New Report Finds That Conserving the World’s Forests Depends on Support for Community-Based Forest Enterprises Indigenous and Local Groups Now Control 25 Percent Of Developing World’s Forests

London, 7 March 2002 — The fate of the world’s forests is inextricably linked to the fate of more than 500 million of the world’s poorest people living in and around forested areas, according to a report released today by two of the world’s leading forestry organizations. The report finds that when forest communities have the opportunity to generate income by marketing forest products and services, they are motivated to protect their forest assets.

The report, Making Markets Work for Forest Communities—issued by the Center for International Forestry Research (CIFOR), a Future Harvest Center based in Bogor, Indonesia, and the Washington, D.C.-based Forest Trends—finds that improving the lives of individuals residing in and around forests is vital to forest conservation. Eight percent of the world’s forests are in legally protected areas, known as biodiversity reserves. This report focuses on how to best manage the vast areas of forest outside of these reserves.

"Excluding poor people from forest markets will not, as some people believe, help to protect forests outside reserves," said David Kaimowitz, Ph.D., director general for CIFOR and one of the report’s authors. "We need to acknowledge that hundreds of millions of people live in forests, and their lives depend upon them."

A transition is underway with regard to ownership and control of developing countries’ forests. Rural communities and indigenous people are successfully asserting control over forestland, now owning or officially administering at least 25 percent of the developing world’s forests—nearly 300 million hectares (741 million acres). That trend is expected to accelerate over the next several years. However, despite their holdings, local communities often do not have authority to fully use and capitalize on their forest assets.

For example, in the Brazilian Amazon, the government has recognized the rights of indigenous groups to about 75 million hectares of forestland, but timber harvests are banned in the same area. "This restriction creates conditions under which illegal logging becomes the only viable option, with mahogany sold for US$30 per tree to traders, who resell it for upwards of US$3,300," said Andy White, Ph.D., program director of Forest Trends and a coauthor of the report.

"We have to make it easy for small producers to operate legally," said Sara Scherr, Ph.D., a senior policy analyst at Forest Trends and another of the report’s co-authors. "Existing regulations are hurting the small landholders, not the large plantation owners. There is a need to level the playing field."

Little has been done, the report states, to help local people use their forest assets in a sustainable manner and to benefit from—and cope with the pressures of—growing demand for forest products.

Yet, the report notes that forest communities do have clear competitive advantages in some markets. For instance, local communities can easily monitor and protect their forests, while corporations must account for the cost of hired management and labor. In addition, communities are often eager to adopt management systems that are sustainable during boom-and-bust cycles for forest products.

"For most of these rural communities, commercial forestry is the only viable pathway for improving their standard of living," said Scherr. "These people should have the opportunity to seek sustainable approaches to managing their forest assets for economic benefit and local habitat preservation. Allowing and encouraging opportunities for the rural poor to play a role in forestry offers an effective way to fight poverty, while also providing the incentive to help conserve their own forest resources."

The report notes that forest communities can better tackle these tasks by forming local producer organizations and gaining business expertise. For example, 256 indigenous communities in poor mountainous areas of southern Mexico joined forces in 1997 to expand and improve their forest enterprises. Through the project, known as Proyecto de ConservaciÛn y Manejo Sostenable de Recursos Forestales, these communities have been able to access outside expertise and support to create more than 1,400 new jobs and increase annual wood production by roughly 60 percent to 660,000 cubic meters. The communities have also improved forest management and established 13,500 hectares of permanent old-growth reserves.

The authors believe that promoting commercial forest markets will require public policy changes and regulatory reforms, as well as partnerships between private sector businesses and community-based enterprises.

"The economic, social, and environmental payoffs from sustainable forest development with local producers could be significant over the next 50 years—large enough to attract the interest of national finance and environmental ministers," Kaimowitz said. "It is urgent to promote a well-defined strategy of forest market development that focuses on local community participation and ownership as opposed to subsidizing large-scale, industrial plantations as a means to forest conservation."

The report describes several opportunities for local forest producers:

Developing countries’ domestic wood demand is growing more rapidly than that of industrialized nations. As developing countries’ need for wood increases and the ready supply decreases, many countries—such as China and India—are becoming major importers. Over the last 20 years, the Philippines has actually moved from being a major exporter of timber to being an importer. This has sparked intense interest in new domestic wood sources. Much of the forestland near rapidly-growing population centers, where this supply could be found, is currently controlled by rural communities.

Company-community partnerships help to meet consumer demands. Investors could partner with local growers to reforest land that is marginal or unsuitable for farming. For example, international paper companies Sappi and Mondi currently contract with more than 10,000 small farmers in South Africa to grow trees for pulp.

High-value tropical hardwood is increasingly scarce. Much of the world’s remaining supply of woods such as mahogany and rosewood is located in areas controlled by forest communities.

New niche markets are expanded by globalization. For example, environmentally and socially aware corporate buyers, such as home products companies like Swedish firm IKEA and U.K. firm B&Q Do It Yourself, increase demand and awareness of certified wood harvested from sustainably managed forests.

To take advantage of these opportunities, the report states that concerted action is required on two fronts: 1) developing commercially viable small-scale forestry operations; and 2) removing many of the regulatory and market barriers that discriminate against small producers.

In order to improve their market position, the report points out that small producers must analyze markets and position themselves competitively—as is necessary for any successful business. This requires building supply networks to link producers and markets, increasing production efficiency, responding to consumer preferences, and conducting strategic marketing.

The report cites 57 countries with at least one existing partnership between forest industry and local communities. These partnerships promote small-scale forestry operations and offer considerable benefits for all parties. Industrial firms are provided with competitive prices for wood fiber and non-wood products, protection of desirable forest assets, expertise on local forests, and opportunities for socially responsible marketing. Local producers receive benefits such as high-quality planting materials, technical assistance, quality control, investment resources, and marketing expertise.

"We believe that businesses investing with local forest producers will be in a much stronger position in coming years in terms of supplies," White said. "An effective partnership requires a long-term perspective for business development, flexible contract terms, special attention to reducing business risks, and mechanisms to reduce transaction costs."

  • The authors also call for removal of government policies that thwart efforts to develop local forestry operations. Some of these impediments include:
  • regulations that limit local commercial activities in forests or claim a large share of forest-generated income;
  • subsidies that almost exclusively favor large-scale forest producers;
  • complex permit processes intended to protect resources that instead create barriers for poorly financed local forest producers;
  • trade restrictions enacted in the name of environmental protection that disproportionately burden poor producers; and
  • political disenfranchisement that gives local communities little input in decisions affecting land use regulations and forest management.

"The key is creating a model for forest management that offers communities a chance to make a profit, but in a way that is compatible with environmental concerns," said Kaimowitz. "Given the scarcity of viable alternatives for rural development in poor agricultural and forest regions, it makes sense for the international community to increase attention and financial investment in forestry beyond purely subsistence goals."