Forestry Policy and Institutions Working Paper 35 Latin American Experiences in Natural Forest Management Concessions 2016
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Forestry Policy and Institutions Working Paper 35
LatinAmericanExperiencesinNaturalForestManagementConcessions
2016
LatinAmericanExperiencesinNaturalForestManagementConcessions
SteveGretzinger
ZakResources
Food and Agriculture Organization of the United Nations
Rome, 2016
Disclaimer
The Forestry Policy and InstitutionsWorking Papers report on issues in the work programme of Fao. These working papers do not reflect any official position of FAO. Please refer to the FAO Web site (www.fao.org/forestry) for official information. The purpose of these papers is to provide early information on ongoing activities and programmes, to facilitate dialogue and to stimulate discussion. The Forest Economics, Policy and Products Division works in the broad areas of strenghthening national institutional capacities, including research, education and extension; forest policies and governance; support to national forest programmes; forests, poverty alleviation and food security; participatory forestry and sustainable livelihoods. For further information please contact: For further information, please contact: Cesar Sabogal Forestry Officer Forestry Department, FAO Viale Delle terme di Caracalla 00153 Rome, Italy Email: [email protected] Website: www.fao.org/forestry Comments and feedback are welcome. For quotation: FAO.2016. Latin American Experiences in Natural Forest Management Concessions, by, Steve Gretzinger. Forestry Policy and Institutions Working Paper No. 35. Rome.
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TableofContentsAcronyms...............................................................................................................................................iv
ExecutiveSummary...............................................................................................................................1
1. Objectives.....................................................................................................................................10
2. Methods.......................................................................................................................................10
3. Introduction................................................................................................................................10
4. LatinAmericanSetting.................................................................................................................12
5. HistoryofForestConcessionPrograms......................................................................................27
6. OperationalDetails.....................................................................................................................39
7. Relationshiptoforestpolicies....................................................................................................58
8. Mainsuccessesandpositiveimpacts.........................................................................................62
9. Mainweaknessesandobstacles.................................................................................................67
10. Lessonslearnedandfactorsforsuccess....................................................................................72
11. Finalreflectionsonthefutureofconcessions...........................................................................79
Annex1:References............................................................................................................................81
Annex2:SummaryTableofLatinAmericanConcessions...................................................................85
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AcronymsABT ForestandLandAuthority(AutoridaddeBosquesyTierras-Bolivia)ARFFS Regional Forestry and Wildlife Authority (Autoridad Regional Forestal y de Vida
Silvestre–Peru)ASL AgrupaciónSocialdelLugar(Bolivia)BPP PermanentProductiveForests(BosquesdeProducciónPermanente-BPPPeru)CARICOM CaribbeanCommunityandCommonMarketCATIE TropicalAgriculturalCenterforResearchandEducationCEPLAN NationalCenterforStrategicPlanning(CentroNacionaldePlaneamientoEstratégico
–Peru)CGFFS CommitteeforForestandWildlifeManagement(Peru)CIFOR CenterforInternationalForestryResearchCNFP NationalPublicForestCadestral-BrazilCONAP National Protected Areas Council (Consejo Nacional de Areas Protegidas -
Guatemala)CSME CaribbeanSingleCommonMarketandEconomyCU ConservationUnit(Brazil)DCF DiscountedCashFlowEIA EnvironmentalImpactAssessmentFLONA NationalForestArea(Brazil)FPDMC ForestProductsDevelopmentandMarketingCouncil(Guyana)FORESCOM Community Forest Services Company, Inc. (Empresa Comunitaria de Servicios de
Bosque,S.A.– Guatemala)FSC ForestStewardshipCouncilGDP GrossDomesticProductGFC- GuyanaForestryCommission(Guyana)GFTN GlobalForestandTradeNetworkha hectaresHKV WoodCuttingPermit(Suriname)IADB Inter-AmericanDevelopmentBankIBAMA BrazilianInstituteofEnvironmentandRenewableNaturalResourcesICL IncidentalCuttingLicense(Suriname)ICMBio ChicoMendesBiologicalInstitute(Brazil)IFC InternationalFinanceCorporationINAB NationalForestInstitute(InstitutoNacionaldeBosques–Guatemala)ITTO InternationalTropicalTimberOrganizationLKTS LesserKnownTimberSpeciesITTO InternationalTropicalTimberOrganizationMBR MayaBiosphereReserve(ReservadelaBiosferaMaya-Guatemala)NGO Non-governmentalorganizationOSINFOR SupervisoryEntity for ForestandWildlifeResources (OrganismodeSupervisiónde
losRecursos ForestalesydeFaunaSilvestre–Peru)
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PEAS StateProjectsforSustainableSettlements(Brazil)PEAX StateProjectsforAgro-extractiveSettlements(Brazil)PEFC ProgrammefortheEndorsementofForestCertificationPGMF GeneralForestManagementPlan(PlanGeneraldeManejoForestal)PMFI IntermediateForestManagementPlan(PlandeManejoForestalIntermedio-Peru)POA PlanOperativoAnualRESEX ExtractiveReserve(Brazil)RDS ReservesforSustainableDevelopmentSBCBi BolivianForestCertificationandIncentivesSystemSERFOR PeruvianForestryService(ServicioNacionalForestalydeFaunaSilvestre–Peru)SINAFOR NationalSystemofForestryandWildlifeManagement(SistemaNacionaldeGestión
ForestalydeFaunaSilvestre–Peru)SFB BrazilianForestryService(ServiçoFlorestalBrasileiro-Brazil)SFP StateForestPermit(Guyana)SNUC NationalSystemofConcessionUnits–BrazilTCO LandsofOriginalCommunities(TierrasdeComunidadesOriginarias–Bolivia)TFT TropicalForestTrustTRF TasadeRegulaciónForestal-BoliviaTSA- TimberSaleAgreement(Guyana)UTMFC CommunityForestManagementTechnicalUnits(Peru)VMA MinimumAnnualValue(Brazil)VRC ReferentialContractValue(Brazil)WCL WoodCuttingLease(Guyana)WWF WorldWildlifeFund
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ExecutiveSummaryFAOisleadinganinitiativetoimprovepoliciesandpracticesrelatedtoconcessionsonnaturalproductionforestsinordertosustainforests,buildruraleconomiesandimproveopportunitiesforlivelihoods.Theobjectivesofthisinitiativeareto:
→ positivelyinfluencepoliticaldialogueatinternationalandregionallevelsontheroleofforestconcessionsforachievingtheaforementionedgoals,and
→ providepracticalguidanceonthedesign,implementationandevaluationofforestconcessionsystemsthatbetterrespondtotheireconomic,social,institutionalandenvironmentalgoals.
Thisreportcontributestotheaboveinitiativebypresentingtheresultsofanextensive,structuredanalysisofforestconcessionprogramsinthesixLatinAmericancountriesselectedforthestudy:Bolivia,Brazil,Guatemala,Guyana,PeruandSuriname.Forestconcessionsaresubjecttocriticismeventhoughmuchofthecontroversyisduetoasmallnumberofhigh-profilecasesthatdidnotdelivertheexpectedbenefits.LatinAmerica’sexperiencehasbeenmixed:successesinsomecountriescomparewithfailuresinothers,Finalverdictsaredifficulttomakeasallcountrieshaveevolved,someforthebetterandsomefortheworse,butallwithvaluablelessonsthatFAOshouldtakeintoconsiderationinitswork.Considerthefollowing:
• Despitecomplexsocio-economicenvironments,GuatemalaandBoliviahaveservedasleadersinthesocialandtechnicalaspectsoftropicalforestryrespectively,settingahighstandardforothercountries.
• SurinameandGuyana,withlowpopulationdensitiesandhighforestcoverwouldseemidealcandidatesforrobustconcessionprograms.Unfortunately,bothcountrieswereinitiallyplaguedwithdissatisfyingperformanceonsocialissues,andhaveonlyrecentlybeguntoimproveforestaccessbylocals.
• Brazil,despitebeingaglobalforestrypower,hasonlyrecently(andataslowpace)beguntograntconcessionsonfederalandstatelandsviaatechnicallycomplexsystembasedonabalancedsharingofpowersbetweengovernmentalinstitutions,andarobustinformationalbase.
• Despitestrongsupportfrominternationalconservationgroupstodevelopitsconcessionsystem,Perustrugglestomakeitsambitiousprogramoperativeandcompetitiveagainstillegallogging,andrelevanttoindigenouscommunitiesclamoringforeconomicopportunities.
• Venezuela,oneoftheregion’sfirstentrantsintotheworldofforestconcessions,hasregresseddramaticallyandtoday,hasfewfunctioningoperationsthatcomplywiththebasicprinciplesofsustainableforestry.
ThisExecutiveSummaryhighlightslessonslearnedfromthesetypesofexperiencesandprovidesinputsfrombothpositiveandnegativeresultsfromLatinAmericanexperiencesthatFAOcoulduseintheregion,aswellasinAsiaandAfrica.
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A. Economiclessonslearned
Mostcountriesreviewedaspartofthisstudyhaverobustforestproductindustriessustainedbyconcessionsystemsthatprovideconsistentvolumesoflogs,thusgeneratingemployment,governmentrevenuesanddevelopmentimpactsinunder-servicedareas.LogvolumefromBrazil’sstateandfederalconcessionsareincreasingandconcessionsinSuriname,MexicoandGuatemalamaintainregularvolumelevels.UpuntiltherecenteconomicdownturninChinathathasreduceddemand,andthedevaluatingcurrencyinBrazilthathasreducedthepriceofwoodproductsfromthiscountry,Peru’swoodproductionhadbeenaccelerating.Priortoamajorchangeinpolicy,Boliviahadalsoastablevolumeofproductionfromitsforestconcessions.
Concessionsseemtofomentthediversificationofvalue-addedprocessingthatleadstoevengreatereconomicbenefitstoacountry.ArangeofcompaniesinBolivia,Brazil,GuatemalaandPerumakespecialdimensionortechnicallysophisticatedproductstoexactingstandardsforclientsandoftenfromawiderangeoflesserknownspecies.Thishasprovenparticularlytrueincountrieswithamoderatelyrobustmanufacturingsectorpriortoconcessions.Boliviansawmillsdidnotstartfromscratchandembracedtheideaofmanagingforestsviaaconcessionmodel,asdidseveralprogressiveGuatemalanmanufacturers.
Government-fundedindustrydevelopmentorganizationsthatsupportforestconcessionairesonmarketdevelopmentinitiativeshaveproventobeausefulincentive.Thesehavebeensetupinrecognitionoftheneedforconcessionairestoimprovetheirmarginsbyharvestingmorevolumeperhectareortodevelopnewproductsfromlesserknownspecies.Guyana’sFPDMC,Bolivia’sCADEFORandPeru’sCITEMaderahaveallplayedkeyrolesintestingnewspecies,developingnewproducts,andpromotingnewtechnologies.
Strongandwell-establishedconcessionprogramswithstablerevenuegenerationduetoconsistentvolumesarerecognizedbyfinancialinstitutionsandfundsassolidinvestmentopportunities.InGuatemalaandPeru,statebank,venturecapital,pensionfunds,andstrategicinvestorsfromallovertheworldhaveinvestedtheirresourcesinconcessionsandattimes,evenacceptingannualharvestplansascollateralforloans.
Despitetheabove,tropicalforestconcessionsshouldnotbeconsideredahighlyprofitableendeavor,norforthefaint-of-heart.ExperiencesinBrazilandPeruinparticularhaveshownthatthehighcostsoflong-terminvestmentinforestrymakeprofitsdifficulttoobtain,particularlywhencompetingagainstinformalloggerswithlowercosts.B. Environmentalresults
TropicalforestmanagementaspracticedinconcessionshasproventobeoneofthemosteffectiveconservationstrategiesavailabletoLatinAmericangovernments.Guatemala’scommunitymodel“saved”muchoftheMayaBiosphereReserve(MBR)fromfires,illegalloggingandslash-and-burnagriculture;Bolivia’spastindustrialmodelprovedthatsustainableproductionisasoundapproachtopreventingtheconversionofforesttoagriculturalproduction(i.e.soybeans),andinPeru,forestconcessionareashavelowerdeforestationratesthanprotectedareas.
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Thereasonforsuccessislargelyattributedtothestronghumandesiretoprotectwhatbelongstoone,orwhatsustainsone’seconomiclivelihood.IncountriesrangingfromMexicotoBrazil,concessionaireshaveshowntheircommitmenttoprotectingtheirsourceofrevenuebykeepingillegalloggersandlandspeculatorsout;essentiallyplayingtheroleofthestateinkeepingforestforindividualsandcompanieswithformalizedaccesstotimberandnon-timberproducts.
Inadditiontotheproductionareasmanagedfortimber,virtuallyallconcessionprograms(andparticularlyFSC1-certifiedoperations)includestrictpreservationzonesofuniquevegetativecommunitiesandhabitat.ThisisdonetoachievefinancialincentivesasinthecaseofPeru,maintainFSCcertificationasrequiredbytheGuatemalangovernment,orcomplywithstatemonitoringrequirementsasinBolivia.C. Technicalissues
Althoughdetractorscitethetechnicaldifficultyofmanagingtropicalforests,Bolivia,GuatemalaandMexico(andBraziltoalesserdegreegivenitsmorerecententranceintotheconcessiongame)haveallimplementedsustainableforestryonawidescaleincomplextropicalforestsandoftenunderdifficultconditions.Acceptedtechnicaltoolsforensuringsustainableharvestlevelsandforestintegrityarefrequentlyused,including:forestinventories,pre-harvestcensuses,mappingoftopographicandhydrologicalobstacles,markingofseedtreesandtreesforharvest,reducedimpactlogging(RIL),andtheuseofminimumdiametercutlevels.Themostimpressiveexampleoftheapplicationofsuchtoolstoareal-worldsettingwasBoliviawhichforoveradecade,hadarguablytheworld’smostsuccessfulconcessionprogramimplementedoveralargescaleanddesignedbyworldclassexpertsthatbolsteredastrong,forest-basedeconomy.
ThetechnicalsoundnessofconcessionsystemsinBolivia,GuatemalaandMexicohavebeenshownbytheindependentcertificationofmanyoperationsinthosecountries,eithervoluntarilyorduetogovernmentalobligations.Forexample,theMexicangovernmentrequiresejidostogetcertifiedandpaysforcosts.Guatemalanconcessionairesarerequiredtoachievecertificationafter3yearsbutnoassistanceisprovided.PeruoffersincentivesforobtainingFSCcertifiedstatus.
Millionsofhectaresofwell-managed,FSC-certifiedforestconcessionshavesupportedwoodproductsindustriesgeneratingjobsforthousandsofruralpeoplewithfewoptions,andtaxrevenuesfromtheexportandlocalsaleofprocessedwoodproducts.D. Impactsonlocalcommunities
Thesteadyflowoflogsandwoodproductsderivedfromconcessionshasledtostrongforestbasedeconomieswithapublicconstituencyforforestconcessions.TheGuatemalanandMexicanexamplesareparticularlyimpressiveinshowinghowtherelianceoftheforestproductsindustryonconcessionstranslatedintovocalsupportforkeepingforestsstanding,oftentimesagainstplanstoconvertforeststootherusesorusurpcommunityrightstotheirforest.
Whilesomebelievethatcommunitiesareunabletomanagetropicalforests,GuatemalaandMexicohavemanyexamplesofcommunitiesthatprofitablyharvesttrees,milllogsandsellproductswith
1Forest Stewardship Council.
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theirownmachineryandinforestsbelongingtothemorundertheirstewardship.Guyana’sForestryEnterprisesandSocialDevelopmentProgramprovidesawayforcommunitiestosecurerightsandbenefitsfromtheirforests.WiththeexceptionofVenezuela,LatinAmericancountriesaretakingmajorstepstoallowforgreaterbenefitstogodirectlytolocalcommunities.
Theimpactsofforestconcessionsoncommunitieshasbeenlarge.Brazilianconcessionsgenerateover6directandindirectforestryjobsper1,000m3oflogsharvested.InBrazil’snorthernParáState,concessionstotaling176,000hawillgenerateUS$20millioninrevenuesaswellas400jobs,or50%ofallformaljobsinaregioncharacterizedbyhighpoverty.InBolivia,ruralfamiliesinvolvedincommunityforestrymanagementbenefittedfromanaverage23%increaseinincomecomparedtopreviousyearswhenengagedinlessformalforest-relatedactivities.Thesecommunitiesalsoinvestedforestryprofitsinbasiccommunityeducation,infrastructureandhealthprojects.InSuriname,forestryandwoodprocessingbasedprimarilyonconcessions,accountedfor2.5%ofthecountry’sGDPandprovidedemploymentfor4.5%oftheentireworkforcein2000.
FunctioningforestconcessionsaspartofabroaderlanduseplanhavebecomewellregardedbycommunityleadersandthegeneralpublicinBrazil,Guatemala,andMexico,andhavehelpedincreasesocietalawarenessthatcuttingatreeisnotbadaslongasitisdonewithinthecontextofsustainablemanagement.Thereislittleornooppositiontotheconceptofconcessionsaspracticedbygoodconcessionaireswhentheycontributetobothsocio-economicdevelopmentandreduceddeforestation.
Alessquantifiableachievementhasbeentherolethatconcessionshaveplayedinbuildinglocalindustrybasedonindividualsthatmustacquirenewskills,becometrained,changejobs,anddevelopnew(moreoptimistic)perspectives.ThedevelopmentofhumancapitalisillustratedbyGuatemalawherethemostsuccessfulcommunityconcessionairesarenowabletoengageinsophisticateddiscussionsonexporttaxesandforestpolicy.InPeru,indigenousmachineoperatorshavebeentrainedandearnhighersalariesthantraditionalunskilledlaborpositions.Communitiesthathaveonlyrecentlyenteredthemarketeconomyarenowmeasuringlogs,calculatingvolumes,andmonitoringcosts.
ThedeliberatebuildingofhumancapacityonbothanindividualandorganizationallevelbypublicorprivateentitiesdedicatedtothistaskhasprovencriticalinGuatemala,Peru,Bolivia,andMexico.Suchorganizationsplaymajorsocio-politicalandfinancialroles,anddidnotexistpriortotheinitiationofforestconcessionprograms.Theydevelopednaturallyasneedschangedandbecamemoresophisticated.
WorkersinBrazil,PeruandGuatemalahighlightedthatimprovedsafetyandworkingconditionsfortreefellersandsawmilloperatorswereconsideredthemostimportantimpactsofwell-managedconcessions(i.e.protectiveclothing,improvedventilation,safetyequipment,bettermachinery,firstaidtraining,andregularworkinghours).Insuchcountries,concessionairesusuallyensurethatworkershavefullhealthcoverage,andcontracthealthprofessionalstoattendtostaffinforestcamps.ThewidespreaduseofreducedimpactlogginginGuyanaandBoliviahasreducedthelikelihoodofinjuryandprotectiveequipmentisnowstandardinconcessionscommittedtothisproductionsystem.E. Institutionalissues
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Landscapelevelplanningthatexcludelandsoftraditionalcommunityuse,potentialconflictand/orhighconservationvalueshaveensuredthatareaschosenforconcessionssucceed.Brazilhasbeenparticularlyproactiveinlanduseplanningforlarge,forestedregions.UpfrontinvestmentinidentifyinghighconflictzoneslikeillegalmininginItaituba,BrazilorconflictingresourceusersinGuatemala’sMayaBiosphereReservehavehelpedensurethatmanagementobjectivesarenotatoddswithcurrentresourceusers.
Havingfewer,butlarger,areastomonitorimprovestheefficienciesofagencyemployeesandreducesthefocalpointsofpotentialillegallogging.Acommonwinningformulahasbeentoformnewgovernmentalentitieswithamoderncorporatephilosophyledbyindividualsnottaintedwithpreviousinvolvementinthesector.Bolivia’sABThastakenauniqueapproachtodigitaltrackingofwoodflowthatdoesnotsanctionerrorsbutrathercontinuestoworkwithproblematicoperatorstoimprovetheirbehavior,inpartviapublicembarrassmentandlackofaccesstofinancialincentives.Theinculcatingofaproactiveandpositivephilosophymotivatesnationalprofessionalsofprestigetoreturntogovernmentalservice.
Relatedtotheabove,theroleofinspiredandhard-workinglocalprofessionalsor“champions”inbuildingconcessionprogramsisanotablesuccessforvariousLatinAmericancountries.Brazilisthemostrecentexampleofhowtheestablishmentofaprofessionalgovernmentalinstitutionwithclearrulesofengagementinspiresmotivatedindividualstochangetheforestryparadigm.Guatemala,despiterampantviolenceandinstability,wasalsoabletobuildacadreoflocalprofessionalswithsufficientdriveandcommitmenttostoppingillegalloggingandbuildinganeffectiveconcessionprogram.
WhilesomecountriessuchasVenezuela,SurinameandGuyanahavehistoricallygeneratedlowrevenuesforgovernmentalcoffers,othercountrieshavedesignedsystemstoensurefinancialsustainabilityoffederal,stateandmunicipalgovernmentalinstitutions,thususingprofitstoimprovegovernance.InBrazil,feescollectedfromfederalconcessionsaredistributedtotheMunicipality(either20%or30%)andState(either20%or30%)wheretheconcessionislocated,aswellastoanationalfundforfomentingforestdevelopment(40%).Thissystemisgoodforensuringacertainleveloffinancingforvitalgovernmentalfunctions,aswellastheoverallsector.F. Generalconsiderations
Expertscontinuallycitelandtenureconflicts,violenceandweakgovernmentsasobstaclestoforestmanagement,butbothSurinameandBolivia(andPerumorerecently)havesuccessfullyimplementedgoodprogramstobuildlocaleconomiesbasedonlegalforestmanagementthatcompeteswithillegalloggers;despiteobstaclesrelatedtotenure,crimeandgovernments.
Despitethelackofbetterpricesinthemarketplaceforcertifiedwood,manycountrieshaveorhad,extensiveareasofforestscertifiedbytheFSC,particularlyMexico,Guatemalaandatonepoint,Bolivia,andsomeuniqueapproachestoenteringnichemarketswithcorrespondinghighpricesforFSC-certified,non-commodityproducts.
State-runconcessionsarerare,butnativeforestsmanagedassuchbyprivateownersareevenmoreuncommon.Nogovernmentshaveprivatizednationalforests;mosttendtograntlong-termaccess
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toageographicallydefinedforestviaastructuredprocesstomanufacturers,individualloggersorassociations,communitiesorevennon-profitorganizations.
WhilesomeprogresshasoccurredonecotourismandNon-TimberForestProducts(NTFPs),thesearestillexceptionsratherthantherule,andaremainlylocatedinBrazil.Thisisdueinparttothefactthatonecannoteasilylinktheforesttothetreeswithnon-timberproductsparticularlywhentherearediffuseuserarrangements.Thereadymarketsforwoodandmorewidespreadexperiencewithwoodproductsmakestimberamorefeasibleeconomicdriveraroundwhichtoframeconcessions.G. Weaknesses
Ifthereisonecommonthemeacrossallcountriesandrequestedfromallinterviewees,itisthatgovernmentsneedtodramaticallyreducetheflowofillegalwoodthatdepressesmarketsandlowersprices.CompaniesinPeruandBoliviaarefocusingharvesteffortsonnativeandcommunityforestswhererequirementsarelessstringent,costslowerandsupervisionbythegovernmentmuchlaxerthanintheconcessionmodel.Woodfromcommunitiesinthesecountriesnowdominatesthesupplyandcompetesunfairlywithconcessionaires.UnfaircompetitionisstillthelargesteconomicobstaclefacingconcessionairesaroundLatinAmerica.
Despitebeinggovernmentalpropertywithclearlydefineduserrights,fewgovernmentshavetheappetiteforremovingillegaloccupants(loggers,farmers,families)fromfederalorstateconcessionsevenwhentheyhavethelegalrighttodoso.Thisisahugeissuesinceconcessionairesinvestinanareawiththethoughtthatthegovernmentwillindeedlookoutfortheirmutualinterestsandremoveinvaders.ManyexpiredconcessionsinBolivia,Guyana,PeruandSurinamearenotbeingmanaged,andsubjecttoillegalloggingorconvertedtoagriculture.Fewcountrieshavefunctioningprocedurestopassrescindedconcessionstonewowners.
Overall,thereisstillalackofinterestbybanksandfinancialinstitutionsinallocatingresourcestonaturalforestmanagementconcessions.Businesssupportforbothcommunitiesandcompaniesisusuallyminimalinthebeginningpreciselywhenkeydecisionsarebeingmadeandfinancialastutenessismostcritical.Fortheseandotherreasons,manyconcessionsarenotdoingwellfinancially;theysimplydonothavetherequisitebusinessskillstomanageacompanyunderchallengingclimatic,financialandriskconditions.
Economiesofscaledictatethatlargerareaswithsufficientcapitalareneededtomakeconcessionseconomicallyviable.Theclassicproblemoflowvolumesperhectareisnotedinmostcountriesbutmissesthepoint:itislessaquestionofhowmanym3/haareavailablebutmoreanissueofhowmuchUS$/haisgeneratedinprofit,particularlyinrelationtooperatingcostsinfluencedbyroadandriveraccess.
EconomicreturnsincountriessuchasBrazilandPeruhavebeenmuchlessthanexpected,dueinlargeparttopoorinventoriesandhigherthananticipatedcosts.Reducingthecostandincreasingthereliabilityofforestinventoriesisapressingtechnicalneedsinceallsubsequentinvestmentdecisionsstartwiththeamountofavailablevolume.
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Itissurprisingthatgivenwidespreadforestcertificationandconcernaboutindigenousrights,somecountrieshavebeensoslowtoincorporatecommunityandsocialissuesintoforestpolicies.Somecountriesareadvancingslowly(i.e.Peru)orregressing(i.e.Nicaragua).Boliviaallowseasyaccesstoforestsforcommunitiesbutwithoutsupport.Formalforestmanagementrequiresthatcommunitiesbecomeorganizedandefficient,butwiththeexceptionofMexicoandGuatemala,thereisalowrateofuptakeinmostcountries,andmoreexplicittoolsareneeded.Despitethebeliefthatdonororganizationskeep“inefficient”operationsafloat,thereareactuallyinadequateprogramsforsmalloperators.WiththeexceptionofBrazil,socialimpactassessmentsarerareinforestconcessions.
Silviculturaltreatmentsareusuallybasedonpolycyclicsystemswherebyminimumdiameterlimitsareestablishedassumingthatsmallerdiametertreeswillenteraharvestablesizeclassbytheendofthecuttingcycle.Whileconceptuallyreasonable,thisapproachrequiressite-specificgrowthandyielddatatoadjustprojections,anddoesnotaccountforshadeorlightpreferencesofparticularspecies.Innoneofthereviewedcasesareconcessionairesimplementingtreatmentsdesignedtomeetregenerationrequirementsofcommercialspecies.Therearenoexampleswheresilviculturehasbeenimplantedonanoperationalbasisoveranextendedperiod(i.e.largedisturbancesforlight-lovingspecies,liberationthinningforsmaller,shade-lovingspecies).H. Ingredientsforsuccess
ThemainingredientsthatcountrieswouldseemtoneedinplaceforasuccessfulforestconcessionprogrambasedontheLatinAmericanexperiencearehighlightedinthissection.
1. General
• Thegrantingofaparticularareaofforesttoaprivatecompanybythefederalgovernmentfomentslong-terminvestmentbytheconcessionairewhoknowsthattheywillreapthebenefitsofcapitalimprovementsoveranextendedperiod.Thisrunscountertothenormalattitudeandperverseincentiveofshorttermharvestpermitsandiscrucialforbuildinganeconomicconstituencyforstandingforests.
• Time,lotsofmoneyandconsistencyaretheunheraldedandseldommentionedharbingersofsuccessfordevelopingforestconcessions.Asoundconcessionprogramcannotbebuiltinaseveralyearswithoutadequatefinance.
• Giventhemultivariatenatureofforestry,improvementsinconcessionsystemsmustbeimplementedatalargescale,withstrongtechnicalsupport,andafocusontheoftentimesforgottensocialandfinancialaspects.
• Experiencedprofessionalswithproductionorprivate-sectorexperienceshouldbeinvolvedandallowedtocross-disseminateideasandmethodswithroomfortrialanderrortoadjustandapplyproventechniques.
• Participationbylocalandinternationalnon-profitorganizationstopromotethegood,exposethebad,andchanneltechnicalguidanceandfunds.
• Whenconcessionmanagementispartofabroaderstrategywithamulti-prongedapproachbythegovernment,successislikelyandimpactsinstabilizingimmigration,forestconversionandland-holdingsarehigh.
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2. Concessiondesign
• Transparentsystemsshouldbebuiltthatdonotpropagatethefeelingthatfavoritismandunder-the-tablepaymentswerethereasonswhysomeonereceivedaparticularconcession.
• Pragmaticconcessiondesignwithconsistentandcoherentgovernmentalsupportthatprotectstherightoftheconcessionaire.
• Determiningtheappropriateforestsizeshouldnotbeanarbitrarynorpurelytechnicaldecisionbutrathermustbebasedonacompletefinancialanalysiswithaccuratecostandrevenueinformation.
• Evidenceshowstheimportanceofresolvingorminimizingconflictsbetweenuserspriortoestablishingconcessionboundaries;inthelongrun,itismuchcheapertoestablishacleanandlow-conflictconcessionareaup-front.
• Sinceeffectiveconcessionareasareseldomaslargeasonemightthink,itisusefultostartwithalargeplanningareatoworkwithin.
• Ratherthanbeinganafterthought,governmentsshouldincludethemanagement,harvestandtradeofnon-timberproductsasacomplementarypartoftheirprograms.Simplyallowingotherstoharvestsuchproducts,ornotaddressinginannualoperatingplans,isnotsufficientlyproactive.
• Giventhedesireandneedtogeneratehighrevenuesfromconcessions,governmentsshouldwidelypublicizeconcessionsthatareupforbidandensureacompetitiveprocessthatusuallyresultsinhigherprices.
• Establishingconcessionfeesbasedonarearatherthanvolumeisonewaythatgovernmentscanatleastreducethecostofharvestinglowmarginspeciesandincentivizetheircommercialization.
• Whenitcomestoconcessions,simplerpricingapproachesthatdonotallowforcorruptionbyofficialstoobtainillegalpayoffsseembetterthanmorecomplexapproachesthatdependonlotsofinformationthatcannotbecorroborated.
• Atthesametime,thepricechargedshouldbeestablishedviaaclearmethodinordertorebukechargesthatlowpriceswereprovidedtofavorlargecompanies.
• Concessionpricingmechanismsshouldincorporaterealcostsfromsimilaroperationsthatincludeallexpensesrelatedtoaconcessionaireandanalyzedfromadiscountedcashflowapproachratherthansimplystumpage.
• Production-basedfeesshouldbebasedinpartonpricespaidforcertainspeciesofcommercialinterest,theseshouldbederivedonanindividualspecieslevel(orsimilarlypricedgroupings).
• Feesbasedonmarketpricesshouldensurethatthespeciesaretrulycommercialandthatthepricesarefromthespecificregionwherethewoodiscommonlysold.
• Flexiblecontractsthatallowforjustifiablechangesandforperiodslongerthanthetraditional20-25yearcuttingcycleswouldincreasetheappetiteforcompaniestobidonconcessions.3. Technical
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• Forestinventoriesandcensusesshouldfocusoncommercialspecieslikelytobeharvestedratherthanlowvaluespeciesorthosewithnomarketpotential.Concessionairesshouldbeabletovisitforestsandconducttheirownsupplementalinventoriespriortobidding.
• Succinctmanagementplansthatclearlysummarizeinventorydata,justifycuttingcyclesandharvestlevels,offerrealisticfinancialprojectionsandpresentoperationalrelatedinformationwouldbeadramaticimprovementoverthecurrentsituationofplansthatdonotprovidepracticalinformationrelatedtoaconcession’ssuccess.
• Concessionsrequiremorethanmanagementplans;successfulprogramsdevelopcleartechnicalguidelines,manuals,proceduresandreportsthatfosterbothconsistencyinapproaches,efficientmonitoringandstructuredreporting.
4. Economic
• Concessionairesmustobtainsufficientprofitstobeabletocompetewithillegalandinformalsuppliesofwoodinthemarketplace.
• Suchprofitsmustleadtovisibleandquantifiablebenefitstolocalsintheformofdirectandindirectjobs,salestoexportandlocalmarkets,andtaxrevenuesdistributedtolocalgovernmentsfromboththeforestryandmanufacturing.
