourismOption Non-consumptive Ecological process, future values of drugsQuasi-option Non-consumptive Value of being able to ascertain option valueNon-use value Non-consumptive Existence value of elephants, turtles

The perception of benefits of biodiversity differs between rich and poor countries, developing anddeveloped countries. For the local the direct-use value is high; option and existence values are high for developedcountries. All these values may not be congruent (Flint 1992). However, there is no uniform currency forvaluation and it depends on the location. It is also emphasized here that not all aspects of the environmentalgoods or services provided by them can be valued. There are a few such aspects which go outside the frontiersof 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 sacrificeof many tribal lives over the generations could be used for solving many ailments and diseases and problemsof population explosion. These herbal drugs have the potential of solving the ever-increasing and ever-eruptingproblems. These drugs may not only solve the problems but also do not produce any side effect. In certainsocieties human value is measured in terms of material possession. This is possible when more yields canbe harvested from the limited area through practices like mixed cropping system and when sufficient rawmaterial from plant diversity is available. Hence the human value is recognized only when the biodiversityis 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 utilizationand conservation of biological diversity would help us derive benefits based on their ecological prudenceif the above described conservation methods, followed by tribal communities, are adopted by every one ofus involved in biodiversity conservation. This in turn would enable tribal communities to derive more stableincome 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 knowledgeand to Prof. M.S. Swaminathan, Chairman, M.S. Swaminathan Research Foundation (MSSRF), Madras, forhis encouragement. I am also grateful for the help and assistance received from my colleagues and officialsof 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 inEnvironmental Economics, pp. 437–469.

Garrod, G. & Wills, K.G. 1999. Economic evaluation of the environment: methods and case studies. EarthscanReader in Environmental Economics, pp. 263–288.

Kadekodi, G.K. 2001. Valuation of natural resources: What we have learnt from Indian experience? Ind.J. of Agric. Econ 56(3): 285–312.

Schultes, R.E. 1991. The reason for ethnobotanical conservation. In O. Akerele, V. Heywood & H. Synge,eds. Conservation of medicinal plants, pp. 65–75. Cambridge, Cambridge University Press.

T. Ravishankar 105

12 Economic value of biodiversity: arural perspective for sustainablerealizationP. 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 stockof natural capital, biodiversity could be a source for increasing man-made capital as well as sustenance ofcommunities. Substitution of natural assets by man-made assets in different stages of economic developmenthappens at different rates. Also, in a developing economy, economic realization of such benefits encountersproblems. Undervaluation and poorly defined property rights often contribute to inefficient management ofnatural capital. The realization of benefit flows from natural assets for subsistence is constrained by a hostof other factors. Notable attempts at realizing the value in subsistence rural economies are reviewed to identifyemerging issues in different contexts.

INTRODUCTION

We generally find an asymmetry in the distribution of man-made and natural capital. The disparity in thedistribution of man-made and natural capital is more distinct in developing economies than in the developedworld. This could be because as man-made capital accumulates, some of it will be substituted and returnedback by natural capital. As economies grow, the nature of relationship between man-made and natural capitalsvaries from complementarity to trade-off with different rates of substitution. This becomes evident when wecompare 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 widelypractised economic activity, the same may not hold true for natural capital. Though ecological sustainabilityhas 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 induceddiversity in some instances of cultivated crops. How and to what extent this can result in economic benefitto 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, biodiversitycan 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 marketableskills (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:seemap@atree.org

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A major option to provide the resourceless with food and income security is the social security systemof 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 ofteneating into the basis of all options, i.e. biodiversity itself. In this context, the paper attempts to think on modalitiesto facilitate sustainable realization of biodiversity benefits minimizing the inefficiencies of market-based andsocial security schemes.

The way out could be linking markets to traditional knowledge and skills based on sustainable extractionof natural resources. Again, this would be affected by the functioning of the government machinery in assessingand checking permissible harvests or in the laxity to facilitate evolution of ex situ alternatives to natural sourcesof 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. Theseinstruments may not work in similar perfection in the context of natural assets due to the absence of clearlyspecified property rights. Thus subsistence economies in the resource-poor situations find it difficult to realizethe benefits from biodiversity, especially if realization involves a flow of benefits in money terms as alsoin kind for immediate consumption or use. Realizing the benefits in money terms involves conversion ofnatural forms of capital to man-made ones. Also we generally agree that the current stock of natural resourcesneeds to be preserved if not augmented.

It has been recognized that the relationship between man-made and natural capitals moves fromcomplementarity to trade-off between various stages of economic development (Pearce et al. 1990). Whilesubstitution of natural capital by man-made capital seems to be happening at a faster pace, there also areincreasing instances of investing in the reverse substitution like the long-term research process of increasingvarieties of cultivated species or by gradual cross-breeding in domestication. This addition to the natural diversityis only a minute proportion of the natural biodiversity stock of the world. There are also instances of substitutingman-made capital in, say, corporate firms doing expensive outdoor landscaping in their office premises orowning a stretch of country club for their employees.

When it comes to the collectively owned and enjoyed assets without clear property rights, the substitutionof natural capital by human/man-made capital happens at unsustainable rates. Due to undervaluation and lackof property rights, we may need to sacrifice more than one unit of natural capital for one unit of man-madecapital.

Natural capital stock in subsistence economies already has kinked benefit functions at the current stocklevels, 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 notdeplete the stock any further.

Also substitution of natural assets by man-made assets need not always have a positive impact onthe value of remaining lesser quantum of natural assets, i.e. the marginal economic value of the naturalenvironment may not always be positive. A riverside farm in the suburbs of a big city may fetch buyers likea corporate firm, but the owner of the farm (as well as his neighbours) compromises on his own natural capitalin that his remaining farm, if any, would be less appealing and less valuable now. The remaining naturalassets 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 happyto) 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 areless 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 profitgenerated in a corporate enterprise apparently would be poor compared to the efficiency of converting it forpurposes 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. Sostudies on realization of value of biodiversity with respect to the subsistence communities seem to be moreimportant 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 ofbiodiversity 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 ASUBSISTENCE 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 poorwith no ownership rights over assets like land, water sources, biomass sources and technical skills will beeven worse. They do not own much but are directly dependant on the collective natural capital. In the currentscenario, in most of the developing economies, this dependency itself is being discouraged by state economicpolicies of privatization and nationalization. Take the case of a river ecosystem collectively dependent asanywhere else, but which recently got privatized by the Chattisgarh State Government in India. One of thepoor states in the country, Chattisgarh has more than the stipulated area under forests while many other stateswith negligible forest area have thriving economies with high domestic product. Such poor states have beenstruggling to improve their economy and have been even requesting for economic compensation to keep thenations’ best forests intact even though most of their population are dependant on these. The Governmentof Chattisgarh leased out River Seonath to a private firm, depriving the access of surrounding communitiesand livestock to the river. In the absence of alternatives to bathe, fish and irrigate, communities started reactingand fearing political backlash, the lease is being reconsidered by the government, which may be legally andfinancially difficult given the contractual agreements and the heavy investments in huge check dams by thelessee. This illustrates the relative easiness to access the common natural assets by the resourceful ratherthan 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 andhealth hazards. So depletion or delineation from the natural assets preventing their realization by subsistencecommunities has been conspicuous in development history.

Common grazing lands are shrinking fast and forests are becoming protected areas with reduced andcontrolled 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 forestswith low input dry land agriculture and limited extraction from government forest area. The probability ofconversion 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 – even that employment comes occasionally in theform of afforestation or soil conservation programmes. Most of these marginal farmers as mentioned earlierface declining yields due to what some refer to as “socially induced drought” (Mehta 2000) attributed toour dry land blindness in development planning. Indian villages in the dry zones are a typical example ofsuch extreme situation. Their numbers are swelling due to large-scale rehabilitation of displaced populationfrom hydroelectric projects.

While external agencies find it easier to access natural resources like water for soft drink factoriesor wilderness for potential ecotourism areas, with the advent of economic liberalization, the native populationwho had been both the guardians and dependants of biodiversity assets, find it more and more difficult torealize the benefit of natural assets even for sustenance. There are alternative sources for profit-making orentertainment 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 commonlyowned assets it is even lesser).

The pressures of subsistence prevent complete delineation of local communities from common naturalassets like forests resources, fishing in streams, etc. As the population increases, realization of value ofbiodiversity 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 biomassregenerating, 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 thevalue of biodiversity sustainably.

P. Seema 109

STRATEGIES FOR SUSTAINABLE REALIZATION OF VALUE OF NATURALCAPITAL STOCK

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

• Leaves of tendu trees have been harvested for decades in dry deciduous forests of central India formaking 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 andthe 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 similarspecies with the realizable benefit in plant parts, which can be harvested sustainably. The leaves ofthese species are used to make disposable cups and plates. With growing concern for eradicating plasticdisposables and need to afforest areas, such species with possible interim benefits could be used inparticipatory 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 fruitsin central India for consumptive and commercial uses have ensured protection of the species as wellas sustained realization of benefits for rural poor. It is not uncommon to see denuded hillocks in centralIndia where the only woody component left standing are mahua trees just because of the perceivedreligious 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 needmany incentives to prevent exhaustive exploitation if consumptive use is permitted. Relevance of constantinteraction with the people living in the periphery of forests and continuing a mutual learning processis 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 fruitsare used both for consumptive and commercial medicinal uses. As the demand for the fruits in thefast 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 ofrevenue, the unsustainable rates of harvest of non-timber forest products (NTFPs) can be cause forconcern. Certification of NTFPs to ensure sustainable harvest rates and substitution of natural sourcesof 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 theexpanding pharmaceutical industry need not alienate the forest dependant communities nor preventthem from realizing benefits of biodiversity. Since the active ingredient content of a raw material isdependant on its natural habitat, it is ideally grown just adjacent to forests in marginal dry lands oflocal communities. This also ensures that such marginal lands can be rejuvenated, livelihood securityassured, and also on-farm biomass production improved while the pharmaceutical industry gets goodraw material. Again what is needed is a good network of producers and industries with an independentbody to ensure/certify that the product origin is from natural environments but not from inside forestareas. 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 attemptat avoiding the middlemen in the NTFP trade, simultaneously creating community and individual revenuewith microcredit as well as facilitated trade. For the past three years, many women self-help groupshave been working to collect tamarind fruits, gather and sell to industries at remunerative prices, whilegenerating a common fund, a multiple of which they receive as microcredit from an affiliated bankfor 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 actionsand 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 resolvingmechanisms 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 strengtheningfood security since 1996 (Koziell & McNeill 2002) in that country. Efforts at preserving the food securityhelps 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 forlow input dry farming methods and the incremental yield in coarse-grained crops with irrigation isnot much compared to crops like wheat and rice. Impacts of large-scale waterlogging in soils of suchareas are yet to be understood. We also have been seeing indebted farmers committing suicide in dryregions because the steep loans taken for deepening wells could not be repaid. The most cost-effectiveinvestment will be in promoting millet-based agrohorticultural systems with soil and water conservationpractices 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) (1988–1995) in Lesothocombined natural resource management with appropriate agricultural technologies that allowedenvironmentally sustainable livelihood improvement for the poor residing on degrading hillsides. Thegreatest success of SWaCAP was the reintroduction of an indigenous farming technique known as theMachobane Farming System (MFS), a low external input farming system that relies on relay andintercropping a series of cash and subsistence crops on plots of land generally not larger than onehectare.

• Communal Areas Management Programme for Indigenous Resources (CAMPFIRE) is anothercommunity-based ecotourism venture, in the Sunungukai camp, Zimbabwe. If the clearing of woodlandfor 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 theriver, fish population would have declined. This could have triggered game poaching for an alternatesource of protein. In general, mounting environmental degradation has had a direct and negative impacton economic development in the Sunungukai area. In the long term, the community stood to sufferas the ecosystem’s capacity to provide essential environmental services that support the socio-economicsubsystem was endangered (Munasinghe 1995).

• Serious human resource constraints, inadequate financing arrangements, inefficient managementstructures and weak management systems variously contribute to the community-based organization’sinability to effectively and sustainably manage natural resources. The beautiful Sunungukai camp isnot 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 ofaccumulated skills in cultivation have laid a firm foundation to the cause. On-farm conservation issignificant not only for breeding material but also for food security. It was also learnt that the improvementof the potential of the land races, development of market for farmer’s produce, establishment ofcommunity-based seed networking and integration of conservation strategies at all levels are the priorityareas considered necessary to sustain a system. Importance of persistent efforts to keep the momentumand establish seed banks is emphasized by the foundation workers.

CONCLUSIONS ON FACTORS FACILITATING REALIZATION OF SUBSISTENCEBENEFITS 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 sustainablebasis 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 incentivesto prevent exhaustive exploitation even if consumptive use is permitted. Other measures that can be incorporatedin 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 farmingtechniques incorporating components of nutrition and soil conservation. It would also help to make availablethe propagation materials of local varieties to ensure food security. Finally, human resources constraints andinadequate 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 governingbodies and community institutions. This is a constant and crucial componet in realizing the benefits of biologicaldiversity.

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): 2439–2441.

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. 11–18. Washington, DC, World Bank

Pearce, D.W., Barbier, E. & Markandya, A. 1990. Sustainable development economics and environmentin the third world. London, Earthscan.

Purushothaman, S. 2003. Economics of land-use options in a tropical dry deciduous area. SANDEE ProjectReport.

112 Economic value of biodiversity: a rural perspective for sustainable realization

13 Market-based instruments forwatershed protection—what do weknow?Shin Nagata*

ABSTRACT

Using market mechanism for resource allocation is generally inadequate. Public and future goods argumentsare needed for forest, or watershed management. This may require special arrangements in the form ofgovernment intervention, or direct government administration. Biodiversity is one example of the “areafunctions” 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, watershedconservation, 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 caseof 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 environmentalfunction and long-term elements of resource management. This special arrangement may be governmentintervention, or direct government administration. These days, we hear of governmental failures as well asmarket 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 exclusivityof goods are related, but yet we can consider them independently.

In some cases joint consumption can be achieved without any interaction from consumers; we maytake 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; werestrict the entrance to the theater where joint consumption, i.e. watching the act, is possible inside. We callthis case as club goods. Depending on the technical or physical characteristic of consumption, entrance restrictionis easy in some cases, but difficult in others. We can arrange entrance control; some theaters can be set freeof 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 verticalaxis to represent the extent of entrance ease, the first quadrant indicates “public goods”, the third “privategoods”, the second “club goods”, and the fourth “common pooled resources”. This last case is problematic;

* University of Tokyo, Tokyo, Japan; E-mail: nagata@fr.a.u-tokyo.ac.jp

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

Joint vs. individual consumption

Exclusivity

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

Extent of coverage

Global vs. regional public goodsWe 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 beneficiaryis everybody on earth. Coverage of water control and/or erosion control by the forest depends on the watershedunder consideration. In some cases, it covers a limited area within a local community, but in others, it coversa 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 speciesfor biodiversity, but if we keep only these species, we cannot have diversity. In some places we may keepsome endangered species but in nearby places we may need another, and next to them still yet another. Soto 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”. Educationaland recreational functions of forest are other examples. We may add landscape conservation to this list ofarea functions of forest. These area functions of forest are based on spot-specific functions of forest, becausethey can be fulfilled well when each spot of forest is designed to perform its spot-specific task. I may enumeratespot-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 postulatethat 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 minimumwith 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 derivea production possibility set for wood production and water conservation (Figure 4).

