Introduction

This note contains background information on:

• The main issues and trends;
• Key stakeholders and their reaction; and
• Options under consideration

I. main issues and trends

The main issues affecting the sector include:

A. Main Issues and Trends

• Traditionally, at least during the middle years of the colonial period, forests were managed as a 'forest'. The objective was, on a sustainable basis, to maximise the commercial returns while minimising costs, subject to the environmental constraint that the land could not change purpose. The Forest Department had been founded with this objective in mind. It was more autonomous than other departments of state, operating as estate managers – able to raise revenue as well as spend public money! Uneven aged, mixed-species forests were slowly converted to even-aged, monocultures in order to maximise returns and minimise costs.

• This system broke down in the period before and after Independence, with rapid growth in infrastructure and population resulting in the demand for higher and unsustainable levels of harvesting. Pressure for land for agriculture also resulted in the forest area shrinking in both size and quality.

• With the rise of a more welfare approach to public expenditure, investment in the forest sector was mostly in the form of employment-generation schemes. In practice, this translated into expenditure on plantations, rather than the management of natural forest.

• Following a recent change of government, policy has changed again. Conservation remains of fundamental importance, but a high priority is given to meeting the needs of local people, since much forest degradation results form exploitation of forest resources to meet these local needs. However, the policy explicitly recognises the potential of local people to manage and conserve forest resources.

B. Technology Changes

• Most of the genetic material currently planted in forests is of poor quality when compared to horticultural species. However, there are known varieties of clones for commercial species with yields twenty times in excess of current yields. The Forest Department has traditionally not been concerned about the economics of tree planting. Until relatively recently, there was little scope for technological improvements and few genetic options were available. Subsequently, the focus of the Department has been on employment generation rather than cost effectiveness.

Private farmers are reluctant to plant at the moment for two reasons:

• Economics . Most of the cost of establishing a plantation is in the actual planting and subsequent protection, and they would prefer to wait faster-growing, high yielding species are available.

• Regulations . The systems of permissions, licences and passes for cutting and transporting timber acts as a disincentive.

Economic Growth

• Post Independence, there has been rapid and substantial economic growth, which has been accompanied by an expansion of urban areas due to both industrialisation and population growth. Following a slow down, after the Gulf War, this process is being accelerated again as result of economic liberalisation and pro-industrial policies and low international interest rates. Meanwhile, natural forests continue to be under threat. Growth and urbanisation have increased the demand for fuelwood, which has been met by rural headloaders supplying urban and semi-urban consumers. The work is unskilled and demanding and usually undertaken by the poor, by women and the socially excluded for whom there is little alternative employment.

Environment Awareness

• During the same period, there has been an increased awareness of the state of the environment and the forest in particular. Satellite imagery shows that the forest extent is much less than currently shown on operational maps. Since the Rio Conference on the Environment in 1992, public awareness has increased and government policy, responding to pressure from environmental NGOs, has resulted in conservation policies that ban any removals form large tracts of forest and limit removals from other areas. Although this has stopped much official harvesting, it has increased the demand for illicit material. In many places, this is a blanket ban that prevents the grazing of animals and even the removal of leaf litter and dead wood.

Political and Governance Reform

• Another important factor has been reform of the public sector. There are two main elements to this reform:
• Decentralisation . The Chief Minister is talking about decentralisation and wanting to empower local communities. Districts are to have elected governments, responsible for education and health. Villages are to have elected Councils.

• Pluralistic Service Provision . A major focus of the current government is to empower local communities by giving them more 'choice' over both the services supplied and over the service provider. This involves challenging the 'monopoly' currently held by government departments by encouraging the development of alternative service delivery mechanisms.

• Funding Mechanisms . As part of the reform programme, two new proposals have been put forward as well as the less radical alternative of improving the flow of funds within the existing systems of allocating money through the annual budget system.

• Village Funds . A recent proposal put forward by the political party in power was that funds for 'development' would be channelled direct to the village accounts. This could be based on a formula related to population and access to other services. The fund would be under the control of a directly elected Village Council. The argument for this approach was that it would create a more transparent process (i.e. that it will be easy to see where money is spend), be more efficient (i.e. a better 'fit' with what people want and need), and have greater ownership (i.e. leading to better maintenance and improved sustainability).