• Vertically-integratedconcessionslinkedtoexperiencedmanufacturingfacilitiesarethemostlikelytosucceedsinceasecuresupplyofwoodallowsthecompanytoexperimentwithspecies,productsandmarkets,andproducerawmaterialsatacompetitivecost.
• Themainincentivetoanyforestconcessionprogramwouldbethereductioninillegallyproducedwoodwithlowercoststructuresthatdonotallowconcessionstocompetewell.
• Coststoconcessionaires,intermsoftimetoapprovepermitsoractualfeescharged,mustbereasonableinorderforaconcessionprogramtowork.Atthesametime,governmentsmustshowawillingnesstomodifyprocedures,paymentstructuresandcostsoncetheyrealizethattheyareonerousorexpensive.Efficientprocessesareanincentivethatgovernmentscanofferbidders.
• Incentivesintheformoftaxbreaks,feereductionsandsubsidieshavebeensuccessfulinreducingthecostofoperatingaconcessionandimprovingthelikelihoodofprofitability.
• Apragmaticapproachtostimulatinginvestmentsinconcessionswouldbeforthegovernmenttosharethecostsofroad-buildingwhicharethelargestcapitalexpenditurethataconcessionaireneedstoassume(andwhichinmanycasesrepresentsapublicinfrastructureusedbystateofficialsandlocalcommunities).
5. Institutional
• Therehavebeenvaryingdegreesofsuccesswithlocalgovernmentsandtheirinvolvementinconcessionprocesses.Forstate,regionalandmunicipalgovernmentstobeabletoplayasubstantiverole,clearandlogicalobjectivesandinstalledcapacitymustbebuilt.
• Governmentsneedtoensureadequatefinancialresourcesfromnotonlyconcessionrightsandproductiontaxes,butalsofromthegeneralbudgettocoverthecostsofrunningaconcessionprogram.
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• Greaterautonomyforagencieshelpsincreasetherateofprocessingandgrantingconcessions.Inseveralcases,arelativelyautonomousgovernmentalbodywithnew,motivatedandpoliticallystrongleadershipwiththeauthorityandbudgettomakesignificantchangeswaskeytochangingthewayforestresourcesweremanaged.
• Therearenoexampleswereaunilateral,hardlineapproachtostoppingforestconversionhaseverachieveditsobjectives.Whatdoesworkisacombinationofthecarrotandstickapproachwherebyconcessionairesdealwithanefficientgovernmentalentitythatcanalsoenforcelackofcompliance.Governmentsshouldworkaspartnerswithconcessionaires,notsimplyasapoliceforce.
1.ObjectivesTheobjectiveofthisreportistoassistFAOinimprovingpoliciesandtechnicalpracticesrelatedtonaturalforestconcessions.Thereportsummarizesthestatusofforestconcessionsfortimberproduction,andtoalesserdegree,non-timberforestproducts(NTFPs),conservation,restorationandecotourismasrelevantinBolivia,Brazil,Guatemala,Guyana,PeruandSurinam.
2.MethodsAnextensiveseriesofdocumentswasreviewedtoobtainup-to-dateandhistoricalperspectiveonthestatusofconcessionsinthevariouscountries(seeAnnexA).Theseincludedgovernmentdocuments(i.e.laws,regulationsandstatusreports),privateplanningdocuments(i.e.managementplans,financialstatementsandprojections),internetinformation(governmentalandnon-profitorganizations),telephonecalls,face-to-faceinterviews,andemailcommunicationwithindividualsengagedinforestconcessionsfromtheprivate,governmentalandnon-profitperspectives.
FieldvisitsweremadetoGuatemala(GuatemalaCity,Flores,MelchordeMencos),Peru(Lima,Pucallpa,Atalaya),andMexico(MéxicoCity).Althoughnotaprimaryfocusofthisresearch,theexperiencesofMexicoandVenezuelawerebrieflyreviewedduetotheirlonghistoryofforestmanagementconductedbytwoverydifferentimplementers:smallcommunitiesandlargecompanies.
3.IntroductionMostacademicsrepeatalitanyofsimilarobstaclesthreateningtheviabilityofconcessions:lackoflandtenure,inadequateattentiontocommunities,minimalaccesstocapital,corruption,andlimitedaccesstoinformation.Whiletheseareallimportant,theydetractone’sattentionfromacoreissueunderlyingwhythemanagementoftropicalforestsviaconcessionshasbeenonlymarginallysuccessful:
Woodproductsderivedfromforestconcessionscostmuchmoretoproducethanproductssourcedfrominformal,unsustainable,orillegallogginganddonotgenerateasufficientrisk-adjustedreturnfortheentrepreneur.
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Inmostcases,theeconomicallywisedecisionistoengageinshort-termharvestswithminimumcosts.Fromabusinessperspective,sustainableforestryisoftenmuchlessprofitableandariskierinvestmentthantraditionallogging.Thisreportshowshowgovernments,non-governmentalorganizations(NGOs),companiesandcommunitieshavecollaboratedtoreduceriskandincreasedtheprofitabilityoflong-termconcessionssothatforestcoverismaintainedandeconomiesstrengthened.Wheregovernmentshavenotbeenentirelysuccessful,thisreportwillshowthereasonsforlackofprogress,andhowlessonslearnedcanbeutilizedtoagoodend.
Thelast10-15yearshavebeencharacterizedbysignificantreformsandprogressinLatinAmerica.Despitesimilarculturesandlanguage,thedifferentconcessionprogramshavebeenanythingbutuniformineitherdesignorresults:
• In1996,Boliviapassedoneofthemostprogressive,innovativeandimpactingforestrylawsinLatinAmerica,andestablishedanindependententitytomanageanaggressiveconcessionprogrambasedonsoundtechnicalprinciples.Asaresult,atonetime,Boliviahadthelargestareaofindependentlycertified,industry-managedtropicalforestintheworld.Duetoradicalshiftsinthegovernment’sforestpolicies,theseconcessionshavebeendramaticallyreducedandwillnotbegrantedinthefuture.Concessionsoncebelongingtocompaniesarebeinggiventocommunities.ThenewlyestablishedForestandLandAuthority(AutoridaddeBosquesyTierrasinSpanishorABT)hastakenitsroleinreducingillegalloggingandbringingcommunitiesintothewoodbusinessseriouslyandhasmadefundamentalchanges.
• Brazilisunusualinthatdespitehavingamajorforestresource(thelargesttropicalforestintheworld)andastrongforestproductsindustry,ithasbeenslowingettingitsfederalconcessionprogramupandrunning.BrazilisalsouniqueinhavingstateconcessionprogramsinParáandAcrethatareincreasinginarea.FederalandstateforestryagenciesnowmanageconcessionsonthatsmallpartoftheAmazonallocatedforproductionforestry(<2%)inordertosupportruraleconomiesandproviderawmaterialstothewoodproductsindustry.Althoughthefederalprogramischaracterizedbygreatcomplexityduetotheinvolvementofthreeseparatefederalagencies,Brazil’sforestryservice(ServiçoFlorestalBrasileiroinPortuguese-SFB)hasshownawillingnesstoadjustitsprocedures.Asaresultofthisadaptability,considerablepublicconsultationandtechnicallysolidland-useplanning,Brazil’sindustrialconcessionsarebeginningtoplayakeyroleinthegovernment’sconservationanddevelopmentplanfortheAmazon.
• Thesmall,complexandpoliticallyvolatilecountryofGuatemalahasbeenattheforefrontofthecommunityforestrymovement.Guatemalapassedanewprotectedarealawandestablishedanewparkserviceintheearly1990’s.ThisledtoaforestconcessionprogrampioneeredintheMayaBiosphereReserve(MBR)inthemid1990’sthatallowedthecountrytoreducedeforestationandmakehugeimprovementsintheabilityofruralcommunitiestoproactivelyengageinforest-basedbusiness.State-ownedforestshavebeendesignatedfortheproductionofbothtimberandnon-timberproductsandareaccessedviaconcessionsgrantedtocommunitiesandindustrialcompanies.Itisoneofthefewcountriesintheworldwherecommunitiesareabletobidonconcessionsunderaregimedifferentfromthatofindustrialoperations,andiffact,arenowthedominantcategoryofconcession-holder.
• Duetoeconomicnecessity,in1987Guyanabeganliberalizingitspoliciesandopeneditsforestresourcetoinvestmentbyforeigncompaniesallocating2.4millionhectares(ha)forloggingthroughdifferentmechanisms.Lowpopulationpressures,highforestcover,andunique,
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commerciallyvaluablespeciesallowedGuyanatoimplementafast,massiveandopaqueconcessionprogram.In1997,Guyana’spermanentforestestatecoveredalmost9millionhaofwhich6.5millionhahadbeengrantedasconcessions(vanderHout,1999).Today,Asianinvestorscontrolalmost80%ofthecountry’slargeforestryconcessions,equivalentto1/3ofthealmost16millionhaofstate-owned,publicforests(Bulkan,2014).Guyanaischangingandhastakenagiantsteptoprovidingaccesstoremotecommunitiesthatnowmanagealmost500,000haofforestandgeneratealmostUS$9millioninannualrevenues(GFC,2015).
• Mexico’simpressivecommunityforestrymodelisworthyofadeepanalysisofitsownbuthasdeliberatelysteeredawayfromconcessionsandfocusedonbuildingacooperative(orejido)basedmodel.Whileconcretefiguresarehardtocomeby,estimatesonthenumberofMexicanforestcommunitiesrangefrom7,000toover9,000(Brayetal.,2005).WhilethismodelisauniqueartifactoftheMexicansocio-politicalhistory,itdoesprovethatsmall,ruralcommunitiesareabletosuccessfullyrunforestryenterprisesifgiventheappropriatetypeofsupportfromtheirrespectivegovernments.
• Onpaper,Peruhasarobustconcessionprogramintermsofarea;however,thiscountry’sexperiencehasbeenfrustratingandcharacterizedbymanyinoperativeandfailedconcessions,somelegitimateconcessionairesstrugglingagainsthighoperationalcostsandlowpricesfortheirproducts.Althoughthegovernmentisslowlybeginningtoreigninillegallogging,thePeruvianmarketisstillfloodedwithcheaplyproducedwood,oftenfromcommunityoperationsthathavesignificantlylowerrequirementsthanconcessions.Onlyaveryfew,verticallyintegratedcompaniesareachievingmoderatesuccessthroughtheirconcessionsandseveralhigh-profile,large,FSC-certifiedcompanieshavegonebroke.
• SurinameinitiateditsconcessionprogrambyproactivelysolicitingAsianinvestorstoobtainlargeconcessionstopumpmuch-neededfinancialresourcesintoitstroubledeconomyintheearly1990’s.Aftermanyyearsofforestpracticesthatdidnotmeetinternationalstandards,thecountrycannowlayclaimtoalargeareaofFSC-certifiedcompanies,atboththeforestmanagementandwoodprocessinglevel.
AsummarycomparisontableofforestconcessionsinthesevenLatinAmericancountriesstudiedispresentedinAnnex2.
4.LatinAmericanSettingA. Forestlandstatus
Boliviaestablishednaturalforestmanagementconcessionsinthatcountry’slowlandsincludingtheAmazonwithmostofthecountry’sforest(22.2millionha)andthedrier,rougherandrockierterrainoftheChiquitanaregion(7.5millionha).TheChaco(10.1millionha)andAndina(13.7millionha)regionsarenotaptforconcessions.TimberplantationscomprisearelativelysmallpartofBolivia’slandscapeandforestproductssector.AccordingtotheTropicalForestTrust(nodate)andbasedondataprovidedbytheInternationalTropicalTimberOrganization(ITTO),in2005Boliviahadonly60,000haofplantationsandprimarilyinthehigherAndeanregions.
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AccordingtodirectinterviewswithWorldWildlifeFund(WWF)staffworkingonforestsectorissuesinBolivia,in2015thecountryhadatotalforestareaof53.5millionha(48%ofthecountry)ofwhich17.1arepubliclandsavailableforforestmanagement,and8.9millionhawithapprovedforestmanagementplans(over¼ofallpublicforestland)2.Atpresent,only2.1millionhaareinconcessionsasillustratedbelow(Table1):
Table1.CurrentForestUseinBoliviabyManagementRegime,Area,andPercentage
ManagementRegime Area(hectares/%)Indigenouscommunities 3,143,035ha(35%)
Ex-concessions 2,107,726ha(24%)Privateownership 1,540,486ha(17%)
Communities(Non-indigenous) 1,522,476ha(17%)Non-community/socialholdings 477,365ha(5%)
Research 163,611ha(2%)TotalArea 8,954,699ha(100%)
(Source:Carreras,2015)Whereaslessthan5yearsago,Boliviahad42%ofitsproductionforestinindustrialconcessions(withanaveragesizeof73,215has),itnowhasonly24%insuchtenure.Aswillbeexplainedfurther,thegovernmentnolongerusestheconcessionmodelperse,andreferstotheselandsas“ex-concessions”.Previously,communitiesonlyhadformalizedaccessto37%oftheproductionforest(withanaverageareaof16,721ha).Communitiesnowhold57%oftheproductionforest(Carreras,2015).Thesefiguresshowthesuccessofthegovernment’spolicyfavoringcommunitymanagementofforestresources.Privateholdingsandresearchforestshavestayedroughlythesame.Short-termharvestpermitsthatwerefrequentlyforlargeareasarenolongeroccurring.
2 In percentage terms, this is very similar to Guatemala with has a total of 3.7 million ha of forest of which 1.5 million ha are public lands and 450,000 ha allocated to concessions (29%). By comparison, only 2% of Brazil’s Amazon has been allocated to forest production.
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Map1.ForestusebydifferentparticipantsinBolivia
(Source:WWF,2015)
Brazilhasatotalforestareaofalmost463millionhaofwhich310millionhaarepubliclands.In2015,1.3millionhaoffederalandstatepubliclandswereconcession(0.4%ofallpubliclands)(NRPF,2015).TheareaofBrazilutilizedfornaturalforestconcessionsisthelegallydesignatedAmazonregioncomprisedofallsevenstatesoftheNorthRegion(Acre,Amapá,Amazonas,Pará,
Code Forest Rights by ActorIndustrial Annual Operating Plans Non-Indigenous Community Operating Plans (ASL)Farmer Community Plans
Indigenous Community Plans (TCO)
Private Landowner PlansForest Clearing PermitsForest ConcessionsPermanent Production Forests
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Rondônia,RoraimaandTocantins),aswellaspartofMatoGrossointheCenter-WestRegionandmostofMaranhãointheNortheastRegion.
Map2.BrazilianStatesbelongingtotheLegalAmazon
Through2015,themajorityofforestintheBrazilianAmazonwasheldbyindigenousandnon-indigenouscommunities(47%or>145millionha)withslightlyless(46%or<144millionha)managedbyfederalandstategovernments,ofwhichlessthan1,350,000haweremanagedasforestconcessions(<1%)3.TheBrazilianForestService(SFB)reportsthatatotalof840,000haoffederallandshavebeengrantedasconcessions(Table2).
FederalforestconcessionsinBrazilarelocatedinfivemainnationalforestareas(referredtoasFLONAS)including:Jamari(RondoniaState),Saraca-Taquera(ParáState),Jacunda(RondoniaState),Altamira(ParáState),andCrepori(ParáState).
Stateconcessionsaresimilartofederalconcessionsinmostaspectsbutaregrantedandmanagedbystategovernmentratherthanfederal.In2012,themajorityofthestateconcessionswerelocatedintheStateofParáwhichhad215,000haunderconcessionwithanaveragesizeof50,000ha.
Table2.LandusageandconcessionsofPublicForestinBrazil(2015)
Source:NRPF,2015
3 Only 2% of Brazil’s Amazon forest has been allocated to production or approximately 20 million has (STCP, 2014).
Type Percent Area(ha)
IndigenousForests 36,03% 111,940,181
NonIndigenousCommunityForest(TraditionalSettlements) 13,24% 41,152,218
MilitaryAreas 0,90% 2,804,076
OtherDesignatedFederalForests 16,20% 50,321,007
OtherDesignatedStateForests 10,47% 32,542,450
OtherDesignatedMunicipaltyForests 0,09% 278,043
NonDesignatedForests 23,07% 71,666,849
TotalPublicForests 100% 310,704,824
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Concessions Area(ha)
Federal 842,000
State 477,000
TotalPublicForests 1,319,000
Source:NRPF,2015
Guatemalahasatotalof3.7millionhaofforestofwhich1.5millionhaarepubliclandsandapproximately450,000haallocatedtoconcessions(29%ofpublicforestlands).TheregionutilizedfornaturalforestmanagementconcessionsisPetén,thecountry’snorthernmostdepartment.Theconcessionshavebeengrantedinthe2.1millionhaMayaBiosphereReserve(MBR)establishedin1990asGuatemala’sfirstunitoftheInternationalNetworkofBiosphereReserves.
TheMBRincludes747,800haunderstrictprotection,864,300hadestinedformultipleuseincludingconcessions,and487,900haofprivateholdingsinthebufferzone.Decree5-90assignedadministrationoftheMBRtotheConsejoNacionaldeAreasProtegidas(CONAP)whichhadbeenestablishedearlierin1989underDecree4-89.Thevastmajorityofthecountry’snaturalforestconcessionsarelocatedwithintheMultipleUseZoneoftheMBR.Despitecancelingthreecommunityconcessionsduetofarmingpressureoversmallareaswithloweconomicpotentialanddrugtraffickers,thesystemfunctionson485,122ha(91%)ofthe533,045hagrantedasshowninTable3.
ThemajorityofGuyana’sforestryindustryislocatedinthePre-Cambrian,LowlandRegionoflowhillscoveredbytropicalrainforestonclayeyandloamysoils(vanderHout,1999).In1999,80%ofGuyana(16.8millionha)wascoveredbylargelyuntouchedforest(logginghadconcentratedintheareasclosetoroadsandbodiesofwater)anditspermanentforestestatewas8.9millionha.Tenyearslater,in2010,FAOestimatedthatthecountry’snaturalforestshaddroppedto15.2millionharepresenting71%ofthecountry’stotallandareaof21.5millionha(itto.int.2015).Therearemanyconflictingfiguresonthismostbasicissue:areaofforests.Inthisreport,“middle-of-theroad”valuesareusedratherthanthoseproposedbybiasedentities.In1987,thegovernmentallocated2.4millionhaforloggingontheselands,andby1996,6.5millionhaunderdifferentmodalities(tobedescribedlater).Map3showsthelargeextentbywhichforestconcessionsdominatethelandscapeinGuyanareachingatotalofapproximately43%ofthepermanentforestestate.
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Table3.ForestconcessionsinGuatemala’sMayaBiosphereReserve(2013)
(Source:Morales,2014)
Map3.ForestConcessionsandLandUsesinGuyana
(Source:forestmonitor.org)Inthefirstyearsofthe21stCentury,Peruclaimedalmost68millionhaofforestofwhichalmost19millionhawerepubliclandsand5.5millionhapubliclandsunderconcession(29%).Over52millionhaofforestareclassifiedasprotectedareas,indigenousreserves,privatelandsandothertypesof
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(non-timber)concessionswheretimberorforestmanagementisnotapriority.Nationalforestallocatedforwoodproduction(knownasBosquesdeProducciónPermanenteinSpanishorBPP)hasbeenestablishedbytheMinistryofAgricultureandisaccessedviaconcessionsgrantedtoprivateinvestors.
MostBPPsavailableforconcessionsareinLoretowithover9millionha(FAST,2014).TheDepartmentofUcayalihasapproximately3.5millionha(morethanathirdofLoreto).MadredeDios,despitebeingtheDepartmentwitharguablythemostprofitableconcessions,hasbarely2millionhaavailableaspermanentproductionforests.
Map4.PermanentproductionforestsinPeru
(Source:MINAG(PeruvianGovernment),2012)
By2011,thetotalareaofBPPinPerureached16.9millionhaequivalenttoonly30%ofPeru’sforestestate.From2002-2004,andwithsomeadditionsthrough2008,Perusigned605concessionscovering7.11millionhaUcayali,Loreto,MadredeDios,SanMartinandHuánuco.Theremaining9.8millionhaofBPPwhichcouldbeconcessionshavenotbeenlegallyassigned,butinmanycasesarebeingloggedorotherwiseused.Map5andaccompanyingfiguresillustratethatasmallpercentageofthetotalforestareainthePeruvianAmazonisoccupiedbyconcessions.
Atroughly550,000inhabitants(www.countrymeters.com,2015),SurinamehasanevenlowerpopulationthanGuyanaandvirtuallyanundisturbedforestlandscapemostofwhichiscoveredbythemesophyticmoistforesttypecharacteristicoftheGuyanaShield(ITTO,2015).Twoothermajorforestecosystemsarethenortherncoastalswamp,mangroveandridge/marshforestsandadriersavannahforesttype.Thecountryhasadeforestationrateofclosetozero,experienceslittleimmigrationandoverallisnotsubjecttomajorforestconversionpressures.By2005,ofits14millionhaofforestarea,roughly1millionhahadbeengrantedtoforestconcessionaires(ITTO,2005).
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Map5.ForestuseinthePeruvianAmazon
(Source:DGFFS,2013)
Venezuela’smainforestedarealiesoutsideofthenortherncoastalplainandtheAndeanregioninthelargeOrinocoandAmazonRiverbasins.ThestatesofBolivarandAmazonascoveralmosthalfofthecountry’slandmassandin2005(ITTO)contained70%ofitsforests.DeforestationhasbeenhighinBolivarstate,threateningthemainareaofthecountryforforestdevelopment.In2005,Venezuelahad13,000,000hadedicatedtoproductionforests,20,600haasprotectionforests,and863,000hainplantationsforatotalofalmost34.5millionha.B. Harvestlevelsinforestconcessions
Code Forest Rights by Actor %Production Forest - No concessions 14%Production Forest - Concessions 10%National Protected Areas 32%Indigenous Communities 20%Private and un-classified land 16%Indigenous Reserves 4%Other (non-timber) concessions 3%Various contracts 1%
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LogproductionlevelsfromforestconcessionshavebeendramaticallyloweredinBoliviasinceindustrialconcessionswerereducedandmoreunder-capitalized,inexperiencedcommunitiesarenowinvolvedinlogging.Recentrecordsshowthat85%ofthecountry’sproductionforestisincommunityhandsandmuchofthecountry’swoodisnowcomingfromtheseareas(officialvolumesareunavailable).
BrazilhasrelativelyhighcommercialvolumesfortheAmazon(over13.5m3/hawhereasPeruandBoliviaoperationsusuallyaverageunder10m3/ha)andacorrespondinglyhighproduction.In2012and2013,thetotallogproductionfromthe112,200haoffederalconcessionsintheJamariandSaraca-Taquerablocksremainedstableatslightlyunder50thousandm3despiteamoderateincreaseinharvestarea(SFB,July2014).
Totallogproductionfromnaturalforestswithharvestpermitsissuedunderaseriesofmechanisms(concessions,smallharvestpermits,landclearing,etc.intheBrazilianAmazonin2012was13.5millionm3(SFB,May2014).TogainperspectiveonthemagnitudeofBrazil’stimberindustry,notethatin2013,BrazilexportedwoodproductsworthUS$435.7millioncomprisedasfollows(SFB,May2014):
• Processedwoodproducts:US$218.5million• Lumber:US$155.1million• Particleboard:US$46.6million• Fiberboard:US$7.8million• Plywood:US$7.7million
ThemajorityoftheseexportswenttotheU.S.(US$129.7million)withFrance(US$56million)andJapan(US$45.4million)inadistantsecondandthirdplace,respectively.TheaveragevalueoflogsincreasedfromroughlyUS$30/m3in2003toUS$120/m3in2011(SFB,May2014).
InGuatemala,assuminganaverage25yearcuttingcycle,approximately19,404haofthe485,122haof concessions areharvestedannually. Table4 shows thenumberofharvestsbyeach concessionovertheperiodforwhicheachhasbeenfunctioning.NootherLatinAmericacountryhascommunityconcessionswithsuchalongtrackrecordofharvests(althoughMexico’sejidoshavebeenoperatingformuchlonger).
As one can see in Figure 1, wood production from Guatemala’s concessions has been growingsteadily to over 20,000 m3 per year. While mahogany volumes make up the bulk of annualproduction with approximately 11,000m3, the remaining volumes are comprised of santa maria(5,200m3),andpucteandmanchichewhichtogetheraveragealmost5,000m3.
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Table4.NumberofAnnualHarvestsCompletedbyConcessionaireinGuatemala’sMayaBiosphereReserve(MBR)through2013
(Source:Morales,2014)
Figure1.LogProductioninGuatemala’sForestConcessions(1994-2013)
(Source:CONAP,2015)InGuyana,annuallogproductionfrom1981to1992was160,000m3.Thisincreasedto220,000m3in1993and520,000m3in1997.Greenheartoccupiedmorethan40%ofloggingvolumesthrough1990andupto70%ofthe40,000m3ofproductsexportedofthisspecies(28,000m3)duringthesameperiod.Exportsbeganincreasingintheearly1990swhenBarama,aSamling-ownedcompany,establishedaplywood,deckingandhardwoodlumbermillinNorthwesternGuyana.Barama
ConcessionaireNumber of
HarvestsRio Chanchich 15Chosquitan 14La Union 13Yaloch 12Uaxactun 14Las Ventanas 14San Andres 14Carmelita 16Cruce a la Colorada 13Paxban (Industrial) 14La Gloria (Industrial) 14
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introducedbaromalliintothemarketplaceviaplywoodproductsandlogproductiongrewto520,000m3annually.
Figure2illustrateswheremostlogvolumesareproducedinPeru.LoretohasfewerconcessionsthanUcayaliandMadredeDios,butthegreatestvolume(mostarelow-value,“floating”specieswhichcanbeharvestedwithouthighcapitalexpenditurecostsduetoroadconstructionbutratherviarivertransport)4.
Figure2.LogProduction(m3)byDepartmentinPeru(2014)
(Source:DGFFS,2014)
Suriname’sannualwoodproductionincreasedfrom1997to1999asfollows:logsfrom183to250,000m3;lumberfrom41to50,000m3;andplywoodfrom7,800to8,000m3.Sincetheyear2000,logproductionhasbeenstableatroughly160,000m3annually.In1995,logandlumberexportswereUS$495,000andUS$1.9millionrespectively(ITTO,1995).
AccordingtoITTO(2005),asVenezuela’splantationareahasincreased,productionfromtropicalforestshasdroppedfrom55%in1993to40%in2000.AlmostallofVenezuela’swoodproductionisforlocaluse,andvolumesaredecreasingasillustratedbelow:
• 1999:1.7millionm3inlogs(conifersaccountedfor910,000m3)• 2003:1.1millionm3inlogs(conifersaccountedfor638,000m3)
4Peruvian concessionaires can obtain permission to move leftover volumes from previous harvests that were unable to be transported due to inclement weather or mechanical problems. Concessionaires can also re-enter a previous harvest area to finalize the cut by felling and transporting logs that it was unable to complete (this can occur twice over 5 years).
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C. Legalframework
ThelegalprecedentforaforestconcessionisfairlystandardandusedbymostLatinAmericangovernmentstograntrightsovercertainpublicgoodsortoauthorizeanentitytoprovidecertainservicesderivedfrompublicresources.Thelegalbasisbehindtheconcessiongrantingprocessisessentiallythesameforforestaswellassubterranean(orother)publicresources,andgenerallyfollowthefollowingsteps:
• Developbiddingdocuments• Providepublicnotificationthatthestateisinterestingrantingconcessionviaofficial
publication• Establishreviewingbody• Receivebids• Evaluatebidsbyreviewingbody(legal,administrative,forestry,technical)• Makedecisionandnegotiateterms• Awardconcession• Obtainbondpayments• Developandsigncontract• Finalizeapproval
Whilethisconcessiongrantingprocessisessentiallystandard(forforestsaswellasotherstate-ownedassets),notallcountriesusethesameapproach,anddevelopmentsofthelegalframeworksbehindconcessionmodelsarequitedifferentdependingonthecountry.Inmostcontractshowever,specificmentionismadeoftheneedtocomplywithnationalstandardson:inventorytechniques,managementplandevelopment,reducedimpactloggingtechniquesandotherperformance-basedmeasures.
Boliviaadoptedaclassicapproachtotransformingitsforestconcessionprogram.Harvestcontractswerethesimpleapproachtograntingaccesstoforestusedfrom1974to1995.In1996,afterconsiderablediscussionandinputsfrominternationalexperts,BolivianLaw1.700/1996wasapproved,establishingtheforestconcessionasawayforgovernmenttograntexclusivefortimberandnon-timberrightsfromaspecificareatoaprivateentity.Thisrightisaccompaniedbyobligations.Theprogramwashighlysuccessful,reachingalargeamountofFSC-certifiedforestmanagementconcessions:thehighestintheworldatthattime.In2010,however,BoliviapassedDecree#726/2010prohibitingnewconcessions.Whilethegovernmentwouldnotrescindcurrentconcessions,itwouldallowthemtoexpireattheendoftheircontractualperiod.
Whilenotexactlythesameastraditionalindustrialconcessions,theSocialGroupmodel(AgrupaciónSocialdelLugarinSpanishorASL)fornon-indigenouscommunitiesisanimportantpartoftheforestlandscapeinBolivia.PerResolution#133/97,communitiesmustshowthattheyhaveusedforestresourcesfromaparticularareaforatleast5yearsinordertobegrantedaccesswithoutabiddingprocess.Theypaytheminimumlegalrateforthisaccess.Forindigenouscommunities,theLandofOriginalCommunities(TierrasdeComunidadesOriginariasinSpanishorTCO)modeloffersinalienableandexclusiverightsoveraforestarea,butresidentsmustfollowstandardforestrylawsiftheydecidetoengageincommercialuseoftheirresources.Boliviaalsohasmodelsforresearchers,smallcommunities,andsmallforestowners.
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Brazilianregulations(Law#11.284/2006andDecree#6.063/2007)setthestageforbothstateandfederalconcessions,althougheachdevelopsitsownrulestoadministerconcessionsinitsjurisdiction.Thislawwaspassedaspartofamulti-prongedefforttoreducethedeforestationrateintheAmazonwhichhadreachedrecordlevelsin2004(Azevedo-Ramosetal.,2015).TheBrazilianconceptofaconcessionissimilartoothercountries:governmentdelegatestherighttosustainablymanagepublicforesttoobtaingoodsandservicesforprivategain.Thisrightisgrantedviaapublicbiddingprocesstoanindividual,companyorconsortiumthatcomplieswithregulationsandshowsthecapacitytocomplywiththetermsofthecontract.Federalconcessionsaregrantedoverareaandpaymentsarebasedonthevolumeextracted.ThemainstepstakentoimplementtheprocessinBrazilareworthnoting:
• Pre-bid(pre-editalinPortuguese)–definitionandmappingofoverallforestarea,developmentofabroadmanagementplanandenvironmentalreviewforlargeconservationunits(notspecificconcessionspersehowever),publicationofbiddingdocuments,andpublicconsultation.
• Preparationofbiddingdocuments-basedononepriceforallspeciesgroupsordifferentiatedpricesperspeciestoestablishaminimumbidprice(thisapproachisunderreviewandisbeingmodified).
• ReceiptofbidsandevaluationbySFBbasedonspecificandconsistentenvironmental,financialandsocialcriteria(reviewingbodydoesnotvary).
• DecisionbySFB.• Paymentofbondbywinningbidderandawardingofconcession.• Signingandapprovalofcontract
ForGuatemala,in1990,thegovernmentpassedthe“ReglamentodelaLeydeÁreasProtegidas,AcuerdoGobernativo759-90”allowingforconcessionstoprovidelegalaccesstospecificresourceswithintheMBRdependingonscaleandlikelyimpactofuse.Theserightscanbegrantedbysimplelicenseswhenanentitywishestoharvestasmallvolumeofaproduct,theimpactsareminimal,andharvestingwilloccurforlessthanoneyear.Whenthestatebelievesthatimpactsmaybegreaterorthatotherusersmayopposetheactivity,itrequirespublicinputspriortograntingapproval.Bothoftheseapproachesutilizelicenseswhichexpirebyacertaindatelessthanayear.Thethirdapproachisbasedonconcessionsforalonger-periodoftimeandaremorecomplicatedthanasimplelicense.Whenthestateisfullyawareoftheproductivepotentialoftheresourceinquestionandtheexploitationofthesamemayhavemajorandwidespreadimpacts,theconcessionmodelisconsideredthemostrelevant(ColomdeMoran,1996).