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

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

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

1 2 3 4 51 wood production – P C C N private goods2 carbon fixation P – C C N global public goods3 water conservation C C – C N local public goods4 erosion controll C C C – N local public goods5 strict nature conservation N N L L – public goods

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

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 workif 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 fineis 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 planningmay bring a certain reward to the volunteers; that is probably why they become volunteers. If one does notobey mandatory planning, one is punished. In that sense, mandatory planning is observed, because there isincentive to avoid punishment.

Shin Nagata 115

2

Wood production

1

CarbonCarbonCarbonfixationfixationfixation

Wood production

3

Felling age

Total sum

Water conservation

Wood production

TwTsTp

EvaluationEvaluationEvaluation

4

Wood production

IC

S

E

P P S

WaterWaterWaterconservationconservationconservation

StrictStrictStrictnaturenaturenaturepreservationpreservationpreservation

BIBLIOGRAPHY

Musgrave, R.A. 1939. The Voluntary Exchange Theory of Public Economy. Quarterly Journal of Economics53:213–37.

Samuelson, P.A. 1954. The Pure Theory of Public Expenditure. Review of Economics and Statistics 36:387–89.

116 Market-based instruments for watershed protection – what do we know?

14 Inter-regional partnership forwatershed 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 theconservation of watershed. The case of the Han River was investigated to identify the important factors forsuccessful implementation of land-use policy for watershed conservation. The watershed conservation policyis 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 thestakeholders can be resolved through the establishment of a partnership among themselves, with the helpof governmental and non-governmental agencies. The effectiveness of the policy instrument is determinednot only by the participation of the stakeholders but also by a sound understanding of the facts, the lackof 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 conservationof watershed is a good example of such conflicts in many parts of the world. This paper explains our experiencesof resolving the conflicts related to watershed conservation in Korea by forming a partnership between regionsin the lower and upper parts of a watershed. The case of the Han River was investigated to identify the importantfactors 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 neighbouringcities and thus the watershed is considered a vital environmental resource for the people living in the lowerregions. Figure 1 shows the Han River watershed area in the Korean peninsula. The lower region is urbanizedwhile 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 droppedbelow the limit of drinkable water. Even though the water drawn from the Han River is treated for drinkingwater 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 environmentalconservation policy. The government’s water quality control policy was in the past based on command andcontrol 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: youn@snu.ac.kr

** Korea Legislation Research Institute, Seoul, Korea.

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

The Han River watershed Major rivers in South Korea

Figure 1. Location of the Han River watershed

Figure 2. Water quality in the Han River

118 Inter-regional partnership for watershed conservation in Korea

1.6

1.4

1.2

1

0.8

0.6

0.4

0.2

0

mg/

l

BOD in Paldang Dam

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

year

WHAT MATTERS IN THE WATERSHED CONSERVATION POLICY?

A new policy is usually formulated to resolve a social problem, which involves many stakeholders. In theprocess of policy-making, the political power of stakeholders is decisive. Usually the political power is basedon the social structure concerned. In a democratic society, the political powers of stakeholders are usuallyexpressed 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 qualitypolicy 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 theinterest groups. Information on watershed management is essential for the evaluation of a watershed conservationpolicy based on a newly introduced partnership among stakeholders.

The public awareness of issues and facts about water quality and watershed conservation is the firststage of a policy formulation. The awareness of water quality was instrumental in the case of the Han Riverwatershed conservation partnership programme. The public awareness of the water quality problem broughtout the downstream residents’ willingness to pay for benefits from watershed conservation.

The watershed conservation policy is an output of a series of negotiations between representativesof downstream and upper region residents. The stakeholders expressed their cases in the process of designinga new policy instrument composed of income transfer and collection of an extra water user fee. The newpolicy introduced an instrument for internalization of externalities from watershed conservation, based onthe 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 stillvalid statute, that is, the Civil Act, regulates the basic relations about water distribution and use among theresidents in upper-and down-stream areas. But the new special statutes like the Riparian Act and the DamConstruction Act surpass the Civil Act in the respect of legal effect. According to such special statutes, theenterprises that obtained the licenses of water use by the government can obstruct the traditional rights tothe riparian water of the indigenous peoples under the Civil Act or distribute the water of rivers. The followingare 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 1990The Natural Conservation Act of 1997The Riparian Act of 1999The Dam Construction Act of 1999The Han River Water System Act of 1999The Nag Dong River Water System Act of 2002The Geum River Water System Act of 2002The 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, andmanufacturing and service sectors in the lower areas such as the Seoul Metropolitan will be the beneficiariesof the new watershed conservation programme while they pay less for their use of the water from the HanRiver. The farmers, forest holders and tourism industry in the upper areas will have to bear the costs of limitingtheir 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 ofa new law which regulates their economic activities in the upper regions. The forest owners were not activein 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, questionslike 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 manycases 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 amongthe stakeholders. The negotiations were moderated by the government and non-government organizations sincethe 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 industrieswhile the central government played the role of an intermediary. Their political powers were well exertedin various ways including the law-making processes in the national parliament to secure the environmental justiceof watershed protection policy. But there is still a remaining question of whether the minority’s interests were adequatelypresented or protected in the policy-making process. We are not sure that the information on the facts, costs andbenefits 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 ofwhich the fund is created from user fees collected from tap water users of the lower regions. The residentsof the lower regions pay 100 won per tonne of water consumed as user fee. The residents and landownersin 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 tothe public periodically. The income transfer programm is audited by legal identities such as the nationalparliament and the central government. The public can participate in the process of distribution of funds amongthe 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 theestablishment of a partnership among themselves. Here the roles of government and non-governmentsorganization are important in such arrangement of social relations. The political process is critical for successin 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 stakeholdersbut also by a sound understanding of the facts. We do not yet know much about the effect of forest managementon water conservation. This lack of information makes it difficult for the water users to pay for the watershedprotection function of forests.

120 Inter-regional partnership for watershed conservation in Korea

15 Biodiversity resources, economicvalues 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 andpotential utilization value of biodiversity resources in China are evaluated generally. Measures that havebeen 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 fragmentationof 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. Soconservation of biodiversity resources has become one of the hot spots globally. China is one of the countrieswith abundant biodiversity resources and is the largest developing country in the world. Conservation ofbiodiversity 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 andvarious habitats and determined the abundant biodiversity resources in China. The biodiversity has the followingcharacteristics.

Abundant species resources

There are more than 30 000 higher plant species in China, less only to Brazil and Columbia by world-widecomparison. In Asia, the number of species in China is highest. It accounts for about 10 percent of the totalspecies 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 endemicto 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 about17 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: shizm@forestry.ac.cn

121

Table 1. Species number in China and in the world

TypeSpecies number Species number

Percentagein China in the world

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

Table 2. Some animal and plant species (or genera) endemic to China

TypeNumber of known Number of endemic

Percentagespecies (or genera) species (or genera)

Mammals 581 species 110 species 18.9Birds 1244 species 98 species 7.9Retiles 376 species 25 species 6.7Amphibians 284 species 30 species 10.6Fish 3862 species 404 species 10.5Bryophyta 494 genera 13 genera 2.0Ferns 224 genera 6 genera 2.3Gymnosperma 34 genera 10 genera 29.4Angiosperma 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 continentalglacier in the Quaternary glacial period. Thus old and relic species of the Cretaceous and Tertiary periodshave been preserved all over the country in different degrees. For example, there are seven families of pineand fir in the world now, and China has six of them. There are many old or original families and generaof 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 tracedto the Hipparion fauna of Pliocene of the Tertiary period. The fauna north of Qinling belongs to the Palearcticrealm 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 tropicalarea. 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 thepaleotropical area. Dibamidae, Varanidae, Irenidae, Artaidae, Trogonidae, Eurylaimidae, Psittacidae,Bucerotidae, Pteropidae, Tupaidae, Lorisidae, Hylobatidae, Tragulidae and Elephontidae derive from the tropicalarea.

Additionally, many monotypic genera and oligotypic genera in the flora and fauna of China also reflecttheir old characteristics.

Plentiful genetic resources

Genetic diversity is very vast in China. The plentiful animal, plant and microbial species are valuable poolsof 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 treespecies found in China, including Ziziphus spp., Castanea mollissima, Camellia spp., Vernicia spp. andToxicodendron vernicifluurn that are specific to China. China is even the original and distributional centreof wild and cutivated fruit tree species; the number of cultivated fruit tree species in China is the most inthe 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 Oryzasativa and the original place of Glycine max. China also has more than 11 000 medical plant species and4215 grazing grass species.

As for animals, China has the most varieties and categories of domestic animals in the world. Accordingto the current statistics, there are 1938 varieties and categories of domestic animals in China, including endemiceconomic 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 typesare cold temperate coniferous forest, temperate coniferous and broad-leaved mixed forests, warm temperatedeciduous 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. temperategrassland, high and cold grassland, and mountain grassland. Desert ecosystem can be divided into four maintypes, 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 intobeach, estuary, coast, wetland, mangrove forest, coral reef, island and ocean ecosystems. Farmland ecosystemis 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 importantrole in poverty reduction, especially in rural areas. But, because there are many uncertainties in their exactvalues, we can now only evaluate them generally.

Generally, economic values of biodiversity resources can be divided into direct utilization, indirectutilization and potential utilization values. Direct utilization values include direct utilization values ofbiodiversity resources products and materials for processing other products; indirect utilization values includethe values of organic matter production, CO2 sequestration, O2 production, cycling and storage of nutrientmatter, water and soil conservation, water resources retention and reduction of environmental pollutants; potentialutilization 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 asRMB33.57x109, RMB358.21x109, RMB137.01x109, RMB51.80x109, RMB438.78x109 andRMB126.0x109 respectively.

• Service value. This value includes tourism, scientific and cultural values, and utilization value of livestockpower. 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 variousecosystems. 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 wereused for calculating the economic value of CO2 sequestration of terrestrial ecosystem in 1995. Theresult was RMB3.27x1012. The value of O2 production of terrestrial ecosystem in 1995 wasRMB3.11x1012, calculated by the methods of afforestation cost and industrial producing O2 shadowprice.

• Value of cycling and storage of nutrient matter. Based on the approximate calculation for the annualuptake and total storage of important nutrient matter such as nitrogen, phosphorus and potassium, itseconomic value was calculated by the average price of fertilizer. The result showed that the indirecteconomic 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: reducingloss 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 terrestrialecosystem for reducing soil erosion was RMB6.64x1012.

• Value of water resource retention. The value has been evaluated mainly for forest ecosystem. It wasabout RMB271.28x109 per year.

• Value of reduction of environmental pollutants. The value has been calculated just for forest ecosystem.Its value for SO2 absorption was RMB9.70x109 and for dirt removal was RMB390x109.

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 potentialspecies; potential reserve value should be larger that the value of potential option value. Accordingto 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 achievementsin 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 inthe relevant management departments of the state council and relevant institutions have also beenestablished in local governments;

• dissemination and education: news, reports, films and television programmes, exhibitions, memorialactivities 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, redanimal 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 conservationbiology and the artificial breeding techniques for specific species such as Davidia involucrata andAiluropda melanoleuca.

124 Biodiversity resources, economic values and conservation in China

• Monitoring and information system: Ecological stations and monitoring sites established include 64ecological stations of the Chinese Academy of Sciences (CAS) in different ecosystem types, 13 ecologicalstations of the State Forestry Administration (SFA) in different forest types, ecoenvironmental monitoringcentre, wetland resources monitoring centre and wild animal and plant resources monitoring centreof the SFA, monitoring network of the State Environment Protection Administration(SEPA), State OceanAdministration (SOA) and the Ministry of Agriculture (MOA). Information systems including thebiodiversity information systems of the CAS and relevant information systems of the SFA, SEPA, MOAand SOA have also been set up.

• Publishing books and journals on biodiversity: More than 400 relevant books have been publishedin the past 20 years including tens of national journals on nature conservation and biodiversity andover a hundred journals on biological science, agricultural science and forestry.

International cooperation

• implementation of international conventions such as the Biodiversity Convention, Ramsar Conventionand CITES Convention;

• multilateral cooperation and cooperation with government and non-government organizations such asWorld 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 Germanyon 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 resourcesin the world. The biodiversity resources have vast economic values and play an important role in povertyreduction, especially in the rural areas. Many activities in different ways of conserving biodiversity resourceshave been conducted and prominent achievements have been gained in the country. But because of China’sfast economic development, large population, and some irrational traditional lifestyles, more work on biodiversityresources conservation should be done in the future.

BIBLIOGRAPHY

Biodiversity Committee of Chinese Academy of Sciences. 1994. Principles and methodologies of biodiversitystudies. Beijing, Chinese Science and Technology Press.

Chen Lingzhi. 1993. China biodiversity—current situation and their conservation strategies. Beijing, SciencePress.

Editing Committee of Country Study Report of Biodiversity in China. 1998. Country study report ofbiodiversity in China. Beijing, Chinese Environmental Science Press.

Liu Shirong, Jiang Youxu & Shi Zuomin. 1998. A study on the biological diversity in warm temperate forestsin China. Beijing, Chinese Science and Technology Press.

Shi Zuomin 125

16 The role of forestry in povertyreduction, biodiversity conservationand Clean DevelopmentMechanism in Viet NamTrieu 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 totalphysical 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, especiallythe 8.5 million people of the ethnic minorities. The role of non-timber forest products (NTFPs) is very importantfor rural households, creating economic opportunities for communities, particularly for the poor in highmountainous and remote areas. Viet Nam is one of the most important centres of biodiversity with a veryhigh potential of non-timber forest products. With the policy of sustainable development, the Forest Science Instituteof 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 CleanDevelopment 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. Forestscover 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 andnon-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 neweconomic areas. The forestry management mechanism is not effective and does not meet the purpose of forestprotection and development; for example, there is a lack of effective mechanism to implement a sound conversionof forested land into agricultural land or other purposes. The motivation for forest protection and developmentis still weak.