• Challenge Funds . This alternative suggestion, by a leading NGO with considerable weight in political circles, was to place all operational (i.e. not salaries etc. ) public funds in a social investment fund (or 'challenge' fund) for which agencies or communities could compete. However, there is uncertainty about how to target the poorest and most 'socially-excluded' communities and people.

• Government Budget Systems. The traditional system allocates money between departments each year as part of the annual budget cycle. State parliament considers the proposals and expenditure is only possible after parliament has voted. Spending departments allocate the money within the Department according to the organisational structure of that Department in such a way as to distribute an equal work load amongst all officers and staff. Unfortunately, the structure of most Departments no longer matches their goals and strategies. The proposal is to reorganise each Department to bring its structure back into line with its goals and priorities.

Key stakeholders in the forest sector

The main agencies involved in the forest sector include:

Bureaucrats

• A bureaucrat civil service controls a rigid administrative system affecting all public sector activities. The bureaucrats are an elite (well educated, selected on merit and mostly urban) with little real contact with rural people, who they see as illiterate and ignorant. They support the public sector reforms for two reasons: (a) local decision making would make locally elected officials more directly accountable to local people; and (b) would reduce the influence of powerful state politicians to control and, by implication, misdirect public expenditure. Although they believe in decentralisation and delegation to people's organisations, they have many reservations.

Forest Department Officers

• Morale in the Forest Department is at an all time low. Officers are losing respect: Salaries are still paid on time, but there is increasingly little money for operations, unless they can access other rural development funds. Some of the older Forest Department officers would like to return to the traditional way of forest management.

• The public sector reform issues, especially the proposed funding mechanisms are of great importance to the Forest Department. No decision has been made as to whether this will include forestry sector funding. The Forest Department is split over this issue. Some argue that forests cover large tracts – many villages – and that an overall plan is essential. Other argues that the environment is too important to be left to local people. As result, the Department has not responded or put forward a proposal and the Chief Minister and the Cabinet will decide themselves.

• At a state level, forestry competes each year with other sectors such as health and education and, while the share to forestry has been slowly eroding over the long term, it has stabilised since the Rio Environment Conference in 1992, as result of increased environmental awareness.

• Officers are uncertain about the priority poor people would attach to forestry and especially to working with Forest Department official. The fear is that people will prefer water supply, roads, health and education to forestry investments.

• As a revenue-raising department, the Forest Department has not has not had to bid for funds before. There has been little experience of working with other Departments, who are generally regarded within the Department as being less effective and efficient.

Forest Department Frontline Staff

• Frontline staff are often unskilled and poorly educated. Up to now, they have had a policing role, which has been of limited success. In practice, the rules have provided a means to hassle smaller and less important people and allows staff to make small amounts for themselves on returning confiscated axes etc. They hear that senior officers are able to make large sums in kickbacks from some industrialists who receive forest products at highly subsidised rates.

Local People

• By definition, the forest communities consist of the poorest people in the state. In general, they have less access to public services and are often socially excluded on grounds of culture and religion. The government does not have positive discrimination programmes in place but these only really help those that get away and have a little impact on people left behind. There is concern about traditional ways of life of forest dwelling peoples and also the effect on their economic survival – which depends on preventing further environmental degradation. In mixed communities, of forest dwelling and settled peoples, the forest dwellers are rarely consulted, but are grateful for any employment of largess their receive. However, their real concerns are seldom fully articulated as they often lack courage to address the mainstream communities!

• In all communities, women traditionally do not speak up at public meetings. On the other hand, women are responsible for collecting firewood and fodder, managing livestock and are the main collectors of minor forest products.

Social and Development NGOs

• Social NGOs are lobbying for even more power to be given to people, but they still insist that there is a need for an explicit role for themselves. Some have been involved in meetings with government on policy reform and, as a result, government is starting to take some NGO priorities into consideration. Some of these NGOs feel that they have skills and experience in community participation, which are lacking in the Forest Department. Others see their role as champions of local people and are not prepared to work with, or accept contracts form government departments.

Environmental NGOs

• In contrast, the environmental NGOs argue that local people have short term horizons and will 'eat up' the environmental resources and, therefore, for the good of future generations and society as whole, forests need to be managed by an impartial forest department, advised by the scientific community and supported by effective legal framework.

Traders and Agents

• Traditionally, forest dwellers made a living from so-called, 'Minor Forest Products' such as herbs and medicinal plants. The market has improved and the agents are more active. However, supply is harder to find as forest quality declines and the share to the collector remains low. The collectors may collect for the Forest Department of for private dealers. The few agents can easily dominate the many collectors either as result of the contracting system, managed by the Forest Department, which gives the agent a monopoly over collection from a particular forest area or as result of a system of credit and advance payments, making it impossible for the collectors to increase their share of final product price.