WhileforestconcessionsarelocatedexclusivelyintheMBRunderthejurisdictionofCONAP,Guatemala’sforestrylawdoesallowfortimberconcessionsonfederal(national)publiclandsoccupiedbyprimaryorsecondaryforeststhatwouldbeunderthejurisdictionoftheInstitutoNacionaldeBosques(INAB).ConsultationwithINABindicatedthatnonaturalforestmanagementconcessionsarelocatedonINABland.ThemostinfluentialaspectsofGuatemala’slawsasrelatedtoforestconcessionsarenotedbelow:
• Decree5-90prioritizedtheuseofnaturalresourcesasaconservationstrategythatwouldallowlocalresidentstofulfilleconomicneedsinasustainablewaybasedonforestresources.
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• TheAcuerdoGobernativo759-90(759-90)definedaconcessionasasystematizedstructureforensuringtheprovisionofpublicservicesaccordingtolegalprecedents,basedonthesustainableutilizationofplantsandanimalsoveracontinualperiod,maintainingcoreconservationqualitiesforfuturegenerations,andmanagingbasedontechnicalprinciplestoattaintheobjectivesoftheMBR.
Theagreement759-90alsorequiredCONAPtodevelopaMasterPlanfortheMBRandforwhichannualoperatingplansforspecificareasneededtobeestablishedandapproved.CONAPhadtoidentify,quantify,andlocatetheparticularresourcetobemanaged(timberornon-timber)aswellasunderstandhowitwouldbeharvestedandwhatthebalancewouldbepost-harvest(i.e.standingvolumeminusharvestedvolumeequalsremainingvolumeplusprojectedgrowth).Thislaidtheconceptualgroundworkforclassicnaturalforestmanagementbasedonfieldinventories,growthandyielddatafrompermanentmonitoringplots,andsilviculture.Thisdecreealsointroducedtheconceptofstatecontrolandmonitoringtoensurecomplianceasappliednotonlytoprotectedareas,butalsoconcessions,thusfirmlyplacingCONAPinthedriver’sseat.
In1996,theGuatemalanCongresspassedDecree101-96thatexplicitlynotedhowpublicbenefitsneededtobeprotected,publicparticipationintheentirevaluechainwasimportant,andthattheprivatesectorhadakeyroletoplayinmanagingthecountry’sforestresources.Whileadvocatingforpublicinvolvement,thepolicyalsorecognizedthatcommunitiesdidnothavethecapitalnortheexperiencetomanageallforestsandprovisionsweremadeforindustrialconcessionaries.In2011,thislawwasreplacedbyLaw#29763LeyForestalydeFaunaSilvestre.Implementationofthelawisstillbeingrefinedandrelatedregulationshaveonlybeenveryrecentlyapproved;itdoesnotcontemplatemajorchangestotheconcessionsystem.
InGuyana,bothcolonialandindependentgovernmentshavesovereigntyovermostoftheforestinthecountryexceptforprivateandAmerindian-ownedproperties(1.3millionhaownedbyAmerindians)(ITTO,nodate).AsestablishedinGuyana’s1997NationalForestPolicy,thegovernment’sobjectiveistoconserve,protectmanageandutilizethecountry’sforestresourceswhilealsoensuringforestproductivity.Perhapsmoresothananyothercountry,Guyana’spolicyispro-industryemphasizingthebroaduseofresourcestodeliverfairreturns,improvingyieldswhilepreservingtheenvironment,andensuringwatershedprotection(ITTO,nodate).TheForestAct(Chapter67.01oftheLawsofGuyana)wasinforcefrom1953to2009.ItwasreplacedbytheForestBill(2009)topromotesustainableforestmanagement,protectionofdesignatedforestreserves,andregulationofforestoperationsandwoodproducts.Relatedtoconcessions,thislawrequiredthegovernmentto:
− invitethepublictoapplyforspecificconcessionareas,− makeavailablecopiesofalldocumentsrelatedtotheareatobegranted,− maintainenvironmentalintegrityandfomentsocialdevelopment(specificallyfor
communityforestproductionandprimaryprocessing),− streamlineforestconcessionareasbysizeofareaaccordingtointernationalbest
practices,− requiremanagementplansandannualoperatingplans,andcompliancewiththesame,− offeracompetitivebiddingprocess,− providecommunitieswiththeopportunitytoaccesslocalforestareas,
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− ensureconcessionpricesatmarketratesorgreaterandarevenuestructurethatcapturesgreaterrentsforthestateviabothareaandvolumefees,
− establishpenaltiesfornon-compliance,and− developaprotocolfordealingwithchangesinownership.
ForPeru,Article3ofSupremeDecreeNº014-2001(ReglamentoforForestryLawNº27308)allowsfortwotypesoftimberconcessionsonfederal(national)publiclandsoccupiedbyprimaryorsecondaryforestsinaccordancewithzoningstipulationsandviapublicbiddingprocesses:
• CategoryI:from5to10,000hafora40-yearrenewableperiod• CategoryII:from>10,000–40,000haforthesame40-yearrenewableperiod.
Perudoesnothavecommunityforestryconcessions,butdoesallowforindigenouscommunitiestoharvesttimberontheircommunalpropertyaswellasforprivateindividuals.Aswillbediscussedfurther,largevolumesofwoodcomefromsuchlandholdings;moresothanthevolumederivedfromconcessions.UnlikeBrazil,Perudoesnothavestateconcessions,butthecountryisestablishingforestsformunicipaluseandmanagementonpublic,federallands.
Perualsohasconcessionstructuresforreforestationandnon-timberproducts(fruits,resins,flowers,medicinalplants,etc.)thatdonotresultintheremovalofforestcoverandaregoodfor40yearsonamaximumof10,000ha.Conservationconcessionsareavailableforwildlifeprotectionandallowforresearch,educationandecologicalrestoration.Theseconcessionsareonlyavailableinlandnotzonedforpermanentproductionandloggingisnotpermitted.Eco-tourismconcessionsaregrantedfor40-yearperiods(renewable)onareasover10,000hawherecommercialloggingisnotallowedandareallocatedtolow-impactactivities(education,research,travel)thatprovidesignificantsocio-economicimpactstothelocalpopulations.Althoughuncommon,Perualsoallowsforwildlifeconcessionsupto25years(renewable)onareasdeterminedbytheneedsoftheparticularspecies.Thebelowtableshowsthedifferenttypesofconcessionsbynumberandareas.
Table5.Differenttypesofforest-relatedconcessionsinPeru(2013)
(Source:MINAG–DGFFS,2013)Themajorityofpreviouslygrantedforest(wood)concessionsinPeruareinactive:rangingfrom50%inLoretotoover70%inUcayali.Pucallpaoriginallyhad175concessionsbuttodayhasonly14functioningwell(withonlyanadditional43stillevenactiveonpaper)asillustratedinTable6.
ConcessionType Number % Area(Ha) %BrazilNuts 983 49.50% 863,778 8.60%
Wood-Granted 588 29.60% 7,542,077 74.80%Reforestation 293 14.80% 136,863 1.40%Conservation 38 1.90% 1,086,806 10.80%Ecotourism 35 1.80% 77,674 0.80%Rubber 24 1.20% 16,155 0.20%
Wood-Underbidding
20 1.00% 343,885 3.40%
Wildife 4 20.00% 12,832 0.10%
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InSuriname,by2003,67concessionscovered1.74millionhawithanaveragesizeofonly25,970hahadbeengranted(ITTO,2005).Theseconcessionsweredistributedasfollows:
• 8foreign-ownedconcessionsbetween100-150,000ha(totaling1.09millionhaofwhich740,000hawerebeingrescinded),
• 10concessionsbetween5-10,000ha,and• 34concessionslessthan5,000ha.
Itisnotablethat67%ofthelarge,foreign-ownedconcessionsweresubjecttowithdrawal,andtherearefewactualproductionconcessionssuchasGreenheartGroupwithalmost300,000ha,andSunwideInvestment’s25,000haoperations.Mostconcessionsareheldforspeculativepurposesandarenotgeneratinglogvolumes.Inaddition,mostarelocalcompanieswithlittleaccesstocapital,limitedbusinessexperienceandlowexposuretoglobalmarkets.Morethan75%ofthecountry’sconcessionshavebeenabandonedordonotcomplywithgovernmentalregulations.
Table6.StatusofconcessionsintheDepartmentofUcayali,Peru
5.HistoryofForestConcessionProgramsA. Governmentalmotivation
DueinlargeparttotechnicalassistanceprovidedbytheBoliviaSustainableForestManagementProject(BOLFOR),fundedbytheUnitedStatesAgencyforInternationalDevelopment(USAID),thiscountrywasabletodesignaconcessionprogrambasedonacceptedtechnicalprinciplesforsoundtropicalforestry(Guzman,2015).BOLFORinitiatedactivitiesinearly1997,andoneofitsfirsttaskswastoworkwiththegovernmentofGonzaloSánchezdeLozadatomodernizethecountry’sforestrylaw.Electedpresidentin1993alongwithVictorHugoCárdenas,SouthAmerica’sfirstindigenousvicepresident,deLozadainstitutedmajorconstitutional,social,economicandpoliticalreforms.Theseincludedrewritingtheconstitutiontoincludeprovisionsforindigenousrights,decentralizing
Legal StatusSuperficie
(ha)
Percentage
(%)Number
(#)
Average
Size (ha)
Active 707,691 25 43 16,458Inactive 1,061,682 37 56 18,959PAU 178,348 6 14 12,739Cancelled 558,653 19 38 14,701Planned for cancellation 379,805 13 24 15,825
2,886,179 100 175 16,492
NOTE: Active concessions category does not include CFA which is insolvent
REFERENCE: Ing. William Pariona, Technical Advisor, GIZ (June 2015)
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politicalpowerbycreating311municipalgovernments,guaranteeing20%ofthefederalbudgetformunicipalities,andteachingpublicschoolinindigenouslanguages.
Thereformagendamostreflectiveofwhatthegovernmentultimatelydidwithforestconcessionswasthecapitalizationprogramdesignedtoformjointventures(fromstate-ownedcompanies)betweenprivatecapitalandBolivianresidents,andrequiringtheprivatecapitalbeinvesteddirectlyinthenewcompany.Althoughcontroversial,SanchezdeLozadafeltthatthisapproachwasnecessarytoreducecorruptionandobtainscarcecapitaltobolsterthecountry’skeysectors.
Alongtheselines,themainmotivationbehindthewellregardedforestrylawof1997wastherecognitionthatsustainablemanagementofconcessionswasthemostpragmaticapproachtoreducingcorruptionanddecreasingillegallogging.Thecountry’sleadersbelievedthatawell-managedpermanentforestestatewouldprovideasteadysupplyofrawmaterialstothecountry’swoodprocessingindustryandallowittodiversify,generatejobs,andexpandthecountry’seconomicbase(Personalknowledge,1998).ThistenetprovedtrueandBolivia’sforestrysectorgrewtobecomeoneofthemostrobustinthetropics.
Amajorchangeinthegovernment’smotivationandpoliticalparadigmoccurredin2005whenEvoMoraleswaselectedPresidentofBolivia.Pre-disposedtogivinggreaterpoliticalpowerandeconomicbenefitstothecountry’sindigenouspopulation,Mr.Moraleswasskepticalofthelargeconcessionaires,noneofwhomwereofindigenousdescent,allofwhomhadgoodconnectionswiththecountry’spowerbrokers,andmanyofwhichhadadditionalbusinessinadditiontoforestry.Onceinpower,areviewoftheconcessionprogrampurportedlyrevealedillegalchildlabor,illegalcocainemanufacturing,andconcessionsthathadnotbeengrantedviatransparentmechanismsbutratherduetopoliticalconnections(Carreras,2015).Inaddition,thegovernmentfeltthattheannualpaymentsofUS$1/ha/yearweretoolowandthatthelandsshouldbemadeavailabletolandlesspeasants.AsaresultofthedecidedlydifferentpoliticalbeliefsandeconomicpoliciesoftheMoralesadministration,theconcessionprograminBoliviahasbeenessentiallydisbanded:manyhaverevertedbacktothegovernmentandthosethatremainwillnotbereapprovedwhentheyreachtheendoftheirinitialcontractperiod.
AsthelargesttimberproducerinSouthAmericaandthelargesttropicalwoodconsumerintheworld,Brazil’smainmotivationforitsconcessionprogramwastoensurerawmaterialsforthewoodproductsindustrywhichplaysastrongroleinthesocio-economicdevelopmentofruralAmazon.Whilethismayseemoverlygeneroustooneparticularindustry,lessthan2%ofthecountry’sAmazonianregionmaybeallocatedtoconcessions,thussuggestingthatthisispartofabalancedapproachtodevelopment.Ofparticularrelevancewasthefactthatoneyearpriortopassingthenewforestrylawwhichsetupthelegalbasisforforestconcessions,Brazil’sdeforestationrateintheAmazonhadreacheditssecondhighestlevelever(Azevedo-Ramosetal.,2015).
Inaddition,onemustrecognizethat90%ofBrazil’shardwoodproductscomesfromtheAmazonandthedomesticmarketconsumesmostofthisAmazonianproduction.In1998,Brazil’sAmazonianforestrysectoremployedroughly500,000people(5%oftheavailableworkforce(~500000people)andgeneratedaboutUS$2.2billion(Blateetal.,2002fromLeteetal.,2000).Fifteenyearslater,SFBreportedapproximately2,300wood-basedbusinessesintheLegalAmazongeneratingatotalof204,000jobsofwhich32%isdirectemployment(SFB,May2014).Thus,anyrationalestrategytoreducedeforestationintheBrazilianAmazonmustincludeapragmaticapproachtostabilizingforest
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resourceuse,woodproductionandthemanufacturingofwoodproducts.Industrialforestconcessionswereconsideredalegitimatemeansforaccomplishingthistask.
Theapproachtoforestrycontemplatedinthenewlawisbasedonmoderntechniques,jobgeneration,lowenvironmentalimpactandtheargumentthatawell-managedforestwillnotbeconvertedtoothernon-forestuses,butratherallowforaperpetualsupplyofproductsforthecountry.Brazilhadtheadvantageoflookingtoitsneighborswhohadestablishedconcessionprogramspreviouslyandcouldavoidsimilarmistakes.Asaresult,itspentconsiderableeffortondesigningatransparentandfairsystemthatwouldfostercompetitiontoensurehealthyrevenuestreamstothegovernment(Azevedo-Ramosetal.,2015).Thegovernmentconsistentlystressesthefollowingreasonsforhavingdevelopedaforestconcessionprogram:
• Activemanagementkeepsforeststanding(complementarytoprotection)• Concessionsprotectandmaintainpublicgoodssuchaswater,biodiversity,andcarbon• Formaljobcreationinunderservedareas(withtraining,medicalcare,benefits)• Financemonitoring&controlfunctionsensureastreamofrevenuestothegovernment
Guatemalahasalwayshadanactivecivilsocietyengagedwiththegovernmentonforestconservationandaninterestinghistoryofpendulumshiftsonforestpolicy.Directlyrelatedtoconcessions,Peténforestshadbeeninventoriedandhadahistoryofformalizedblocksbeinggrantedbythestate.Therewasalsoahistoryofuserrightsoverdefinedareassubjecttostatecontrolandevenearlier,aninformalapproachtoresourcepartitioningbyusers.Againstthisbackdrop,MarcoVinicioCerezobecamethefirstdemocraticallyelected,civilianpresidentinGuatemalasince1966,andfacedimmensechallengesfromanongoingcivilwarcharacterizedbyforcedrelocations,refugeemovementstoMexico,openbattlesandascorchedearthpolicy.CerezohadtoproceedslowlywithprofessionalizingtheGuatemalanmilitary,reducinghumanrightsviolations,andmakingmajorchangestoimprovethesocio-economicconditionsthatledtoastrongguerillamovement.CerezowantedtoleavehismarkonGuatemalabybringingthatviolence-wrackedcountryintothemodernworld.
Atthesametime,asmallgroupofwell-educatedurbanitesbegandevelopingaconservationagendaandpressuringthegovernmenttopreserveenvironmentallyimportantareasincludingnorthernPetén.Cerezorealizedthattheenvironmentalmovementwasanareathathecouldpositivelyimpactwithoutcausingaseverereactionthatwouldfurthercomplicatehispoliticallife.Atthesametime,theU.S.governmentbadlywantedtosupportthecivilianpresidentandconsideredforestconservationanimportanttopicthatitdecidedtosupportviatheMAYAREMAProject.ThisconfluenceofdifferentmotivationsultimatelyledtoapragmaticapproachtomaintainPetén’sforestcoverbyarelativelyautonomousgovernmentalentity(CONAP)whichhadstrongsupportbythecountry’spoliticalelite.ThecombinationofGuatemalanandforeignfinancialsupportexceedingUS$40millionoverMAYAREMA’sprojectlife;thepresenceofexperiencedinternationalnon-governmentalconservationorganizationssuchasTheNatureConservancy(TNC),ConservationInternational(CI)andCARE;andperhapsmostimportantly,committed“local“champions”willingtoleadthechargeresultedinasurprisinglystrong,multilateralshowofsupportfortheconcessions.OneexampleofthiswastheComitéConsultivoForestal(ForestryConsultationCommitteeinEnglish),avoluntarybodythatprovidedadvicetoCONAPonforestpolicyissueswithmembersfromallacrossthespectrum.
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ThemotivationbehindGuyana’sinterestinconcessionscouldnotbemoredifferentfromGuatemala’s.LocatedonSouthAmerica’snortherncoastandborderedbyBrazil,VenezuelaandSuriname,Guyana’smainpopulationoccupiesanarrowstripfacingtheAtlanticOcean.WhileonlyashortdistancefromtheCaribbean,Guyanasharesculturalattributeswiththeislands,butisverydifferentecologically.WhereasmostCaribbeanislandshavelittleremainingforest,Guyanaharborsalmost14millionhaoflargelyintacttropicalforest.Anappreciationofthisuniquecountry’shistoryisnecessarytounderstandtheevolutionofitsconcessionprogram.
GuyanahasbeencommerciallyloggedforGreenheart(Chlorcardiumrodiei)since1882.Despitesuchalonglogginghistory,Guyanahasoneofthehighestpercentagesofforestcoverperlandmassofanycountryintheworld(vanderHout,1999).ThecountryhasneverhadhighpopulationgrowthrateslikemanypartsofLatinAmerica.Withbarely782,000people,Guyanaisexperiencingapopulationdecrease(-0.44%)asresidentsleaveGuyanainsearchofbettereconomicopportunities(countrymeters.info.2015).In2013,accordingtotheWorldBank,Guyanahada+0.53%populationgrowthrate(tradingeconomics.com.2015).Over15yearsagoin1998,Guyanahadmoreinhabitantsthattoday(863,000)andanannualgrowthrateof+2.3%.ItispreciselythislackofpopulationpressureandlimitedeconomicdevelopmentthathaskeptGuyana’sforestsstanding.
AtthetimeGuyanabecameindependentofGreatBritainin1966,itseconomywasdependentontheexportofcommodities,principally:gold,bauxite,riceandsugar.Guyanawasaclassicexampleofresourceexploitationbycolonialpowerswhoinvestedonlytheminimumtobeabletoextracttheaforementionedcommodities.Uponachievingindependence,asaresponsetoforeigndomination,thenewgovernmentadoptedananti-capitalism,socialistapproachbasedonstateinterventionintheeconomy.Whilethismayhavebeenanunderstandablereaction,theimpactofsuchpoliticswasnegative:nationalizedsugarandbauxitecompanieswentbroke,the1973oilcrisisincreasedpetroleumpricesandthegovernment’sdebtatthesametimethatpricesforsugarandbauxiteplummeted.Asaresult,Guyana’seconomystumbledalongat0.4%annuallyfrom1966to1988.
Thegovernmenthadnorealchoice:inthelate1980’sitbeganpromotingamarket-basedeconomy.Investmentincentives,reductionofstatecontrols,andliberalizationofpricesallleadtoarapidexpansionoftheGuyaneseeconomy,astablecurrencyanddecreasedinflation.In1987,duetothesepolicychangesandincreasedinterestfromAsiancompanies,thegovernmentopenedupitsforestresourcetogreaterinvestmentbyallocating2.4millionhaforlogging.In2000,theGuyanaForestryCommission(GFC)madeamajorshifttowardopeningupaccesstoforestresourcesforruralcommunitiesbyestablishingaSocialForestryProgramandleasingforeststocommunities.
ForPeru,themanagementandcontrolofforestresourceswasgrantedtotheNationalInstituteforNaturalResources(INRENA)in1999,whichsubsequentlyestablishedtheDirecciónGeneralForestalydeFaunaSilvestre(DGFSSorGeneralDirectorateofForestryandWildlife)todecentralizefunctions.ThecountryestablishedtheconcessionmodelviaLaw#27308in2000anditsoperationalstatutesviaaReglamento(Regulations)viaSupremeDecree#014-2001-AG.Thispoliticaldevelopmentallowedwide-scaleforestutilizationbyprivateentitiesvialong-termcontractswiththegovernment,aslongasconcessionairescompliedwithsustainablemanagementcriteria.TheprimarymotivationinPeruwasagrowingmanufacturingsectorthatneededaccesstorawmaterialscoupledwiththerealizationthatthegovernmentwasunabletoprotectmillionsofhectaresofAmazonianforestfromillegallogging,conversionorinvasion.Concessionswereviewedasa
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pragmaticdevelopmentandconservationstrategyforaremote,unpopulatedpartofthecountrywithlittleindustry.
SurinamepassedaForestManagementActin1992thatestablishedapermanentforestestate(PFE)of11.3millionhacomprisedof(ITTO,2005)5:
• Productionforest:6,890,000ha• Protectedarea:4,430,000ha,and• Plantationforest:7,000ha
TheForestManagementActwasestablishedtoprovidefor:“themanagementandconservationofforestresources,andtoregulateforestexploitationandtheprimaryforestprocessingindustry,inordertoincreasetheeconomic,socialandecologicalfunctionsofforestsasnationalresourceandtoenhancearesponsibledevelopmentoftheforestryindustry”.(MinistryofNaturalResourcesSuriname/FAO,2002).
Onpaper,thelawdidnotseemthatdifferentfromthoseofothercountries;itpromisedtopromotesustainableuseofforestresourcesbyestablishingregulationsformanagementandwoodprocessing,conservingbiodiversity,andaccountingfortheinterestsofforest-dwellers(ITTO,2005).Purportedlyhowever,thedrivingforcebehindthislawlayinthepoliticalalliancesbetweenSuriname’smulticulturalpopulationandAsiancountries(particularlyIndonesiaandChina),thegovernment’sneedtostimulateeconomicdevelopmentwithoneofthefewresourcesavailable(Surinameisthecountrywiththehighestpercentageofforestcoverintheworld),andastrongdemandfortropicalhardwoodsinAsia’sboomingeconomies(SizerandRice,1995).
ItisworthrecallingthatSurinamewasacolonythatrotatedbetweenBritishandDutchownershipfrom1630until1815whentheDutchgaineddominionoverthelandwithaprimaryinterestinsugarproduction.SlaveshadbeenimportedtoSurinamefromWestAfrica,butwhenslaverybecameillegalin1863,IndianandIndonesianimmigrantswereencouragedtocometothecountrytofillthelaborgap.ThiscombinationofAfrican,Indian,Indonesian,DutchandnativeIndianshasgiventhecountryadiversemakeup,butalsopoliticalpartiesdividedstronglyalongethniclines(SizerandRice,1995).
In1993,SurinamesentadelegationtoIndonesiatopresenttheforestconcessionoptiontopotentialinvestors.Severalmonthslater,acontingentofIndonesianinvestorsvisitedSurinameandincorporatedthemselvesasalocalcompanycalledMUSA(SizerandRice,1995).Laterthatyear,MUSAreceiveda150,000haconcession.SubsequentlyMUSAproposedestablishinganadditional60+localcompaniestoreceiveatotalofover10millionhaofconcessionarea.Thisattempttodominatethecountry’sforestestatewasnotwellreceivedsincetheMUSAproposalwouldhaveresultedinalmost63%ofthecountryunderconcessionbelongingtoonecompany(Surinamehas16.3millionhaofarea).Thegovernmentdefendeditsconcessionplansasapragmaticwaytorevivethecountry’sdismaleconomyintheearly1990’sby(SizerandRice,1995):
• Generatingrevenuesfromworkers'salariestoimprovethecountry'sbalanceofpayments,• Providingemploymenttounemployedorunderemployedcitizens,• Promotingdevelopmentoftheruralareas,and
5In 2003, ITTO estimated that the actual amount of accessible production forest was only 4.5 million ha.
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• Performingalloftheaboveinanenvironmentallysustainablefashion.B. Evolutionofsystem
Boliviahasalwaysreliedonfederalcontrolofforestaccess;initiallyviatheSuperintendenciaForestal(ForestrySupervisor–FS),butnowthroughtheABT,asemi-autonomousinstitutionthathasimplementedmassivechangeintheforestrysector.By1996,theFShadgranted89concessionstocompaniesandby1999,hadapprovedmanagementplanscovering6millionhaofwhichroughly4.8millionhawereinconcessions(Blateetal.,2002).UndertheABT,however,thisfiguredroppedbyoverhalftoonly42concessionscoveringbarely3millionha(6%oftheentirepermanentforestestate)by2013(Carreras,2015).
TheABT’spowerstocontrol,superviseandensurelegalcompliancewithBolivianregulationswereestablishedviaForestManagementLaw1700(1996),theAgrarianReformLaw1715,andtheCommunityRechannelingLaw3545passedin2007(WWF,2015).
Inthelastseveralyears,theABThasassumedananti-concessionattitude,exertingmuchstricterandlessflexiblecontrols,andwillnotgrantnewconcessions.Itregularlystatesthattheconcessionprogramwasafailureleadingtodeforestation,thusjustifyingits“commandandcontrol”stanceonforestandwoodproductissues.MostobserversbelievethatthisattitudeisamanifestationofpolicyarticulatedbytheMoralesadministrationtoofferaccesstolandtoBoliviancitizensresidingintheover-populatedhighlands.
Thetrendisforconcessionstoreverttothestatewhichthenfomentscontractsbetweencommunityownersandwoodmanufacturersaswascommonintheearly1990’s.By2014,morethan60%ofBolivia’sproductiveforestswerebeingmanagedbyindigenouscommunitieswithmuchlowervolumesofharvest.Fewofthesecommunityoperationsactuallyfunctionasproductiveenterprises;mostjustsellstumpagetobuyers.Thishasaffectedthecountry’swoodproductssector:itnowimportsmuchofitswoodfromoutsidethecountryandisnolongeragloballeaderintropicalforestry.WhiletheimpactsofthesepolicychangeshavebeennegativeintermsofBolivia’stimberproduction,therehavebeensomepositiveadvances:
• Onadailybasis,theABToperatesaslesspoliticalentitythanpastagenciesandhashiredwell-trained,professionalsthatoperateunderstrongtechnicalguidance(i.e.WWFhelpedtheABTtocompleteafullforestinventoryofthecountry).
• Althoughtheterm“concession”isnolongerusedandnomorewillbegranted,supervisionremainsvigilantandtheABTdoesworkcloselyandwellwiththeremainingconcessionaires.
• TheagencynowfocusesonfacilitatingandapprovingIntegratedForestUsePlans(PlanesIntegralesdelUsodelBosque)ratherthansimpletimberplans,inanefforttodiversityrevenuestreams.
• Thegovernmentnolongerconfiscateswoodbutrather,gives“redcards”forpoorperformanceorillegalactivities.Itthenworkswiththeoperatortoimproveperformance.Forconsistentlyillegaloperations,thegovernmentpubliclynotesthatwoodshouldnotbepurchasedfromthesefirms(Carreras,2015).
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Brazil’sconcessionsystemismuchmorecomplexthanBolivia’s.Threegovernmentalentitiesareinvolvedintheprocess,andalthoughtheyallbelongtotheMinistryoftheEnvironment,theyhaveseparatefunctionsanddifferentoperatingphilosophies:
• ICMBioisresponsibleformanagingConservationUnits(CUs)withinwhichconcessionsarelocatedandleadsrelatedresearch,policy,publicuse,andpolicingactivitiesonalargescale,aswellasdeterminingwheresustainableforestmanagementcanbeperformed;
• IBAMAisresponsibleforgrantingtheenvironmental“licensetooperate”,monitoringsustainableforestryactivitiesandinvestigatingenvironmentalcrimes;and
• SFBisresponsibleforoperatingtheconcessionprogramperse(i.e.inventory,publicconsultation,approval,establishingprices,makingoperationalregulations,biddingprocess,andgrantingconcession).
Asonemightexpectgiventheinvolvementofthreeinstitutions,progressingrantingconcessionswasslowinBrazilduetobureaucraticobstaclesandmisalignmentonprioritiesandapproaches.Minimumbidpriceswerealsotoohighandextractionwasdifficult.Mostconcessionairesmustbuildinfrastructuresystemsfromscratchanddonotgeneratereturnsthefirstyear.Thisiscoupledwithdelaysinapprovalofrelevantdocumentswhichhasmajornegativeimpactsonrevenues(althoughthegovernmenthasloweredpricesinrecognitionofthissituation).Forexample,twoneighboringconcessionairesinParáState,GOLFandEBATA,wonbidsin2010butwereunabletoinitiateoperationsuntil2012,overtwoyearsaftersuccessfullyobtainingtheirconcession.AnadditionalreasonfortheslowprocesswasthatSFBhadinadequatenumbersoftrainedpersonnel,andamajorworkloadindevelopingtechnicalguidelines,preparingmanagementplans,andcollaboratingwithotherstateentities.
Inrecognitionoftheinitiallyslowgrantingofconcessions,SFBestablishednewtechnicalguidelinesin2010and2011.Oneofthebiggestmodificationswastoallowthefederalgovernmenttoestablishaminimumpriceviaanaverageamongallspeciesorwithdifferentiatedpricesdependingonvalueofeachspecies.Oncetheseimprovementswereapproved,in2012,SFBwasabletodesignate2.9millionhaofpotentialconcessionareasspreadamong10differentFLONAsintheAmazon.Whilethiswasapositivestep,inventoriesandforestmanagementplansstillneededtobecreatedforeach.Suchtechnicalworkoversuchalargeareahasresultedintheprocessgoingslowly,butadvancingnevertheless.
Intheearly1990’s,GuatemalabegandevelopingaforestconcessionsystemfortheMBRwiththesupportofvariousnon-profitorganizationsandtheU.S.andGermangovernmentsasadualconservationandsustainabledevelopmentstrategy.In1994,afteryearsoftechnicalandlegalstudies,andincipientforestryworkwithcommunitiesbothoutsidetheMBR(i.e.Sayaxche,SanJoséBuenaFe,Bethel)andinside(SanMiguellaPalotada),CONAPgrantedthefirst(andsmallest)forestconcessionatslightlyover7,000hatoSanMiguel.In1998,CONAPgranteda12,218hamanagementunitnearBelizetoasmallgroupofindependentloggersfromMelchordeMencoscalled:LosImpulsoresSuchitecos(analogousto“TheSuchitecoMoversandShakers”inEnglish)andalmost54,000hatothetraditionalforest-basedcommunityofCarmelitainnorthernPetén.Bylate2000,allremainingconcessionshadbeengranted,including132,215haforindustrialuses.CONAPalsoregulatessmall,privateforestlandsintheMBR’sbufferzonebutthesearenotconcessionsperse.ThefirstcontractsignedbyCONAPforanon-concessionareawasin1994with50familiesoftheBethelCooperativelocatedalongtheUsumacintaRiver.Bethelholdstitleto4,149haofprivate
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land,ofwhichalmost2,900ha(70%)waspreviouslyloggedandunloggedtropicalforest(Gretzingeretal.,1993).
TheGuyanaForestryCommission(GFC)wascreatedin1979butwasrestructuredandassignedbroaderandmoreprogressivetasksasasemi-autonomouspublicagencywithpassageoftheGFCAct67:02(ITTO,nodate).Itsnewobjectivesweretomanagepublicforestresourcesforthesocio-economicbenefitofitscitizensratherthanfocusingalmostexclusivelyonindustry.TheGFCisafairlyautonomousentitywithbroad-rangingauthorityoverstateforestlands.ItisamemberoftheCabinet-levelsub-committeeonNaturalResourcesandtheEnvironment,buthascompetingfunctionswiththeLandsandMiningCommission,bothofwhichcanissuepermitsonthesamelandfordifferentobjectives.ItadministerstheForestAct,alsoadvisestheMinisterofAgricultureonforestry-relatedissues,andrepresentsthegovernmentinforestryforums.