The changes in the forest area through the years are shown in Table 1 (below):

Table 1: Forested area in Viet Nam, 1943–2000Unit: 1000 ha

Year Natural forest Plantation forest Total Forest cover (%)2000 9 444 1 471 10 916 33.21995 8 252 1 050 9 305 28.21990 8 430 745 9 175 27.81985 9 308 584 9 892 30.11980 10 486 422 10 908 32.11976 11 077 92 11 169 33.81943 14 300 0 14 300 43.0

* Forest Science Institute of Viet Nam, Hanoi, Viet Nam; E-mail: trieuvanhung@hn.vnn.vn

127

FOREST PRODUCTION

Since 1995, in line with the economic restructuring of the country, Viet Nam forestry has been developingsmoothly with some changes and a shift in focus from utilization to conservation and development of theforest. The trend is reflected in the conversions of (i) the natural forest to plantation and development offorest industries, (ii) governmental and state forestry into social forestry with multi-organizations includingthe 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 sustainableuse of forest.

Besides meeting the domestic requirements, forestry has seen its export value increasing steadily:

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

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

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

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

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

Forestry production is concentrated mainly in logging and forest products processing, which from 1985to 1999, took up 72.72–79.6 percent of all forestry activities, forest plantation and forest tending 13.05–17.88percent, and other activities 3.85–12.96 percent only.

In order to protect and develop the forest, the government has laid down a policy to limit logging:

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

Although the forestry sector contributes only a very small portion to the national economy in VietNam and its direct economic value is not high, it plays an important role in the people’s livelihood, especiallyin 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 peoplewere living in or around forested areas. Over 8.5 million people come from the ethnic minorities. Althougha rapid change is taking place in the economy and society at this moment, wood, fuelwood and non-timberforest products still play an important role in the livelihood of the ethnic minorities. According to theAdministration Unit, Viet Nam has 61 provinces with approximately 10 500 communes, of which 57.1 percentare at mountainous, upland and remote areas. There are 1175 communes in deprived conditions. These arethe poorest people and their livelihood depends on forests; nevertheless this group impacts strongly on theforest resources and forest degradation.

The Vietnamese Government has long encouraged the participation of the people in forestry activitiesfor poverty reduction. In implementing forest and land allocation, thousands of farmer households have receivedlong-term forest lands and rights to do business by themselves on the allocated land. Many national programmeshave been carried out with good results, including:

• Programme 327 “Regreening denuded lands and bare hills”: From 1993 to 1998, it has allocated 1.6million ha forest to farmer households, established new plantations of 638 500 ha and undertaken foresttending, 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 327from the years 1998–2010 with its objective to set up 5 million ha of new plantations of forest. After4 years of implementation with the support of the local people, it has newly planted about 200 000ha involving forest tending, protection and annual regeneration. The forest cover has increased by 2percent.

• Fixed cultivation and settlement programme: It has contributed actively to a stable life of the highmountain people. After 20 years of implementation, there are 1185 communes belonging to 26 provinceswith altogether 1.9 million people participating in the whole country. In many fixed cultivation andsettlement areas, production development has created some concentrated forestry production zones suchas bamboo plantation in Thanh Hoa with more than 20 thousand ha. In Yen Bai province, there arethousands of hectares of planted Cinnamomum trees. This has assisted over 132 000 households withmore than 800 000 people having a stable living, and established many forest farms at new habitationareas.

• Programme 135 “Poverty reduction in socio-economic development” has been implemented in 2235poor communes. Every year, the number of poor households has been declining by 1.5–2 percent.(28 000–30 000 households/year), creating 1.4 million jobs where the stabilization and developmentof 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 Forestryin 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 hasbeen 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 17national 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 centresof 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 biodiversityconservation and integration of forestry, biodiversity conservation and environment protection. In reforestationand forest enrichment, using indigenous tree species has been given more attention. Currently, there are morethan 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 beunderestimated, especially for the poor and remote households. NTFPs can create economic opportunitiesfor 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, harvestingan average of 200–300 kg of fruit per year, in some cases, as much as 500–1000 kg, equivalent to 20–30million VND, which is 10–20 times higher than rice cultivation on the same area (Nguyen 2001).

Table 2. NTFPs harvested from 1995 to 1999Product Unit (trees) 1995 1996 1997 1998 1999Bamboo Thousand stems 67 026 720 858 174 189 172 649 171 000Neohouzeaua dullooa Thousand stems 108 500 104 779 105 175 248 310 150 000Phyllostachys spp. Mllion stems 15 600 24 664 2 649 12 197 100 000Rattan Tonnes 28 500 25 975 25 639 80 097 65 700Pine resin Tonnes 5 350 1 348 6 387 6 777 7 182Anise fruits Tonnes 1 870 6 672 9 896 9 500 5 000Cinnamon Tonnes 7 790 3 658 3 954 2 100 2 900Bamboo 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 Mechanismin Asia–Pacific Countries” in Hanoi, 1999, CDM awareness has improved in Viet Nam. The practicality ofCDM can be seen in its relationship to forestry issues. The potential of forestry CDM in Viet Nam is at thepolicy 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, timberand other products.

The National Five Million-Hectares Reforestation Programme holds an opportunity for CDM applicationwith different types of projects: forest protection (watershed management, sand-dune stabilization, soil andwater 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 ForestScience Institute of Viet Nam , founded by the International Greenhouse Partnership Office (IGPO), is beingimplemented within the CDM framework. By using improved and selected seed sources of Acacia auriculiformisand Eucalyptus terreticornis for plantation at 1600 ha y-1, the growth yield increases of 15–20 percent meana carbon sequestration of 6000 tonnes y-1 equivalent to 22 000 tonnes CO2 y

-1 more than by using normalseed 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 conservationIn forested areas, the division of labour is lower than that in other areas; therefore enhancement of the awarenessof 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 DevelopmentMechanism. There are no two opposite issues.

2. Stable land-use planningIn general, the Government of Viet Nam pays great attention to land-use planning. However, in practice thefeasibility and effectiveness of land-use planning projects do not meet the requirements of sustainabledevelopment. 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 initiativelyand based on a need for economic restructuring in each region. Planning has to be made according to intersectorapproach to ensure a balanced and feasible implementation.

3. Reasonable resource utilizationThis is a need to develop effective production models like agriculture–forestry and agriculture–forestry–fisheryfarming systems, where appropriate technologies can be applied. Selecting crop structure, animals and farmingtechniques suited to the physical conditions and characteristics of each region (for example, cultivation onsloping land) must be linked to marketability to ensure high and sustainable effectiveness. In addition, newtechnical advances and traditional indigenous knowledge of each community should be combined for bestresults.

4. Socio-economic and policy issuesForest and land allocation policy has helped many farmer households to establish some effective productionmodels. 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, protectionforest, special-use forest and production forest, are not well defined with the benefits for the forest ownersnot clearly shown. In general, there is still lack of a sound forestry policy system to motivate active participationof the people in forest protection and development.

5. Forestry researchIn order to strengthen the role of forestry in poverty reduction, biodiversity conservation and application ofClean Development Mechanism, some questions need to be answered and constraints addressed for forestryresearch 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 researchfields (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 lackof information, extension and dissemination of research results.

• Specific objectives of forestry research in Viet Nam in the coming years need to be developed to setthe research priority to 2010, to enhance research capacities and networks, to improve the effectivenessof 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:– 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 producecommodities including non-timber forest products; investigating and evaluating the traditionalindigenous knowledge of the communities and marketing possibility of the main products includingthe NTFPs;

– studies on seed improvement, propagation, farming technique, products processing, and preservationtechnique aimed at raising productivity and economic effectiveness;

– developing and establishing models towards good production, high effectiveness and sustainability(combined with ecotourism), agroforestry models for various zones such as ethnic minority areas;

– 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, policiesto benefit forest owners, on tax, investment and credit;

– strengthening forestry extension services in suitable forms to various target groups.• Tasks of the Forest Science Institute of Viet Nam:

– To undertake research in line with the priorities and issues mentioned above, linking research to practicewithin the national programmes on poverty eradication, especially in mountainous and remote areas.

– In technology transfer, there is a need to establish pilot models at important zones, produce extensiondocuments with background information and form suitable for farmers and organize training andtechnology transfer to farmers.

– To meet the requirements of forestry development, it is necessary to strengthen the capacity buildingof the FSIV such as training and education of the staff, as well as development of an internationalcooperation and information network.

BIBLIOGRAPHY

General Statistical Office. 2000. Statistical data of Viet Nam agriculture, forestry and fishery, 1975–2000.pp. 7–10. Hanoi.

Ha, C.C. 2001. Mot vai y kien ve che bien lam dac san. Thong tin chuyen de Khoa hoc Cong nghe va Kinhte. Trung tam thong tin, Bo Nong nghiep va Phat trien Nong thon. So 1 nam 2001. (Some ideas on processingNTFPs in Viet Nam). MARD. Hanoi.

Ha, C.C., De Beer, J. & Tran, Q.T. 2000. Non-timber forest products subsector analysis – Viet Nam. Hanoi.43pp.

MARD. 2001a. Forestry development strategy of Viet Nam 2001–2010. Hanoi. 75 pp.MARD. 2001b. Lam nghiep Viet Nam 1945-2000 (Viet Nam Forestry 1945–2000). 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 – 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

17 A policy review on watershedprotection and poverty alleviationby the Grain for Green Programmein ChinaLi Zhiyong*

ABSTRACT

The rapid development of the Chinese economy is still confronted with constraints from deterioratingenvironment 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 ecologicalconditions, 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 implementedin 2002 across the country, is the biggest land-use transition, watershed management and poverty alleviationprogramme 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 Grainfor Tree policy has a significant bearing on the ecological protection and poverty alleviation of the farmersin 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 theother developing countries in the world in their efforts to combat the deteriorating environment and alleviatepoverty.

POLICY SETTING

Ecological improvement and poverty alleviation make demands on the Grain for Treepolicy

China is a big mountainous agricultural country. In the past five decades vast forest lands and grasslandshave 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 millionha of farmland with a slope of over 25 degrees in China. The annual volume of silt flowing into the YangtzeRiver 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 releasedin 2002 indicate that the area prone to soil and water erosion in China accounts for 37.5 percent of the nationalterritory and the annual volume of soil erosion reaches over 5 billion tonnes. In addition, China is sufferingfrom a serious shortage of water resources, with per capita share of water resources reaching merely 2000tonnes. It has become one of the 13 water-poor countries in the world. Although China’s poverty reductionpolicy has helped the 220 million poverty-stricken population solve the problem of food and shelter, currentlya 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:zyli@forestry.ac.cn

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

China’s enhanced economic strength offers a sound economic basis for it to map out and implement the Grainfor Green Programme. Since the policy of reform and opening up was initiated in 1978, China has maintaineda sustained and rapid economic development for over two decades. Its GDP in 2002 exceeded RMB1 trillionfor the first time, with a remarkable growth in its overall national strength and fiscal revenue, thus makingit possible for the government to contribute certain financial and material resources to ecological improvementfor such programmes as the Grain for Green Programme.

Consecutively good harvests of grain offer favourable conditions for the implementation of the Grainfor Tree policy. First of all the policy would not produce a great impact on national grain security becauseof the abundant storage of grain. Since 1995 China has experienced consecutive years of good harvest, withthe grain output exceeding 500 billion kg for three consecutive years (1996, 1998 and 1999), thus givingrise to a situation where supply exceeds demand in a successive and structural manner. If 14.67 million haof farmland were to be converted into forest land and grassland by the year 2010 and 2250 kg ha-1 y-1 and1500 kg ha-1 y-1 of grain were to be subsidized for the Yangtze River catchment and southern region as wellas the Yellow River catchment and northern region respectively, the grain subsidies in peak years would amountto 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 bearingon 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 over15 degrees produces on average only 1770 kg of grain per hectare. Even if all of the 14.67 million ha ofsloped farmlands and sandificated farmlands were converted into forests according to the plan, only 26 billionkg of grain would be reduced annually across the country, taking up only 5.2 percent of the average grainoutput nationwide during the 9th Five-Year-Plan period. It is obvious that conversion of sloped farmlandsand sandificated farmlands into forests would not produce a significant impact on the equilibrium of supplyand demand for grain nationwide.

POLICY ESSENTIALS

In order to ensure the successful implementation of the Grain for Green Programme, the Chinese Governmenthas issued the Regulation of Grain for Green in 2002 and has adopted a range of innovative and operationalpolicy 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 farmlandin the Yangtze River catchment and southern region and 1500 kg of grain are subsidized annually for eachhectare 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 cashsubsidies: subsidy for conversion of farmland into grassland is valid for two years, subsidy for conversionof farmland into economic forest is valid for five years and subsidy for conversion of farmland into ecologicalprotection 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 unifiedleadership of the county or township government in barren hills where conditions permit after they haveconverted 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 barrenhills are borne by the government, calculated in terms of RMB750 per ha. The sloped farmlands which havenot been contracted out to individual households and fallow sloped farmlands would not be eligible for grainand cash subsidies, but can be afforested as barren hills. Subsidies are given for afforestation costs that areused only for seeds and seedlings, and the lands are closed for regeneration and maintenance instead of forother 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 asof the year when the conversion programme is implemented. If the grain subsidy does not reach the previousannual yield, agricultural tax would be deducted accordingly and in a reasonable manner. If the convertedfarmland is not subject to agricultural tax, agricultural tax must not be deducted from the grain subsidy regardlessof the previous annual yield. For the counties where the Grain for Green Programme is implemented, thedrop in collection of the agricultural tax would be subsidized properly by the national revenue in the formof transfer payment.

Guarantee policy for forest tenure

The government is implementing a policy of “those who convert sloped farmlands into forests and managethe forests would benefit from them”. It adheres to the mechanism of contractual operation by individualswith a combination of responsibility, power and interests. Following the implementation of the Grain for GreenProgramme, 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 certificatesof tenure to tree crops by the People’s Government above county level. The contracting-out duration wouldextend to 50 years after farmers have established plantations on farmlands and barren hills. Farmers are entitledby law to inherit and transfer the contract and extend it upon expiration in conformity with relevant lawsand regulations.

An ecological protection forest-biased policy

The proportion of ecological protection forest must not be lower than 80 percent when counties are regardedas 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 1999–2002, 7.7 million ha of farmland were converted into forest nationwide, including 3.72 millionha of farmland-turned forest and 3.98 million ha of plantations established on barren hills. In 2002 alonethe Grain for Green Programme involved 5.162 billion kg of grain and RMB458 million, from which 10.31million farmer households benefited. Implementation of the Grain for Green Programme has altered thetraditional farming practices of the Chinese farmers, achieved agricultural restructuring, increased the farmers’incomes, improved the ecoenvironment and promoted the local economic development and poverty reductionprocess in poverty-stricken areas.

Some achievements have been made in the grain for ecology programme and the deteriorating ecologicalconditions 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 andland sandification. The serious soil and water erosion in some southern areas, where trials of the Programmewere first undertaken, has been mitigated, with water in some river catchments turning clear and theecoenvironment improved. Some relevant industries like tourism and animal husbandry have been boostedand local economies further developed. The area proned to soil and water erosion in the Grain for GreenProgramme 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. Over90 percent of the farmer households under survey contend that the ecoenvironment in the vicinity of the villagehas 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 thefarmers’ poverty reduction process has been accelerated. Over one-third of farmer households in most programmeprovinces (or regions) are involved in the conversion of farmlands into forests. Some farmers engaged inthe conversion programme have obtained not only a reliable supply of grain but also increased their incomeby engaging in diverse economic undertakings and sideline production.