H. Private Growers

• Private farmers rarely grow trees, although many of the larger farmers express interest. There are permits preventing them transporting the main species to markets, and although possible in theory, they are frightened of private investment into a market with fluctuating prices and uncertain and complex bureaucratic arrangements. Prices fluctuate due to erratic off-take from state forests and uneven application of restrictive rules.

I. Forest Industries

• Industrial users of wood products are stuck – imports of timber and, even paper pulp, have increased many-fold. The 'industry' is unhappy about policy and in indirect conflict with both environmental and social NGOs. They want to lease forest areas that they would manage on sustainable basis, ensure high productivity and scientific management. Last year, they heard that there was a plan to remove the subsidies they currently receive on their output prices and only through using their political connections lobbying was it stalled. The public argument was twofold: (a) inputs were controlled and so without output price support they could not survive; and (b) a vibrant democracy was needed to keep the price of newspapers low! Also some of these industrial ventures were actually joint ventures with the public sector and the government was worried about the loss of jobs that would result from closure.

Options for reform

• A number of options, for the future of the forest sector, are already under consideration by the Government of the state. based on experience in neighbouring states. These include:

Return to Traditional Role of the Forest Department

• A recent internal review carried out by the Forest Department produced a document that outlined this option in some detail. This includes the following options:
• abandon degraded areas of forest that the Department has no hope of reclaiming and managing, either to private 'encroachers' or other state authorities;
• empower and resource the Forest Department to carry out its mandate, without interference from people or politicians
• refocus attention on managing the remaining good forest with (a) strong and effective policing (including increased staffing, new communication systems, rapid deployment squads and arms, if necessary); and (b) scientific management techniques.

Joint Forest Management (JFM)

• JFM pilot projects have been implemented in several neighbouring states and are strongly supported by several international organisations presently working in the country. This involves local communities forming a Forest management Committee (FMC) to protect and manage areas of forest adjacent to each village, in partnership with the Forest Department. A new law would be passed defining the rights of communities to forest products and in which the state could share 50% of the revenue with the community. This revenue is placed in village managed account, together with any other revenue they earn form fees or fines, group marketing of minor forest products (grass, herbs, etc.). Some committees have built up large surpluses, which are used for (a) construction of rural infrastructure (roads, dams etc); (B) acquisition of equipment which can be rented to members and; (c) revolving loans to members or groups of members for investment or consumptive purposes.

• The committees organise protection of the forest, and early experience shows that this has been very effective. So effective that there are stories of women and headloaders who have not been able to collect any product6s from the forest, while some forest areas have now become a fire risk, due to excess dry material remaining on the ground.

• The committees are also responsible for implementation of the management plan and which they can often do at lower cost than the Department, though the poorest in the village complain that they have less employment opportunities and lower wages as a result of community management.

Leasehold Forestry

• In one neighbouring state, with a more pro-business government, the Forest Department has been closed and large tracts of forest have been given out on lease to industrial companies. The social and environmental NGOs have banded together to protest, but no one will listen to them. Their leader recently attended an historic event in Seattle where he was encouraged by the international support he received.

Exercise

• The forest sector in the state has considerable environmental, economic and social importance. Long established policies and institutions for the management of the sector no longer meet the political and social needs of society, given increases in population, demands for greater equity and a growing awareness of environmental issues. Reform of the sector is, therefore, urgently needed.

• You are an (unpaid) team of consultants, asked to advise the Government of the state on the necessary reforms. Yours is a multi-disciplinary team with specialists in:
• Policy and Institutions
• Economics
• Social Development
• Natural Resources management
• Environment

• Decide which member of your team is the Chairperson and who will have primary responsibility for each of these subjects.

Task

Using the background information provided in the attached sheet and reasonable assumptions based on your experience:

• Analyse the present situation
• List the key stakeholders and place them on a stakeholder 'map' like the one presented earlier.
• List the key institutions involved.
• Place these different institutions into the 'hub' model, showing the different roles (enablers, delivery agencies, users), the relationships between them and the flows of funds between them.
• Considering the '4Rs' and using the policy worksheet provided, identify some key questions that need to be addressed in order to proceed with the reform process.