TheGFCchosetoemphasizesustainableforestmanagementasthebasisforahealthywoodproductsindustryasthebestwaytoreconciletwoseeminglyconflictiveneeds.NotonlydoestheGFCestablishpracticecodesandmanagementguidelines,butitalsofomentsresearch,makesforestinventories,providesextensionservices,inspectswoodproducts,andrepresentsthegovernmentininternationalarenas.Thischangewasamajorstepintheevolutionofthecountry’sforestconcessionsystemsinceitsettheprecedentforclearrules,transparentdecision-makingandaprofessionalapproachtoforestry.Priortothisphase,decisionswerefarfromtransparent:stateForestswereestablishedviabroaddecreesoverlargeareaswithlittleornopublicconsultation(7.7millionhain1953,1.4millionhain1969,and4.6millionhain1997foratotalof13.7millionha)andthecountry’slargestconcession(Barama)hadbeenestablishedwithvirtuallynoconsultationortransparency.
Afteropeningupitsforestresourcetoconcessionsinordertoincreasetradeandrevenues,by1996theGuyaneseconcessionareahadincreasedto6.5millionhaunderthreemodalities:
• 41%viaTimberSalesAgreements(TSA’s)onareaslargerthan24,000haforperiodsgreaterthan20years;
• 17%throughWoodCuttingLeases(WCL’s)forsmallerareasrangingfrom8,000to24,281haandforperiodsrangingfrom3to10years;and
• 42%viaStateForestPermits(SFP’s)forannualharvestsonlessthan8.094ha(GFC,2015).
In2011,Peru’s2000forestrylawwasreplacedbyLaw#2976andfurtherrefinedin2015.Someofthemorerelevantaspectsofthislawaswellasthespecificcaseforconcessionsareincludedhere.Topromotetheefficientuseofthecountry’spublicforest,PeruestablishedtheNationalSystemofForestryandWildlifeManagement(SINAFOR)withadirectoratecomprisedof:
• MinistersofAgricultureandIrrigation,Environment,Production,Culture,EconomicsandFinance,
• OSINFORthatsupervisescompliancewithnationalforestryregulations6,• thenationalcenterforstrategicplanning(CEPLAN),and• thenationalForestandWildlifeService(SERFOR).
6 OSINFOR is an independent institution that responds directly to the Presidential Council of Ministers and is responsible for monitoring the compliance of concession contracts and technical guidelines provided by SERFOR.
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Attheoperationallevel,SERFORplansandimplementsforest-relatedactivitiesthatallowthecountrytocomplywithnationalpoliciesandlaws.Itestablishesprotocolsforcarryingoutforestinventoriesandmanagementplans,data-sharing,technicalforestryandharvestguidelinesfordifferent-sizedoperations.
Pressurefrominternationaldonors,aswellastheneedtoshowprogressonimprovingthecountry’sforestmanagementsystemtocomplywiththeenvironmentalappendicesoftheU.S.andPeruFreeTradeAgreement,causedthePeruviangovernmenttoquicklyissueconcessionsinthreemajorregionsdespitetheircontrastingphysical,culturalandeconomictraits.DespiterecommendationsfromorganizationssuchasCIFORregardingtheneedtoadjustplanningrequirementsandharvestingsystemstoeachregion,governmentalofficialsdidnothavethetimeorinteresttotakesuchrecommendationsintoaccount.Designflaws,coupledwithacceleratedbiddingprocesses,leadtoanoverallauraofspeculationandresultedinmanyofthePeruvianconcessionsbeinggrantedtoindividualswithrelativelylittleforestsectorexperience.
Ononehand,SurinamehadachievedacertaindegreeoffameintheworldoftropicalforestryduetoitsinnovativeCelossilviculturalsystembasedonthetwinprinciplesofreducedimpactloggingandpost-harvestsilviculturaltreatments.Ontheotherhand,itsskeletalconcessionprogrambeganin1993withminimalcriteriaandmanagementplansdesignedprimarilyforcollectinguserfeesfromlarge,foreign-ownedcompanies.Againstthisbackdropisthefactthatallnon-privatelyownedSurinameseforestsbelongtothestate.AlthoughAmerindianandMaroonpeopleofAfricandescentclaimrightstotraditionallands,theSurinameseconstitutiondoesnotallowforcollectivelandownership(ITTO,2005).Suchpeopleweretobelargelyexcludedbythegovernment’splantogeneratejobs,developmentimpactsandtaxrevenues.
Theprogramdidevolvetoaccountsomewhatforlocaluses.By2005,inadditiontoconcessionsgrantedvialessthantransparentprocedures,Surinamehadissuedwood-cuttingpermitsknownasHKV’stoAmerindianorMarooncommunitiesonstate-ownedland,andIncidentalCuttingLicenses(ICLs)forsubsistencefarmersthatneededtoconvertforesttoagriculture(ITTO,2005).
In1970,VenezuelabecamethefirstLatinAmericancountrytoestablishaforestconcessionprogramwhichgrewto3.2millionhaby1992.Concessionsizeaveragedslightlyunder100,000haperunitandwerelocatedprimarilyinthedepartmentofGuayana.Duetostronggovernmentalpressuretosuspendtheindustrialconcessions(whichwereessentiallyviewedasfamilymonopolies)andchangethemodeltooneofmultipleproductsinadditiontowood,therearenowonlysixfunctioningforestmanagementunits.Asaresult,thepercentageofVenezuelanwoodderivedfromconcessionshasdroppedto6%from40%in1987.SimilartothesituationinNicaraguawhereVenezuelanfundingwasusedtoestablishasemi-governmentalloggingcompany,VenezuelapassedDecree7.457in2010tocreatea“SocialistNationalForestCompany”thatnowdominatesthesector.C. Privatesectorinterest
InBolivia,theprivatesectorplayedakeyrolemakingrapidadjustmentsinitsbasicbusinessmodeltobidon,win,andmanageforestsaccordingtothenewregime.Virtuallyallofthemostsuccessfulcompanieshadlargeconcessionslinkedtotheirprocessingfacilities.TheBolivianForestryTradeAssociationwasveryactiveandheldwell-attendedtradeshowsthatledtostrongexports,increased
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value-addedproductionandincreasedemployment.Comparedtoothercountries,Bolivia’sprivatewoodproductsindustryshowedthemostenthusiasm,creativityandunityinmovingforward.WhilemostcompaniesinitiallytargetedonlythehighvaluespecieslikemahoganyandSpanishcedar,theyquicklyretooledandbegandevelopingnewproductlinestomaximizeefficienciesintheirgeographically-fixedconcessionswithdifferentspecies.
ThingsaredifferentinBoliviatodayasbarely1.5millionhaareinconcessions.Forexample,veryfewconcessionsareleftinthe6.4millionhaDepartmentofPando,whichstillharborsconsiderableforestcoverandwouldbealogicalregiontoimplementaconcessionprogram.AnotherpointofreferenceisWWF’sBolivia’sForestandTradeNetwork(FTN)whichin2010had25FSC-certifiedmembersworkingtodevelopmarketlinkswithinternationalbuyers.Itnowhasonlyfivecompanymembers(Carreras,2015).Thefewremainingconcessionairesarealllong-timeplayersintheindustry,haveverticallyintegratedoperations,diversebusinessinterests,andlargeareas7.Someofthemoresuccessfulcompaniesinclude:
• DEKMAwhichpurchasedthe119,200haCINMAconcessioninBajoParaguafromSanMartin;
• TheRodafamilymaintainsalargequantityofFSC-certifiedconcessionsincludingCIMAL(75,400ha)andCIMAL/IMR(303,450ha)andcontinuestoprosperpartiallyduetothecompany’sdevelopmentofpre-fabricatedhomesandsupplyoftimberstotheminingindustry,and
• SanLuiswith80,848haofcertifiedforests(info.fsc.org.2015)
ManufacturersintheBrazilianAmazonhavehadalong-standinginterestinconcessionsparticularlyasthesupplyoflogsfromlegalsourcesdecreasesduetodeforestationandanoveralltighteningupofcontrolfunctionsbythegovernment.SurveysconductedbyIFCin2014of10companiesinParáStaterevealedthatvirtuallyeverymanufacturerwasinterestedinobtainingaconcessionandfeltthatthetimewaslongoverdue.ThisisalogicalconsiderationgivenTable7whichillustratesthepervasivenatureofthesectorinBrazil’sLegalAmazon:over2,200companiesconsumingover14millionm3oflogsin2010provideddirectemploymenttoover200,000individuals.ThiseconomicactivitywasspreadovereightstatesandgeneratedalmostUS$2.5billioningrossrevenues,primarilyinremoteareaswerealternativesourcesofincomewerenotavailableonawidescale.
TRIUNFO,along-timeplywoodmanufacturerintheStateofAcre,illustrateswhycompaniesareinterestedinconcessionsaswellashowtheycanworkwithdifferentsupplierstomeettheirvolumetargets.Withatotalannualcapacityof60-70,000m3inpanelproducts,thecompany’s7,840ha“publiccontract”doesnotprovideadequatevolumessoitmustpurchasewoodfromsmalleroperationswithvolume-basedcontracts.
7 By comparison, although not a concession, the ASL Caoba manages only 15,000 ha of FSC-certified forest in the Iximas region. Previously large, successful, and high-profiles companies such as La Chonta have returned their concessions to the government and left the sector.
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Table 7. Economic and production-related aspects of thewood products sector in the BrazilianAmazon
(Source:IMAZONandSFB,2010)
Intheearly1990’swhentheGuatemalanconcessionmodelwasbeingdevelopedtherewereatleast10sawmillswithahistoryofharvestingwoodintheMBR.Mostofthesecompanieshadestablishedoperationsinthelate70’sandwereaccustomedtoasimplisticbusinessmodelbasedontheselectiveharvestingofmahoganyandcedarforreadymarketswithstrongprices.Theeconomicpowerwieldedbythesecompaniesinthetwodecadespriortotheinitiationofaconcessionprogramwasquitehighandprofitsweregood.Theideaofcommunityconcessionswaslargelyunacceptedbythetraditionalwoodproductsindustryandmanyintervieweesnotedthatdisparagingremarksregardingthecapacityofcommunitieswerecommon.Suchcommentswerenotwithoutsomelogicsincecommunitieshadnorecordofmanagingforestsforaprofitandimplementingwhatwereessentiallyindustrialoperations.Ascommunityconcessionscameintoplayinthemid-1990’s,someofthecompaniessimplyclosedupshopandtheirownerslefttoengageindifferentbusinesses(i.e.JorgePeroni’smillinSanAndrés)orprocessedillegallysourcedwoodfromalongtheroadtoElNaranjo.
Astheforestareathatcouldsupplylegalwoodbecameconsolidatedincommunities,BarenCommercialandGIBORS.A.realizedthatitwasintheirbestinteresttodirectlyengagewiththenewsystem.Bothcompaniessuccessfullyobtainedlargeconcessionsandexpandedtheiroperations,speciesmix,andproductofferings.AprivatecompanythatrepresentsthecommunityinterestsisCommunityForestServicesCompany,Inc.(EmpresaComunitariadeServiciosdeBosque,S.A.-FORESCOM).LocatedintheoldofficesofthePetén’sforestworker’sunion,thecompanyisownedbynineFSC-certifiedcommunitieswith220,000haofproductiveforests.FORESCOMprovidesmanagement,logging,woodprocessing(milling,planing,drying),marketing,andfinanceservicestoitsownersforafee.Despiteearlyfinancialproblems,FORESCOMhasbecomeaviableenterprisethatdevelopsproductsfromLesserKnownTimberSpecies(LKTS)andhassuccessfullyenteredhigh-endmarketsintheU.S.andEurope.
Guyana’sforestconcessionprogramcontributedtothegrowthofthecountry’swoodproductsindustrywhichincreasedcontributionstoitsGrossDomesticProduct(GDP)from1%in1987to5%
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in1996(vanderHout.1999).Aspartoftheliberalizationprocess,andparticularlyafterenteringtheSingleMarketandEconomy(CSME)oftheCaribbeanCommunityandCommonMarket(CARICOM)in2006,timberexportsassumedgreaterimportanceasgeneratorsofrevenue,andtheeconomybegangrowing.Still,Guyanawasunabletoreduceitsdebtload,andinMarch2007,theInter-AmericanDevelopmentBank(IADB),thecountry’slargestcreditor,forgaveUS$470millionofitsdebt,thusservingtodecreaseitsdebt-to-GDPratiofrom183%toonly60%(forbes.com.2014).
InadditiontoBarama,a1.6millionhaforestconcessionandprocessingcompanyownedbySamlingGlobalLtd.Subsidiary,Guyanahasmanyothercompaniesthatproducearangeofproductsalmostexclusivelyfortheinternationalmarket(DemeraraTimbersLtd.,VarietyWoodsandGreenheartLtd.,ToolsiePersaudLtd.andIwokramaaresomeofthelargest).Thecountry’sForestProductsDevelopmentandMarketingCouncil(FPDMC)isauniqueentityestablishedbythegovernmenttoassistconcessionairesandmanufacturersinthetaskofresearchingusesfornewspecies,establishingprices,fomentingtradeandpromotingthesector.
AccordingtoITTO,Guyana’slogproductionhasfluctuateddependingontheglobaleconomy:366,000m3in2004,474,000m3in2006,and299,000m3in2009.Lumberproductionhassteadilygrownovertheyearsasinstalledcapacityimproves(64,000m3in2009hadincreasedfrom50,000m3in1999),butplywoodproductionhasbeendecreasing.Totalwoodexportsin2009wereUS$48.1millioncomparedtoUS$31.3millionin1999.MuchoftheincreaseinvalueofexportshascontinuedtodaydueinparttotheincreasedtariffonlogexportsestablishedinJanuary1999.
ContrarytoBoliviaandGuatemala,manyoftheinitialinvestorsinPeru’sconcessionswereeitherspeculatorsorindividualswithminimalexperienceinforestry;manythoughttheycouldmakemoneyquicklyandwithlittleinvestment.Estimatesbysuchinterestedpartiesonoperationalcosts,investmentneedsandexpectedrevenueswereofteninaccurateandresultedinoverlyhighbidpricesorlackofcapital.Today,thesituationhaschangeddramatically.Virtuallyeverymemberofthewoodproductssectorunderstandsnowthatconcessionsarenot“businessasusual”andrequiresubstantialcapitalaswellaspatiencetocomplywithgovernmentalregulationsandslowprocesses.Asaresult,thesmalleroperatorsfinditmucheasiertoobtainrawmaterialsfromcommunities,privateholdingsandabandonedconcessions.Suchcompaniesarenotinterestedinconcessionsatthistime,anddespitetheshort-termnatureandcomplicatednegotiationsassociatedwithpurchasinglogsfromindigenouscommunities,mostpreferthisapproachtoconcessions.
Ontheotherhand,larger,internationally-fundedand/orstrategicallyorientedcompaniesareactivelybuyingconcessionsandconsolidatingtheirholdings.NaturePeru(200,000ha),Maderacre–GrupoWong(220,000ha),GrupoBozovich(150,000ha)andGreenGoldForestry(<100,000ha)areexamplesofsuchfirms.SomesmallermanufacturerswithanorientationtoEuropeanandU.S.marketsarealsoengaginginconcessions,butotherssuchasCFISAChaveoptedtonotinvestinconcessions.Suchfirmsfindnoshortageofwoodandstatethatalloftheirwoodcomesfromlegalsourceswiththeappropriatepaperwork.
In2005,Surinamehad200smallloggingcompaniesand68sawmillswithaproductivecapacityof500,000m3(itisnotknownhowmuchwoodwasactuallybeingproduced).Roughly200,000m3(40%)wasderivedfromconcessionswiththeremainderfromcommunities,subsistencefarmersorillegalsources(ITTO,2005).
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6.OperationalDetailsA. Legalandadministrative
Thissectionofthereporthighlightsthemainlegalandadministrativeaspectsofeachcountry’sconcessionprogram.Althoughtherearemajordifferencesbetweenthecountries,thebelowschema(Figure3)oftheBraziliansystemillustratesinasuccinctmanner,thegeneralconcession-grantingprocessusedinmanycountries.ThisgraphicalsohighlightshowaconcessionunitisestablishedwithinthelargercontextofBrazil’soverallconcessionstrategyandwithinaparticularconservationunit8.
Figure3.BrazilianConcessionGrantingProcess
(Source:STCP,2012)
B. Determiningconcessionlocationandarea
Despiteatechnicallysoundsystemintermsofforestplanningandpractices,Boliviadidnotuseaverytransparentmethodforassigningareastospecificcompanies.Whilemostareashadsufficientvolumesofcommercialspeciestojustifyconcessionsandwerenotlocatedwithinprotectedareas,therewerecasesofconflictswithcommunities(i.e.thedefunctTaramaCompany).Thefactthatconcessionsneededtobeapprovedbytheagencyforagrarianreformhelpedkeepthistypeofsituationfromoccurringregularly.
Relatedtothemorerecentapproachtodeterminingthelocationofforestmanagementunits,oneofthereasonsthatthecurrentgovernmentdecidedtoeliminatetheconcessionmodelisthatmanyofthecompaniesthathadbeengrantedareasinthe1990’shadpoliticalandeconomictiesthat
8 The detailed public consultation that occurs during the concession-granting process in Brazil is unique among Latin American countries and although one of the reasons why concessions take so long to move forward, is also why few issues occur once the concession is granted.
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suggestedfavoritism.ABTnowpreferstosimplygivethelandtocommunitieswithtraditionalrightsornewpopulationsthatrequestformalaccess.
Theconcessionsizewaslargelyafunctionofavailablecommercialvolumeandthewillingnessofaconcessionairetopaythegovernmentthelegallymandatedfee(US$1/ha/year).Atpresent,oldconcessionsthathavebeengivenbacktothegovernmentaregrantedtoindigenouscommunitieslivinginandaroundtheseareas,ortonewcommunitiesthathaverecentlysettledthere.
ThesizeofBrazilianforestconcessionsisbasedonFederalDecree#11.284/2006andvariespertechnicalconsiderationsuniquetoeachsite,including:speciescomposition,needsoflocalindustry,infrastructureandmarkets.WithineachFLONA,atleastonesmallconcessionmustbeavailableaswellaslargerareasforhighvolumeproduction.MorethananyothercountryinLatinAmerica,Brazilanalyzessite-specificconditionstodeterminesizeandlocation,suchas:bidder’sannuallogconsumption,harvestintensity(m3/ha)andcuttingcycle,areaabletoprovidelogstomeetdemand,andpreservationareaswhichmustbeatleast5%oftotalarea.SizecategoriesstipulatedbyAnnualPlanofForestConcessionsareasfollows:
• Small–lessthan40,000ha• Medium–40-80,000ha• Large–over80,000ha
TheAugust2015exampleoftheCaxiuanaconcessionsinParáillustratehowthegovernmentstrivestoensureaccesstodifferentsizedareasbybothlargeandsmallcompanies.Thethreemanagementunitsrangedfrom37,000hato52,000hatothelargestat87,000hawiththesamecommercialvolumesof20m3/ha(MMA,2015).
Brazil’sNationalSystemofConservationUnits(SNUC)hastwocomponents:IntegratedProtectionandSustainableUse.Thelattercategoryallowsforbalancedresourceusetocomplementthe“no-touch”natureoftheformercategory,anditiswithinthislanddesignationthatconcessionsmaybegranted.Suchdesignationandlandscapeplanningiscarriedoutbythegovernmentalagency,ChicoMendezInstitute(knownasICMBio).InbothstateandfederalprocessesthefirststepistoanalyzedatafromBrazil’sNationalPublicForestRegistry(CNFP)tolocateConservationUnits.
TheAnnualForestGrantPlanisafiner-grained,analyticalstepthatallowstheGovernmenttodeterminewhereandhowtheconcessionfitswithotheruses.CUsaredelineatedonlandthatisunoccupied,notdesignatedfortraditionaluses,notinprotectedareas,orwithoutdifficultoperationalconditionsnorzonesofhighconservationvalueswhereconcessionmanagementwouldbeproblematic.Map6illustrateshowareasofpotentialconflictduetocompetingresourceusersaredelineatedinordertoreducepotentialproblemsinconcessionareasintheItaitubaregion.
In2016alone,theaboveprocesswasappliedtoalmost310millionhaoffederalpublicforestsofwhich>99%wereexcludedduetoissueswithindigenouscommunities,protectedareasandareasofcommunaluse.Anadditional13,7millionhawereconsideredlegallyviableforthepurposesofconcessionsbutonly1.81millionhaweredeemedfeasibleacross14federalareasin4Amazonianstates(Acre,Amazonas,ParáandRondônia).
Asanexample,theStateofAcreutilizesapublic-privatecontractmodeltoprovidedirectaccesstotimberandnon-timberresourcesforlocalcommunitiesthatlivewithinthearea.Forlarge
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companies,Acreissuespermitsbasedonvolumethusallowingmanufacturerstohaveamorestablesupplyoflogsandworktogetheronextractingdifferentspeciestoobtainthedesiredvolume.
Map6.DelineationofdifferentusesandpotentialsourcesofconflictinBrazil’sItaitubaFLONA
(Source:InstitutoEKOS,2014)
TheconsensusinBrazilwasthatinitially,federalconcessionsweretoosmalltobeviableandthatstateconcessionsweremoreappropriatelysizedtojustifythelargeinvestmentneededtoattaineconomiesofscale.BasedonSFBdatafrom2012,theaveragefederalconcessionsizewas41,000harangingfrom17,000hato89,000ha(theaveragehaslikelyincreased).Themajorityofthestatepublic-privatecontractsarelocatedinAcre(533,000ha)wherecontractsizeislarge,averaging133,000ha.Pará,despitebeingamajorwoodproducingregion,onlyhad215,000haunderconcessionin2012withasmalleraveragesizeof50,000ha.
FederalforestconcessionsinBrazilarelocatedinfivemainnationalforestareas(referredtoasFLONAS)including:Jamari(Rondonia),Saraca-Taquera(Pará),Jacunda(Rondonia),Altamira(Pará)andCrepori(Para).Stateconcessionsaresimilartofederalconcessionsinmostaspectsbutaregrantedandmanagedbystateratherthanfederalagencies.Brazilpassedanewforestrylawin2006(LeideGestãodeFlorestasPúblicas)thatestablishedtheBrazilianForestryServiceandoutlinedtheroleforforestconcessionsonstatelands.Brazilgranteditsfirstconcessionsin2008afterformalrulesweredesignedandapprovedin2006.AsisevidentinthebelowMap7,despitegreateffort,theareaoflandcoveredbyfederalforestconcessionsisstillverysmallcomparedtothetotalareaoffederalforestintheAmazon,andevenincomparisontostateconcessionlands.Whilethishasincreasedinrecentyears,thereisstillsubstantialroomforgrowthofconcessionsinBrazil’sAmazon.
FromthebeginningofGuatemala’sprogram,CONAPutilizedapublicconsultationprocesstodefineconcessionunitsforcommunitiesbasedontraditionalforestuses(GretzingerandCarrera,1996).Interestedcommunitiesorgroupscreatedamapoftheareawithintheirsphereofinfluenceorinterest,andjustifiedtheirrequestsbasedupontraditionaluse.AgriculturallandsareincludedaslongasthepermanentforestestateisnotreducedandismanagedaccordingtoCONAPguidelines,thuslegalizingagriculturaluseofstatelandaslongasrulesarerespected.Protectedareaswithin
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theconcessionareasthatarenotsubjecttoharvestmustalsobeidentifiedandprotectedbytheconcessionaires.Moreremoteforestblocksnoteasilyaccessedbyroadswereputtobidformanufacturers,ofwhichtwowonindustrialconcessionsthattheystillmanagetoday.
Map7.FederalandStateForestCoverandFederalConcessionsintheBrazilianAmazon
(Source:Alvez,MarcusV.,DirectorofSFB,June11,2013)
Guyanautilizesthreeforestaccessapproachesfordifferentsizeconcessions:
• TimberSalesAgreements(TSA):Areas>24,200hafora10to25-yearperiodwithrenewalpossibilitiesrequiringforestinventoriesandapprovedmanagementplans;
• WoodcuttingLease(WCL):Areasbetween8,100and24,200hafor3-10yearperiodsandrenewalpossibilitiesaswellandsameplanningrequisites.
• StateForestPermission(SFP):Areas<8,100haforoneyearandwithoutexclusiverights.
ItisunclearhowGuyanachooseswhichareastograntforconcessionsbutthefocushasbeenonforestwhichiscommerciallyviable,hasminimaloperationalobstacles,andisnotpartofaprotectedareanorcontestedbycommunities.AccordingtoBulkan(2014),thegovernment’sapproachhasledtoa“landgrab”byAsiancompanieswhichnowhaveaccesstoalmost80%ofthecountry’spublicforests.
Whilepermanentproductionforests(BPPinSpanish)havebeendelineatedbythePeruvianGovernment,modificationsandnewareasarepresentedbytheregionalforestrydepartmentstoSERFORforapprovalandsubsequentgranting.HarvestunitsaccessedviatimberconcessionscanonlybelocatedinBPPsandmustbegrantedbasedonpublicconsultation.Thegovernmentconductsexploratorystudiesofpotentialareaswhicharecomplementedbyworkcarriedoutbybidderstomakesurethataspecificareamakessenseasaconcession.Intervieweesnotedthatthegovernmenthasmentioneditsinterestinputtinganadditional2millionhaupforbidbuthasnotdeterminedwhere.Oneproblemisthatmanyoftheexpiredconcessionsaresmallanditisnoteconomicallyfeasibletomanagethemunlesstheyareofferedinblocks.AccordingtoregulationsassociatedwiththenewForestryLaw,uptothreecontiguousareasmaybeplacedforbidandobtainedbyoneentity.C. Publicnotificationprocess
GiventhatinBolivia,thegovernmentissimplyturningpreviousconcessionstocommunities,andthereisnobiddingprocessbyprivateentitiesandpublicnotificationisnotrequired.
Code Land ClassificationFederal Forest ConcessionsFederal Forest under biddingFederal Public ForestsState Public Forests
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Priortobringingaconcessiontobid,BrazilianlawrequiresthatIBAMAprovidesanenvironmentallicenseallowingaparticularareatoserveasaconcession.Aspartofthisprocess,IBAMAconductsaPreliminaryEnvironmentalAnalysisthatincludesfaunaandsocio-economicanalyseswhichonceapproved,allowstheSFBtoinitiatetheconcessiongrantingprocess.SFBfirstpresentsthebiddocumenttothepublicincludingallrelevantdetailsontheconcession:resourcestobeharvested(timberornon-timber),typeofguaranteerequired,obligationsoftheconcessionaire,impactsontraditionaluses,andpotentiallandtenureandforestuseconflicts.PublicinputsfeedintothebroadConservationManagementPlandevelopedbyICMBio9.SFBprovidesinformationonitsweb-pageincludingdatarelatedtoupcomingconcessions(www.florestal.gov.br).Forexample,detailedinformationonhowtobidontheCaxiuanaconcessionwasofferedonline(MMA,2015)anddistributedtonewspapersandthepress(www.florestal.gov.br2015).
Surinameusesapublicnotificationprocessperstandardproceduresforallpublicresources:announcementsinofficialgovernmentpaper,adsinprivatenewspapersanddirectnotificationofcommunityandindustrialbidders.Guyanalawstipulatestheuseofsimilarpublicprocessesbutthereareclaimsthatitsprocessesarenottransparent(startingwiththeBaramaconcessiongrantedwithlittleconsultationintheearly1990’s).
InPeru,biddingprocessesforunoccupiedorrescindedareasareconductedbytheregionalforestryandwildlifeauthoritiesfromJuly1toDecember31.Noticesarepublishedintheofficialpress,governmentalwebpages,andnewspapers.Someinterviewees,however,notedthattherecentbiddingprocessforrescindedconcessionsinLoretowasheldwithoutwidespreadnotificationnordiscussion.D. Applicantcriteriaandscoringprocess
Giventhatlandisgiventocommunitieswithhistoricrightsorthathaverecentlysettledandarerecognizedasappropriateownersofvacantforestland,Boliviadoesnotuseascoringprocessforselectioncriteria.
ApplicantsmustberegisteredinBrazilasformalcompaniesorcommunityassociations,butthereisnorestrictiononforeigncapitalorshareholders.Bidderscannothaveenvironmentalinfractions,crimesagainsttheenvironment,norsocialdebts,andtheymustpledgethattheydonotuseminors(<18yearsofage)innocturnal,dangerousorunhealthywork,noranyoneoflessthan16yearsofageexceptfortrainingprograms.Aprofessionalforestermustindependentlypreparethetechnicalproposalwithsupportfromaqualifiedteam.Thefinancialproposalshouldbereasonable,andthereshouldbenotaxissueswiththegovernment.Financialsolvencymustbeprovenbyshowingauditedfinancialstatementsfromtheprevioustwoyearsofoperations.
Brazilhasthemostdetailedscoringprocessofconcessionsofanyofthecountriesthatwereanalyzed(MMA,2015).Itusesawell-structuredapproachbasedonsubjectiveandobjectivecriteriagivenvaluesbySFBstafftodetermineatotalscore.Eachmemberofthereviewingbodymust
9In the case of the Itaituba concession, the plan was developed by IFC as part of its support to improve the concession-granting process.
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documenthis/heropinionandwhileonemightdisagreewithascore,therationaleisavailableforalltosee10.Criteriainclude:
• HighestpriceinReais(R$)/m3forallspeciesorperspeciesdependingonSFBstipulations;• Technicalcompetency,environmentalimpact,socialimpact,productionefficiency,andvalue
added;• Locationofprocessingfacilitywithinorneartheconcession;• Balancebetweentechnicalandeconomicconsiderations;and• Productivepotential.
TheGuatemalanmodelisuniqueinthatmostoftheconcessionaireswereidentifiedpriortodeterminingtheconcessionarearatherthanbeingbiduponbyvariousbidders(sincemostweregrantedtocommunitieswithalong-term,well-documented,andpublicly-accepteduseofaparticulararea).Theconceptualstartingpointwasnotagovernmentwantingtograntpublicresourcessimplytogeneraterevenuesbutratherrecognizingthatlong-terminhabitantshadaninherentrighttotheresourceandwerebestsituatedforprotectingthesame.Someofthecriteriausedtoensurethataparticularcommunitywouldhaveasuccessfulconcessionincluded:soundplandevelopedbyprofessionals,agreed-uponareawithoutconflicts,adequatevolumesofcommercialspecies,agreementofcommunitymembers,andadocumentedabilitytopay.
MinimalinformationcouldbefoundonhowtheGuyanesegovernmentevaluatesconcessionbidsalthoughsuccessfulbiddersmustpresentfullmanagementplans(>5yearperiod)andannualoperatingplanspriortoinitiatingoperations.Communitiesmustpresentrequestsforareasbygroup(i.e.asloggingassociation),theirassetsmustberegistered,theavailableareamustbeclearlyspecified,abankaccountmustbefunctionalandtheymustpaytheirarea-basedfees.Forindustrialconcessionaires,inadditiontoapprovedplanningdocumentsbasedonlegitimateinventories,thecompanymustshowaprovenabilitytoengageinforestrywoodproductsprocessing.Firmsmustalsodeliverenvironmentalandsocialimpactassessment,aswellasaBusinessPlan.
Peruvianconcessionairesmustprovethattheyhavethefinancialresourcestoinvestinaconcessionandthetechnical/marketknowledgetomakeaconcessionsucceed.Thesequalificationsaremoreimportantthaninthepastsincemanyofthecountry’sfirstconcessionaireswerespeculatorswithlittlewoodorforestryexperience.Peruisnowputtinggreaterweightonabidder’sinstalledindustrialcapacity,trackrecordinthesectorandfinancialwherewithal.Therecentreallocationofexpiredorrescindedconcessionsto25biddersinLoreto,allofwhomhadextensiveindustryexperience,illustrateshowthegovernmentisprioritizingthesecriteria.Applicantsmustnothavepenalrecordsforenvironmentalcrimes,crimesagainstthepublicgood,orcrimesperSERFORregulations.Bidderscannothaverescindedconcessionswithinthepast5years.Biddersmustpresenttheresultsoftheirexplorationoftheclearlydefinedconcessionareawiththebroadoutlinesoftheirproposedmanagement.E. Contractperiod
10The maximum amount of points which a bidder may obtain is 1,000 divided between technical (600) and financial (400). No bidder may win more than two concessions in a particular bidding process.
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InBrazil(asinPeru),40yearcontractsmaybeused,butmosthavebeenfor30-yearperiods.Boliviahascontractsupto40years.Guyana’scontractsrangefrom3yearsforshorttermharveststo20+yearsforlong-termconcessionsoverlargeareas>24,000hadependingontheaccessmodelused.InSuriname,althoughconcessionsinitiallyvariedinlengthbetweenoneand20years(itisnotclearhowtimeperiodswerechosen),theSurinamesegovernmenthasbeenpromotinglongercontractsupto25years.