The Grain for Green Programme is also the largest project for poverty alleviation. The rural householdsthat 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. Amongthe 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 Countyin 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 cropharvest for consecutive years, and thus no grain ration for rural households. Under the Programme, this countyhas converted 8000 ha of cropland. The cash and grain subsidies provided by the Programme have immediatelyreleased the hunger problem of these rural poor.

The agricultural industry structure has been readjusted effectively and the rural economy has furtherdeveloped. The Grain for Green Programme has helped to change the traditional way of extensive cultivationwith little harvest and to readjust the inappropriate land-use structure. Since the Programme started, governmentagencies 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 whichalso facilitated a shift from agricultural production to tree crop production, stockbreeding and other secondaryand tertiary industries. The rural industrial structure has been adjusted appropriately and farmers’ economicincome has been increased. The Grain for Green Programme at Longhui County in Hunan Province adopteda model of combining forestry with medicinal plants so that water and soil have been well conserved whileachieving a high economic value. An output value of RMB60 000 per ha can be secured when the medicinalplants mature. The county has established a total area of 1200 ha of medicinal plants, which will bring anincome of RMB72 million for local farmers four years from now.

The policy of conversion of cropland to forests policy has received extensive support and participationby local farmers, and has become the largest and most successful community forestry project. Since its pilotphase started in 1999, the Grain for Green Programme has covered altogether 25 provinces (autonomous regionsand municipalities) which include more than 1600 counties, 20 000 plus towns and townships, more than100 000 villages, over 15 million rural households and more than 60 million farmers. The programme hasalready become the largest participatory community forest project in China. The design of the Programmewas 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 10towns and townships, 50 villages, 9909 households and 18 301 plots: such a well-organized forest programmewas unprecedented. According to the survey of one hundred households that converted their croplands, about94 percent of them signed contracts with the village, around 93 percent acknowledged that the village hadrevealed information on converted area and cash and grain subsidies of each household, and about 89 percentagreed that the information was accurate.

POLICY CONSTRAINTS

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

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 converttheir croplands and also converted more than what was planned in the Programme. Secondly, although it wasstated very clearly in the policy that “people who convert their croplands should plant trees, and those whomanage the forests should benefit”, it has remained to be an issue of great concern as to how farmers couldreap economic benefit from the trees especially those ecological forests that were established under theProgramme when the subsidy ends. Thirdly, the forest management and utilization policy eight years afterthe Grain for Green Programme is unclear. Also constrained by the logging quota, the rural households thatconverted their croplands and other planting units lost interest in establishing ecological forests. All thesehave 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 soilerosion under control, and improve the ecosystem through providing grain for green in return. Therefore theProgramme should cover sources of big rivers, river banks, steep slope cultivation areas around lakes andreservoirs, and sandy cultivation areas that are severely threatened by sandstorms. There are some problemsemerging 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 largeareas of degraded land under control. Secondly, some ecologically fragile areas and key areas of ecologicalimportance were not assigned with conversion tasks or with very few tasks; thus the watersheds along somebig rivers were not harnessed as priority areas. This breaches the principle of putting key ecological areasin the first place.

POLICY RECOMMENDATIONS

Aiming at the problems emerging during the implementation of the Grain for Green Programme, there willbe need for further improvement of the policy in three areas in the future given that the current policy isimplemented effectively by the central and local governments. The proposed improvement will contributeto the long-term effectiveness of the policy, the realization of watershed management, poverty alleviationand 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 bereadjusted to change the traditional way of extensive cultivation with little harvest. Grain production on steepslope 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 productioncan be replaced by growing fruit trees, medicinal plants and other tree crops, so as to readjust the internalstructure of the planting business. In areas that have tourism resources, forest ecotourism should be developedwith local characteristics. Secondly, farmland infrastructure needs to be further developed to improve grainproductivity. At the same time the conversion of cropland is taking place, rural households that participatedin the programme should be left with a certain amount of farmland for subsistence. Grain productivity inthose reserved farmland should be greatly increased through technological improvement and intensifiedmanagement. Thirdly, the growing of high quality and new variety of products such as fruit trees should bepromoted to increase the farmers’ incomes. Fourthly, the traditional way of grazing should be improved andcaptive breeding should be promoted. Livestock species should also be restructured and the integration ofcaptive breeding, half grazing and half breeding, and grazing during summer and breeding during winter shouldbe adopted to effectively protect natural pasture and forests. Fifthly, township enterprises should be promotedto release the reliance of local farmers on land resources. Township enterprises of forest industry, tourismindustry and processing industry in the areas covered by the Programme should be greatly developed to increasethe farmers’ incomes.

Rural energy structure needs to be further improved for the effective conservation of forests establishedunder the conversion programme. The strategy of concerted economic and environmental development shouldbe followed to integrate rural energy development into the conversion programme and to release the energyreliance of local farmers on the newly established forests. Based on the overall objectives of energy andenvironmental 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. Supportiveeconomic 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 systemwith multiple energy sources supplementing one another should be established and an organizational structureand service system for rural energy consumption needs to be completed. Therefore energy use for rurallivelihoods and the issue of rural energy can be solved comprehensively and systematically, with the ecologicalenvironment 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 torelease the pressure of population and agriculture in water and soil erosion areas. The conflict between populationand land has become more prominent since the Grain for Green Programme was implemented. Although thepolicy requires grain subsidy being provided by the national government, such subsidy is limited to certaintime frame. If follow-up measures are not well considered, once the subsidy is stopped, farmers will resumecultivation 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 onlythe ecological environment can be harnessed and improved, but the newly established forests in the keyecologically fragile areas can also be well maintained. Ecological immigration should be carried out togetherwith the development of small townships, the creation of employment opportunities and new skills trainingin order to improve the adaptability of the immigrants. The investment on ecological immigration should be mainlyfrom the central and local governments. It is also possible for the national or local governments to establish a specialfund 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 westChina economy development. Forestry Economy 2001 (01): 50–55.

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 Republicof China (367th): Regulations on conversion of cropland to forests/grassland (available atwww.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 croplandto forests/grassland in west China economy development. Forestry Science 2002(01): 130–135.

Zhou Shengxian. 2002. Historic change of forestry in China. Beijing, China Forestry Publishing House. 304pp.

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

18 Forest resources of Bangladeshwith reference to conservation ofbiodiversity and wildlife inparticular for poverty alleviationM.M. Rahman*

ABSTRACT

The loss of biodiversity has been taking place since humans first learned to harvest natural resources andto manage the land to increase its productivity. Depletion of natural resources and rapid loss of biodiversityhave occurred over time to meet the basic needs of the growing population. Bangladesh is far behind in raisingpublic awareness of the ecological, economic and sociocultural value of biodiversity and promoting localcommunity participation in its sustainable conservation and management programmes. Biodiversity beinga major source of food, fibre, fuel, fodder and other useful things needs adequate attention and increasedknowledge for its conservation and wise use in a sustainable manner. Sustainable management and conservationof ecospecific biodiversity through the poor people’s active participation can contribute substantially to povertyalleviation in the context of environmental conservation. Poverty alleviation programmes should be aimedat creating common property management such as common forestry, common horticulture, common fruit gardensand 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 growthrate of population with almost half of the population below fifteen years of age. Most of the people are amongthe poorest in the world, and depend mainly on the natural resource base for their livelihood. But now theresource base is under serious threat, as many natural resources are either being overexploited or usedsuboptimally. Besides the effects of anthropogenic stresses, the low ‘land-man’ ratio in the country is oftenfurther threatened by natural hazards. Thus, for the survival of Bangladesh’s dense population, it is essentialto have environmental planning and management that conserve and sustain the ecosystems that support theirlivelihoods.

The high population density, low economic growth, lack of institutional infrastructure, an intensivedependence on agriculture and agricultural products, geographical settings, and various other factors, allcontribute to make the country weak in its economic development and quality of life. Table 1 is a summaryof the social, economic and environmental indicators in Bangladesh from 1981 to 1995.

* Bangladesh Forest Research Institute, Chittagong, Bangladesh; E-mail: bfri@spnetctg.com

139

Table 1. Statistics of the social, economic and environmental indicators in Bangladesh from 1981 to 1995Indicator 1981 1991 1995Population (millions) 89.9 111.5 119.8Land area (km2) 144 000 147 570 147 570Forest (%) 15.0 12.8 12.7Agriculture (%) 60.5 55.1 52.1Urban population as % of total population 15.2 17.2 22.0Population below poverty level (%) 73.0 47.0 45.8Life expectancy at birth (years) 55.0 56.0 58.0Literacy 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 mostdensely populated country in the world. Population growth is identified as perhaps the most serious probleminhibiting the sustainable use of resources. Increases in development or productivity are eroded by populationgrowth. At present over 50 percent of the population in Bangladesh are below 15 years of age. Hence inthe next 10 years, there will be a dramatic rise in demand for employment, but opportunities in agricultureappear 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 verylimited land resources for different uses. Conversion of the vast population to a productive human resourceremains the greatest development challenge.

Poverty

It is estimated that more than 40 percent of the population regularly consume less than the absolute criticalminimum of 1800 kilocalories per day. These 50 million people are amongst the poorest in the world by anystandard of development. Furthermore, it has been estimated that the number of absolute poor has risensignificantly. The poverty of these deprived people is deep rooted, pervasive and multi-faceted, relating notjust 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 disasterand disease. The challenges posed by this massive poverty are enormous for a country with acceleratingenvironmental degradation of an overpopulated land base.

The human development indicators for Bangladesh are also staggeringly low. Bangladesh has an adultliteracy 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 percentper 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 reductionof 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. Theproportion 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 only5.8 percent of the total area of Bangladesh in 1991 (Figure 1) with an estimated annual deforestation rateof 8000 ha. The actual proportion is likely to be lower as the extraction of forest resources has increasedin recent years.

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

140 Forest resources of Bangladesh with reference to conservation of biodiversity and wildlife in particular for povertyalleviation

Figure 1. Status of closed forests, 1991.

Ecological harmony necessitates a certain balance between resource endowment and population. Viewedin this context, the situation in Bangladesh is extremely critical. Based on the forestry figure of 1980 andpopulation figure of 1980–90, per capita availability of closed forests is estimated to be 1.4 ha in Bhutanand 0.8 ha in Myanmar. In Nepal, 10 persons are endowed with one hectare of forest on the average whereasit 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 thesoutheast, the country consists of low, flat and fertile land with a network of rivers flowing to the Bay ofBengal. The forests comprise 17 percent of the total area of the country. Of this, the Forest Department managesabout 10 percent and off-forest land covered by trees is about 7 percent. In recent decades, there has been a greatdecline in forest resources. Only 7.7 percent of the total areas of Bangladesh are under close tree cover (Tables2 and 3).

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

Source: Anonymous (1982).

M.M. Rahman 141

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%Bangladesh Bhutan India Nepal Sri Lanka Myanmar Pakistan

Countries

For

ests

as

% o

f lan

d ar

ea

6%

16%

13%

26%

45%47%

3%

Table 3. Forest land and tree cover as percentage of total land of Bangladesh

ClassificationTotal forest area Percent of total land

(million ha) Total area Tree coverHill forest land 1.38 9.6 2.3Littoral forest land 0.65 4.5 3.2Plains (sal) forests 0.11 0.7 0.3Total state forest land 2.14 14.8 5.8Village forests/homestead 0.27 1.9 1.9All 2.41 16.7 7.7

Source: Anonymous (1982).

There are three major natural forest types in Bangladesh (Kamaluddin and Shamsuddin 1977). Theseare semi-evergreen forest occurring on the eastern hills, deciduous sal (Shorea robusta) forest on the centraland 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 highlyproductive. Besides, fresh water swamp forest occurs in low-lying areas of Sylhet and also in depressionswithin 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 supporta heterogeneous vegetation. Due to the raising of plantations with single crops following the harvesting ofthe natural forests and the introduction of exotic species in some areas, the floral diversity has been reducedover a greater part of the country. A rich heterogeneous flora is ideal habitat for wildlife. Reduction in floraldiversity 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 povertyalleviation

Biodiversity research initiatives in Bangladesh

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

National Conservation Strategy (NCS)

The idea for a National Conservation Strategy (NCS) emerged in September 1986. Its primary goal was thesustainable use of natural resources. The National Conservation Strategy Implementation Project I (1994–1999) was a five-year project implemented by the Ministry of Environment and Forest (MoEF), with financialand technical support from NORAD and IUCN. Through this NCS Phase 1, one major programme wasimplemented in four distinct ecosystems—tropical and mangrove forest areas, St. Martin’s Island, TangourHaor 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 BiodiversityManagement Project” funded by the Global Environmental Facility (GEF). It was a preparatory initiative todevelop 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 primaryfocus was to integrate conservation and development, in order to protect and manage the priority areas ina sustainable way. The duration of the project was 15 December 1997 to 31 December 1999. The ProjectBrief and the outcome of the said PRIF study project have already been approved by the Project SteeringCommittee, and subsequently accepted by the GEF. The product of the follow-up project entitled “Coastaland Wetland Biodiversity Management in Cox’s Bazar and Hakaluki Haor (BGD1991G31)” has also beenprepared, and approved by the GEF council for funding. This project is under process of execution by theGovernment of Bangladesh.

Integrated Coastal Zone Management (ICZM)

In December 2000 the Minister of Water Resources announced the Government’s intention to develop anICZM policy. Among other objectives, the ICZM policy will attempt to rationalize and coordinate moreeffectively a number of environment and development initiatives taking place in the coastal zone. A numberof donors, including the World Bank and the Netherlands Government, will be supporting the developmentof 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 utilizationwill be executed in Rangamati Hill district. This project is in the process of final approval by the GEF. Thespecific 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 NationalEnvironment Management Action Plan (NEMAP) process. It focuses on community-based resource managementin wetlands. In the NEMAP several major priority areas of environmental concern were identified, and theSEMP has been designed to address these priorities. The programme consists of 26 components on five majorthemes, 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 areasof haor and floodplain ecosystems. The major focus of the programme is to involve community people inthe planning and implementation of activities for the management of natural resources that maintain biodiversityand 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 conservethese resources the Government of Bangladesh and the United States of America have jointly developed aprogramme called MACH. An agreement to implement this programme was signed in May 1998. Its goalis to ensure the sustainable productivity of all wetland resources such as water, fish, plant and wildlife overan 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 managementof 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 willwork 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 objectiveof the project was to establish and maintain a forest management system that was fully responsive to theeconomic, 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 protectingthe 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 resourcesavailable in the designated areas. The potential value of each protected area was evaluated through determinationof the species present, the relative abundance of the species and the species diversity. The critical habitatsin each of the protected areas were identified for protecting the threatened species, and also for developingprotective area management plans.