OneoftheproblemsinBrazilhasbeentherigidityincontractlanguage.Giventhelackofdetailedinformationontheforestconcessionareaperseandchangesinbothtechnologyandmarkets,a40–yearcontractneedsmoreallowancesbuiltintoittochangeandmodifythingsascircumstanceschange.
InGuatemala,onceaconcessionareaisapproved,aninventoryoftheentireforestisconducted,followedbyamanagementplanandEIAdevelopedwithstandardizedmethodologies.Uponacceptanceofthesedocuments,a25-yearcontractiswrittentodefinerightsandresponsibilities.
Inallcountriesreviewed,contractsarerenewableandmaintainedaslongastheconcessionairespassannualfieldinspectionsmadebytheappropriategovernmentalagency.Additionalreviewsaremadepriortoapprovalofcontractextensions.
F. Rightsandobligations
Noconcessioninanyofthecountriesgrantslandtitle,butinallcases,theylegallyprovidecommunitiesandcompanieswiththerightovermostresourceswithintheareaaslongastheyfollowuserulesandprotecttheforestfromconversiontootherusesordegradation.
Forexample,theBraziliangovernmentalwaysmaintainsownershipof,andresponsibilityfor,theconcession,butconcessionairescanutilizeallresourcesexceptforcarbon(thesaleofCO2creditsarereservedforthestate)andpetroleum(asisthecasewithvirtuallyallcountriesworldwide,oilandgasassubsurfaceresources,arealwaysseparatefromabove-groundrights)aslongastheyfollowspecificrulesrelatedtothemanagementofthesame.Concessionairesmustpayfortheirowninfrastructure,butanyinvestmentsmadeinroadsorbuildingsbecomestatepropertyuponfinalizingthecontractperiodanddonotremainwiththeconcessionaire(nordoesthestateneedtoreimbursetheconcessionaire).
Guatemala’sconcessionproceduresdistributeresponsibilities,benefits,andrightsamongthedifferentgovernmental,privateandcommunityplayers(CONAP,1994;Synnott,1994).Asasemi-autonomousentitywithaclearlydefinedgeographicandtechnicalrole,CONAPestablishestherules,overseesconcessiongranting,andsupervisescompliance.Communitymembersandcontractorsimplementmanagementactivitiesinthefield.Legally-establishednon-profitorganizationsorapprovedconsultantsareresponsibleforprovidingtechnicalsupporttocommunityconcessionaires.Anexamplebestillustrateshowthisapproachworks.Communitiesprepareconcessionandforestmanagementplanningdocumentswithadesignatedorganizationorprofessionaltoattesttonumbersandprojections.Thecommunity(orcompany)concessionaireisresponsibleforclearlydelineatingboundariesandmarkingtheareawithlegiblesignage,aswellasimplementingtheharvest.Thegovernment,howeverisresponsibleforreviewingcompliancewith
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regulations,andremovingillegalinvadersorforestusers,sincetheareaultimatelybelongstothestate.
Whereassomegovernmentshaveseparatedconcession-grantingfunctions(planning,guidelines,inventories,andadministration)fromthemonitoringofthesame(BrazilandPeru),otherssuchasGuyana,havetakenamoretraditionalapproachtohousingthese“carrotandstick”functionsunderoneroof.Guyanaisalsotheonlycountrywithaprofessionalwoodproductsdevelopment,marketing,lobbyingandeducationalorganization(FPDMC)thatworkscloselywiththefederalagencyresponsibleforconcessionmanagement.Whilesomemightconsiderthisanover-emphasisontimberattheexpenseofotherresources,itdoesshowtheimportanceofwoodtothecountryandprovidesgreatbenefittoconcessionaires.
AshighlightedbyintervieweesinPeru,thelackofgovernmentalprotectionofconcessionairerightsisamajordisincentivetowould-bebidders.Itiseasierandcheapertobuyaccesstowoodincommunityorprivateholdingsratherthanassumealloftheobligationsexpectedinaconcession(i.e.ifpeopleinvadeaconcession,itistheresponsibilityoftheconcessionaireratherthaneventhegovernmentperse).ThecaseoftheVonHumboldt,CFAandGreenGoldconcessionsshowthatconcessionairesarerequiredtoassumecostsrelatedtooverlappinglandclaimsormustpayforlogtransportrightstopassthroughcommunities(evenforpublicroads).AnunusualobligationinPeruisthattheconcessionaireisrequiredtoimplementextensionandeducationactivitieswithlocalcommunitiestopromotesustainableforestry.G. Performancemonitoring
InBrazil,annualforestoperationmonitoringisconductedbyIBAMAwhichcanvisitaconcessionatanymomentwithoutpreviousnotification.IBAMAmaintainsanationaldatabaseonwoodproducedbyallconcessionairesineachstatewhichisupdatedregularlyonvolumesproducedandtransportedbyeachoperation.Independentauditors(i.e.certificationbodies)maycarryouttheannualauditinanindependentfashion.InParáandAcre,stategovernmentsutilizeotherentitiestocarryouttheserespectiveroles.
ForGuatemala’sconcessions,monitoringisconductedbyindependentorganizations,whicharepartlyfundedbyincomegeneratedfromtheconcessionsaswellascontinuedsupportfrominternationaldonororganizations.Thisdelegationanddistributionofrolesminimizesdependenceuponthegovernmentandreducesopportunitiesforcorruption.CONAPapprovesproposedharvestspriortothefellingoftreesbyconcessionaires,andauditstheresultsinthefieldonanannualbasis.Thesevisitsarelegitimateanddocumentthestatusoftheconcessionaire’sharvestintermsofspecies,volumesandsales.Eachconcessionairemustpresentbasicfinancialreportsrelatedtotheharvesttothegovernmentthatisusedtochargetheannualtaxbasedonareaforusingtheconcession,andvolumeforamountofproduction(Santos,2015).
GuyaneselawstatesthattheGFCwillmonitorcompliancebytheconcessionairewiththeapprovedmanagementplanandtheTimberHarvestingCodebutnoinformationwasobtainedonexactlyhowtheseevaluationsareconductednorwhattheyfocuson.Guyanahasdeveloped,however,awell-regardedtimbertrackingsystemthathasbeeninoperationsince1999(ITTO,nodate).Thegovernmenthasestablishedover25stationsthroughoutitsforestestatetoensurethat
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concessionairesareaccuratelytaggingtreespriortofellingandaffixingthecorrespondingtagsonlogs(thisisusedonbothconcessionandAmerindianlands).Additionalworkhasfocusedonestablishingabar-codesystemandaUK-basednon-profithashelpeddevelopavoluntarytrackingsystemtomeettheinterestsofdifferentpurchasingcountries(GuyanaLegalAssuranceSystem).
InPeru,45daysafterthecompletionoftheannualharvest,theconcessionairemustpresentasummaryofactivitiesrealized,volumesandspeciesmovedandotherinformationasperSERFORstipulations.On-the-groundmonitoringoftheoperationsiscarriedoutbyOSINFOR.ThetaskforOSINFORisadifficultone:ofall3.2millionhectaresofconcessionsgrantedinLoreto,almost77%areinactive,sanctioned,expiredorotherwisenolongerfunctional;12%arebeingreviewedfornon-compliance,4%havebeenevaluatedandanadditional10%areprogrammedforsupervision.
WhileOSINFORhasbeentrainingindigenouscommunities,signingagreementswithlocalgovernmentsandfederations,sanctioning“low-hangingfruit”andpublicizingtheerrorsofhigh-profilecompanies,theyseldomtargetthemoredifficultoperatorsthatoftenworkout-of-sightandarethemostnotoriousviolators.ForthecaseofLoreto,only74,429haofthe>790,000hastillfunctioninghavebeenmonitored.OSINFORisindeedfulfillingitslegalmandatebyclosingconcessionsthatdonotcomplywithregulations,butithasalsocreatedperverseincentiveswherebyvacantconcessionswithoutanyactivemanagementareoftentimessubjectedtoillegallogging.Communityoperationsarealsonotsupervisedasmuchasindustrialconcessionsandaconsiderable,un-documentedamountofwoodcomesfromcommunityoperationsthusprovidingcheapfiberthatcompetesunfairlywithconcessionaires.H. Rescissionofcontractandfines
InBrazil,thefollowingconditionscanresultincancellationoftheconcession:endofcontractperiod,lackofcompliancewithtermsofcontract,non-compliancewithmanagementplan,lackofpaymentoffees,failuretocomplywithpenalties,inhumanworkingconditionsorforcedlabor,deathofconcessionaire,orreturnoftheconcessiontothestate.Therearenoconcessionsthathaveyetbeenrescinded.Totransferaconcessiontoanewowner,thepreviouscontractmustbepaidforandallobligationsclearedpriortothisoccurring.
Guatemalaenforcesfailuretocomplywiththemajortermsofaconcessioncontractbycancellingtheconcession;thishasoccurredwiththreecommunitiesthathadflagrantviolations.Concessionagreementsmayberevokedifthecommunitydoesnotfollowthemanagementplan,lacksoperatingcapacity,stopsoperationswithoutjustcause,ordeclaresbankruptcy(JohnstonandLorraine,1994).Priortoexpirationoftheallottedconcessionperiod,CONAPmustrenewtheconcessionaire’srequestforanadditionalcontractunlessthecommunityhasrepeatedlycommittedinfractions(CONAP,1994).
Itappearsthatfew,ifany,ofthelargeforestconcessionsprimarilymanagedbyforeigninvestors,havebeentakenawayfromtheownersinGuyana.Regulationsclearlynotewhatactionsmayresultinthecancellationofconcessions.
Peruviancompaniescanalsolosetheirconcessionsorbefinediftheyprovidefalseinformationunderwhichactivitiesareactuallytakingplace,makeunauthorizedharvests,causeunnecessarynegativeimpacts,convertforesttoothernon-forestuseswithoutpermission,ordonotmake
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agreeduponpaymentsorinvestments.ThemainreasonthatPeruvianconcessionsarecancelledisduetoinactivityandinabilitytopay.Concessionairesarerequiredtomakeannualpaymentsregardlessofwhethertheyharvestandundereconomicduress,manychoosetonotpay,thusvoidingtheirconcession.Forextremecaseswheretheconcessionisrescindedorthecompanynolongerwishestooperate,theareaisreturnedtothegovernment.Theoretically,localauthoritiesprotecttheareaandultimatelyallocateittootherconcessionaires.ThecaseofCFAshowshowthisapproachdoesnotwork:thecompanywentbankrupt,theforestwasreturnedtothegovernmentbutnorealprotectionisoccurring.I. Financial
1. Guarantees
InBrazil,guaranteesmustbeprovidedtothegovernmentagainstpossibleenvironmentaldamagesandperformanceissues.Thevaluesofsuchbondscanrangefrom40-80%ofthetotalreferencevalue11forthecontract.Usually,theoverallconcessionperformancebondisbasedon60%ofthereferencevaluedefinedas:
Bidprice(US$/m3)xAnnualharvestarea(ha)xHarvestablevolume(m3/ha)(IFC,2015).
AssumingaUS$30/m3bidpricefora40,000haconcession(2,000haharvestedannually)with15m3/ha,thebondwouldequateto:US$540,000(US$900,000x60%)tobepaidby:cashdeposits,propertytitles,guaranteeprovidedbyregisteredinsurancecompany,orbanknote12.Atthestartofthebiddingprocess,theapplicantmustalsopayabidbondtoproveseriousnessofintentandcompliance.ThevalueofsuchabondisUS$1/hectarewhichisreturneduponthecompletionofthebiddingprocess.
Guatemalancommunityconcessionairesmustpayaone-timefee(lessthanUS$1perhectareforagriculturalandforestlands)overaten-yearperiod,aperformancebondfor1%ofthetotalbid,andstandardproduction-basedtaxesfortimberandnon-timberproductsperm3byspecies.
Peruvianconcessionairesmustprovideadeposittocoverpotentialfines,damagesornon-compliancewithregulations.Theguaranteecanbeeitheranirrevocablebanknote,lienonaproperty,insurancepolicyorcashdeposit.Notallconcessionaireshaveprovidedguaranteesandthegovernmentdoesnotalwaysrequirethem.Article35ofthenewForestryLawregulationsstatesthattheforestresourcesembodiedintheconcessioncanbeusedasaguaranteeforloansandcreditbytheconcessionaire.
ItisnotclearhowconcessionguaranteeswerestructuredinBolivia,Guyana,SurinameandVenezuela.
2. Pricing
11 Reference value is equivalent to the value of one year of concession revenues based on estimated volumes and prices. 12The state of Pará charges 10% of the total value of the operation during the concession period as a performance bond.
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BoliviachargesconcessionfeesbasedonareaharvestedeachyearviathePatentedeAprovechamiento(essentiallytheaccessrightorleasefee)andvolumeharvestedviatheTasadeRegulaciónForestal(TRF)whichiscalculatedpervolumeactuallyharvested.CommunityoperationsonlypaytheaccessfeebutnottheTRFbasedonvolume.Thegovernmentreducedthecostofaccessfeesfouryearsafterithadimplementedthisapproachsincethecostsofimplementingallconcessionrequirementswerehigherthananticipated.
FederalconcessionairesinBrazilarechargedbasedonthevolumeextractedperpriceestablishedbythegovernmentonspeciesvalue.Aminimumannualvalue(VMA)whichisapercentageofthereferentialcontractvalue(VRC)canbecharged,dependingontheminimumvolumeextracted.Thispricedoesnotvarybyamountofwoodharvestedandmustbepaidannually.Forexample,forthefirstyearoftheJacundáconcession,theVMAwas5%oftheVRC.Inyeartwo,theVMAwas15%oftheVRCandclimbedto30%oftheVRCbythethirdyear.Thisapproachissympatheticoftheconcessionaire’sneedtoincurgreatcapitalexpensesinthefirstyears.
PerSFBResolution#2/2011,pricescanbebasedonthevalueofindividualspeciesgroupsoranaveragepriceforallspecies.SFBreviewspricesinthemarketwheretheconcessionairewillproductlumberfromthesespeciesandcalculatestherelevantfeebysubtractingoperationalcostsfromthemarketvalue(i.e.stumpage)13.InbothfederalandParáconcessions,theusermustpayfortherighttooperateaparticularareabasedonthevolumeextracted.
Allcostsassociatedwiththepreparationoftheconcessionbiddingdocuments(delimitingboundaries,forestinventory,environmentallicense,overflights,consultativeprocess,fieldvisits,etc.)arechargedtothewinningbidder.ThesecostsvarygreatlyfromUS$115,025fortheJacundáconcessiontoUS$505,108fortheSaracá-Taqueraconcession.Thereareothercostsrelatedtotransportinglogs,providingbenefitstocommunitiesandobtainingotherenvironmentalpermits,butthesearevariedandafunctionofeachparticularsituation.
Minimumbidpriceswerebasedonresearchconductedina150kmrayaroundtheforesttobegranted.Lateron,in2015,aninnovativeefforttoimprovepricingwasundertakenbyIFCbasedonarealisticcoststructureandadiscountedcashflowanalysisratherthansimplyastumpageapproach14.
TheactualmethodologyusedtodeterminetheconcessionpricefortheGuatemalancommunitiesinthemid-1990’sisunknown.Concessionairesarerequiredtopayonanannualbasisanddonotreceiveapprovalforharvestortransportationoflogsiftheydonotcomplywithpaymentschedule.
Guyanahaslongbeencriticizedforitsextremelylowconcessionprices(<US$0.20/ha/year)andalthoughexactpriceswerenotobtained,recentforestrylegislationdoesexplicitlyrequestthatpricesbeabovethestandardmarketrate(althoughitisnotclearhowthisrateiscalculated).
AllPeruvianconcessionairesarerequiredtomakeannualpaymentsonaperhectareprice(US$/ha)perofferedbidprice.Everybidderhastheabilitytodeterminehisorherownstumpagecostsandsubsequently,pricetopaythegovernmentbasedonwhattheirparticularcostofoperationswould
13 Pará State requires monthly payments based on volume produced, and Acre also charges fees based on volume.14 For revenues generated by the payments of concession rights, 70% of the payment goes to SFB and 30% goes to IBAMA to fund their respective functions.
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bebasedonharvestedspecies.Concessionpriceshavebeenwildlyvariableandnotalwaysbaseduponanaccurateestimationofoperatingcosts.Whilesucherrorswerethefaultofconcessionairesandtheirtechnicaladvisors,theimpactofthesameisfeltbythecountrysincethehighpercentageoffailedconcessionseffectivelymeansthatmostofthesamearesubjecttouncontrolledentrance(“natureabhorsavacuum”).Article25oftheReglamentoparaelManejodelosRecursosForestalesmedianteConcesionesnotestwotypesofpaymentsthatmustbemadebyconcessionaires:
• Accessrighttoarea-0.01%oftheUIT15forentireareapaidatharvestendandpriortoinitiatingnewharvest.
• Priceofproductharvested-basedonthestumpagevalueofthespeciesharvested.
AlthoughSERFORisanalyzingthepossibilityofothermethodsfordeterminingprices(i.e.fixedratesperm3ofeachspecies)regulationsstillarebasedonaclassicstumpage-basedpriceperm3,butdoesintroducethevagueconceptof:“thenaturalstateofharvestedspecies”.Thisvaluewouldbebasedon:degreeofthreat,speciesabundance,potentialproduct,marketdemandandothervariables,andwouldbedeterminedbythelocalgovernmentwithSERFORsupportonanannualbasis.Whilethisapproachmayappearsimpler,itisactuallymoreproblematicandunfairtocertaincompaniessincethegovernmentdoesnotconsiderfinancialresultsinthecalculationofitsconcessionprices.
Intermsofhowpaymentsarestructured,onlyarecentlybankruptedconcessioncompanypresentsagoodexample.Althoughregulationsinitiallyrequiredcompaniestomakepaymentspriortoharvest,CFAwasallowedtomakequarterlypaymentsasitsharvestdeveloped.Regionalgovernmentsalsoallowcompaniestopayonaquarterlybasisasproductionunfolds;thisflexibilitymakestheentireprocessmuchmorefeasibleandpractical.
3. Incentives
TheBoliviangovernmentmotivatedcompaniestoobtainFSCcertificationthatrequiredcompliancewithstandardsmoredifficultthangovernmentalregulationsbyofferinga10%discountonaccesspayments.Anadditional30%couldbediscountedbasedonthecompany’sdesignationofecologicalreserves.Thisprogramisnolongerfunctioning,buttheABTdoesprovideincentivestothosecommunitiesandcompaniesthathaveadoptedwood-trackingprograms.Suchoperationsreceivepreferencefortheapprovalofplanningdocumentsandharvestinglicenses.Thosewithamaximumscoregreaterthan70pointsaccordingtotheBoliviansystemobtaineasieraccesstofinance,areexemptfromfieldinspections,andareconsideredhighpriorityforreceivinggovernmentalpreferentialpurchasingoftheirwoodproducts(WWF,2015).Inaddition,Bolivia’sProductionForestryCreditprogramisparticularlyinterestingsinceitoffersloanstocoveralloperatingexpensesrangingfrominventoriesandplanningdocuments,tomillsandtruckingwithaone-yearpaybackperiod.Loansfortheoverhaulingorreplacementofequipmenthavea10-yearpaybackperiod.GuaranteescanbebasedonthevolumeofwoodinanapprovedAnnualOperatingPlan,asalescontract,orforestinsurance(WWF,2015).
Brazilhasaprogressiveincentivesystemthatreducesannualpaymentstohelpconcessionairescoverthecostsofmanaginglargetractsofforest.Companiesthatimplementthefollowingactions
15Unidad impositiva tributaria or a sort of tax unit.
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alsoarechargedlowerfees:monitoringofforestdynamics,reducedimpactlogging,generatingemploymentinconcessionarea,supportingresearch,implementingconservationinitiatives,developinggender-neutralaffirmativeactionstrategies,andutilizinghighqualitycontrolsystems.ForthecaseoftheCreporiconcession,theBraziliangovernmentusedtwotypesofindicatorstoevaluatebids(SFB,2013):
• Classification(requirements)relatedtoqualitymanagementsystemforforestryoperations,investmentinlocalinfrastructureandcommunityservices,modernforestmanagementtechnologiesandlocalprocessing;
• Scoring(additional)degreeofvalue-added(15%),investmentsintheprotectionofthemanagementunit(10%),generationofemployment(10%),workertraining(5%),socialresponsibilityandworkersafetymeasures(5%),utilizationofwoodwastes(15%),andqualitycontrolsysteminthemill(7%).
Theaforementionedpercentagesindicatetheimportanceplacedontheefficientandprofitableprocessingofrawmaterialswhichalsopointstothepreviouspointmaderegardingthegovernment’srecognitionthatconcessionsareneededforindustrialdevelopmentinremote,forestedareas.Thebrillianceofthegovernment’sapproachisnotobviousunlessonelooksdeeplyattheindividualcriteria.Onecanseeforexamplethatbiddersillustratingamoreefficientapproachtologgingwillgetadditionalpointsorweightinthescoringprocesssincetheirapproachwillresultinlessmachinetimetoremovethesamevolume,thusresultinginlesscarbonemissions.
WhilenaturalforestmanagementconcessionsinGuatemalahaveneverhadastrongincentiveprogramlikethosefoundinCostaRicaorPeru,concessionairesweretherecipientsofmanysubsidiesprovidedbydonors,governmentandnon-profitorganizations.CATIE,theRainforestAllianceandUSAIDhavebeenparticularlyreliable,long-termsupportersoftheconcessionprogramandkeytoitssuccess.
Apartfromthestrongsupportthatconcessionairesreceivefromthegovernmentontechnicalandproductionrelatedthemes,Guyanadoesnotofferincentivestoconcessionaires.GiventhelowpricespaidforaccessrightsandthestrongdemandforconcessionsinGuyana,thegovernmenthaspreferredtoincreasetaxesontheexportoflogs.
ThePeruviangovernmentprovidesanincentivetoconcessionairesbyallowingforreducedconcessionpaymentratesuptoamaximumof70%discountifthecompany:
− verticallyintegratestheconcessionwithmanufacturingon-site(25%reductioninpaymentshownby>70%ofprimaryprocessingoccurringinorneartheconcessionor20%ofsecondaryprocessing);
− establishesvoluntaryconservationareaswithintheconcession(10%reductioninpaymentwhen10%oftheconcessionisallocatedtoprotection;20%reductioninpaymentif20%allocated);or
− obtainsFSCcertification(25%reductioninconcessionpriceforfullFSCcertificationand5%reductioninharvestpaymentifconcessionairehasinitiatedtheprocess).
Thecountry’snewregulationsreferencetheestablishmentofaforestsectorpromotionandfinancingstrategythatwouldreceivefundsfromtheMinistryofAgriculture(butalsostatesthatnonewallocationswouldbenecessarysincefundsshouldcomefrominternationaldonors).Article123
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suggeststhatpublicinstitutionscouldutilizethelegalorcertifiedstatusofwoodsuppliesasacriteriaforselectioninthepurchaseofwoodproducts(buthasnolegalstandinginofficialprocurementprocesses).
Peru’slongest-standingincentiveisLaw#27037(PromocióndelaInversiónenlaAmazonía)whichexemptscompanieslocatedintheAmazonfrompayingtaxesongoodssoldintheAmazonforlocalconsumption(i.e.saleoflogsorlumbertoamanufacturer),firstsaleofaconstructionproject(i.e.saleofamill),orservicesprovidedlocally,anda5-10%reductionontaxesonearnings.Thisbenefitappliestoanycompanywithaconcessionornot.ForestryLaw#29763statesthatregisteredforestconcessions,harvestpermitsandotherofficialauthorizationsforforestryactivitiesmayserveaslegalguaranteesforfinancialorlegalobligations.
4. Financialmonitoring
Giventheneedforconcessionairestobeprofitableenterprisesthatsustaintheirproductionaswellasgeneratesufficientearningstopaytheirgovernmentalfees,itissurprisinghowfewgovernmentsmonitorthefinanceofconcessionairesthatareusingstateresources16.GovernmentalagenciesforneitherPerunorBoliviarequireanythingfromconcessionairesotherthanaminimaldiscussionofthecostsandbenefitsoftheoperation,orageneralizednetreturnestimation.
Personalexperiencehasshownthatmostconcessionairesmonitortheircashflowwithbasicsystemsandoftentimeshaveinternalsystemsofvaryinglowdegreesofrigorandreliabilitytocalculatecoststructures.Traditionally,thishasbeenaweakpointofmanycompaniesandinPeruandBolivia,forexample,concessioncontractsdonotrequireaccuratecosttrackingorregularfinancialstatements.Forthisreason,well-knowncompaniessuchasAserraderoEspinoza,CFA,GGF,andSLVhavegonebankrupt,soldoperations,orhadreoccurringissueswithinvestors.
Inthemid-1990’s,Bolivianconcessionsweremuchmoresophisticatedintheircosttrackingduetothefactthatthemajorityhadalreadybeenengagedformanyyearsinthewoodproductsindustry.ThishaschangedconsiderablynowthatcommunitiesaremanagingthemajorityoftheproductivepublicforestsinBoliviasincefewhavesufficienttrainingandaccesstosystemstoefficientlytrackcostsorfinancialreturns.
Therearesomeimpressiveexceptionstotherule.Guatemalaconductsaparticularlyrigorousmonitoringofcostsandrevenuesfromconcessionoperations.CONAPreviewsbasicfinancialsandbankaccountstomakesurethereisconsistentfinancialreportingandthatuserfeesarereceivedaccordingtoLaw.ThisdeepinvolvementinfinancemaybeoneofthereasonsthatGuatemalanandinternationalfinancialinstitutionshaveloanedmoneytocommunityoperationsaswellaslargercompaniesfocusedonprovidingservicestocommunityforestry.Brazilisnowusingarobustdatabaseonrealisticcostsfromspecificconcessionareas,andmarketpricesforspecies,productsandqualityofproductstodetermineannualfees.
J. Technical
16 This observation is relevant for certifiers as well: very few FSC certification reports show more than a cursory examination of an operation’s financial viability, much less the reliability of its cost structure, cash flow or financial projections.
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1. Productsandservices
TimberisthemainproductwhichBrazilianconcessionairescanbidon;mining,commercialhuntingandfur-trappingarenotallowed.Woodinbothlogformandresidualmatterfromtheharvestaswellasnon-timberforestproductsmaybeuseddependingontheapprovedmanagementplan.Tourismintheformofhotels,adventuresportsandnatureobservation(i.e.birdwatching)isallowed.CO2belongstothestate,asdogeneticresourcesandwater,andconcessionairescannotengageinREDD+norVCSprojects.Miningbyaforestconcessionaireisnotallowed(althoughtherearecasesofoverlappingtimberandminingconcessions).
TimberproductsarethemaineconomicdriverbehindtheGuatemalanconcessions,butnon-timberproductscanbeincludedinthemanagementplanaswell(asisactivelydonebythecommunitiesofCarmelitaandUaxactun,forexample).
InGuyaneseconcessions,thedominanteconomicdriveristimber(andprimarilyfromonly2-3species)despitethefactthattherearegoodvolumesofpalmheart(Euterpeoleracea)thatisexported,andvinessimilartorattan(HeteropsisflexuosaandClusiasp.)thatareexportedforfurniture.
InPeruandBolivia,timberisalsothemostcommonproductincludedinmostconcessions.Therearefewexamplesofconcessionairesthatactivelymanageforestformultipleproducts,withtheexceptionofMadredeDios(Peru)thathasBrazilnut(Bertholletiaexcelsa)concessionsforsmalllandowners.Perualsoallowsconcessionairestoaccessgeneticresourcesfortheirownusebutnotforpatentrights.
SomePeruvianoperationsarebasedonmultipleproductssuchasthe11,000haconcessiondesignedtocreatethreerevenuestreams:tourismandCO2creditsinalluvialsoilsalongstreams,andtimberproductiononhigherground(NatureServicesPeru,2014).PeruvianconcessionairescanobtainfinancialbenefitsbyprotectingenvironmentalservicessuchasCO2andseveralhavealreadydoneso(i.e.GrupoWongontheMaderacreconcession).ThisiscontrarytoBrazil’sunusualpolicywhichexplicitlyprohibitstheabilityofconcessionairestoobtainrevenuesfromGHGemissionreductionsormitigations.
2. Forestinventoryprotocol
TheinventorymethodologyutilizedinBrazilisstandardformosttropicaloperationswiththeexceptionthatitusesanunusuallylargenumberofcommercialspeciestodeterminestatisticalrobustnesswhichresultsinneedingfewerplotsandlessrelevanceforthosefewerspeciesofcommercialinterest.
InPeru,SERFORhasestablishedclearguidelinesonhowtoconductinventoriesperinternationallyacceptedmethods.Unfortunately,therearefewexperiencedforesterswillingtoconductinventoriesunderdifficultconditionsandmostcompanieshirerecentgraduateswithminimalexperience.
Overall,inventorymethodsusedinLatinAmericaareconsistent,technicallyjustifiedandappropriate.Themajorityuseastratifiedsamplingmethodwherelarge,rectangularplotsaredispersedthroughouttheforestbasedonstatisticalvariability.Dataisgatheredonallspecies,not
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justcommercialones,andincludes:species,estimatesofthetotalandcommercialheight,measurementsofdiameteratbreastheight,perceivedlogqualityandothers(i.e.vines,hollowness,etc.).Topographic,soilandwaterconditionsthataffecttreegrowtharealsonoted.Subplotsofregenerationandsmallerstemsarealsomeasured,albeitatamuchlowerlevel.
Theoutstandingissueisrelatedtotheexperienceandhonestyoftheindividualscarryingouttheinventory.Mostforestryprofessionals,astheyageandsimultaneouslybecomemoreexperiencedandcompetent,prefertospendlesstimeinthewoodscarryingoutinventories.Othershavebeenknowntocreatefalsedatabanksinordertojustifytheharvestofwoodfromdifferentareasbutsoldunderpermitsissuedforotherareas.
3. Managementplan
Managementplansarefairlyconsistentintermsofcontentacrosstheregionandoftenincludeawealthofinformationthatalthoughofacademicinterest,isnotnecessarilyrelevanttomanagersnordecision-makers.Relativelyfewmanagementplansgivesufficientattentiontohowannualallowablecutlevelsareestablishedinordertoensuresubsequentharvests.GuatemalahasdoneagoodjobwiththisareadueinparttostrongsupportfromtheCentralAmericanTropicalCenterforResearchandTraining(CATIE)whichhasaccompaniedtheconcessionprocesssincetheearly1990’s.Guatemalanmanagementplansincludeusesforthreedifferentpartsoftheconcession:timberproduction,strictpreservation,andagriculture.Theyalsodetailthetimbercuttingscheduleandcycle,theannualallowablecut,commercialspeciesofinterest,minimumcuttinglimits,silviculturaltreatments,andprotectionstrategies(CONAP,1994).
Brazilianmanagementplansdetailtypicaltechnicalrequirementsincluding:inventoryprotocol,summarizedresultsofinventory(byspeciesandcommercialgroupings),descriptionofmaingeographicalconstraintstomanagement,proposedroadnetwork,justificationofcuttingcycleandharvestlevels,proposedsilviculturaltreatments,andmitigationmethodsforpredictedimpacts.TheseareconductedbytheconcessionairepostapprovaloftheconcessionbySFB.
Oncethemanagementplanisapproved,theconcessionairemustconductacommercialcensusandprepareanannualharvestplanafterthegatheringoffielddataonallcommercialspecies.NoEIAneedtobedevelopedsincethegovernmentconsidersthesustainableforestmanagementplansufficienttocomplywiththisfunction.
SeveraltypesofmanagementplansmaybedevelopedbyPeruvianconcessionaires17:
• GeneralForestManagementPlan(PlanGeneraldeManejoForestal-PGMF)whichiscomplete,long-termplanformanagingtimberbasedonadetailedforestinventory;
• IntermediateForestManagementPlan(PlandeManejoForestalIntermedio-PMFI)whichisacombinationofbothstrategyandoperationsplanningfornon-timber,ecotourismorconservation;and
• AnnualOperatingPlan(PlanOperativoAnual-POA)whichisa1-3yearplanforharvestingbasedonguidelinesestablishedinthePGMF.
17 Other variants exist to consolidate several operations into one or for low-intensity operations.
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Priortoinitiatingoperationsonaconcession,theconcessionairemusthaveacompletedandapprovedPGMFandPOAbasedonSERFOR’stechnicalrequirements.Inreality,manymanufacturerswithoutconcessionsdonotpreparemanagementplansandingeneral,operatefromoneannualcuttingplantoanother.Whilethisislogicalgiventhattheyhavenoinvestmentintheforestsperse,thelackofabroadervisiononmaintainingastableflowofwoodmayledtoover-capacity.Thisislessofanissueforthosecompaniesthathaveinvestedinqualitymanagementplansbasedonpreciseinformation.Perregulations,managementplansinPeruincludecomponentscommoninmosttropicalforestcountries:
• Descriptionofareaandproposedzoningforproductionandconservationactivities;• Definitionofspeciesofcommercialinterest;• Descriptionofproposedmanagementsystem,silviculturaltreatmentsandharvestactivities;• Mapsandtimelines;and• Listofproposedactivities.
Whatissurprisingisthatdespitethemajorexpenditureoftimeandmoneyinthemid-1990’stodevelopsimplifiedmanagementplansfocusedonlyontheessentialissues,mostgovernmentsnowseemtobeadvocatingoverly-detaileddocumentsthatonlyincreasecostsandtimededicatedtowritingdocuments.
4. Cuttingcycle
Ingeneralterms,cuttingcyclesinLatinAmericahavebeenbasedlooselyonthefrequentlyquotedestimatethattreeswillgrow0.5cm/yearintermsofdiameter.Thisfigureisappliedsimilarlytoallspeciesandsizesandassumesthereforethatina20yearperiod,atreewillgrow10cmindiameter.Witha50cmminimumdiametercutlimit,anytreeinthe40-49.9cmdiameterclassisassumedtobeharvestablebythetimethe20-yearcuttingcycleisover.Cuttingcyclesareusuallybetween20and35years.
Althoughtherotationageconceptisnotrelevantforthemulti-agetropicalforest,andnotthusdiscussedwithregularity,mostestimatethatthreecuttingcycleswouldberequiredbeforeatreereachesmaturity(i.e.asmallseedlingleftintheforestatharvestorthatgerminatespost-harvestwouldtake60to105yearstoreachadulthoodandbereadyforharvest).
Dependingontherelativevolumesofdifferentcommercialspecies,cuttingcyclesareadjustedandareasareestimated.Thetotalcommercialareaisdividedbythecuttingcycletodeterminenumberofhectaresperannualcuttingarea.
InBrazil,cuttingcyclesformechanizedoperationsarestipulatedbylawtobebetween25and35yearsalthoughmostarefor30years.Operationswithoutmechanizedskiddingcanhavecuttingcyclesdownto10years.ThestatesofParáandAcreutilizesimilarperiods.SFButilizesstandardizedincrementfiguresperhectare(0.86m3/ha/year)tocalculateannualallowableharvestsformechanizedoperations.Thisreducesdiscrepanciesandensuresfairnessintermsofvolumespermitted(althoughitdoesnotaccountforvolumedifferencesbetweensites).Concessionairesareallowedtopresentmonitoringdatathatjustifiesdifferentvolumefigures.Insummary,concessionairesusethefollowingaverageSFBproductivityfigurestodetermineharvestintensity:
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• 0.86m3/ha/yearforaCCbetween25-35years(anoperationwitha30-yearCCcanharvest25,8m3/ha)
• Fornon-mechanizedoperations,1m3/hacanbeusedforaCC<10years,thusyielding10m3/ha.
TheaveragevolumeharvestedintheJamariandSaracá-Taqueraconcessionsincreasedfrom13.5m3/hain2012to13.9m3/hain2013(authorizedvolumebasedonconcessionaire’srequest)(SFB,July2014).Thiswasaconsiderableincreaseoverthe2011averageof7.35m3/ha.
SFBhasestablisheddifferentcategoriesforcommercialspeciesforwhichpricesaresetoncebasedontheselectedproposal,anditisadjustedonceinayearaccordingwiththeinflationrate.Itutilizesagenerouslistofpotentiallycommercialspecies(>100)thathastheundesirableimpactofallowingforesterstoconductinventoriesofalowerintensitytoobtainstatisticalrobustnessthanifthelistonlyincludedspeciesthattheconcessionairewastrulyplanningonharvesting.Thisincreasestherisktoinvestorssincethereisdecreasedlikelihoodofaccuratevolumeestimatesfortheirspeciesofinterest.
InSuriname,mostconcessionsuse20to25yearcuttingcycles.Thetotalstandingvolumeofagenerouslistofcommercialspecies(morespeciesthanwillusuallybecutinactuality)isdividedbythecuttingcycletoestablishthemaximumvolumeavailableforharvest.Seedtree,structure,andconservationrequirementsresultinarea,andthusvolumedeductions,andonlyvolumesoverapre-determinedminimumdiametercutlevelcanbecut.Thisapproachissimilartothatusedinothercountries,suchasGuatemala,PeruandBoliviathatutilizesanareaapproachbasedon20,25or20yearcuttingcycleschosenbytheconcessionaire.
Thequestionsubjecttomostdebateis:whatisthecorrectcuttingcycle?Thisisbasedondataforgrowth,yieldandmortalityasdocumentedinpermanentmonitoringplotsor,asinthecaseofBrazil,perpre-establishedfiguresthatthegovernmentestablishes(thisistheonlycountrythatprovidesafixed,assumedtargetperhectare).Veryfewoperationsusegrowthandyielddatafromtheirownpermanentplotstocalculatethecuttingcycle.
5. Silviculture
ForestmanagementformostconcessionsinLatinAmericaisbaseduponapolycyclicfellingsystemcommoninthetropics.Forsuchunevenagedforests,futureharvestsofthesamecuttingblockareplannedtooccurwhenadvancedregenerationandsmallertreesfromlowerdiameterclassesreachesmarketablesize.Althoughearlyresearchlookedatsilviculturaltreatmentstoaddresstheecologicalrequirementsofthreatened,high-valuespeciessuchasmahoganyandcedarthatregeneratemosteffectivelyinthehighlightconditionspromptedbydisturbance(Putz,1993;Snook,1993),littlemodificationstothe“minimumdiameterlimitcut-percentageleavetree”approachhavebeenmadeontheground.Diagnosticsampling,atooloriginallydevelopedinMalaysia,hadbeenmodifiedforuse,forexample,inthePeténtodefinesilviculturalprescriptionsbuthasnotbeenusedoperationally(StanleyandGretzinger,1996).
Virtuallyallconcessionprogramsrequireastandardapproachtosilviculturebasedonminimumdiameterlimits(establishedbythegovernment)forspeciesandspeciesgroups,coupledwitharequiredpercentageofcommerciallyviabletreestoremainstandingpost-harvest(usually10-20%),
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andacuttingcyclethatstipulatesnoentranceincuttingblockuntil20,25or30yearsafterharvest.Basicallynoreplantingorthinningisconductedbyanyconcessionaire.
InVenezuela,ahighharvestintensityhasprovenproblematicdespitelongcuttingcyclesof30to40years.Themaincommercialspecies,Pachiraquinata,wasvirtuallyabsentfromforeststhathadbeenharvested13and19yearspreviously.Enrichmentplantingshadbeenusedintheseforestsaswellbuthadresultedinveryslowgrowthrates(0.027m3/ha/year).EnrichmentplantingswerealsounsuccessfulinGuatemala’sPeténregionandasaresultarenotutilizedinforestconcessions;noraretheyfoundinotherconcessionsinLatinAmerica.
InBrazil,atleast10%ofalltreesofallsizesofaparticularspeciesmustremainintheforestpost-harvest.Asanabsoluteminimum,atleast3treesper100hawithadiametergreaterthantheminimumdiameterlimitofaparticularspeciesmustremainintheforest.Minimumdiameterlimitsareestablishedformanyofthespeciesandwherenosuchlimitexist,50cmDBHistheminimum.Concessionairesareallowedtomodifytheselimitsiftheycanprovidedatajustifyingthesame.Forestdynamicsaremonitoredviapermanentplotsoneachconcessionpreciselytodeterminecuttinglimitsforeachspecies.Reducedimpactloggingisrequiredonconcessionsandvinesareusuallycutpriortoharvesttoreduceimpact.Directionalfellingisadvocatedbutpracticedtovaryingdegreesofsuccess.Replantingorthinningisnotconductedbyconcessionaires.
InGuyana,lowsoilfertilityandlackofregulardisturbancehasresultedinovermaturestandsoflowquality;manytreesarecrookedorhollow.Standsdominatedby1-2commercialspeciesareoftenseparatedbylargeareaswithveryfewofthesamespeciesinapatchworkquilteffect.Inthepast,2-3treeswerefelledperhectarewithanaverageyieldof7m3/ha.Thenationalplanallowsfor60yearcuttingcycleswithupto20m3/ha/year.
6. Conservationareas
BrazilianandPeruvianconcessionairesarerequiredbylawtoestablish,signordelimit,andimplementlower-impactmanagementactivitiesinareasconsideredofhighecologicalvalue.InPeru,thoseconcessionairesthatgoaboveandbeyondtheminimumrequirements,obtainreducedconcessionfeeasanincentive.Boliviahasasimilarapproach:steepandriverineareasareconsideredoff-limitstologgingbylaw,companiesareencouragedtoestablishotherconservationareasthatreflectthediversityoftheconcession,andofferreducedpaymentfeesasareward.
Inallcases,companiesarerequiredtoprotecttheentireconcessionareafrominvasion,deforestationorsimilaractivitiesthatreducethevalueofthepublicasset.IncasessuchasPeru,thecompanymustpayforthegovernmenttomonitoritsoperations(i.e.anyexpensesassociatedwiththefieldvisittotheconcessionarepaidforbytheconcessionaire).Thisisoddsincethecompanyalsopaysanannualfeetothegovernmentthatpresumablywouldbeusedforsuchexpenses.
InGuyana,concessionairesmustkeep4-5%oftheirforestareaasconservationareasnotavailableforlogging.TheseareasmustberepresentativeofalltheplantandanimallifefoundintheconcessionandsurveyedbyGFCtoverifythattheconservationareaisappropriate.Noharvestingmayoccurinthoseareas.
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7.RelationshiptoforestpoliciesThissectionexploressomerelationshipsbetweentheforestconcessionprogramsofthereviewedcountriesandnationalpoliciesrelatedtotwomajorissueswhichhavealwaysbeenassociatedwithconcessions:socialbenefitsandparticipation,andindependentcertificationandwoodlegality.A. Socialbenefitsandparticipation
Asdetailedpreviously,theBoliviangovernmenthaseliminatedconcessionsfromitsdialogueandisactivelyengagedinaprocessofdistributingforesttoruralcommunities,bothindigenousandmestizo.ThisispartoftheMorales’administration’spolicytofavortheruralpoorthathasresultedinroughly85%ofthecountry’slandsnowbeinginthehandsofcommunity,insomecaseswithprivatetitle(WWF,2015).
AfterafailedattemptatinstitutingawidespreadindustrialforestconcessionprogramandinthewakeofindigenousprotestsregardingitsLima-basedpolicies,Peruhasattemptedtodecentralizeisforestadministrationactivitiesandallowformorecommunityforestmanagement.Althoughrecentregulationsmakenomentionofsocialobligationsregardingtraining,safety,orwagesandnorregardinglocalcommunities(i.e.hiring,training,investment,processing),Peru’sforestpolicyisestablishingregionalplanningentities,regionalimplementationauthorities(ARFFS),andtechnicalorganizationstoprovidetrainingoncommunityforestmanagement(UTMFCorUnidadesTécnicasparaelManejoForestalComunitario).ThecountryhasalsobeenexperimentingwithlocalforestrycommitteessimilartotheforestryconsultativecommitteesutilizedinGuatemalaandNicaragua.TheseCommitteesforForestandWildlifeManagement(CGFFSorComitésdeGestiónForestalydeFaunaSilvestre)areanadditionallayerofcommunityinvolvementinissuesthataffectall,suchasroadaccess,educationandtraining,andcontrolofillegallogging.Althoughlackoffundsandtechnicalcapacityisaproblem,thelegalframeworkdoesenvisionasubstantiveroleforlocalgovernmentsandcommunities18.
Historically,Guyanahasnottakenindigenouslanduserightsveryseriously(dueinparttoitshistoryofcolonizationandrelativelyrecentindependence).TheCrownLandsandMiningOrdinanceshaderodedtheirlandrightsandpost-independencein1969,manytribesweresurprisedtolearnthat,legally,theydidnotpossessdirectrightsoverthelandtheyhadoccupiedformanyyears(Bulkan,2014).Asfarbackas1861,Guyanahadbeengrantingtimbercuttingpermitstonon-aboriginalownersonforestthatwaspartoftheAmerindian’sperceivedlandholdings.TheForestActof1953madenoprovisionforpublicconsultationandalthoughAmerindianlandwithcommunaltitlewasconsideredprivateland,similarholdingswithouttitlewereconsideredaspartofthestate’sforestestate.WhiletheproceduralmanualforStateForestExploratoryPermits(SFEPs)preparedbytheGFCnotesthatsuchpermitscannotbegrantedonlands“occupied,claimedorusedbyAmerindians”thegovernmentdoesnotfollowitsownprocedures(Bulkan,2014).However,Guyana’smostrecentpolicyshifthasresultedin75communityforestryorganizationsobtainingconcessionsonalmost500,000haofforest.Althoughallocationsbeganslowlyin1985withonly
18 Community forest in Peru is not subject to concession law but technical requirements are similar. ARFFS approve master plans for the BPPs where concessions are located, and is authorized to conduct exploratory inventories with technical support provided by SERFOR.
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1,907hagranted,since2011theareagrantedtocommunitieshasaveraged57,000haannually(GFC,2015).Employmentinforest-basedcommunityenterprisesreached3,611peopleandgeneratedandincomeofalmostUS$9million.
Despitetheseeminglypositivetrend,fewcommunitieshaveexperiencerunningforestryenterprises,handlingfinances,trackingcostsorproducingaproductviaanindustrialmodel.Althoughtherearesomeexceptionalcaseswherecommunitiesinthesecountrieshavebeenmakinggoodprofitsfromsustainablemanagement,withoutthetypeoflong-termsupportofferedinMexicoandGuatemala,trueadvanceswillbelimited.
Guatemalahastakenaradicalapproachtoconsideringtheneedsoflocal,ruralcommunitiesanddesignedaconcessionmodelspecificallyfortheirneeds.Itclearlyarticulatedasocialpolicytoplacebothrightsandresponsibilitiesinthehandsofcommunitiesandsupportthesamewithtechnicalassistance.IntheGuatemalanmodel,requirementsforconcessionairestogeneratesocialbenefitsareminimallimitedbecausecommunityconcessionsareessentiallysocialenterprisesthatbydefinitionbenefitmembers.
OneofthereasonsthatGuyanaandPeruhavebeenmotivatedtoincluderuralcommunitiesintotheirconcessionmodelshasbeenthelackofadequatebenefitstolocaldwellerslivinginandaroundtheforestedareasmanagedbylargecompanies.TheBrazilianmodeldoesnotincludefederalcommunityconcessions.AsaresultofthisandthesocialobjectivesofthegovernmentinBrazil,stringentworkerandcommunityobligationsarerequired.UniquetoBrazil,detailedsocialanalysesareconductedonruralcommunitiestominimizeconflictinglandholdings.
InthecaseoftheItaitubaconcessionarea,IFCinterviewedlandowners,residents,minersandloggerstodeterminepotentialareasofconflictandadjusttheconcessionboundariesaccordingly.ThefollowingMap8showstheresultsofon-the-groundinterviewsandremotesensinganalysisrequiredundertheBrazilianmodel.Potentialareasofconflictduetoalreadyestablishedhumanoccupationandforestuse(legalorillegal)areusedbythegovernmenttolayoutconcessionsinawaythatreducespotentialconflict.
Thereareinterestingexamplesofcommunityaccesstoforestareasfortheextractionofnon-timberresourcesbasedonhistoricalusepatterns.Brazilinparticularhasawell-knownsystemthatdevelopedoutofviolentconflictoverforestuserightsinthelastcentury.Whilenotconcessionsperse,relevantaspectsofthismodelarepresentedbelow.
TheBraziliangovernmenthasshownlittleenthusiasmtomoveillegalforestoccupantsduetopoliticallyvolatilegroupsoflandlessfarmersthatarepronetoengaginginprotests.ForthecaseofItaituba,thegovernmenterredonthesideofcautionbydrawingconcessionboundariesveryfarfromeventhesmallestofindigenouscommunitiesthatwereillegallyoccupyingland.ThisisasharpcontrasttoGuatemala’sdeliberatepoliciesofprotectingthelegalrightstoconcessionsofcertaincommunitiesfromtheillegalattemptstooccupyoruseforestresourceswheresuchconcessionswerelocated.ThePeruviangovernmenthasbeenabletoadjustconcessionboundariestoavoidoverlapsorinadvertentconflicts;GreenGoldForestryinLoretoandCFAinUcayaliaretwocasesthatillustratethisabilitytonegotiateinordertoprotecttheinterestsofbothparties.
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Map8
HumanactivitiesinItaitubaConcessionArea,ParáState,Brazil
(Source:FRMBrazil.2012)
Note:IndustrialforestoperationsarebasedonvolumeinAcreStateperLaw#1.425/2001;ParáStateonlyallowsforindustrialconcessionsbasedonareaperLaw#6.462/2002).
SFB does not grant community forestry concessions on federal lands, although the State of Acre does allow for community concessions based on area. Community concessions that may be granted for the extraction of non-timber resources have different objectives and are referred to as:
• State Projects for Sustainable Settlements (Projetos Estaduais de Assentamento Sustentavel - PEAS) or State Projects for Agro-extractive Settlements (Projetos Estaduais de Assentamento Agroextrativista -PEAEX) in Para State
• Extractive Reserves (Reservas Extrativistas - RESEX) per ICMBio terminology.
Such concessions are designed for traditional communities that subsist on resources such as rubber or Brazil Nuts, or for those who wish to maintain a traditional lifestyle. The reserves are designations where both the land and the resource legally belong to the government but it has chosen to cede access and use rights to a private entity; a user group comprised of individuals with historic use patterns.
Reserves for Sustainable Development (RDS) allow for more extensive use and are not restricted to extractive industries. Acre has a clear and pragmatic approach to community use rights which it grants via: exploration rights for small areas/volumes, management licenses for communities to work on larger areas, and agro-extractive concessions, such as the Chico Mendez concession established for rubber and Brazil nut extraction.
Community-based contracts are not granted via bidding processes and communities are not charged for resource use. They are not concessions in the traditional sense of the word but the government does cede access to public resources to community entities with defined legal objectives, tasks and agreements.
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B. Independentcertification
Boliviawastheregion’struepioneerintermsofpromotingindependentcertification.Withthe1996ForestryLaw,theBoliviangovernmentallowedforindependentauditsbyinternationallycredibleorganizationssuchasFSCtocomplywiththelegalrequirementthatallconcessionsbemonitoredannually.Initiallyquitesuccessful,changesinpoliticscausedthegovernmenttoestablishitsownnationalforestcertificationsystemin2014asaresponsetothehighcost,hightechnicalcapacityrequirementsandlowimprovementratesthatitbelievedcharacterizedtheFSCmodel.AlthoughFSCcertificationinBoliviahadreached2.2millionhectaresin2006(almost25%of9millionhaofproductionforest,thenumberdroppedto890,000hectaresin2014(40%ofgreatestamount)andisroughly650,000hatoday(Carreras,2015).
Thisnewsystem(theBolivianForestCertificationandIncentivesSystem-SBCBi)isbasedonfinancialandeconomicincentivestomotivateforestuserstocomplywithlawsandimprovetheirforestrypractices(WWF,2015).Thesystemisfree,obligatoryandbasedonauser-friendlyanddigitizedtooltotrackwoodflowfromforesttomarketandlinkedtoanonlineplatformtoprovidereal-timeinformationonforestmanagementinBolivia.Asnotedpreviously,ABTdoesnotfineorsanctionbasedonthissystem,butratherusesittograduallyimproveoperationsovertime.TheEuropean-basedProgrammefortheEndorsementofForestCertification(PEFC)ispreparingtoevaluatetheSBCBiandworkwiththegovernmenttobeefupthecommunityandsocialaspectssothatitcanbecomeamutuallyrecognizedsystem(Carreras,2015).
Boliviaalsohiredaworld-classteamofBolivianexpertswithfinancialsupportfromtheNetherlandsandGermanytoestablishcertificationstandardsforcommunities,woodbrokersandmanufacturers(Carreras,2015).TheSBCBiwastestedon40forestusers(concessionaires,indigenousandcommunityorganizations,individualloggers)andthegovernmentclaimsthatitsstandardsareconsistentwithFSC,theLaceyActandtheEuropeanFLEGT(ForestLawEnforcement,GovernanceandTrade)regulations.AreviewofthestandardsrevealsthatthesystemisanalogoustoFSCControlledWoodandonlyassuresthebuyerthatwoodisfromalegalsource;itcanmakenolegitimateclaimastothesustainabilityoftheproductionsystem.
Peruviancompaniesthatbuy,transport,processandsellwoodproductsarerequiredtotrackwood-flowtoshowthatlegalsourceshavebeenused.Transportationpermits,forestharvestrecords,recoveryratesfromconvertinglogstolumber,andlogsmarkedwithsequentialcodenumbersareutilizedtoshowauthoritiesthatwoodislegal.ThissystemattemptstofacilitateincreasedvolumesofcontrolledwoodincompliancewiththeLaceyActandFLEGT.Millsandharvestoperationsareinspectedbygovernmentofficialsandinformationincorporatedintothenationalforestdatabase.Althoughrobustonpaper,thesystemiscriticizedasineffectiveon-the-ground(althoughimproving).
RegardingFSCcertificationperse,independentauditsareconsideredequivalenttothegovernmentalinspectionsnormallycarriedoutbyOSINFORevery5yearsaslongasOSINFORprovideswrittenapprovalthatthecertifierlookedatthesameissues(Article147).Regardless,OSINFORstillreviewsoperationsandinfactseemstomonitorcertifiedoperationsmorethannon-certified.
ThecertificationpanoramainPeruisdynamic.In2014,thecountrylostthelargestsinglecertifiedoperation:ConsorcioForestalAmazónicowhichwentbankrupt.TheAshaninkacommunity,Puerto
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Esperanza,recentlylostitscertificationbutOrozaisclosetogainingControlledWoodstatus.GreenGoldForestryrecentlypassedbothitsforestconcessionannualauditbySmartWoodanditsmillChain-of-CustodycertificationbyControlUnion.TheChinese-backedcompany,NaturePeru,ispursuingControlledWoodstatusforover100,000hathatitmanagesinSepahua.
FSCcertificationisnotarequirementformaintainingaconcessioninBrazilbutinMexico,allejidosmustachieveindependentFSCcertificationandcostsarepaidbythegovernment.Despiteahistoryofhigh-profileinternationalagreementsandtechnicalsupportprovidebyworldclassexpertsintropicalforestryandlogging,Guyanahasmadelittleprogressintheareaofcertification.Thecountryhas,however,workedhardondevelopingawoodtrackingprogramincompliancewithinternationalprogramssuchasFLEGT.ThismaybeduetothefactthatmostAsianmarketsdonotrequirecertifiedproducts(andmanyGuyaneseconcessionairesareofAsianownership).AlthoughBaramahadFSCcertificationatonepoint,andvariouscompanieswereengagedinpre-assessments,currentlynoGuyaneseconcessionairesorcompaniesareFSC-certified(FSC,2015).Surinameonthecontrary,hasmademajorstridesinthisareaandnowhasagoodsupplyofFSC-certifiedwoodproductsavailableforlocalandexportmarkets.
8.MainsuccessesandpositiveimpactsTherehasbeenrelativelylittledisseminationofthequantifiableimpactsfromforestconcessionsinLatinAmerica.Mostresultsareempiricalandeitheroverlyglowingorcritical,oftenreflectingmoretheopinionoftheindividualmakingthestatementratherthantherealityofthesituation.Thissectionofthereportsummarizesthemainpositiveimpactsofforestconcessionsfromdifferentperspectives.A. Environmentalbenefits
Oneofthebiggestreasonsthatmosttropicalforestsareunderthreatisbecausetheyareessentiallyopenaccessresourcesthatareonlytheoreticallyprotectedbygovernmentalagenciesthatseldomhavetheresourcesormotivationtokeepoutillegalloggers,farmers,drugtraffickersandlandspeculators.Oneofthebiggestsuccesseswithconcessionshasbeentheirabilitytosimplykeepforeststanding.ThisisshowninGuatemalawheremanyparkshavebeenlogged,burnedanddegraded,butconcessionareasremainintact,landinvasionsarelargelyathingofthepast,andfiresarerare.Ratesofdeforestationandfireincidencearelowerinmanagedconcessionsthaninnon-managedforests,andoftentimeslowerthaninprotectedareas.
Alogicalquestionis:howdoestheestablishmentofconcessionsreduceillegallogging?Thesomewhatcounterintuitiveansweris:bylettingcompetingeconomicinterestskeepeachotheratbay.Inotherwords,aconcessiongivesalocalcompanyorcommunitythelegalrightandgovernmentsupporttoengageinforestryonaparticularpieceoflandtosupportabusinessandgenerateearnings.IncountriesrangingfromMexicotoBrazil,concessionaireshaveshowntheircommitmenttoprotectingtheirsourceofrevenuebykeepingillegalloggersandlandspeculatorsout;essentiallyplayingtheroleofthestateinkeepingforestforindividualsandcompanieswithformalizedaccesstotimberandnon-timberproducts.
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ThecaseofCFAinPeruillustratesthispoint.Priortogoingbankruptin2014,CFAkeptits180,000ha,FSC-certifiedforestsafefromillegalloggers.Italsoworkedwith,andsupported,theforestmanagementactivitiesofPuertoEsperanza,aborderingAsheninkacommunity.UponthedemiseofCFA,PuertoEsperanzagaveupitscertificationstatusandfoundareadybuyerforitsun-certifiedhardwoods.PeoplearepurportedlyloggingwithoutpermitsinwhatwastheCFAconcessionsincenooneelseisactivelypresent.
Inthelatterpartofthelastcentury,theWorldBankhadreportedthatoverall,forestconcessionshadbeensuccessfulindevelopmenttermsbutlesssoinpromotingsustainableforestry.ResearchconductedforthepresentreportsuggeststhatthisisnolongertruesinceBolivia,Guatemala,andMexico(andBraziltoalesserdegreegivenitsmorerecententranceintotheconcessiongame)haveallimplementedsustainableforestryonawidescaleandoftenunderdifficultconditions.
AcceptedtechnicaltoolsforensuringsustainableharvestlevelsandforestintegrityarefrequentlyusedinBolivia,Brazil,Guatemala,Mexico,PeruandSuriname,including:forestinventories,pre-harvestcensuses,mappingoftopographicandhydrologicalobstacles,markingofseedtreesandtreesforharvest,directionalfelling,cuttingofvinespriortoharvest,andtheuseofminimumdiametercutlevels.Strongtechnicalsupportfrominternationalexpertswithconsiderablecross-disseminationhasallowedforamassivetrialanderror,andthesubsequentadaptationandapplicationofproventechniques.
Forexample,from1996to2010,Boliviahadarguablythebestforestconcessionprogramanywhereinthetropics.MillionsofhectaresofwellmanagedandFSCcertifiedforestssupportedastrongwoodproductsindustrywhichgeneratedjobsforthousandsofruralpeopleandtaxrevenuesfromtheexportofvalue-addedproducts.MonitoringandresearchbyrespectedentitiessuchasTheNatureConservancyindicatedthatBolivia’sapproachtoRILhadlittleimpactonbiodiversityinharvestedforests.Perhapsmorethananyothercountry,Boliviashowedthatenvironmentallysoundmanagementoftropicalforestsviaindustrialconcessionscouldbeaprofitableandpracticalconservationapproachacrossarangeoflandscapes.
Mostforestconcessions,particularlythecertifiedones,includestrictpreservationzonesofbothuniqueandrepresentativevegetativecommunitiesandwildlifehabitatwithintheirboundaries.ThisisdonetoachievefinancialincentivesasinthecaseofPeru,maintainFSCcertificationasrequiredbytheGuatemalangovernment,orcomplywithstatemonitoringrequirementsasinBolivia.
TherelationshipbetweenFSCcertificationandforestconcessionshasbeencomplicated,butmanyforestconcessionshavevoluntarilyorduetogovernmentalobligations,becomecertified.Asexplainedearlier,theMexicangovernmentrequiresejidostogetcertifiedandpaysforalargeportionoftheassociatedcosts.Guatemalanconcessionairesarerequiredtoachievecertificationafter3yearsbutnoassistanceisprovided.PeruandBolivia,offerincentivesforobtainingFSCandnationalcertifiedstatusrespectively.EvenBrazil’sregulationsincorporatemanyaspectsoftheFSCstandardsandmakethecompliancewithinternationalstandardssimpler.B.Economicsuccesses
Allreviewedcountries(withtheexceptionofVenezuela)arehometorobustforestproductindustriesandconcessionsystemsofvarioustypesthatprovideconsistentvolumesoftropical
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hardwoodsimportantforgeneratingdirectandindirectemployment,governmentrevenuesanddevelopmentimpactsinunder-servicedareas.Brazil’svolumesareincreasingandSurinamemaintainsstableoutputs.TheMexicanejidosandGuatemalanconcessionsoftheSelvaMayahaveregularvolumelevels,andeveninPeru,thefewlarge,functioningconcessionsshowstableproductionlevelsthatarecriticaltolocaleconomies.
Concessionsseemtofomentthediversificationofvalue-addedprocessingthatleadstoevengreatereconomicbenefitstoacountry.FORESCOMinSurinamemakesarangeofspecialdimensionproductstoexactingstandardsforoneEuropeanclient.CFAinPerusoldbroomhandlestoHollandandkilnsticksandtruckbedstotheU.S.(andfromlesserknownspecies).UTMinBoliviamakestechnicallysophisticateddoorproducts,andEBATAinBrazilusesover15speciesinitsproductionsystems.
OneofthereasonsthattheBolivianmodelworkedwellisthatthecountryhadamoderatelyrobustmanufacturingsectorpriortoconcessions,aswellashistoryofcompaniesoperatinginlargeareaswithgovernmentpermission.Bolivianwoodproductsmanufacturersdidnotstartfromscratchandwerewillingtoembracetheideaofmanagingforestviaaconcessionmodel,asdidthetwoprogressiveGuatemalanmanufacturersthatarestillprosperingtoday.InPeru,tothecontrary,companieswerereluctanttochangeandfewembracedthenewlaw.
Strongandwell-establishedconcessionprogramswithstablerevenuegenerationduetoconsistentvolumesarerecognizedbyfinancialinstitutionsandfundsassolidinvestmentopportunities.InPeru,Agrobanco,astatebankhasinvestedoverUS$25millioninAmazonianforestryandwoodproducts.VenturecapitalfromU.S.andCanadianinvestors,aswellasEuropeanpensionfunds,andstrategicAsianinvestorshaveallplacedbetsonthePeruvianwoodproductssector.InGuatemala,variousfundsandstatebankshaveinvestedwithsuccessinthesector(i.e.OIKOCREDITandGrupoOccidente).OfparticularinterestistheGuatemalancasewherebankshaveacceptedannualharvestplansascollateralduetothefluidnatureofsuchassets.
Inseveralcountries,thegovernmenthasestablishedindustrydevelopmentorganizationstosupportthenationalforestservicesandconcessionairesonmarketdevelopmentinitiatives.Thesehavebeensetupinrecognitionoftheneedforconcessionairestoimprovetheirmarginsbyharvestingmorevolumeperhectaretodevelopnewproductsfromlesserknownspecies.Forexample,theFPDMCofGuyana(FPDMC)workscloselywithalloftheconcessionairesandtheGuyanaForestryCommissiontoproactivelypromotenewspeciesforexportmarkets.TheAmazonianCenterforForestDevelopment(CADEFOR)wasaBoliviannon-profitorganizationsetupforsimilarreasons.Peru’sCITEMaderaisfocusedalmostexclusivelyontestingnewspecies,developingnewproducts,andpromotingnewtechnologiestoincreasetheproductivityofforestconcessionairesandmanufacturers.
Asteadyflowofwoodleadingtoastrongforestbasedeconomybuildstheeconomicconstituencyforforestconcessions.TheGuatemalanandMexicanexamplesareparticularlyimpressiveinshowinghowtheforestproductsindustryrelianceonconcessionshastranslatedintovocalsupportforkeepingforestsstanding,oftentimesagainstplanstoconvertforeststootherusesorusurpcommunityrightstotheirforest.Thelong-termstabilityassociatedwithsustainablevolumelevelsconvinceslocalsthatthebusinessisgoodfortheirregionandconsequently,theydefenditagainstoutsidethreats.