Floral diversity

The vegetation of Bangladesh has been discussed under forest types. But the species include mainly thosewhich are of commercial importance. The greater bulk of plant species for Bangladesh are yet to be recordedfor different forest types. It is believed that 5000 species of angiospermic plants occur is Bangladesh. Thereare 750–800 tree species including indigenous, exotic and naturalized ones. The number of shrubs and woodyclimbers is 1500–2000 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 haveecologically adapted species, especially of higher groups of plants and animals. Biodiversity has threecomponents: species, genetic and ecosystem. Considering the available information and time constraint onlyspecies diversity in relation to habitat will be discussed. With forests disappearing rare wildlife and biologicaldiversity has also been reduced quite rapidly. Many species have gone totally extinct, and some wildlife specieshave 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 povertyalleviation

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 ofvertebrate animals became extinct during the last century from their natural habitats in Bangladesh (Table4). Still species diversity is quite good (Table 5) although the population status of important species isunsatisfactory. However, information on the high diversity of invertebrate animals is insufficient owing tothe lack of studies and limited resource personnel. Nevertheless, the author has identified 12 species of wildlifeas 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 hastaken place for various reasons such as:

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

Table 4. Animal species extinct from Bangladesh during the last centuryWildlife class English name Scientific nameMammalia Great one-horned rhinoceros Rhinoceros unicornis

Lesser one-horned/Javan rhinoceros Rhinoceros sondaicusAsiatic two-horned rhinoceros Didermocerus sumatrensisBlue bull/nilgai Boselaphus tragocamelusWild buffalo Bubalus bubalisGaur Bos gaurusBanteng Bos bantengSwamp deer/barasingha Cervus duvauceliMarbled cat Canis lupusHog deer Axis porcinusWolf Canis lupusGolden cat Felis temmincki

Aves Pinkheaded duck Rhodonessa caryophyllaceaGreater adjutant Leptoptilos dubiusKing/black vulture Sarcogyps calvusBengal florican Euphodotis bengalensisBurmese peafowl Pavo muticus

Reptilia Marsh crocodile Crocodylia palustrisSource: Husain (1992).

Table 5. Status of inland and resident vertebrates (species diversity) of BangladeshTotal No. Threatened

Group of living Extinct CriticallyEndangered Vulnerable Total

species endangeredAmphibians 22 0 0 3 5 8Reptiles 109 1 12 24 22 58Birds 388* 2 19 18 4 41Mammals 110 10 21 13 6 40Total 629 13 52 48 38 147

Source: IUCN (2000).

* Excluding migratory birds.

M.M. Rahman 145

Table 6. Animal species extinct from Bangladesh at presentWildlife class English name Scientific nameMammalia Great one-horned rhinoceros Rhinoceros unicornis

Lesser one-horned/Javan rhinoceros Rhinoceros sondaicusAsiatic two-horned rhinoceros Didermocerus sumatrensisBlue bull/nilgai Boselaphus tragocamelusWild buffalo Bubalus bubalisGaur Bos gaurusBanteng Bos bantengSwamp deer/barasingha Cervus duvauceliMarbled cat Canis lupus

Aves Pinkheaded duck Rhodonessa caryophyllaceaCommon peafowl Pavo cristatus

Reptilia Marsh crocodile Crocodylia palustrisSource: 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 andforest resources. A good number of species are endangered and threatened. They are also likely to be extinctunless adequate measures are immediately taken. Merely declaring and demarcating some places as protectedareas 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. Scientificand socio-economic studies must be undertaken to address the problem.

Table 7. Protected areas for wildlife conservation under the management of the Forest DepartmentName of protected

National categoryIUCN Area Year of

area category (ha) notificationBhawal National park V 5 022 1982Himchan National park V 1 729 1980Lawachara National park V 1 250 1996Madhupur National park V 8 436 1982Kaptai National park V 5 465 1999Ramsagar National park Unassigned 52 1974Nijhum Dwee Wildlife sanctuary Unassigned 16 352 2001Chunati Wildlife sanctuary IV 7 764 1986Pablakhali Wildlife sanctuary IV 42 087 1983Rema-Kalenga Wildlife sanctuary IV 1 095 1981Sundarbans East Wildlife sanctuary X 31 227 1996Sundarbans South Wildlife sanctuary X 36 970 1996Sundarbans West Wildlife sanctuary X 71 502 1996Char Kukri Mukri Wildlife sanctuary Unassigned 40 1981Hazarikhil Wildlife sanctuary Proposed 2 903 1967Rampahar-Sitapahar Wildlife sanctuary Proposed 3 026 –Hail Haor Wildlife sanctuary Proposed 1 427 1983Teknaf 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 povertyalleviation

ECOTOURISM: TOOLS FOR POVERTY ALLEVIATION

Ecotourism is a sustainable form of land use which contributes to environmental conservation while providingaccrued socio-economic benefits to the indigenous people through the non-consumptive uses and indirect valuesof the natural biological resources. The goal of ecotourism is to promote an environmentally friendly businessand to generate local income. In reality, ecotourism is an economically viable industry at the national andlocal levels.

The forest of Bangladesh is a peculiar type of ecosystem because of its interesting environmentalconditions. It offers a wide range of outdoor recreational opportunities. These opportunities may include powerboating, 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 throughnational 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 ecotourismif well planned. With this in view, the Bangladesh Forest Department can develop tourism facilities in mangroveand hill forest areas.

The strategy of the Forest Department’s tourism and recreation initiative will be to adopt a higherpublicity profile, to strengthen its forest development efforts and to gain new constituencies in forestconservation. For instance, to develop Nijhum Dweep as a tourist spot the Forest Department will endeavourthe following:

• Develop the Nijhum Dweep Wildlife Sanctuary as a visitors’ destination on a limited scale. A sanctuaryoffice 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 DivisionOffice, 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 activitiesof the Forest Department.

• Develop promotional materials highlighting the Department’s forest development activities andaccomplishments in the coastal territory. Videos of the Department’s field activities, especially inplantation development, will be produced, distributed and shown to local audiences and sent tointernational aid agencies. Conservation slogans will be echoed through posters, postcards, maps,brochures and souvenir items to be disseminated to local visitors and commercial establishments. Aninternet web-site will be set up by the Department so that its programmes can be disseminated muchfaster to the intended clients on the web.

Unless the poor forest dwellers can increase their income, it is difficult to get their active supportand involvement in forest and wildlife conservation. The income of the people can be improved through furtherdevelopment of ecotourism all over the country. The rich fauna and floral biodiversity and also beauty ofnature 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. 5–10. 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. 193–196. Dhaka, Bangladesh, Forest Department.

M.M. Rahman 147

Khan, M.S. & Alam, M.K. 1996. Homestead flora of Bangladesh. Dhaka, Bangladesh, Bangladesh AgriculturalResearch Council (BARC). 275 pp.

Rahman, M.M. 2002. Scientific report submitted to the Ministry of Environment and Forest, BangladeshSecretariat, 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 povertyalleviation

19 Poverty reduction and forestrysector: towards the sustainablemanagement of natural resourcesLic Vuthy*

ABSTRACT

Forests are crucial for socio-economic improvement and poverty alleviation in Cambodia. They not only providefood and raw materials, but also serve an important life support function by generating oxygen and regulatingfresh water through preserving watersheds. As part of Cambodia’s approach to using, protecting and managingforests for sustainable development, uses and threats need to be weighed against each other and managedappropriately. In Cambodia natural resources are in danger of being overexploited. The Royal Governmentof Cambodia has taken important steps in mitigating threats to forest through increased community managementand good governance. The greatest challenge is lack of human resources and finances for implementing theseforest protection measures. Sustainable management of forest resources ensures that commercial forestoperations are carried out efficiently; preserves soil; identifies and protects sites of high traditional, historicaland 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 ecologicalvalues; protects water resources; allows continued exploitation of non-timber forest resources in a way thatpermits continued productivity with respect to these resources; ensures that forest activities are carried outin a safe and legal manner; allows existing recreational uses as appropriate and minimizes the adverse effectsof forest operations on people and environment. A possible solution to dealing with development and preservationof 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 tobe retained in their pristine state and those supporting community livelihoods. The Royal Government ofCambodia 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. Manyactivities currently being undertaken are concentrating on the important links between forests and sustainabledevelopment, while at the same time encouraging the protection of representative components of Cambodia’sforests through a system of protected areas. These approaches will help to ensure the ability of Cambodiato 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 protectingthe 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 asfuture needs is an important goal of the Cambodia Government. In order to achieve this goal, however, increasedattention 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: dfw.syphan@bigpond.com.kh

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Forests have significant roles in the development of Cambodia’s agriculture, socio-economic,environmental and tourist sectors – especially in the subsistence of local communities. Forests also providea major source of fuel and building materials for the local populations. Cambodian forests contain substantialbiological resources, including valuable plant and wildlife species such as birds, reptiles and mammals, whichare among the richest in biological diversity among the countries in the region. Sustainable management inforest use and development is one of the crucial constraints that countries around the world are facing. Amongthe ASEAN countries, forest criteria and indicators are being developed and used. Each country needs tofind a way to prevent its own forest from being destroyed. In Europe, countries are encouraged to implementForest Certification to help manage and develop forest sustainably. Forest Certification is one of the modelswith which country members can help one another to curb illegal logging and wood market. Cambodia maychoose 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 theFAO in 1997 showed that forest cover is approximately 10.5 million ha (58 percent). The main reasons fordeforestation 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 (Departmentof 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 beenexported to Thailand, Malaysia and Viet Nam for re-export. Raw material like resin is only exported to VietNam so far.

Although forest still covers 58 percent of the country area, to some extent, these forests are degradeddue to selective cutting of healthier trees rather than the sick or unhealthy ones. Having seen this unsustainableexploitation of forest resource, the DFW has cooperated with the World Bank and the Asian DevelopmentBank 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 (1974–1979), forests continuedto be destroyed in the war that followed to expose Khmer Rouge guerrillas who hid in the mountains andforested areas. Since many farmers could not return to their former paddy fields due to the guerrillas andland-mines, new areas of land were cleared for agricultural production (Chan Sarun 1997). As the post-warpopulation in Cambodia increased rapidly, more and more forested areas were cleared for firewood and tomake way for rice paddies.

Slash and burn is a very common technique since logging “dead” wood is legal in Cambodia. Deliberatelylit 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 tomake 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 serveas new plantation regions. This can been seen in the forests of Bokor National Park where banana farmersbordering 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 SoutheastAsia. 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, 1993–94). Huntingand non-timber forest product (NTFP) collection were allowed only in the buffer zone areas or in production forestareas. Forest rangers would stop any people entering the forest reserves who possessed hunting equipment suchas 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 inwildlife and forest protection—especially in rural areas (pers. observation). Water pools surrounded by smallforests 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 thatallow supervised logging. The concessionaire is responsible and accountable for protection and maintenanceof 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 Forestryand 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 ProtectedAreas. 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 neighbouringcountries such as Thailand, Viet Nam, China and Japan. Cambodia continues to provide timber to local, regional,and international markets – legally and illegally.

FOREST MANAGEMENT

Policies

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

• Act (Prakas) No. 03 Pr.K. Dated 28 April 1995. Forest Policy (Government Guideline for Forest ReformPolicy);

• 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 Codeof Practice for Forest Harvesting was prepared in 1997 with technical assistance from the World Bank Projecton 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 forestconcession lands. Its primary purpose is to prescribe harvesting practices that protect the environment, conservebiodiversity and promote forest development consistent with the principles of sustainable development. TheCode of Practice also provides guidance for protecting sites of cultural significance, maintaining forestregenerative capacity, improving the economic and social contributions of forestry, and ensuring the healthand safety of forest workers. The initial development of the Code was completed in mid-1999 and distributedto 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. Practicesthat 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 croptrees, 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 growthforests 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 forestprotection.

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 understandingthe benefits of the Code, and the implementation of harvesting operations in accordance with the Codeto ensure sustainable forest management in forest concessions;

• strengthening political support from provincial governors and relevant Ministries, particularly in the preparationand adoption of a Sub-Decree on Forest Concession Management that includes provisions to increase localcommunity 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 machineand chainsaw operators;

• preparing technical guidelines for implementing the Code, including guidelines providing directiveson forest concession management planning systems, inventories associated with the forest managementcycle, biodiversity conservation in managed forests, issues associated with social forestry, timber theftmanagement, forest engineering, environmental impact assessments, special management areas, theselection of suitable systems of silviculture, and forest improvement;

• forest reservation and reforestation systems for the management of wildlife habitats, water catchmentprotection and forest monitoring;

• preparing a forest concession management planning manual in order to provide the foundation forimplementing 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 BankLearning and Innovation Loan that will be providing technical assistance for developing comprehensiveforest concession management plans, including environmental and social impact analyses consistentwith international standards;

• conducting harvesting assessments of forest concessionaires in compliance with the Code at the closureof annual harvesting operations on 31 December of each year.

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

Law

The DFW has been using the Forestry Kret-Chbap No. 35 for forest management since 1998. The new Lawon Forestry was ratified in August 2002. The Law clearly defines the rights of use of NTFPs for the localpeople either outside or inside forest concession areas. The Community Forestry Law is in the consultationphase 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 sectorat provincial levels. Trees have been planted in 8325 ha of state areas and the DFW has a five-year rehabilitationstrategy for 250 000 ha of degraded land. This strategy includes planting state tree farms, developing commercialtree plantations in degraded areas and encouraging individuals and the private sector to participate in agroforestryand community forestry.

To ensure the supply of fast growth seedlings, seed quality and sources need to be considered. Naturalseed-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 DANIDATree Seed Project (Cambodia Tree Seed Project Workshop, 2001), the DFW has distributed 2 million seedlingsthrough cooperating with a number of NGOs and students.

The DFW has been cooperating with national and international agencies to develop community forestryprogrammes, to develop and improve human resources and to encourage the local people to participate insustainable forest management and in forest protection. Also, national and international agencies and donoragencies 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 ForestPolicy Reform. The Secretariat, which was established under a World Bank loan, has reviewed and identifiedfour 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 leadingthe 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 developingand implementing a number of policies and regulations, including:

• Forest Policy Platform of the 2nd term for 1998–2003. 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 workin forest regions, especially along the international borders. However, they lack the financial support toinvestigate and act on illegal logging activities. Insufficient equipment and financial support have causeddifficulty in coping with illegal activities in the jungle. Moreover, rogue military based in the remote areasget involved in the illegal activities.

In 2002 there were about 800 staff members in the DFW and about 1000 forestry staff memberscountrywide. In general, the capacity of the DFW staff is limited and there is insufficient training providedto 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 subsistenceincluding:

• 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. Communitiesdepend on forests for many resources, including water, NTFPs, timber and wildlife. Forest protection areasplay a very important role as sources of tree pollination and animal refuge to the adjacent forest areas. TheDepartment 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 Conservationis being considered in the allocation of the area as a forest preserve for production. The ITTO considers thesite as a sole area for long-term forest management in northeast Cambodia along the Viet Nam border incooperation with the Vietnamese government (Gasana & Sun Hean, in press). The WWF Cambodia receivesfinancial funding for a two-year (2003–2004) 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), lotsof 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 thearea. 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 heavilyon the forest for resources. In addition, the Cardamom Mountain range is a crucial water catchment in Cambodiaand 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, andcause sedimentation in the Tonle Sap. Attention needs to be paid to forests and protected areas as essentialwater 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 TamaoZoological 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 MeancheyProvince has been designated as a crane conservation area. These designations have a significant effect onbiodiversity conservation aspects, both in situ and ex situ. People near and around the zoo and sanctuarieshave been aware of conservation and sustainable development within their own communities. Moreover, thePhnom 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 Plantand Wildlife Species in Phnom Penh from 21 to 24 February 2000, to discuss and find appropriate solutionsto CITES in the Asian region. Restriction on wildlife export has been improved since Cambodia became aCITES 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 politicalsituation, the Cambodian government has become aware of the importance of biodiversity conservation. TheCentral Cardamom Mountain area of 330 923 ha was declared a Forest Protection and Water Catchment Sitein 2001. Among others the Central Cardamom Protection Forest might be proposed to be a World HeritageSite (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 supportfrom the Wildlife Conservation Society and small support also from the Crane International Foundation. Theother two proposed forest protected areas are the Mondulkiri and Preah Vihear sites. These two are in theprocess 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 providefood and raw materials, but also serve as an important life support function by generating oxygen and regulatingfresh water through preserving watersheds. As part of Cambodia’s approach to using, protecting and managingforests for sustainable development, uses and threats need to be weighed up against each other and managedappropriately.

Cambodia has achieved some progress in this direction. However, natural resources are in danger ofbeing privatized and overexploited. The Royal Government of Cambodia has taken important steps in mitigatingthreats to forests through increased community management and good governance. The greatest challengeis lack of human resources and financial funding for implementing these forest protection measures. Sustainablemanagement of forest resources ensures that commercial forest operations are carried out efficiently to preservesoil value; identify and protect sites of high traditional, historical and archaeological values; maintain thelogging productivity of those sites designated for logging over many cutting cycles; identify, maintain andprotect 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 withrespect to these resources; ensure that forest activities are carried out in a safe and legal manner; allow existingrecreational 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 specialmanagement areas. The objective is to recognize the unique value of select forest resources within the forestconcession area and designate them as special management areas excluded from commercial logging and annualallowable cut. The principal types of special management area include watershed or soil conservation; wildlifeor biodiversity conservation; preservation of seed sources; historical or cultural sites; areas to be retainedin their pristine state and those supporting community livelihoods (DFW 2000).

The Royal Government of Cambodia and many international agencies, including ASOF (Asian Senioron 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 undertakenare concentrating on the important links between forests and sustainable development, at the same timeencouraging the protection of representative components of Cambodia’s forests through a system of protectedareas. These approaches will help to ensure the ability of Cambodia to use, protect and manage forests forsustainable 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 environmentreport 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): 28–30.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

20 Biodiversity for poverty alleviationin Indonesia

Suhardi*

ABSTRACT

Indonesia has one of the most diverse megadiversities in the world. Although its land area is only about 1.3percent of the world’s, Indonesia has about 17 percent of all species. If the diversity in the sea is also includedthen Indonesia would be regarded as the greatest megadiverse region in the world. The 47 ecosystem typesin Indonesia can be divided into seven biogeographic regions which are centered on the major island groupsand 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 forestsare 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 siteconditions. 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 montanerain 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 wholeof 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: suhardi@ugm.ac.id

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• 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 problemsin Indonesia are serious, for example illegal logging destroys about 1.6 million ha of forests per year. Evenin the national park in Central Kalimantan, at Gunung Leuser in north Sumatra and Aceh, forest degradationis taking place. It has been said that the loss of one species of tree will be followed by that of 10–30 otherspecies 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 woodindustries in Indonesia although the demand of the timber industries (excluding pulp and paper) is about 50million m3 per year. About 1.5 percent of the wood industries in south Kalimantan and only about 30 percentin Jambi Sumatra and 39 percent in east Kalimantan of these industries are still operating; east Kalimantanwas the biggest timber producer in Indonesia until recently.

HOW TO SAVE THE BIODIVERSITY AND ALLEVIATE THE POVERTY ININDONESIA?

Most of the destruction of biodiversity is due to several factors and one of the most important is that Indonesianpeople 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 actuallyprovides a minor income. During the Dutch colonial period the forests in Java were utilized for the purposeof the Dutch Government, for example in their conversion into monocultures of coffee, cocoa, sugar caneand 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 shortperiod, started monoculture of Acacia mangium for their pulp industries without considering the need forbiodiversity and for food, housing, clothing, health, culture and income.

Integrated farming management is a tool for sustainable biodiversity and for it to succeed, monoculturesshould be implemented only in limited areas in Indonesia. Integrated farming management for sustainablebiodiversity should profit all stakeholders in the short, medium and long terms. Several cases have shownthat mixed planting of forest with crops would benefit all stakeholders, as in the case of home gardens offarmers where the area could supply all their needs.

Teak forest dominates most of the forest areas in Java, mostly as monoculture. It has been suggestedthat integrated farming of teak could contribute to better biodiversity and nutrient availability, less risk offire, and higher production of cattle, fruits, vegetables and other crops. There is also an increase in incomefor the farmer utilizing integrated farming of teak.

MANAGEMENT OF BIODIVERSITY BY INTEGRATED FARMING OF TEAK TOALLEVIATE POVERTY

Teak has been planted widely in Java not only in state forests but also in the Hutan Rakyat. In PT Perhutaniwith a total area of about 1.5 million ha, most of the area is planted with teak and pine. Hutan Rakyat withan 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 forestand other communities should utilize more of it for their needs. The teak forest especially should be designedto support such needs, with food as the first priority. Food is very important as the population in Java isthe 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 productsfrom 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 year2000/2001

Product VolumeValue ( Rp )

(US$1 = Rp 8 800)Bamboo 2 857 802 poles 8 573 406 000Charcoal 10 935 tonnes 5 467 500 000Fire wood 2 294 082 stapels 573 520 500Teak 69 359 400 m3 62 423 460 000Non-teak 4 400 m3 190 000 000Log 289 591 m3 86 877 300 000Honey 237 558 litres 11 877 900Silk 91.250 kg (cocoon)

167 118 750 860Source: 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 comparedwith only 1.21 percent and 1.20 percent in the teak forest. Available P in the soil is also higher in the heteroculturewhich is 0.0226 ppm compared with only 0.0134 ppm in the monoculture. Organic matter too is much higherin the heteroculture of teak than monocultures (4.51 vs. 1.51 percent respectively). This means that the formercondition is better for soil microorganisms.

Table 2. Analysis of P, organic matter content and litter layer thickness

AnalysisMonoculture Heteroculture

of teak of teakP content of root (%) 1.213 1.233P content of leaves (%) 1.197 1.207P available (ppm) 0.0134 0.0226Organic matter content (%) 1.51 4.5133Litter layer (cm) 1.227 1.600

Source: Suhardi (1990).

Mixed teak forest with Dalbergia latifolia could reduce fire problems. Humidity increases but themicrotemperature wind velocity decreases. The data below show fire damage to forests in Indonesia:

1982–1983: about 3 200 000 ha1987: about 66 000 ha1994: about 500 000 ha1997–1998: 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 butfor the whole forest rotation. Dioscera allata (uwi) and Dioscera hispida (gadung) are among the approximately35 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 providingnitrogen and land cover. Examples are Dalbergia latofolia, Acacia arabica, Clitoria ternatea, otok-otok, tekik,Leucaena lecocephala and Acacia villosa (Sumardi and Winastuti 1993).

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Tumpang Sari, which involves teak planting for two years, was introduced in Java, Indonesia, in 1883when 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, vegetableand cattle feed; at the same time this cultivation can increase the productivity of the teak. The biggest forestarea is under Perum Perhutani in Java, where the population has become the biggest in the country and utilizingthe 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 thatthe local variety is better than other exotic species (Team Peneliti Tumpang Sari UGM 1974b). Arachis hypogaeawas 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 alsoplanting 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 TumpangSari UGM 1974a). Total volume in 3 ha is 100.1791 m3. Therefore volume per ha is 33.3930 m3 or 3.33m3ha-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 XAcacia 2.058 0.0575 0 0 0 0 0 0 0 0Teak 0.941 4.9859 4.6456 0.7378 0 35.002 1.7660 6.4715 0.4270 0.2907Mahagony 6.2953 1.8248 0.8728 0.0063 0 0 7.0604 1.6065 1.9147 9.3306Paraserianthes 1.4000 0 0 0 0.1435 6.4781 0.9184 2.4731 0 0falcatariaArtocarpus 0 0.1242 0.2071 0 0 0 0 0 0 0integerCoconut 0.2480 0 0 0 0 0 0 0 0 0Bamboo 0.3 0.8 0.3 0 0 0 0 0 0 0Others 0 0 0 0 0.4923 0 0 0 0 0

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 forestinterplanted with other crops with cattle rearing (Tables 5 and 6), the average number of tees per ha is 481with 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 XAcacia 3 1 0 0 0 0 0 0 0 0Teak 5 63 127 44 0 42 9 40 10 1Mahogany 18 14 53 3 0 0 21 9 10 3P. falcataria 2 0 0 0 0 13 1 8 0 0A. integer 0 1 3 0 3 0 0 0 0 0Coconut 1 0 0 0 0 0 0 0 0 0Bamboo 3 8 3 0 0 0 0 0 0 0Others 0 0 0 0 1 0 0 0 0 0Total 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), medicinalplants and cattle

Type of non-wood product Total value in Rp Average per haFruit 263 400 000 17 560 000Vegetables 126 360 000 8 424 000Yam group (tubers) 600 000 40 000Medicinal plant 5 000 000 333 334Cattle 94 000 000 6 266 667Total 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 cropswould bring better returns than planting teak alone. Higher income would also come from the lower costof maintenance. For the monoculture of teak, the maintenance cost is about Rp2 000 000 per ha but that ofthe 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 whichwould help most of the farmers and companies concentrate on their activities. There is also better chanceto get credit from the bank.

Table 6. Total income from fruit and estate crops planted with teak in a 15-ha plot

Type of tree Number of treesTotal product Price per kg Total value

(kg) (Rp) (Rp)Cacao 3500 8 000 12 000 115 200 000Clove 100 200 50 000 10 000 000Coconut 600 18 000 500 9 000 000Coffea 200 200 6 000 1 200 000Rambutan 400 20 000 2 000 40 000 000Parkia spp. 200 20 000 2 000 40 000 000Gnetum gnemon 500 5 000 3 000 15 000 000Durio zibethinus 25 1 500 5 000 7 500 000Pepper 1500 750 30 000 22 500 000Mango 200 2 000 1 500 3 000 000Total 7225 75 650 263 400 000Per ha 481.6 17 560 000

In addition to allowing more trees per ha and bringing better income, the heteroculture provides better shadingfrom 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 establishmentof home industries;

• more simple and appropriate technology, and local management;• more credit from the bank.

MANAGEMENT OF BIODIVERSITY BY INTEGRATED PLANTING OF OIL PALMWITH DIPTEROCARPS

In Indonesia, there is also the conversion of large areas of forest into oil palm estates. The government and alsomost of the farmers are interested in planting oil palm due to the higher income from oil palm and thus also higherrevenue 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 competitionto oil palm production. The cost of management of dipterocarps in oil palm estate is cheaper than that ofplanting timber alone as plantation. Oil palm also plays a role as shading for the dipterocarps. Integratedoil 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. Plantingdipterocarps under rubber should be considered. If rubber is planted together with dipterocarps as shade treesthen the farmers would have the two benefits of rubber and wood. There would be wood supply for the industriesand the world could get more oxygen and more carbon would be fixed. Planting dipterocarps under rubberwould therefore bring more income to farmers, and more biodiversity and probably better conservation ofwater 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 nottoo much disturbed by illegal logging then the biodiversity will return. Certainly some plant species can growwell and faster, and some species of fauna can only thrive, under undisturbed conditions. However, how muchthe 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 animalhusbandry can alleviate poverty.

• Integrated farming of teak increases nutrient availability, reduces fire risk, increases income for thefarmers and companies, and enhances food production.

• In areas with acidic soils, more diversity could be developed under oil palm and rubber, especiallywhere the main trees are dipterocarps.

• While little is known about the fragility of biodiversity in a disturbed secondary forest, it is still importantto 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 Indonesia9: 15–28.

Suhardi. 1990. Konkurensi akar dan tajuk dari hutan jati campur di BKPH Kedungbrubus. KPH SaradanLap Penelitian DPP UGM /10123/M/03/01. 26 pp.

Sumardi & Winastuti. 1993. Identifikasi agen-agen penambat nitrogen dalam hutan jati. Penelitian DPPUGM. UGM /85/M/09/01, Fak. Kehutanan. 19 pp.

Team Peneliti Tumpang Sari UGM. 1974a. Usaha penyempurnaan tanaman Tumpang Sari di wilayah hutanjati. 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 hutanjati. 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 bawahtegakan jati di Wanagama. DPP, UGM/85/M/09/01, 31 Des. 1992. 26 pp.

162 Biodiversity for poverty alleviation in Indonesia

21 Nature conservation andbiodiversity for poverty reduction –case of BhutanLungten 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 arecritical to offset any negative impacts on settlement, agriculture and hydropower. Bhutan Vision 2020 expressesa need to balance economic development with cultural and environmental conservation. The Royal Governmentof Bhutan emphasizes that biodiversity and natural resource conservation do not constitute a constraint todevelopment 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, butthey 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 inrural areas with settlements concentrated in the southern foothills and in the inner broad valleys while thenorthern parts remain virtually uninhabited. Land area suitable for agriculture is estimated to be about 8 percentand employs about 80 percent of the population (Dorjee 1995). The current population growth rate is 3.1 percentand 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 thedevelopment arena and because of its low population. Poverty assessment using a comprehensive set of indicatorswas not done; a rapid quality assessment done in 2000 shows that average income per person per day is aslow as Nu.40 which is less than the equivalent of US$1 per person per day. The income figure is definitelyincorrect 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 andcommercialization, 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 inrural 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 endowedwith rich natural resources. Forests, representing the biological resources, the ecosystems and the diversityof 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 sustainingthe well-being of the people. Realizing this, the government in its policy has given high priority to conservationfunctions of forests over its economic functions and has endorsed a policy to maintain 60 percent of the landunder forest cover for all times. About 34 percent of the country is set aside as protected areas representedby four national parks, four wildlife sanctuaries and one nature reserve located across the country (Table1). 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: lnorbu@druknet.bt

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of mammals (RGoB 2003). Bhutan forests are internationally significant for their rich biodiversities and Bhutanhas 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 thecountry. 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. Forestrycontributes about 11 percent towards the Gross Domestic Product and generates 3 percent government revenuethrough 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 employedin 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 criticalto offset any negative impact of settlement, agriculture and hydropower. More important, forests are sourcesof livelihood for 85 percent of the population as they provide food, wood, fodder, fuelwood, leaf-litter andother non-wood forest products. The well-being of the local people is directly linked to how well forest resourcesare conserved and managed for all times.