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Large,well-financedconcessiondirectlylinkedtomanufacturingfacilitiesarethemostprofitableanddurablemodel.ThesuccessofverticallyintegratedmodelsareillustratedbyBaramainGuyana,GreenheartinSuriname,BarenandGIBORinGuatemalaandGrupoWonginPeru.Suchoperationssucceedwhereothersfailpreciselybecausetheyhaveasecuresupplyofwoodthattheyareabletoprocessefficientlyandatthelowestpossiblecost(sincetheydonotneedtocontractthirdparties).C. Socialimpacts
FunctioningforestconcessionsaspartofabroaderlanduseplanarewellregardedbycommunityleadersandthegeneralpublicinBrazil,Suriname,Mexico,andPeru,andhavehelpedincreasesocietalawarenessthatcuttingatreeisnotbadaslongasitisdonewithinthecontextofsustainablemanagement.Thereislittleornooppositiontotheconceptofconcessionsaspracticedbygoodconcessionairesaslongastheycontributetobothsocio-economicdevelopmentandareductionindeforestationrates.
InBrazil,theverysmallpartoftheoverallAmazonthatisdedicatedtofederalconcessionsisalwayslocatedwithinabroaderconservationland-useplanandplaysakeypartinregionalconservationstrategiesbygeneratingsocietalbenefitsnotavailableinstrictpreservationareas.InPeru,largeconcession-basedcompanieshavesupportedindigenousfederationstopurchaselandandmonitorloggingoperations(i.e.CFAintheAltoUcayaliregion),helpemployeesgetidentificationdocumentsandbankaccounts(i.e.GrupoWonginMadredeDios),andassistcommunitiesinobtaininglegalizedaccesstoforestresources(i.e.GreenGoldForestryinLoreto).
Alessquantifiablebutfundamentalachievementhasbeentherolethatconcessionshaveplayedinbuildinganindustrybasedonlocaltalentthatrequiredmanyindividualstobetrained,changetheirjobs,acquirenewskillsanddevelopnewperspectives.ThedevelopmentofhumancapitalisillustratedbyGuatemalawherethemostsuccessfulcommunityconcessionairesarenowabletoengageinsophisticateddiscussionsonexporttaxesandforestpolicy.InPeru,Ashaninkatribemembersnowoperateheavyequipmentandcommunitiesthathaveonlyrecentlyenteredthemarketeconomyarenowmeasuringlogs,calculatingvolumes,andmonitoringcosts.Thereducedinjuries,moreefficientproductionandimprovedjobopportunities(i.e.skilledversusunskilled,permanentvs.seasonal)forarangeofpeople(i.e.womenoccupykeymanagementroleswithWong’sMaderacreoperationandoverhalfofCFA’semployeeswerefromlocalcommunitiesincludingstaffinskilledpositions)illustratethesetypesofbenefits.
ThebuildingofhumancapacityhashappenedonbothanindividualandorganizationallevelwithentitiessuchasACOFOP(Guatemala),VeeduriaForestal(Peru),IBIF(Bolivia)andReforestemos(Mexico)nowplayingmajorsocio-politicalandfinancialroles.Theseinnovativeprogramsdidnotexistpriortoconcessionsnorweretheyplanned;theydevelopednaturallyasneedschangedandconcessionairesbecamemoresophisticated.
Inmostcountries,betterworkingconditionsfortreefillersandsawmilloperatorswereconsideredthemostimportantimpactsofconcessions.InterviewswithworkersinBrazil,PeruandGuatemalahighlightedtheimprovedworkersafetyofforestworkersthatwerewell-trainedandoutfittedwithprotectiveclothing,aswellasmillworkersthathaveinstallationswithimprovedventilation,safetymeasuresandregularworkinghours.ConcessionairesinPeruregularlyusesafetyequipment,safer
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machinery,andprovidetrainingtoemployees.Inmanycountries(i.e.Brazil,Peru,andGuatemala),theyusuallyensurethatworkershavefullhealthcoverage,haverespondedadmirablyinthecaseofinjuriestoevacuateemployeeswhennecessary,andcontracthealthprofessionalstoattendtostaffinforestcamps.ThewidespreaduseofRILinGuyanaandBoliviahasreducedthelikelihoodofinjuryandprotectiveequipmentisnowstandardinconcessionscommittedtothisproductionsystem.
Thegrantingofaparticularareaofforesttoaprivatecompanybythefederalgovernmentfomentslong-terminvestmentbytheconcessionairewhoknowsthattheywillreapthebenefitsofcapitalimprovementsoveranextendedperiod.Thisrunscountertothenormalattitudeandperverseincentiveofshorttermharvestpermitsandiscrucialforbuildinganeconomicconstituencyforstandingforests.WiththeexceptionofPeru,andbothVenezuelaandBoliviamorerecently,concessionsinLatinAmericahaveservedtoinspireinvestmentandprivatedevelopmentofruralinfrastructure,particularlyroads,inareaswheretheyaresorelylacking.
Brazilianconcessionsgeneratedanaverageof3.52directand2.66indirectforestryjobsper1,000m3oflogsharvestedforatotalof309well-payingjobswithbenefitsforthe50,000m3ofannualproductionfromconcessions(SFB,July2014).IntheCaxiuananationalforestareainnorthernPará,thegovernmentrecentlyrequestedbidsforthreemanagementunitstotaling176,000ha.SFBestimatesthatroughlyUS$20millioninrevenueswillbegeneratedannuallyaswellas400jobs,or50%ofallformaljobsinaregioncharacterizedwiththelowesthumandevelopmentindicesinthecountry(SFB,August2015).
InBolivia,whilenotconcessionsperse,ruralfamiliesinvolvedin14(of16)communityforestryenterprisessupportedbyTNCaspartoftheUSAID-fundedBOLFORIIprojectbenefitedfromanaverage23%increaseinincomefromloggingcomparedtopreviousyears.Thesesamecommunitiesalsoinvestedforestryprofitsinbasiccommunityeducation,infrastructureandhealthprojects.
EveninSuriname,despitemanyweaknessesintheconcessionsystem,onecannotdenytheimportanceofthewoodproductsindustrytosuchasmalleconomy.In2000,forestryandwoodprocessingaccountedfor2.5%ofSuriname’sGDPandprovidedemploymentfor4.5%oftheentireworkforce.
WhileGuyanawasheavilycriticizedforitsnontransparentconcessionsystemthatdidnotaccountforcommunityneeds,theGFC’sCommunityForestryEnterprisesandSocialDevelopmentProgramestablishedinthe2009ForestryActdoesprovideawayforcommunitiestosecurerightsandbenefitsfromtheirforests.WiththeexceptionofVenezuela,LatinAmericancountriesaretakingmajorstepstoallowforgreaterbenefitstogodirectlytolocalcommunities.
D. Institutionalandlegalimprovements
Landscapelevelplanningprocessesthatexcludelandsoftraditionalcommunityuse,potentialconflictand/orhighconservationvalueshaveensuredthatareaschosenforconcessionssucceedinSuriname.Brazilhasbeenparticularlyproactiveinlanduseplanningforlarge,forestedregionssuchastheAmazon,theSelvaMayaandtheGuyanaShield.UpfrontinvestmentinidentifyinghighconflictzoneslikeillegalgoldminersinItaitubainBrazil,orconflictingresourceusersinSuriname’sMayaBiosphereReservehavehelpedensurethatmanagementobjectivesarenotatoddswiththesiteandreduceresourcebattles.Asmentionedpreviously,whenconcessionmanagementispartof
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abroaderstrategywithamulti-prongedapproachbythegovernment,successislikelyandimpactsinstabilizingimmigration,forestconversionandland-holdingsarehigh.
Improvinggovernmentalcontrolofharvestoperationshasnotbeeneasy.Havingfewer,butlarger,areastomonitorimprovestheefficienciesofagencyemployeesandreducesthefocalpointsofpotentialillegallogging.Acommonwinningformulahasbeentoformnewgovernmentalentitieswithamoderncorporatephilosophyledbyindividualsnottaintedwithpreviousinvolvementinthesector.InBolivia,ABT’suniqueapproachtoadigitaltrackingsystemthatdoesnotsanctionerrorsbutrathercontinuestoworkwithproblematicoperatorstoimprovetheirbehavior,inpartviapublicembarrassmentandlackofaccesstofinancialincentives,showsthattherearemanywaystoattacktheissueofpoorlogging.ABThasacompletelydifferentphilosophycomparedtothepreviousSFBandhasbeenabletomotivatedBolivianprofessionalsofgreatprestigetoreturntogovernmentalservice.
Relatedtotheabove,theroleofinspiredandhard-workinglocalprofessionalsor“champions”inbuildingconcessionprogramsisanotablesuccessforvariousLatinAmericancountries.Brazilisthemostrecentexamplethathasestablishedaprofessionalgovernmentalinstitutionwithclearrulesofengagement(technicalandlegal).SFBhasnotbeenpronetocorruption,hasmanywell-qualifiedandhighlymotivatedindividualsinterestedinchangingtheforestryparadigmintheBrazilianAmazon.
Guatemala,despiterampantviolenceandinstability,wasalsoabletobuildacadreoflocalprofessionals(“champions”)withsufficientdriveandmística(i.e.commitmenttoacause).CONAPwasledinitsearlyyearsbyarchitects,biologistsandbusinessmanagerswithoutanyforestrytraining.Theywere,however,committedtoinstillinganewcultureofprofessionalismandresponsibilityandtogetherwiththeinternationalcommunity,builtastrongcadreofemployeescommittedtostoppingillegalloggingandbuildinganeffectiveconcessionprogram.
WhilesomecountriessuchasVenezuela,SurinameandGuyanahavehistoricallygeneratedlowrevenuesforgovernmentalcoffers,othercountrieshavedesignedsystemstoensurefinancialsustainabilityoffederal,stateandmunicipalgovernmentalinstitutions,thususingprofitstoimprovegovernance.InBrazil,feescollectedfromfederalconcessionsaredistributedtotheMunicipality(20-30%)andState(20-30%)wheretheconcessionislocated,aswellastoanationalfundforfomentingforestdevelopment(40%).
9.MainweaknessesandobstaclesA. Environmentaldeficiencies
Acrosstheboard,silviculturalsystemsusedinLatinAmericanconcessionsarebasedonpolycyclicsystemswherebyminimumdiameterlimitsaredeterminedonaspeciesbasisassumingthatsmallerdiametertreeswillgrowandenteraharvestablesizeclassbytheendofthecuttingcycle.Whileconceptuallyadequate,thisapproachrequiressite-specificgrowthandyielddatatoadjustprojectionsbasedonreal-worldregenerationandmortalityinformation.GuatemalaandBoliviautilizereliableinformationregularlythathasbeenderivedfromappropriateresearch(i.e.
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permanentplotsinthespecificconcession)tojustifycuttingcycles.AlthoughBrazilhasestablishedfixedmaximumharvestvolumesperhectare,itisnowbeginningtorefermoretotheresultsofpermanentplotstosubstantiatemodificationoftheselimitswhenthedatajustifiesdoingso.
Thestandardsystemmayworkwellforshadetolerantspecies,butisnotnecessarilyappropriateforlight-lovingspeciesthatrequiredisturbanceandhigherquantitiesoflighttoregeneratewell.Duetohighcostsandlowprofitability,fewifanyconcessionairesimplementsilviculturaltreatmentspost-harvestordeliberatelyopentheforestcanopytopromoteregenerationofhigh-valuespeciessuchasmahoganyorcedar.
Innocases,areconcessionairesimplementingtreatmentsdesignedtomeettheregenerationrequirementsofcommercialspecies.Whilesomeinterestingresearchhasoccurredonhowtoincreaseregenerationofkeyspecies,therearenoexampleswheresilviculturehasbeenimplantedonanoperationalbasisoveranextendedperiod(i.e.largedisturbancesforlight-lovingspecies,liberationthinningforsmaller,shade-lovingspecies).
ManyoftheexpiredconcessionsinSuriname,Peru,GuyanaandSurinamearenotcurrentlysubjecttomanagement.ParticularlyincountrieslikePeruandSuriname,theseareasareeithersubjecttoillegalloggingorarebeingconvertedtoagriculturaluses.PerurecentlygrantedsomeexpiredconcessionstonewconcessionairesbutonlyaftermanyyearshadpassedandtheCFAconcessionremainstothisdaywithoutanyowners.Fewcountrieshaveworkingsystemstopassexpiredorrescindedconcessionstonewowners.
B. Economics
Ifthereisonecommonthemeacrossallcountriesandrequestedfromallinterviewees,itisthatgovernmentsneedtodramaticallyreducetheflowofillegalwoodthatdepressesmarketsandlowersprices.Thisisabasic,fundamentalroleofgovernment.Fewconcessionsaretrulycompetitiveintheirmarkets,largelybecausethegovernmentdoesnotfulfillitssideofthedeal:illegalwood,ormorecheaplysourcedcommunitywoodfloodsthemarketandmakesitdifficultforaconcessionairetomakeaprofit.
CompaniesinPeruandBoliviaarefocusingharvesteffortsonnativeandcommunityforestswhererequirementsarelessstringent,costslowerandsupervisionbythegovernmentmuchlaxerthanintheconcessionmodel.Woodfromcommunitiesinthesecountriesnowdominatesthesupplyandcompetesunfairlywithconcessionairesthathaveagreedtocomplywithastringentsetofhigh-costrequirementsthatarenotreimbursedinthemarketplace.UnfaircompetitionisstillthelargesteconomicobstaclefacingconcessionairesaroundLatinAmerica.
Althoughthereareseveralinteresting(butlimited)examplesofprivateinvestors,fundsandstatebanksinvestingprivateresourcesinnaturalforestmanagementconcessions,thereisstillalackofinterestbybanksandfinancialinstitutionsinallocatingresourcestonaturalforestmanagementconcessions.Itisparticularlypressingforcommunitiesthatdependonup-frontpaymentsfrombuyers.Whilethisissueiscommoninallcommunityoperations,ithasbeenatleastpartiallyresolvedinSurinameandprogressisbeingmadeinPeruduetoAgrobanco’sinterestindevelopingspecificfinancialinstrumentsforcommunities.
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Subsidizedtechnicalassistancetocommunitieshasusuallyfocusedonforestryandenvironmentalissues;thebusinesssideoftheequationisseldomgivenattentionuntillaterintheprocess.Businesssupportforbothcommunitiesandcompaniesisusuallyminimalinthebeginningpreciselywhenkeydecisionsarebeingmadeandfinancialastutenessismostcritical.Inaddition,mostNGOandgovernmentaladvisorshavelittleornobusinessexperience;atthesametime,theyareprovidingtrainingandguidanceonbusiness-relatedaffairs.Forallofthesereasons,manycommunityandcompanyconcessionsarenotdoingwellfinancially;theysimplydonothavetherequisitebusinessskillstomanageoneofthemoredifficulttypesofcompaniestorununderchallengingclimatic,financialandriskconditions.
Whileconcessionsizeisafunctionofspeciescompositionandaccess(thussmallerareasinSurinameandMexicoaremoreviablethanlargerareasintheAmazon),manycountrieshavedesignedandapprovedconcessionstoosmalltobetrulyeconomicallyviable.InBrazilforexample,thefederalgovernmentofferssmallandlargerareastocompanies.Ironically,stategovernmentsrecognizethis:averagefederalconcessionsizein2013was29,000haversusbetween50to133,000haforstateconcessions.Economiesofscaledictatethatlargerareaswithlargefundingareneededtomakemostconcessionseconomicallyviableentities.
Theclassicproblemoflowvolumesperhectareisnotedinvirtuallyeverycountrybutactuallymissesthepoint.Itisnotaquestionofm3/habutUS$/hainrelationtooperatingcostsinfluencedmainlybyroadandriveraccess.SurinameandPeru’sMadredeDiosregionhavelowharvestablevolumesperhectare(<5-8m3/ha)butduetogoodroadaccessandhighvaluespeciestheyarebothquiteprofitable.Surinamehashighervolumesandmoreexpensivetransportation.Brazilianconcessionsregularlyharvest15m3/habuthaveveryhighoperatingcosts(whicharedroppingasinflationlessens).
EconomicreturnsincountriessuchasBrazilandPeruhavebeenmuchlessthanexpected,dueinlargeparttopoorinventoriesandhigherthananticipatedcosts.ArecentcaseinPeruhighlightsthistypeofproblemwhentechnicalassistancefromaUSAID-fundedprojectappliedanuntriedmethodforobtainingvolumedataforacompany’supcomingharvest.Thismethodprovedverymisleadingandthefieldrealityhadlittlerelationtothecensusdata.Thecompanyhascancelledharvestinghalfwaythroughtheseasonandisnowlookingatpurchasingrawlogsonthe(moreexpensive)openmarket.Brazil’sSFBalsofoundmisleadinginformationduetoitsuniqueperspectiveonspeciesneedingtobesampledandoutsourcedprofessionals.Reducingthecostandincreasingthereliabilityofforestinventoriesandcensusesisoneofthemostpressingtechnicalneedssinceallsubsequentinvestmentdecisionsstartwiththeamountofavailablevolume,whichcanonlybeobtainedwithaninitialexpensethatisnotreimbursedforuptoayearthereafter.
C. Socialimpacts
WhilecommunitiesinMexicoandGuatemalahaveshownimpressiveprogressintermsofmanagingforestbasedbusinesses,Peru,Bolivia,BrazilandGuyanahavehadmuchlesssuccess.Formalizedforestmanagementsystemsrequirethatcommunitiesbecomemoreorganizedandefficient,butwiththeexceptionoftheaforementionedcountries,havenotresultedinmajorimprovementsyet.
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Boliviahashadaparticularlysurprisinglypoorperformanceincommunityforestry.Whilepartofthismaybeduetotheremotenessandisolationofmanycommunitieswhicharenotevenpartofthemarketeconomy,itisalsoduetothelackofthegovernmentmakingaconcerteddecisiontosupportthissub-sectorwithappropriatetoolsandincentives.Eachsub-sector,beitcommunity,industry,non-timberorotherneedsconstantsupportthatiscarefullyorientedtoitsparticularneeds.InitiallyBoliviaprimarilysupportedindustrialconcessions(albeitwithsomehigh-profilecommunityprojectssuchasLomerio)butnow,inacompletechangeofpolicy,isallowingextremelyeasyaccesstotheforestforcommunitiesbutwithoutfinancialandtechnicalsupport;thusmanyarefailing.Industrialconcessionsarebeingdiscouraged,nonewconcessionswillbegranted,andeventheterm:“concession”hasfallenoutofuse.
Manycriticizesubsidies,donorprogramsandnon-profitorganizationsandpreferthatmarket-basedbusinessapproachesbeused(i.e.havingconcessionairesandcommunitiespayforatleastaportionoftheservicestheyreceiveup-front).Thereareindeedcaseswherethishasworkedfairlywellbutoneshouldnotforgetthehugeamountofobstaclesconcessionairesareupagainst:weather,externalmarkets,drugrunnersandgrowers,illegaltraffickersofhumans,revolutionarymovements,violence,illegalloggers,andcorruption.Itismucheasierandcheapertogowiththestatusquo.Despitethebeliefthatdonororganizationskeep“inefficient”operationsafloat,thereisactuallyinadequateamounts,consistencyandfocusofpragmaticassistanceprogramsforsmalloperators.
ItisabitsurprisinginthisdayandageofCorporateSocialResponsibility,ForestCertificationandIndigenousRightsthatsomecountriessuchasGuyana,SurinameandVenezuelahavebeensoslowtoincorporatecommunityandsocialissuesintotheirforestpolicies.Whilehistoricalcontextsexplainmuchoftheirdelay,othercountriesaresimilarlyadvancingslowly(i.e.Peru)orevenregressing(i.e.Nicaragua).Despitehigh-profilesuccessstoriesinLatinAmericancommunityforestry,thereisstillanunacceptablylowrateofuptakeincertaingeographiesandmoreexplicitobjectivesandtoolsareneeded.
Socialimpactassessmentsarecommonintheminingandpulp&paperindustries,butwiththeexceptionofBrazil,rareindeedonforestconcessions.Government’sneedtooffertraining,protocolsandsupporttocarryoutsocialimpactanalysesonnewconcessionareas.
Despitebeinggovernmentalpropertywithclearlydefineduserrights,fewgovernmentshavetheappetiteforremovingillegaloccupants(loggers,farmers,families)fromfederalorstateconcessionsevenwhentheyhavethelegalrighttodoso.Thisisahugeissuesinceconcessionairesinvestinanareawiththethoughtthatthegovernmentwillindeedlookoutfortheirmutualinterestsandremoveinvaders.
D. Institutionalandlegalchallenges
Mostcountrieshavetriedtodesign,putintooperation,andexpandconcessionprogramsinanoverlyshortperiodoftime.WhileSurinameandGuyanawerethemostextremecasesintermsofproactivelylookingforinvestorsbeforetheyevenhadasolidsysteminplace,PerualsoproceededtooquicklydespiteassistancefrominternationaldonorsandNon-GovernmentalOrganizations.ForthecaseofBolivia,theassignmentofconcessionstocompaniesinthepastwasnotdoneinatransparentmannerwithclearlydefinedcriteriaavailableforalltoseeandunderstand.Thelackof
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clarityingrantingproceduresmaybepartofthereasonthatthecurrentgovernmentfeelsthatconcessionrightsshouldbeprovidedtocommunitiesratherthanonlycompanies.Toavoidcostlymistakesduetoinoperativeconcessionsandpubliccriticismthatishardtoshake,governmentsshouldproceedslowlywithpilotconcessionsthatallowthemtoworkoutthebugsinthesystembeforeexpandingonamassivescale.
Governmentalagenciesoftenneedmoreresourcesthantheyhaveattheirdisposaltodevelop,implementandmonitoractiveconcessionprograms.CountriessuchasBrazilspenttimedevelopingappropriatefundingstreamswhereasothercountrieslikeSurinameandBoliviahavebeenunpleasantlysurprisedbythelackforrevenuesavailabletocoverbasiccosts.
SomecountrieslikeGuyanaandSurinametraditionallychargelittleforaccessrightsandgovernmentrevenuesfromconcessionshavebeenlowtonon-existent(buthavebeenincreasingrecently).Others,likeBoliviadonotchargecommunitiesanything.Brazilpresentsanunusualapproachtocoveringthecostofdevelopingaconcessionbychargingthewinningbidderallconsultantcosts,andhardexpensesrelatedtotheforestinventory,managementplan,publicconsultation,mappingandbiddingcosts.Apartfromtheargumentthatsuchcostsarepartofthegovernment’smandateformanagingpublicgoods,therearenoclearguidelinesonhowthesecostsarecalculated.Feesforaccessrightsshouldhelpthegovernmentpayforaportion(notall)ofthemanagementcostswhichshouldalsobeeasytounderstand.
Whileagovernmenthastherighttorequirewhateveritwantsofaconcessionairesincetheforestisapublicresource,thecostofcompliancewithsuchrequirementsmustbeincorporatedintotheconcessionprice.Insomecountries,pricingseemstohavebeenarbitraryandadhoc.VenezuelaandBoliviaaretwoexampleswherethecalculationsbehindconcessionpricesarecompletelyunknown.Forthefewcountriesthatdoexplainhowconcessionusefeeswerecalculated,mostchosetousestumpage.Thisisasurprisingdecisionsinceprivatetimberlandinvestorsrarelyusethisapproachandprefertousethediscountedcashflowmethodtoincorporatetheelementoftimeintotheequation.Establishingaminimumrequiredearningforaconcessionaireandtheacceptablereturnthatthegovernmentneedsascalculatedviadiscountedcashflowmethodwouldbeamoreaccurateapproachforestablishingconcessionfees.
InBrazil,SFBdetermineditsminimumbidpricebyextrapolatingcostsandprofitmarginsfromareaswithavailableinfrastructure,lowoperatingcostsandhighmarginstoareaswithoutinfrastructure,highcostsandlowmargins.Aswell,subtlerandindirectcostsassociatedwiththeconcessionmodelwerenotconsideredandminimumpricesweresimplytoohigh.SFBdetermines“market”pricesfortimberspeciesviasurveysthatactuallyreflectthepricesofinformallysourced,orillegal,woodwithalowercostofproductionandisnotafairvalueuponwhichtobasethepriceofconcession-sourcedwood.Truecostsbasedonaspecificpieceoflandinaparticularareamustbeusedtodetermineconcessionprice.
Acommonproblemisthatlackoftrained,well-paidandhighly-motivatedstaffatgovernmentalinstitutionstomanageconcessionprograms.BrazilandPeruaretwoclearcaseswheremorestaffandtrainingisneededtoallowinstitutionstokeepupwiththedemandsofanincreasingworkload.
Anunusualproblemwithconcessionsisthattheirhighprofileoftenpromptsmorecriticismandsupervisionthatthatspentonillegal,informalorunsustainableoperations.Duepreciselytotheir
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formalityandlegalstructure,concessionairesareeasytargetsandpronetorepeatedvisitsbygovernmentagencies(unlikemanyinformaloperatorsthatconductbusinessunderthescreen).Ironically,governmentsoftenfocustheirmonitoringeffortsonthewell-behaved,legalconcessions,andallowinformaloperationstocontinuewithlittlereview.
AnotherfactorwhichcontinuestoimpedetheexpansionofconcessionprogramincountrieslikeBrazilandtoalesserdegreeSuriname,isthatcompaniesmustdealwithvariousgovernmentalentitieswiththeirrespectivebureaucraticprocessesthatresultsinlosttimeandmoney.Differentinstitutionsdonotallagreeonprioritiesandapproaches.
ForthecaseofBrazil,bidrequirementsareonerous,complex,time-consumingandcostly,thusprecludingtheactiveparticipationofsmallercompaniesthatmaynothavethestaffnorfundstobidonaconcession.Inaddition,regulardelaysinthefinalapprovalofconcessionsaftercompanieshaveinvestedgreatamountshavenegativeimpactsonrevenuestream.Forexample,twoconcessionairesinParáState,GOLFandEBATA,wonbidsin2010butwereunabletoinitiateoperationsuntil2012,twoyearsafterwinningtheirbids.Paymentstructures(i.e.quarterlypayments)coupledwithexcessivelyexpensiveperformancebondsdidnotrecognizethedifficultfinancialsituationfacingconcessionairesintheearlyyearswhentheymustinvestconsiderablesumsininfrastructurewithoutevengeneratingreturnsthefirstyear.Stateconcessionsrequiremuchlowerbonds.
TheimportanceofsupportivepolicesfromthecentralgovernmentwasmadecrystalclearintheBoliviancasewhenacompletechangeinphilosophy,legalbasis,andstateinvolvementledtothedestructionofthatcountry’soncehighlyregardedconcessionsystem.Venezuelahasseenasimilartendencyandaprecipitousdropinthecountry’sforestconcessions.ThedeletionoftheconcessionconceptfromtheNationalConstitutionwasanunforeseenchangeinpolicythatclearlyshowedthattheBoliviangovernmentviewedlong-termaccessrightstonaturalresourcesbycompaniesasdeleterioustothesector,andthatcommunitiesshouldbetheprotagonistsofforestryonpubliclands.
10. LessonslearnedandfactorsforsuccessThereisnoshortageofanalysesofforestryinthetropicshighlightingthemultipledeficienciesthatneedtoberesolved.Thissectionofthereportattemptstodefinekeysforsuccessinnotonlydesigningaconcessionprogram(manyofthebiggesterrorsoccurredattheprogramconceptionphase)butalsointhenittygrittydetails.Ihaveattemptedtoorganizetherecommendationsbylogicalsub-themes.Ihavealsodeliberatelyavoidedgrossgeneralizationslike“resolvelandtenureproblems”,orareasthataremoretheresponsibilityoftheprivatesectorsuchas“establishmarketsforlesserknownspecies”.MymotivationistohighlightareasthatFAOcouldcommunicatetogovernmentsandsupportinsomefashionoranother.A. Designconsiderations
Muchoftheruraleconomieswhereconcessionprogramsareimplementedrelyonforestproducts,chieflywood.Theprovisionofjobs,taxes,andinfrastructuretoremotevillagesfromafunctioning
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concessionprogramwillensurestronglocalsupportwhichisnecessaryfortheconcessionmodeltoexpand.Thelackofconcessionsresultsinmanynegativeimpactsthatcanbeatleastpartiallyaddressedbyawell-functioningconcessionsystem.Itisimportanttoimplementconcessionswherelargetractsofpublicly-ownedproductionforestsexisttoachievemaximumimpacts.
Atthesametime,whilegovernmentsneedtomovequicklytocounterdemographicsandlandusetrendsinlawlessfrontierregions,amassivegrantingofconcessionsinrecordtime,suchasinthePeruvianexperience,usuallyleadstofiascos.IntheGuatemalanmodel,thegovernmentestablishedsmallpilotconcessions(i.e.SanMiguellaPalotada)inordertorefinemethodsandprocedures.Carefullyconducted,initialconcessionswhichleadtomodifiedprocessesthatimproveefficienciesarerecommended.
Time,lotsofmoneyandconsistencyaretheunheraldedandseldommentionedharbingersofsuccessfordevelopingforestconcessions.InBolivia,BOLFORIandIIfunctionedforalmost20yearsandrepresentedmillionsofdollarsofinvestmentinaconcerted,scientificapproach.USAID’ssupportofGuatemala’sMBRtookasimilartactthataddresseddifferentweaknessesinlandmanagementtoensurethatconcessionswerenotthreatenedbyoutsideforces.Mexicohadalmost100yearsofworkingwithejidosandthenaconcertedapproachtocommunityforestmanagementsincethe1980’s.Giventhemultivariatenatureofforestry,improvementsinconcessionsystemsmustbeimplementedatalargescale,withsubstantialfinancialresources,strongtechnicalsupport,andafocusontheoftentimesforgottensocialandfinancialaspects.
Theexclusivefocusononetypeofaccesstoforestresources,beitthroughcommunities(MexicoandnowBolivia)orconversely,industry(PeruandSuriname)canleadtopolarizationorlackofsupportwhengovernmentschangeandnewpoliticalpartiesareatthehelm.Ontheotherhand,theGuatemalanmodelprioritizedcommunitiesbutalsobuiltasystemforindustrialconcessionsaswell.Adual-prongedapproachthatstimulatesaccesstoforestresourcesbybothcommunitiesandcompanieswouldseemtobeasaferapproachforensuringbroad,long-termsupportofanyconcessionprogram.
B. Concessionunits
Whiletheappropriatesizeofaconcessionisafunctionofspeciescomposition,siteconditionsandaccess,concessionareasmustbelargeenoughtooffertheadvantageofeconomiesofscale.Dependingonlocation,manyoperationshavelimitedamountsofhigh-valuecommercialspeciestocoverthecostofmanagementandharvesting.ManyMexicanejidoshavelargevolumesoflowvalueoakthatisnotevenharvested.ConcessionsinUcayaliarecharacterizedbyhighcostsandlowvolumesofhighvaluespecies,whereasMadredeDioshasmuchhighervolumesofsuchspeciesandlogisticalconditionsthatmakeitacost-effectiveregiontooperateaconcession.Smallconcessionswithpoor(i.e.expensive)accessareviableaslongasthepricingaccuratelyincorporatesthefinancialdisadvantagesofsuchanoperation.Determiningtheappropriateforestsizeshouldnotbeanarbitrarynorpurelytechnicaldecisionbutrathermustbebasedonacompletefinancialanalysiswithaccuratecostandrevenueinformation.
AsdoesBrazilwithindustrialconcessions,andGuatemalawithcommunityconcessions,Boliviapaidgreatattentiontoreducingthelikelihoodofdirectresourceconflictsduetoerrorsindetermining
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wheretoplacetheconcession.OtherssuchasPeruwerelesscautiousandunhappysurpriseswerefounduponenteringconcessionareas:wholecommunitieswithinconcessionboarders.Evidenceshowstheimportanceofresolvingorminimizingsuchconflictspriortoestablishingconcessionboundaries;inthelongrun,itismuchcheapertoestablishacleanandlow-conflictconcessionareaup-front.
Brazillearnedtonotpromiselargeconcessionareassinceareaswhichfirstappearedgoodforconcessionsusuallyresultinmuchsmalleravailableareasduetocompetinguses.SFBbegantoningdownitspromisesonceitsstaffwentthroughtheprocessseveraltimes.SinceconcessionareasareseldomaslargeasonemightthinkbeforeengagingintheduediligenceprocessonemusthaveasufficientlylargeplanningareatoworkwithinsimilartoBrazil’sFLONAapproach.
Whilenon-timberforestproductsareaviableoptionforincreasingreturnsformanyforestdwellers,theyseldomformpartofforestconcessionprogramsperse(withtheexceptionofcertainareasinBrazil,PeruandSuriname).Despitestrongmarketsforsomeproducts(xate,pimientaandchicleintheMayaforest;andBrazilnutinPeruandBolivia),concessionshaveyettogeneratesignificantreturnsfromsuchproducts.Evennon-timberforestconcessions(i.e.BrazilnutconcessionsinMadredeDios,Peru)havenotservedtoincreasereturnsforsmallfarmersalthoughtheydueprovidesecurityofaccesstoaresourcewhichmaybemoreimportant.Ratherthanbeinganafterthought,governmentsshouldincludethemanagement,harvestandtradeofnon-timberproductsasacomplementarypartoftheirprograms(asABTisnowstartingtodoinBolivia).Simplyallowingotherstoharvestsuchproducts,ornotaddressinginannualoperatingplans,isnotsufficientlyproactive. C. Concessionprocess
Brazilusesaveryopenprocesswhereallrules,regulationsandresultsareavailabletointerestedparties.AparticularlyimpressiveaspectoftheBrazilianmodelisthatSFBmadechangesinitsrequirementstoincreasethegrantingofmore,successfulconcessionsandreducingcostswithoutdecreasingthequalityofthebidsandoverallforestmanagement.InbothVenezuelaandBolivia,concessionsweregrantedtocompanieswithoutanopenprocess,thuscastingdoubtthatthebestpricewasobtainedbythegovernment.Giventhedesireandneedtogeneratehighrevenuesfromconcessions,governmentsshouldwidelypublicizeconcessionsthatareupforbidandensureacompetitiveprocessthatusuallyresultsinhigherprices.D. Concessionfees
Whilevolumeisnotequivalenttoprofitability,thefactthatsolittlevolumeisharvested(despiteBrazil’smuchhighervolumes)makesitdifficulttoreducetheimpactoffixedcostsonperunitprofits.Inaddition,therearecaseswhereaspeciesisprofitablyharvestedinonecountryandnotevenutilizedorisconsideredoflowvalueinanother.Establishingconcessionfeesbasedonarearatherthanvolumeisonewaythatgovernmentscanatleastreducethecostofharvestinglowmarginspeciesandincentivizetheircommercialization.
WhilesomecriticizeBolivia’sarea-basedfeetocalculateconcessionpayments,thisprovedeasytoadministerandlesspronetocorruptionthanaproduction-basedsystem.Surinameusedasimilar
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approachandwasalsosuccessful.Whenitcomestoconcessions,simplerpricingapproachesthatdonotallowforcorruptionbyofficialstoobtainillegalpayoffsseembetterthanmorecomplexapproachesthatdependonlotsofinformation(thatcanoftennotbecorroborated.
Atthesametime,thepricechargedshouldbeestablishedviaaclearmethodinordertorebukechargesthatlowpriceswereprovidedtofavorlargecompanies.WhilebothBoliviaandSurinameusedflatfees,itisunclearastowhyspecificpriceswerecharged(contrarytoBrazilwhereaminimumbidpriceisdeveloped).
Concessionpricingmechanismsshouldincorporaterealcostsfromsimilaroperationsthatincludeallexpensesrelatedtoaconcessionaireandanalyzedfromadiscountedcashflowapproachratherthansimplystumpage.Fewconcessionprogramshaveaclearpricingmechanismbasedonarealistic,modernfinancialperspective.TheapproachtakenbySFBinBrazilwithIFCsupportisparticularlyinnovativeandbasedonanaccuratecoststructureandrealisticfinancialprojectionstodetermineanappropriateminimumbidprice.
Production-basedfeesshouldbebasedinpartonpricespaidforcertainspeciesofcommercialinterest;theseshouldbederivedonanindividualspecieslevel(orsimilarlypricedgroupings).However,thisshouldbeonlyforapragmaticlistofspecieswithtruecommercialvalue(i.e.notliketheBrazilianmodelbasedon>100speciesmostofwhichhavelittleornocommercialvalue).Feesbasedonmarketpricesshouldensurethatthespeciesaretrulycommercialandthatthepricesarefromthespecificregionwherethewoodiscommonlysold.E. Concessioncontracts
Itappearsthatinsomecountries,contractsaredesignedtoreduceflexibilityandofferspecificitysothatgovernmentofficialshavelessleewayto“bendtherules”orfavorcertainconcessionaires.Thisisproblematicinacontextcharacterizedbychangingconditionsanddifficultoperatingcircumstances.ThelengthofcontractsinBoliviaallowsfortwo20-yearcuttingcycles,thusprovidingtheconcessionairewiththechancetoseeandreapbenefitsfromthefruitsofhis/herlaborsandinvestmentsovertwoperiods(thisisrareinconcessionsandwasonereasonwhythemodelworkedsowell).Flexiblecontractsthatallowforjustifiablechangesandforperiodslongerthanthetraditional20-25yearcuttingcycleswouldincreasetheappetiteforcompaniestobidonconcessions.F. Technicalaspects
ContrarytothemethodespousedinBrazilthathasprovenproblematic,forestinventoriesandcensusesshouldfocusoncommercialspecieslikelytobeharvestedratherthanlowvaluespeciesthattheconcessionairewillprobablynotextract.Suchareducedspeciesfocuswillincreasethenumberofplotssampledandinitialcosts,butitwillalsoreducerisksbyprovidingmorereliableinformationuponwhichtomakebusinessdecisions.
Inthe1990’smanyCentralAmericancountriesutilizedsimplifiedforestmanagementplanstoreducetheburdenonconcessionairesandonlyrequiretrulynecessaryinformation.ThisexperienceseemstohavebeenlargelylostinSouthAmericawheremanagementplansremainlargedocumentswithcopiousamountsofinformationoftenirrelevantfordecisionmakers.Succinctplansthatclearly
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summarizeinventorydata,justifycuttingcyclesandharvestlevels,andpresentoperationalrelatedinformationwouldbeadramaticimprovementoverthecurrentsituation.
Concessionsrequiremorethanmanagementplansandsuccessfulprogramsdevelopcleartechnicalguidelines,manuals,proceduresandreportsthatfosterbothconsistencyinapproaches,efficientmonitoringandstructuredreporting.Assumingthattheproceduresarebasedonsoundscienceandarefinanciallyviable,theirroutineimplementationwillimprovetheoverallforestmanagementofconcessionareas.G. Incentives
Intervieweesinallcountriesconcurredthatthemainincentivetoanyforestconcessionprogramwouldbe:anoverallreductioninillegallyproducedwoodwithlowercoststructuresthatwouldallowconcessionstocompetebetter.
Coststoconcessionaires,intermsoftimetoapprovepermitsoractualfeescharged,mustbereasonableinorderforaconcessionprogramtowork.GovernmentinstitutionsshouldfollowtheleadofBrazilandBoliviathathavestreamlinedproceduresdueinlargeparttothefiascos(realorperceived)oftheearlyyearsoftheirconcessionprograms.TheimprovedwoodtrackingsysteminBoliviaisagoodexample.InthecaseofBrazil,costsforpreparingaconcessionforbidhavefallenby75%,ashavepricesforbondsrequiredbythegovernment(i.e.decreasingfrom30%oftheentirevalueoftheconcessioninyearoneto15%,withpaymentsthenincreasingto30%insubsequentyears),thusillustratingSFB’sunderstandingthathighinitialpaymentscoupledwithsubstantialinitialinvestmentswerenotviableforconcessionaires.Governmentsmustshowawillingnesstomodifyprocedures,paymentstructuresandcostsoncetheyrealizethattheyareonerousorexpensive.Efficientprocessesareanincentivethatgovernmentscanofferbidders.
Lesssuccessfulconcessionprogramsarecharacterizedbylowprofitabilitydueinlargeparttotheneedtoinvestlargeamountsofmoneyincapitalexpendituresinremoteareaswithminimalgovernmentalservices.Incentivesintheformoftaxbreaks,feereductionsandsubsidieshavebeensuccessfulincountrieslikeBrazilandPeruforreducingthecostofoperatingaconcessionandimprovingthelikelihoodofprofitability.PeruandBrazilhavesomeofthemostinnovativeincentives,grantingadiscountonpricepaidbasedondegreeoflocaland/orverticalintegration,andforestcertification.Thesehelpreduceoperatingcostsandmakeconcessionsmorecompetitivewithillegalwood.
Apragmaticapproachtostimulatinginvestmentsinconcessionswouldbeforthegovernmenttosharethecostsofroad-buildingwhicharethelargestcapitalexpenditurethataconcessionaireneedstoassume(andwhichinmanycasesrepresentsapublicinfrastructureusedbystateofficialsandlocalcommunities).H. Communitybuy-in
Relatedtocommunityinvolvement,socialdevelopmentandfinancialprofitability,oneofthebiggestweaknessesisthelackofbusinessacumenandtrainingtorunaforestrybusinesswell.Weather,communities,diverselandscapes,variablemarkets,bureaucracyandhighcapitalcostsallmakerunningaforestryconcessionextremelycomplexandaverylowpercentageofcompanies(much
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lesscommunities)havethecompletesuiteofneededskills.Whendirect,pragmaticandusefulsupportisprovidedonaregularbasisasinSurinameandMexico,asolidcoreofbusinesspeoplecanputvalueontheconcessionandkeepforeststanding.
Intheearlyyearsofvariousconcessionprograms,traditionalmanufacturerswerevilifiedandforestresourcesweretakenfromthem.ThisoccurredinMexicoandVenezuela,toasomewhatlesserextentinSuriname,andisnowoccurringinBolivia.Yetmanycommunities,technicaladvisorsandNGOshaveseentheimportantroleplayedbymanufacturersorlong-termplayersinthesector.Theirknowledge,capitalandinstalledcapacityiskeyforestablishingstrategicalliancesthattakeadvantageoftherespectivecompetitiveadvantagesofbothcommunitiesandcompanies.
OnewaytoincreasebenefitstolocalcommunitiesandfostergreaterinvolvementistochargecommunitiesloweraccessfeestoforestedareasaswasdoneinGuatemala,SurinameandBolivia.Thisisareasonablestrategygiventhatmostcommunitieshavelessaccesstocapital,informationandmarketsthanindustrialenterprises.However,whenthecostofaccessistooeasyforcommunities,logbuyersandmillsmaydecidetonotinvestinconcessions.Inotherwords,easierregulationsandlowercostsincommunityforestscoupledwithverystrictregulationsandhighercostsinconcessionsmayserveasaperverseincentivethatcausescompaniestoavoidconcessions.
Theroleofindependent,neutral(i.e.notfromthecountryandnotreceivingbenefitsfromtheimplementationoftheirproposals)technicaladvisorscannotbeunderestimated.InBoliviaandSuriname,world-classexpertscontributedgreatlytothestructuringoftheconcessionprogram.InPeruandBrazil,thiswasnotthecaseandprogresshasbeenmuchslowerandpronetoproblems.Inbothofthesuccessfulcases,localresearchentitieswerestartedbynationalprofessionalstoconductstudiesanddisseminateresultstothekeyend-users:concessionaires(InstitutoBolivianodeInvestigaciónForestal–IBIF,andNaturalezaparalaVida–NPV).I. Institutionalstrengthening
Therehavebeenvaryingdegreesofsuccesswithlocalgovernmentsandtheirinvolvementinconcessionprocesses.InBolivia,consultationwithASLsandmunicipalgovernmentswaskeytobuildingarobustconcessionsystem.Peru’srecentdecentralizationprogramdesignedtoincreasetheparticipation,responsibilitiesandrevenuesforregionalandmunicipalgovernmentsissofaramixed-bagwithoutaclearopiniononhowusefulthenewstrategywillbe.Ontheotherhand,Brazilactuallyhasastateconcessionprogramthatismoreeffectivethanthenationalprogram.Forstate,regionalandmunicipalgovernmentstobeabletoplayasubstantiverole,clearandlogicalobjectivesandinstalledcapacitymustbebuilt.
OneoftheissueswithVenezuelaandSurinamewasthattheirconcessionprogramsdidnotgenerateadequaterevenuestokeepthemfunctioning.Surinameontheotherhand,hasbeenabletomaintainarobustsystemwithgoodmonitoringandfollow-updespiterelyingonrevenuesfromonly11concessionaires,donorfundsandvariablegovernmentalbudgets.Governmentsneedtoensureadequatefinancialresourcesfromnotonlyconcessionrightsandproductiontaxes,butalsofromthegeneralbudgettocoverthecostsofrunningaconcessionprogram.
Areoccurringthemeininterviews,butseldomnotedinacademicpublicationsistheimportanceoflocal,thirdpartyagentsthatprovidea“thirdeye”toreducethelikelihoodofcorruptionandinspire
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governmentalagenciestorootoutillegallogging.Theeffectofhonestgovernment,non-profit,oracademicstaffpersonsonreducingtheoverallclimateoflawlessnessandfosteringanambienceofrespectforlaw,investmentinlong-termenterprises,andtransparentbusinessdealingshasbeenshowninMexico,SurinameandBrazil.Governmentswouldbewell-servedbyfomentingdeeptieswithdonorsandnon-profitstoresolvetoughissueslikeillegalloggingandcreatinganambiencethatrespectsthelaw.
Whereconcessionaireshavereceivedtechnical(Bolivia),financial(Suriname)andevenmarketing(BrazilandMexico)assistancefromthegovernment,andarenotonlysubjecttomonitoring,finesandtime-consumingaudits,theoverallprogramseemstoworkbetter.Countrieswherethisisnothappening(Venezuela,Suriname,Bolivia)havedecliningprograms.Inotherwords,governmentsshouldworkaspartnerswithconcessionaires,notsimplyasapoliceforce.
Greaterautonomyforagencieshelpsincreasetherateofprocessingandgrantingconcessions.Suchautonomyneedstobecomplementedbyefficientlydesignedprocessesthatdonotrequiretheinvolvementofseparateentitieswiththeirownobjectives,rhythmsofworkandphilosophies.ThecaseofBrazilillustratestheproblemwiththreeagenciesinvolvedintheprocess,whereasSurinameshowshowtheestablishmentofonesemi-independentagencyfacilitatedthedevelopmentofaworkingmodel.TherehavebeenvariouscaseswhereSFBgrantedaconcessionafterreceivingsign-offfromICMBiobutIBAMAtookoveroneyeartoactuallyissuethepermit,thusresultingineconomiclossesforthewinningbidder.
Simplydevelopingaconcessionprogramwithoutacorrespondingstrengtheningofinstitutionswithcomplementary,andwell-orchestratedactivitiesledbyamaininstitutiondoesnotwork.InthecaseofGuatemala´sMayaBiosphereReserve,theestablishmentandstrengtheningofCONAP,SIGAPandCONAMA,aswellasfundamentalimprovementsinlegislationandregulations(newforestrylawandregulations)werenecessaryforsuccess.Boliviaadoptedasimilarapproachandbothcaseshadarelativelyautonomousgovernmentalbodywithnew,motivatedandpoliticallystrongleadershipwiththeauthorityandbudgettomakesignificantchangesinthewayforestresourcesweremanaged.
Governmentsshouldnottakeahardlineattitudetowardstoppingillegallandinvasionsorloggingwithoutofferingalternatives.Forexample,intheearly1990’s,CONAPhadminimalphysicalpresenceintheforestandwasnotexperiencedindevelopingworkableconservationstrategies;itfocusedonhardlinepreservationbasedonstrategiesusedinothercountriestominimizeandeliminatehumanimpactsinprotectedareas.AsincreasednumbersoflandlessfarmersandrefugeesreturningfromMexicobeganenteringtheforesttoestablishnewcommunitiesandrevenuegeneratingactivities(basedlargelyonnon-forestindustries),itbecameclearthatahard-line“notouch”approachwouldnotwork.DwellersthatdependedonloggingphysicallyexpelledCONAPguardsfromthecommunitiesofElCruceaDosAguadasandElNaranjointheearly1990’s.Therearenoexampleswereaunilateral,hardlineapproachtostoppingforestconversionhaseverachieveditsobjectives.Whatdoesworkisacombinationofthecarrotandstickapproachwherebyconcessionairesdealwithanefficientgovernmentalentitythatcanalsoenforcelackofcompliance.
AsnotedbyFAST’sexperienceinthefield-testingofitsImpactIndicatorswithleadersoftheforestrysectorinPeruandBolivia,fewcompaniestrackinformationrelatedtohowsustainableforestryaspracticesinconcessionsaffectslocalpopulations.FASTconsultantsnotethatlogically,different-
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sizedcompanieshavedifferentdegreesofimpactsonworkers,communitiesandtheforest,andwouldthusneeddifferentapproachestomonitoringimpacts.Clearquantificationofimpactswouldproveveryusefultoshowinglocalgovernments,non-profitsandgovernmentofficialsallofthe“hidden”benefitsfromforestconcessions.Examplesofthesepositiveimpactsinclude:
− formalremunerationintermsofsalary(atminimumwage),retirementplans(i.e.Peru’sAFPsystem),medicalinsurance,andfood;
− paymentmethods(i.e.CFArequiredindividualstohavebankaccountssothatmoneywouldnotbelost,misplacedormisspentinthefield);
− livingquartersandsanitation(i.e.Wong’sFSC-certifiedfacilitiesaremuchbetterthanmost)
11. FinalreflectionsonthefutureofconcessionsThebiggestdetrimenttotheproperfunctioningofforestconcessionsisthelowcostandhighvolumeofillegallyorinformallysourcedwoodthatunfairlycompeteswithhighercost,concessionwoodinthemarketplace.Theregularinvasionofforestlandsbytransientcommunitiesresultsinforestconversiontoagricultureandthefloodingofthemarketwithcheapwoodthatmakesitdifficultforalegaloperatortocompeteagainstduetohighercosts.
Thesameholdstruewithlegalwoodfromsmallerareasthatdonotincurthesamecostsasconcessionaires.Inmostcountries,despitecampaignsagainstillegallogging,highlypublicizedpressarticles,highlevelmemossignedbetweendifferentgovernments,andthefiningofconcessionsthatdonotcomplywithregulations,informal,non-concessionforestry(oftenillegal)isthemainproductionsystem.
InitiativessuchasFLEGTdonotmattertomostwoodmanufacturerssincetheyselllocallyortomarketssuchasMexico,theCaribbeanorChinathatarenotinterestedinwoodorigin.Corruptionissoingrainedinthesystemandillegalorinformalwoodissoeasytoobtainwithfalsifiedpapersthatthereislittlemotivationtoobtainconcessions:itissimplycheaperandeasiertobuyelsewhere.Thetrendtowardlocalmanagementofconcessions(i.e.PeruandBolivia)andtheestablishmentoflocalforestswherebyunclaimedlandbecomesthejurisdictionoflocalmunicipalities,willlikelyleadtoincreasedharvestsandadditional,low-costwoodfloodingthemarket.
Therearetwolandusesthatcommonlythreatentheviabilityofforestconcessionsystemstodifferentdegreesdependingonthecountry:
• Agriculture,particularlypalmoilplantations,continuestoexpand,oftentimesinstateorcommunitylandswhicharesupposedtoremaininforestcover.Fewgovernmentshavetheresourcesorqualifiedstafftoeffectivelycontrolthemillionsofhectaresofproductiveforeststhatarenotundermanagement.
• Reforestationisbeingpromotedbyseveralgovernmentsandisbecomingapriority.Whiletheplantingoftreesondegradedlandispositive,thefocusofthegovernment’slimitedresourcesonplantationsversusnaturalforestssuggeststhatconcessionprogramsmaylanguish.
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NaturalforestconcessionsappeartohavebecomealowerpriorityforPeru’sforestservicewhichisnowfocusedontimberandagriculturalplantations.Despitetheactiverolemadeforlocalgovernmentinconcessionmanagement,therehasbeenlittlediscussionofhowconcessionscancontributetosocialandeconomicdevelopmentintheAmazon,climatechange,regionalplanninginitiatives,orLaceyActandFLEGT-relatedinitiatives.Thisisparticularlyironicgiventhepotentialimpactthatcouldresultfromawell-managedconcessionprogram.Forexample,assumingthatallBPPwereallocatedtotimberconcessions,that85%ofthe16.9millionhaofBPPisactuallyproductive,andthata25yearcuttingcycleisused,Perucouldharvest574,600haannuallyandproducefrom1.7to11.4millionm3/year.Arealisticyetoptimisticvolumeassumptionis5millionm3(assuming8.7m3/ha,40%recovery,US$1/bf)whichcouldgenerateUS$800millioninannualrevenuesfromlumberexportsales.
Carbonmarketspaysolittleforcreditsthattheydolittletofosterinvestmentinconcessions.OnepositivedevelopmentfromtheCOP21meetingheldinLimainlate2014isthatAgribanco,thePeruviannationalbank,ismotivatedtobecomea“green”bankandhasprioritizedforestryasanareaofaction.
Itisunusualandsomewhatillogicalthatconcessionairesresponsibleforprotectingaforestedareafrominvasions,fires,anddeforestationdonothaveaccesstocarbonrightsasisthecaseinBrazilandpurportedlyBolivia.Althoughthecarbonmarketisnotparticularlydesirableatpresent,itwouldbelogicallyconsistentforconcessionairestobeabletogeneraterevenuesfromthisproduct.
Despitethecloselinkbetweenconcessionsandcertification,manynotethatcertificationhasnotprovidedmanytangiblebenefitsandratherthangeneratinggreaterprofits,mayevencutintomarginsduetohighercostsassociatedwithsustainablemanagement.Itisdifficulttodetermineifanimprovedpriceisduetospeciesrarity,productquality,clientrelationship,orcertification.Certainspecies(mahoganyandSpanishcedar)incertainmarkets(SpainandU.S.)forcertainproducts(guitarpartsandhomebuilding)fromparticularcountries(BoliviaandGuatemala)haveobtainedpricesmorefavorablethanmost.AlthoughFSChasopenedupbetterexportmarketsforsomelesserknownspecies,onecannotclaimthatcertificationhaspassedacost/benefitanalysis.FSCcertificationinparticular,hasnotmetexpectationsofgovernmentorproducersandanoverallfeelingofdisenchantmentexists.
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Annex2:SummaryTableofLatinAmericanConcessions Bolivia Brazil Peru Guatemala Guyana Suriname Venezuela
NationalForest
TotalForestArea(000ha)
53.500 463.000 67.992 3.657 15.200 14.758 47.713
PublicForests(000ha)
38.611 310.000 18.821 1.536 12.200 11.300 29.900
PublicForestsforProduction(000ha)
8.987 100.000 5.513 450 6.850 4.482 13.000
%ofForestinPublicLands
72% 67% 28% 42% 80% 77% 63%
%ofPublicLandsforProduction
23% 32% 29% 29% 56% 40% 43%
IndustrialConcessions 2.107 1.300 450 6.500 1.090
ConcessionSystemCharacteristics
Ownership Federal Federal/State Federal&RegionalJoint
Federal Federal Federal(nocollectiveownershipallowed)
Federal(90%offorestownedbygovt)
Administration 1agency(ABT) 3federalagencies:SFB,ICMBio,IBAMAAtaStatelevel:Ideflor-BioandSEMAS
1Federalagencies(SERFLOR/OSINFOR)andregionalgovernment
1agency(CONAP) 1agency(GuyanaForestryCommission)workingwithForestProducts&DevelopmentMarketingCouncil(FPDMC);boththeMinesandSurveydepartmentsmayissuepermitsforconflictingusesovercertainforest
1agency(MinROGB-MinistryofPhysicalPlanningLand&ForestMgmt)
1agency(MARN-MinistryofEnvironment&NaturalResources)butconflictswithAgriculture&MiningMinistries;MARNGeneralForestDirectoratemanagesforests;centralizedmgmt
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Bolivia Brazil Peru Guatemala Guyana Suriname Venezuelaareas
Objectives Improvequalityoflifeviasustainableforestry,equitabledistributionofbenefitsandinvestment
Ruraleconomicdevelopmentbyforestindustrywithasustainableflowofrawmaterialstomeetstronginternaldemandforwoodproducts
Promoteruraldevelopmentviasustainableforestmanagementonnon-indigenous&non-conservationlands
ProtectconservationvaluesoftheMayaBiosphereReservebystimulatingruraleconomicgrowthbygivinglocalcommunitiesoptiontosustainablyco-managefederalresourcesforprofit
Conserve,protect,manage&utilizeforestwhilemaintaingproductivecapacity;Ensureoptimumsustainedyieldofforestproductswhilemaintainingandimprovingenvironment,andincreasingsocio-economicbenefitsforcommunities
ForestMgmtActestablishedsingleauthoritytoimplementbalancedpolicytoachievesustainableforestmanagementandstrengthenthewoodproductsindustry
Complexcategorizationw/differentobjectives(25)despitelong-termhistoryofforestmanagement;regulatemgmtofnationalforestsforvarioususestodiversifycommunitygoods,maintainsustainability,&fomentparticipation
Types Industrial/Indigenous(ASL)/Community(TCO)
Industrial(FLONAS) Industrial/Reforestation/Eco-tourism/Conservation
2Industrial/11Community
Industrial/Community(SocialDevelopmentPrograminitiatedin2000butnotconcessionprogramperse)
IndustrialConcessions/Community-HKVs/Subsistence-ICLs
Industrial(mainlyprivatew2stateorjointconcessions)/Nocommunityoperationsandlittleofficialrecognition
BasisforAssignmentofRights
Area Area Area Area Area PresumablyArea PresumablyArea
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Bolivia Brazil Peru Guatemala Guyana Suriname VenezuelaStatus Dramaticdecline
duetopolicyfavoringcommunities
Incipient/Growingassystemweaknesseshavebeenimproved
Moderatelyestablished(manygranted-minorityfunctioning/slowgrowth
Well-established/Stable
Well-established/Stable
Declining <40%functioning
Products Timber/Non-timber(increasedinterestinfullrangeofforestproducts)
Timber/Non-timber/EcotourismNoCarbonCredits
Timber/Non-timber/Eco-tourism/Carbon
Timber/Non-timber/Eco-tourism/Carbon
Timber(strongmarketsandgovernmentsupport)/FewNTFPs(palmhart,rattan,latex,tannins)
PrimarilyTThimber
Timber/FewNTFPsforexport(Lianaandpalmheart)
ConcessionUnitTraits
AreaDefinition Conservationbased,landscapefocustodeterminewhereconcessionsfit
Commercialvalueandoperationalobstaclestodetermineconcessionlocationperconcessionaire'sinterest
Determinesuitableareasforforestproductionwithoutconflictsincoordinationwithregionalgovernments
Allnon-protectedareaswithinthebordersoftheMayaBiosphereReserveofinteresttocommunitiesandindustry
Commercialvalueforindustrialconcessionsdeterminedbygovt/Proximity&traditionaluseforcommunityapplicants
Unclear;presumablybasedoncommercialspeciesandoperationalconstraints;verycostlytomanageareasduetopoorinfrastructureandlowyields
SouthofOrinocoRiverinGuyanaregionwhereforestreserveshadnotbeenestablished
AverageSize(1,000has)
73 41(Federal)/50ParaState
14 35(Community)/66(Industrial)
6,600(Community)/Variousareasizeclasses(Industrial):TSA-75,000haaverage(50-100k);WCL:15,000haaverage;SFP:<8,094ha;ExploratoryPermits:135,000haaverage
Maximumsize:150,000hawith25,970haaveragein2003/Smallerconcessionscommon;cuttinglicenses<5,000ha;
155,850haaverage;Concessions>5,000ha;AnnualLoggingPermits<5,000ha
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Bolivia Brazil Peru Guatemala Guyana Suriname VenezuelaLengthofConcession(Years)
40 20-40years 40 20yearaverage TSAsforareas>24,000ha:20+years;WCLsforareas8,000-24,281ha:3-10years;SFPsforareas<8,094ha:annual;Exp.Permits:3years
1-20years(periods>25recommendedbygovt)forconcessions;Collectivewood-cuttingpermits(HKVs)andincidentalcuttinglicenses(ICLs)forshorterperiods
20-40years/30yraverage
CommercialSpecies Notdeterminedbygovernmentsincefeesareareabased
DeterminedbySFBtoserveasbasisforpricing
Notdeterminedbygovernmentsincefeesareareabased
DeterminedbyCONAPbutconcessionairehasrighttoharvestthoseofinterest
1953ForestActspecifiedMDCof34cmbut2009ForestBilldoesnotspecify;speciesselectedbyconcessionaire;30commercialspeciesw/5highlycommercial
5majorspecies(50consideredcommercialbygovt)
12speciesw/10-13m3/haaverage;20speciesconsideredcommercial
CuttingCycle Minimum20yrCCwithaverageharvestedvolumeof0.54m3/ha
25-35yrCCdeterminedbystandardallowablevolume/hawithmaximumof0.86m3/ha
Minimum20yrCCwithaverageharvestedvolumeof1.5m3/ha
25-35yrCCwith30yearaveragewithaverageharvestedvolumeof0.1m3/ha
<60yearCCwithmaximumof20m3/ha(extracionisusuallymuchless)
Unclear >40cmto60cmMDCpergovtregulations
ConcessionGrantingProcess
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Bolivia Brazil Peru Guatemala Guyana Suriname VenezuelaGeneralProcess Companyconducts
researchtomakeproposaltogovernmentincludingmanagementplan
Governmentconductspreliminaryinventory,andestablishesminimumpriceforapplicantstobidon
Governmentpreparesinventoryandbasicinformationforwhichapplicantpreparesproposal
Governmentpreparesallstudiesandrequestsbidsforindustrialconcessions;communitiesjustifyareaofinterestbasedonhistoricuse
Community:letterfromgrouptoGFC,assetregistration,identificationofavailablearea,sitevisit,competitivebid;Industrial:publicnoticefromgovernmenttwiceannually,provisionoftechnicaldocuments,competitivebiddingformultipleinterests
Unclear/Awardbyrequestvs.Awardbybidding
Unclearwithoutpublicinformation
ApprovalCriteria Governmentrequestedproposalsbutdidnotconductbiddingprocess;concessionsgrantedtohighestbidder
Highestpriceoverminimumstipulatedpricethatmeetsenvironmental,socialandproductionefficiencycriteria
Highestpricewasmainconsiderationwithinadequatereviewofcapacity
Historicaluse,communityapproval,operationalcapacitiesandtrackrecord
Unclearapprovalselectioncriteria;Communityuseislegallyaprioritybutisnotpromotedorsupportedinreality
Noperformance,professionalortrackrecordcriteria
Nottransparent
Requirements Formallestablishedcompanywithproventechnicalandfinancialcapacity/commitmenttocomplyingwithlaws
Formalestablishedcompanywithtechnicalcapabilities,commitmenttosocialrequirements,soundfinancialstandingandwithoutillegalprecedents
Financialcapacityandapprovedbiddocument
FormallyestablishedGuatemalancompanywithproventechnicalandfinancialtrackrecord
Communities:Loggingassociation,assetregistration,availablearea,bankaccount,recordedminutes,paymentofarea-basedfees;Industrial:approvedmgmtplan(>5years)&annualharvestplan,provenability
LaxrequirementsforICL(incidentalcuttinglicenses/HKV(communalwood-cuttingpermits);foreignornationalallowed
Unclear;Venezuelannationals;ManagementPlansbasedoninventoryofcommercialspecies,managedbyprofessionalforesters,lineenrichmentplanting,annualoperatingplans
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Bolivia Brazil Peru Guatemala Guyana Suriname Venezuela
inforestry&processing;EIA&SocialImpactAssessment,ForestInventory,BusinessPlan
Guarantees Noguaranteesrequired
Substantialguaranteesrequiredbasedonvalueofannualharvest
Banknoteequalto15%ofthevalueofestimadoharvestwhichresultsinavalue40-80%ofconcessionvalue
Communitiesdeposit1%ofthevalueofthecontractwhereasindustriespaybetween40-60%.
Unclear Unclear Unclear
Payments Nopaymentsfromcommunities/Regularareabasedpaymentsforindustrialholdings
Highestbidpricepercubicmeter
Highestbidpriceperm3convertedtohectares
Consistentrateforcommunities/Variablerateforindustry
PricingpermarketratesfromFPDMCandGFC;historicallyverylow($0.20/ha/yr);taxexemptionsonmachineryimportedforloggingandprocessing.
Historicallyverylowvolume&areabasedpaymentshaveincreased;exporttaxesonwoodproducts
Unclear
Monitoring Robustandconstantforconcessionaires/Variableforcommunities
Moderate Moderateandimprovingw/focusonconcessionairesversuscommunities
Robustandconstant
Annualfieldinspectionspriortorenewalofsubsequentyear'sharvestplan;logtrackingvia26foreststationsandtags
Minimal Minimaltonon-existent
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