Table 1. Protected area systemProtected area Area ( km2) Ecosystem representationRoyal Manas National Park 1000 Subtropical forest, habitat for tiger, elephant, leopard and

golden langurJigmi Dorji National Park 4200 Habital for takin, snow leopard, blue sheep, rare plant speciesJigmi Singye Wangchuck 1400 Pristine upland broadleaf forest, habitat for cloudedNational Park leopard and tigerBomdeling Wildlife Sanctuary 1300 Upland broadleaf forest, winter roosting area of black-neck

craneThrumsingla National Park 768 Old growth fir forest with rhododendrons, habitat for red

panda, tragopan and monal pheasantSakten Wildlife Sanctuary 650 Pristine mixed coniferous forests, highest number of

rhododendron plant speciesPhibsoo Wildlife Sanctuary 278 Natural sal forest, habitat for spotted deerToorsa Strict Nature Reserve 644 Pristine temperate forestKhaling 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 trafficcongestion, sewage disposal and rural–urban migration. Vehicle emission-testing programme is being developedand standards established while waste disposal management system is in its initial stage confined to establishmentof landfill for disposing solid waste. Due to rural–urban migration, the expanding urban population is exertingpressure on natural resources. The land available for urban growth is limited by topography and governmentpolicies to maintain the present forest cover and restriction to land conversion. Bhutanese economy is estimatedto be expanding (approximately by 6.5 percent in 1994) and the traditional sector (agriculture, livestock andforestry) roughly contributing 40 percent to the GDP while the modern sector (mining, construction andelectricity) 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 KyotoProtocol 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 newinitiative 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 sustainabledevelopment, meeting national imperatives as well as global environmental issues and studies on impacts of climatechange were identified (RGoB 2000b). A menu of mitigation options identified relevant to Bhutan are (RGoB 2000b):

• Renewable energy technology options –Although mainly dependent on hydropower, which is a relatively clean source of energy, it is expensivedue 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 –A majority of Bhutanese use wood for cooking and heating purposes. Improved stoves are introducedto reduce fuelwood consumption and air pollution. Electric heaters are being introduced but they areexpensive and beyond the reach of the average household.

164 Nature conservation and biodiversity for poverty reduction—case of Bhutan

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

OPPORTUNITIES WITH CDM, ENVIRONMENTAL SERVICES AND BIODIVERSITYFOR POVERTY REDUCTION

Bhutan Vision 2020 expresses a need to balance economic development with cultural and environmentalconservation. The Royal Government of Bhutan emphasizes that biodiversity and natural resource conservationdo not constitute a constraint to development but instead serve as opportunity for development and return of adequatebenefits to the local people. The existing policy and legal frameworks with respect to forest, conservation, biodiversityand land provide supportive bases for management, control and use of the natural resources through involvementof 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 andbiodiversity

Framework People concerns addressedLand Act 1998 Land entitlement, grazing land and compensation for cropsForest and Nature Conservation Act 1995 Protected areas, soil and water conservation, people participation

in community and private forestrySocial Forestry Rules 2000 Implementation criteria and formalities: community forestry and

people participationBiodiversity 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 worldstandards 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 inunappreciation of the globally emerging trend such as carbon trading that could bring immense benefits for thepoor. For instance, farmers could trade carbon credits with companies for trees grown on private land or in communityforestry 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 erosionof cultural heritage and biodiversity. Thus the policy of high return and low impact tourism targets richindividuals 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 theindustrialized 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 shouldbe implemented involving all stakeholders including the local people from where concrete benefits shouldgo 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 formedicine, food, cash and employment. Also, a substantial amount of revenue is brought into the country throughexport of NTFPs. Bhutan Trade Statistics (1991–1999) indicate the export value of NTFPs to range fromNu.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 handicraftsconstitute 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 richforests of Bhutan will provide a wide range of these NTFPs with benefits to both conservation and developmentefforts. NTFPs can be managed sustainably by the local people under the Community-Based Natural ResourceManagement Programme (CBNRM). The CBNRM is becoming a popular concept and mechanism to managenatural resources such as NTFPs in Bhutan. CBNRM would enhance the rural economy while natural resourcesare conserved, managed and marketed through community empowerment and participation. Research initiativessuch as bringing chirata (Swertia chirata), masutake (Tricholoma masutake) and Cordyceps sinenis under CBNRMinitiatives are underway. Community-based management and product development are under consideration for otherimportant 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 bioprospectingin Bhutan. Bioprospecting is a growing endeavour that involves search for new genes or chemicals of greatvalue. 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 peoplefor their efforts and pains they have taken to preserve the valuable resources and indigenous knowledge (IK) ontheir uses that lead to the development of the useful commercial products. The recently approved all BiodiversityAct 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 resourcesand 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 natureis a crucial task which in turn will need the cooperation of the local communities to optimize the use offorest resources. Ploughing back part of the revenue from electricity to improve the living conditions of thelocal people staying within the hydropower catchments would help sustain both power generation while humancommunities 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 availabilityand quality of water depend on proper ecosystem management. Promoting community forest management and puttinga price tag on the intangible services from forests such as water and recreation and sharing these benefits with therural 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 greatas they are being recognized and valued by foresters, researchers, environmentalists and development workers. Theywill 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 Bhutaneseagriculture. 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

22 Opportunities in using theconservation of biodiversity toalleviate poverty in ThailandSuchitra Changtragoon*

ABSTRACT

Improving the living status of disadvantaged rural people is one of the main policies of the Government ofThailand, which is firstly to decrease their expenditure, secondly to increase their income, and lastly to enhancetheir economic opportunities. Most of the rural people in Thailand rely on agriculture and forests for theirliving. In this paper the prospects of alleviating their poverty based on biodiversity conservation throughecotourism management and food banks from forest community establishment as well as forest plantationsfor medicinal and natural product investment are proposed. The opportunity of future benefits from CleanDevelopment 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 throughecotourism. 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 diversityand natural condition of the environment as well as improving the welfare of the local people. This is inline with the world conservation movement, and also with the policy and planning of the National Park, Wildlifeand Plant Conservation Department of Thailand for natural resources and biodiversity conservation andsustainable development with people participation.

USAID (1995) has identified ecotourism as an enterprise with potential positive contributions to theconservation of endangered biological resources. Contributions of ecotourism include raising local awarenessabout 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 richareas (Anonymous 2002). Wood (2002) pointed out that ecotourism is a growing niche market within thelarger travel industry, with the potential of being an important sustainable development tool. With billionsof dollars in annual sales, ecotourism is a real industry that seeks to take advantage of market trends. Atthe same time, it frequently operates quite differently from other segments of the tourism industry, becauseecotourism is defined by its sustainable development results: conserving natural areas, educating visitors aboutsustainability and benefiting local people.

Chettamart (2003) mentioned in his paper concerning ecotourism resources and management in Thailandthat the current Government of Thailand is keen on tourism development, as stressed by the Prime Minister ThaksinShinawatra in his official declaration of the government policies to the National Assembly in early 2001. The PrimeMinister said that the tourism industry could very well be the country’s substantial income earner and, in turn, couldhelp to solve its current economic problems. He then pledged to increase the diverse forms of tourism and to upgradethe quality of all tourism products, targeting ecotourism, health tourism, nature tourism and services to ensure theirlong-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: suchitra@mozart.inet.co.th

167

The Tourist Authority of Thailand (TAT) has run a campaign “Unseen Thailand” to promote theexploration 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 onnatural forest and so far is a very successful project. The National Park, Wildlife and Plant ConservationDepartment 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 andEnglish. This project is also very successful and is ongoing since the local people and the young generationcan 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 arelocated in national parks and protected areas. In Thailand there are 319 protected areas comprising 145 nationalparks, 53 wildlife sanctuaries, 52 non-hunting areas and 69 forest parks (Chettamart 2003). Income from theentrance fees and accommodations for the ecotourists visiting the national parks in Thailand has increasedgradually from 1993 to 1999, and steeply thereafter as shown in Figure 1. It is a normal practice that fivepercent of the income from these fees go to a community fund. The people living near or inside the naturalforest derive additional income by providing accommodations, meals, drinking water, food, traditional culturalentertainment 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 managementof the local people’s participation and a fair distribution of income for their involvement.

Figure 1. Income from entrance fees to national parks managed forecotourism in Thailand during 1993–2002

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

Most of the local people in Thailand rely on forest products as sources of food, medicine plants and otheruses. It is estimated that about 80 percent of at least 18 000 forest trees and plants in Thailand are medicinalplants. Bhumibhamon and Kamkong (1997) reported that 242 multipurpose tree species are edible and arebeing 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-governmentorganizations are encouraging rural people to establish medicinal plants in their gardens and communitiesfor their own use. Besides, under the campaign of the Government of Thailand on “one (tambom) districtone product”, medicinal plants and natural products are also sources of their additional income. On a broaderscale, at least 80 private companies and a number of hospitals in Thailand have invested in medicinal plantsas sources of local medicines and natural products for local consumption and export. Figures 2 and 3 showthe business trends of medicinal plants and spices for export from 1995 to 2001. The decline in the recentyears may be due to the economic crisis and shortage of materials. Because of the high demand for plantmaterials in this business, it is known that some of the materials have come from harvesting of medical plantsand trees in the natural forests.

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

Figure 2. Export of medicinal plants and spices from Thailand (tonnes)

Figure 3. Income from the export of medicinal plants and spices fromThailand

Therefore, there should be a proper plan for the conservation and sustainable utilization of plants formedicine and as a source of local food bank through the establishment of plantations and management offorest communities. Investment on plantations of medicinal and aroma as well as spice plants to supply themedicinal and natural products business is encouraged for the local people. The Government of Thailand hasalso identified 2512 forest communities (Table 1) as sources for the production of food and medicinal plantsas well as natural products and to increase their income. To maintain these sources in a sustainable way, oneexample is the project on the exploration of biodiversity through local people participation which has beenplanned 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 knowthe status of plants and forest trees as well as the wildlife stock in their communities and can manage theseresources 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 ThailandLocation Number of communities Number of projects Area (ha)Central 402 382 13 709.76North 761 735 57 720.96South 265 260 4 367.84Northeast 1084 926 43 367.68Total 2512 2303 119 166.24

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Suchitra Changtragoon 169

POLICY AND PLANNING ON CLEAN DEVELOPMENT MECHANISM (CDM) INTHAILAND

Thailand ratified the United Nations Framework Convention on Climate Change (UNFCCC) and the KyotoProtocol on 28 December 1994 and 28 August 2002 respectively. According to the Thai cabinet resolutionon 10 September 2002, every governmental department involved with CDM activities has been assigned toinitiate projects and activities related to CDM, firstly to decrease consumption to reduce air pollution andgas release that cause green house effect, and secondly to sequester carbon by increasing and sustaining greenareas 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 Planningof Natural Resources and Environment 2003).

Actually, the Royal Forest Department and the National Park, Wildlife and Plant Conservation Departmentof 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 fiberproduction since several years ago, before the CDM of the Kyoto Protocol was set up. Getting the local peopleand private companies to invest in forest plantations to benefit from the CDM projects may take some timedue to their lack of understanding and information of CDM contribution and also their unclear comprehensionof CDM regulations and management from the Kyoto Protocol. However, this year the Government of Thailandhas planned to initiate the incentive project on setting up sustainable green zones in towns and communitiesas botanical and community gardens by reducing land property tax for the local people who use their ownlands for this purpose.

Table 2. Annual reforestation by objective Area (ha)

ItemFrom

beginning 1997 1998 1999 2000 2001to 1996

Afforestation by government budget 645 184 6 203 6 592 9 283 5 477 3 840The reforestation campaign in 299 885 30 268 10 211 15 348 12 972 16 005commemoration of the Royal Golden JubileeBy Forest Industry Organization (FIO) 27 025 0.00 0.00 59.24 710 0.00By Thai Plywood Co., Ltd. 1 174 701 619 694 378 341Reforestation according to Ministry’s regulations 12 564 234 971 1 337 1 478 1 914Reforestation by concessionaire budget 20 869 651 898 40 54 138Total 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 variousenvironmental conditions have been investigated. The results show that the gross carbon dioxide uptakes bydeciduous forest and teak plantation were 86.65 and 59.83 tonnes ha-1y-1 respectively (Puangchit 2001). Thecarbon 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 beenreduced in 1994 compared with 1990 (Table 3). These results may be improved by the reforestation programmesin Thailand. If this assumption is correct, the net carbon dioxide emission in Thailand may have droppedin 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 andDiloksampan, 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 sequestrationUptake from plantation –812.50 –17,457.26Uptake from secondary forest –24,151.60 –21,644.34Total –24,964.10 –39,101.60Change in woody biomassWood and fuelwood consumption +21,160.59 +40,180.51Forest conversionBiomass burning on site +6,455.61 +13,650.78Biomass burning off site +68,321.84 +14,508.08Decay of timber biomass +6,946.28 +31,237.98Total +81,723.73 +59,396.84Total emission +102,884.32 +99,577.35Net emission +77,920.22 +60,475.75

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 Figure5. However, proper management should be carried out to improve benefit sharing and distribute the opportunitiesto earn the new income for the rural people, so that their living standard will be upgraded. At the sametime, the conservation of biodiversity should be managed properly and efficiently so that the forest resourcescan be maintained and used in a sustainable way.

Concerning CDM, at this stage the potential for poverty reduction in terms of carbon credit contributionmay take some time with respect to reforestation and afforestation in Thailand. However, the activities relatingto CDM are ongoing and encouraged by the Thai Government, case by case. The input of CDM based onbiodiversity from standing natural forests and green zones as well as public parks in developing countriesdeserve consideration.

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Suchitra Changtragoon 171

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.comBhumibhamon, S. & Kamkong, A. 1997. Eatable multipurpose trees. Subcommittee on Research Coordinator

of Forest Resources and Multipurpose Fast Growing Trees. Bangkok, Research Council of Thailand. 485pp. (in Thai)

Changtragoon, S. 2003. Project on administration and management of biodiversity of forest resources andwildlife for conservation and sustainable utilization development. National Park, Wildlife and PlantConservation Department. 31 pp. (in Thai)

Chettamart, S. 2003. Ecotourism resources and management in Thailand. Malaysia—Thailand Technologyand Business Partnership Dialogue, 27–28 July, Langkawi, Malaysia. 16 pp.

Emphadhu, D. 2002. Community-based tourism in protected areas. Research Team Meeting, Strategy forFacilitating Community-Based Tourism in Protected Areas under APEIS Project, 12–13 November 2003,Tokyo, Japan.

Kamkong, A. 2002. Aroma multipurpose trees. Proceedings of Conference on Multipurpose Trees and ThaiCulture. Volume 2, pp. 135–145. (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 andEnvironment. 38 pp. (in Thai)

Policy and Planning of Natural Resources and Environment. 2003. Report on the meeting of theSubcommittee on Planning and Management of Community Environment. Policy and Planning of NaturalResources and Environment, 17 June 2003. 14 pp. (in Thai)

Puangchit, L. 2001. Thailand’s national greenhouse gas inventory 1994, Forest sector: Chapter 6. Ministryof Science, Technology and Environment.118 pp.

Puangchit, L. 2004. Carbon dioxide exchange characteristics and biomass of tropical tree species undervarious 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. 218pp. (in Thai)

Poverty alleviationthrough biodiversity

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

Food bankMedicinal plantsNatural products investment– Plantations of medicinal plants– Forest community– Promotion– Support

EcotourismCommunity based– Knowledge improvement– Management– Benefit sharing

172 Opportunities of using the conservation of diversity to alleviate poverty in Thailand

23 Outputs and recommendationsof group discussions

GROUP DISCUSSIONS

What are the opportunities offered by global initiatives such as the CDM, environmental services and biodiversitythat 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 hasincorporated four group discussions during which the participants discussed several issues, trying to find answersto 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 inthe Asia Pacific region.– The establishment of this information clearing-house could begin with establishing an informal

network and seeking more formal government agreement.– A web site could be launched and to be maintained by contributions from focal points nominated

by participating countries.– 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 fossilfuel demand, being a global responsibility, presented opportunities for small landowners of the developingcountries of the region to increase their incomes.– Policies and guidelines, however, would need to be developed to enable the smallholders to utilize

the opportunity.– 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 CDMwith other environmental goods and services to maximize their incomes and make tree growingan economically attractive option.

– 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 conditionsand consumer preferences. It is necessary to develop appropriate risk management strategies involvingrisk evaluation, risk reduction and risk sharing between state and the tree growers, covering risksby appropriate insurance instruments.

173

– Measuring, verification and certification of carbon sequestration are costly processes involvingscientific, technological and managerial skills beyond the reach of the small landholders. Thegovernments would need to provide these services.

– Likewise, meeting the legal, procedural, methodological and technological requirements of the KyotoProtocol related to the issues of leakage, additionally and biological diversity, would be beyondthe capacity of the individual small landholders. The governments would need to assist to meetthese requirements by laying out appropriate guidelines.

– Appropriate research strategies should be developed in measurement and economic valuation ofenvironmental goods and services produced by growing trees.

– Governments should remove legal and fiscal barriers discouraging tree growing on private lands.– Governments should encourage networking and cooperation among smallholders to enhance their

bargaining power and prevent undercutting.– 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 attractprivate industry investment to support biodiversity conservation.– 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 biodiversityconservation in the region.

– Such a fund could internalize, at least partially, some of the externalities, and reward countries forconserving biodiversity. Organizations such FAO-RAP and APAFRI may lead in establishing suchfund.

– Country studies would need to be conducted to assess private investment opportunities for biodiversityconservation.

– It is also essential that structural and policy reforms at international, regional and national levelsshould be attempted to provide the institutional and policy environment that will facilitate privatecapital flows to biodiversity conservation in the region.

– The national governments need to not only remove barriers but also provide incentives and encourageprivate investment in biodiversity.

– Private industry should assume a good corporate citizenship role and develop and internalize codesof conduct conducive to sustainable development.

– Sufficient safeguards should be put in place to ensure protection of intellectual property rights andthe rights of indigenous people in particular.

– Establishing of new institutional mechanism for private industry’s investment in biodiversityencompassing timber, energy, carbon sequestration, land and water conservation, in situ and ex situconservation, and ecotourism as outputs will require the cooperation of private industry andgovernmental and non-governmental organizations with the support of international agencies.

– It is necessary to build mechanisms to promote better coordination and cooperation between theprivate and public sectors to facilitate private investment in biodiversity conservation.

– Private industry’s involvement can effectively complement other approaches to biodiversityconservation and will add value to make it an economic activity. Biodiversity conservation muststart 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 investmentsin conservation.– Governments should initiate public education programmes for environment awareness.– Clearly quantified environmental benefits will attract private investments.– Opportunities are to be identified of for public-private partnership.– Rights to services and land are to be secured.

174 Outputs and recommendations of group discussions

24 List of participants

Abdul Razak Mohd AliForest Research Institute Malaysia (FRIM)Kepong, 52109 Kuala LumpurMALAYSIATel : 60-3-62797822Fax: 60-3-62797855E-mail: razak@frim.gov.my

So-Eun AhnSeoul National UniversitySeoulKOREATel : 82-2-8804763Fax: 82-2-8754763

Simmathiri AppanahFAO/RAP39 Phra Athit RoadBangkok 10200THAILANDTel : 66-2-6974136Fax: 66-2-6974445E-mail: Simmathiri.Appanah@fao.org

Daniel BaskaranForest Research Institute Malaysia (FRIM)Kepong, 52109 Kuala LumpurMALAYSIATel : 60-3-62797806Fax: 60-3-62797856E-mail: baskaran@frim.gov.my

Jun-Hee ChaKorea Forest Research InstituteSeoulKOREATel : 82-2-9612637Fax: 82-2-9612639E-mail: cjh8285@naver.com

Fiona ChandlerWorld Agroforestry CentreBogorINDONESIAE-mail:f.chandler@cgiar.org

Suchitra Changtragoon (Ms)National Park, Wildlife and Plant ConservationDepartment61 Phaholyothin Rd., ChatuchakBangkok 10900THAILANDTel : 66-2-5614249 ext.440Fax: 66-2-5769576E-mail: suchitra@mozart.inet.co.th

suman@forest.go.th

Ki-Joo HanSeoul National UniversitySeoulKOREATel : 82-2-8804763Fax: 82-2-8754763E-mail: ryan06@snu.ac.kr

Rin-Won JooKorea Forest Research InstituteSeoulKOREATel : 82-2-9612631Fax: 82-2-9612639E-mail: joorw@foa.go.kr

Promode KantIndian Council of Forestry Research & EducationNew Forest, Dehradun 248006INDIATel : 91-135-628614Fax: 91-135-628571E-mail: promodekant@yahoo.com

kantp@icfre.org

175

Rodney KeenanForest and Vegetation SciencesBureau of Rural SciencesDept. of Agriculture, Fisheries and ForestryP.O. Box 858, Canberra Act 2601AUSTRALIATel : 61-0-2-62725582Fax: 61-0-2-62723882E-mail: rodney.keenan@brs.gov.au

Dong-Jun KimChungbuk National UniversityKOREATel : 82-43-2613371Fax: 82-43-2725921E-mail: kdj63@chungbuk.ac.kr

Eui-Gyeong KimGyeongsang National UniversityChinjuKOREATel : 82-55-7515497Fax: 82-55-7536015E-mail: egkim@nongae.gsnu.ac.kr

In-Ae KimSeoul National UniversitySeoulKOREATel : 82-2-8804763Fax: 82-2-8754763E-mail: inae2003@snu.ac.kr

Jong-Ho KimNational Forestry Cooperatives FederationSeoulKOREATel : 82-2-34347114Fax: 82-2-34347169E-mail: kimjh@nfcf.or.kr

Joon-Soon KimKangwon National UniversityChuncheon CityKangwonKOREATel : 82-33-2508338Fax: 82-33-2434484E-mail: jskim@kangwon.ac.kr

Se-Bin KimChungnam National UniversityDaejeonKOREATel : 82-42-8215748Fax: 82-42-8257850E-mail: sbkim@cnu.ac.kr

Young-Hyun KimSeoul National UniversitySeoulKOREATel : 82-2-8804763Fax: 82-2-8754763E-mail: Princekin486@hotmail.com

Rodel D. LascoEnvironmental Forestry Programme (ENFOR)University of the PhilippinesCollege, 4031 LagunaPHILIPPINESTel : 63-49-5365314Fax: 63-49-5365314E-Mail: rlasco@laguna.net

rdlasco@yahoo.com

Don-Koo LeeSeoul National UniversitySeoulKOREATel : 82-2-8804751Fax: 82-2-8733560E-mail: leedk@plaza.snu.ac.kr

Li ZhiyongChinese Academy of ForestryWan Shou Shan, Beijing 100091CHINATel : 86-10-62888311Fax: 86-10-62887192E-mail: zyli@caf.forestry.ac.cn

Nagata ShinUniversity of TokyoTokyoJAPANTel : 82-3-58415203Fax: 82-3-58415437E-mail: nagata@fr.a.u-tokyo.ac.jp

Nguyen Dinh HaiSeoul National UniversitySeoulKOREATel : 82-2-8804763Fax: 82-2-8754763E-mail: haisnu3@snu.ac.kr

Young Ho NohSeoul National UniversitySeoulKOREATel : 82-2-8804763Fax: 82-2-8754763E-mail: catch24@hanmir.com

176 List of participants

Lungten NorbuRenewable Natural Resource Research CentreWestern Region, YusipangDepartment of Research & Development ServicesMinistry of AgricultureP.O. Box 212, ThimpuBHUTANTel : 975-2-321600Fax: 975-2-321601E-mail: lnorbu@druknet.bt

Matti PaloFinish Forest Research InstituteE-mail: Matti.Palo@metla.fi

Dong-Kyun ParkNortheast Asia Forest ForumSeoulKOREATel : 82-2-960-6114Fax: 82-2-960-6005E-mail: pdk5920@korea.com

Chansamone PhongoudomeForest Research CentreNational Agriculture and Forestry InstituteNamsoung, Naxaithong DistrictP.O. Box 7174, VientianeLAO PDRTel : 856-21-770892Fax: 856-21-770892E-mail: Chansamone.p@nafri.org.la

frcfiss@laotel.comchanhsamone@yahoo.com

Seema Purushothaman (Ms)Ashoka Trust for Research in Ecology and theEnvironment (ATREE)659, 5th ‘A’ Main road HebbalBanglore 560024INDIATel : 91-08-3530069Fax: 90-08-3530070

M. Mokhlesur RahmanBangladesh Forest Research InstituteP.O. Box 273SholashaharChittagong 4000BANGLADESHTel : 880-31-681577Fax: 880-31-681566E-mail: bfri@spnetctg.com

T. RavishankarM.S. Swaminathan Research FoundationField Research Center7-5A-2/1, Gopalakrishna StreetRamaraoapet, Kainda-533004INDIATel : 00-91-884-2377177Fax: 00-91-884-2380095E-mail: raviethnobotanist@rediffmail.com

Lucrecio RebugioCollege of Forestry and Natural ResourcesUniversity of the Philippines Los Banos (UPLB)P.O. Box 132, Laguna 4031PHILIPPINESTel : 63-49-536-7446Fax: 63-49-536-7446E-mail: lucreb@laguna.net

Percy E. SajiseInternational Plant Genetic Resources InstituteSerdang 43400, SelangorMALAYSIATel : 60-3-89423891Fax: 60-3-89487655E-mail: p.sajise@cgiar.org

Masabathula SatyanarayanaGovernment of Orissa/Government of India20, Type-V, Lodhi Road ComplexLodhi RoadNew Delhi 110 003INDIATel : 91-11-24691626Fax: 91-11-24364624E-mail: smbathula@yahoo.com

Hyun-Deok SeokKorea Rural Economics InstituteKOREATel :82-2-32994192Fax:82-2-9600165E-mail: hdseok@krei.re.kr

Ramesh ShakyaForest Research DivisionDepartment of Forest Research and SurveyP.O. Box 3339, Babar MahalKathmanduNEPALTel : 977-1-220493Fax: 977-1-220159E-mail: dfrs@enet.com.np

shakya@flashmail.comramesh_058@yahoo.com

List of participants 177

Hee-Kyung ShinNortheast Asia Forest ForumSeoulKOREATel : 82-2-960-6114Fax: 82-2-960-6005E-mail: shinhk80@hotmail.com

Shi ZuominChinese Academy of ForestryWan Shou Shan, Beijing 100091CHINATel : 86-10-62888308Fax: 86-10-62884972E-mail: shizm@forestry.ac.cn

Sim Heok-ChohAPAFRIc/o Forest Research Institute MalaysiaKepong, 52109 Kuala LumpurMALAYSIATel : 60-3-62722516Fax: 60-3-62773249E-mail: sim@apafri.org

simhc@frim.gov.my

SuhardiFaculty of ForestryGadjah Mada UniversityBulaksumur, Yogyakarta 55281.INDONESIATel : 62-274-901400/550541/545639Fax: 62-274-901400E-mail: suhardi@ugm.ac.id

Trieu Van HungForest Science Institute of Viet Nam (FSIV)Dong Ngac-Tu Liem-HanoiHanoiVIET NAMTel : 84-4-8344031, 8362258Fax: 84-4-8389816E-mail: ddsam@aid-fsiv.ac.vn

trieuvanhung@hn.vnn.vn

Lic VuthyForest and Wildlife Research InstituteDepartment of Forestry and Wildlife40 Bvld. Preah NorodomPhnom PenhCAMBODIATel : 855-23-213612Fax: 855-23-212201E-mail: dfw.syphan@bigpond.com.kh

Byung-Il YooKorea Forest Research InstituteSeoulKOREATel : 82-2-9612531Fax: 82-2-9612530E-mail: dryoobi@foa.go.kr

Kwang-Bae YoonKonkuk UniversityChungjuKOREATel : 82-43-8403532E-mail: kbyoon@kku.ac.kr

Yeo-Chang YounSeoul National UniversitySeoulKOREATel : 82-2-8804754Fax: 82-2-8754763E-mail: youn@snu.ac.kr

Yusof Sudo HadiBogor Agricultural University (IPB)Gedung Rektorat Lt 2Kampus IPB, DermagaBogor 16680INDONESIATel : 62-251-621677Fax: 62-251-621256E-mail: sifahut@bogor.wasantara.net.id

yshadi@indo.net.id

Zhang XiaoquanChinese Academy of ForestryWan Shou Shan, Beijing 100091CHINATel : 86-10-62889512Fax: 86 10 62888840E-mail: xiaoquan@forestry.ac.cn

Xiaoquan2065@yahoo.com.cn

178 List of participants

ISBN No: 974-7946-57-2

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.