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The cost of sustainable management

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The cost of sustainable management

By Christian F. Bach


The cost of sustainable management 1

Contents 1

Introduction 2

2. Cost of sustainable management on international level 2

2.1. The strategy and costs towards sustainable management 2

2.2. Funding for sustainable management 3

3. Cost of sustainable management on country level: Ghana 5

3.1. Causes of forest degradation 5

3.2. Log extraction and the timber industry 7

3.3. Cost and revenue estimates 8

3.4. Discussion 11

4. Cost of sustainable management on concession level: An optimal control model for tropical forestry 11

4.1. Introduction 12

4.2. General Description. 12

4.3. Model equations and data 13

4.3.1. Time periods (t) and compartments (n) 13

4.3.2. Groups of timber species (g) 13

4.3.3. Size classes (i) 13

4.3.4. Stock (st(g,i,n)) 14

4.3.5. Regeneration n(g), increment (i(g,i)) and mortality (m(g,i)) 14

4.3.7. Harvest (ut(g,n)) 17

4.3.8. Cost (ct(n)) 17

4.3.9. Prices (p(g)) 22

Annex I. Species groups 28

Annex II. Inventory data - Subri River 30

Annex III. Stock and yield allocation - Subri River 32

Annex IV. End-use distribution and prices 34

Annex V. Stock development - simulations 38

Annex VI. Base-line simulation - result 42

References 48


The cost of implementing sustainable management of tropical moist forests can be viewed on different levels. This report starts with a view on the estimated costs on a global level and then looks closer into the costs on country and concession level in a specific case-study: Ghana. The cost estimates on international and country level are mostly based on other references. Conversely, the cost estimates and the evaluation of the possible economic effects of sustainable management on concession level are based on research undertaken in Ghana and on the construction of a new model framework including growth and stock of tropical timber as well as the cost and revenue of extraction.

2. Cost of sustainable management on international level

The tropical moist forests1 cover a total area of 1,305.6 mn ha or nearly 75% of the total tropical forest resources [Singh, 1993:17]. It is the future of this forest resource that is the concern of this study. Some of it should be conserved as protection forests, some of it used for harvest operations, and some converted to other uses. A general, rough assumption is that allocation of land uses will be such that 25% of the total area is set aside as protection forests, while an additional 25% is likely to be allocated for conversion forest purposes the remainder being available for production and harvest. Furthermore, only 80% of this area would be actually available for harvesting over a cutting cycle, the remainder being required for local reserves, buffer strips and the like [ITTO, 1992c:15]. This means that the total area where sustainable timber production could be implemented is appr. 650 mn ha, of which only appr. 500 mn ha will be available for harvesting over a cutting cycle. The area to be set aside as protection forests is appr. 300 mn ha. The total area to be left as tropical moist forests will be appr. 950 mn ha.

There have been several attempts to estimate the need for resources to protect and implement sustainable management practices in these tropical moist forests. This exercise will not be repeated here. However, we will reflect on one recent study that attempted to summarize, extend and reinterpret these estimates in the light of the recent development [Bach and Gram, 1993]. The result is shown in table 1 below.

2.1. The strategy and costs towards sustainable management

To protect and implement sustainable management practices in a forest area of 950 mn ha spread among approximately 50 countries is an overwhelming task with a number of components. A necessary precondition is a mapping of the total land area in these countries, an inventory of forest areas, and designing and implementation of proper land-use plans, including protection of a permanent forest estate and land rights for forest dwellers. Implementation of sustainable management in harvest operations depends on the establishment of demonstrations forests, forest-harvesting training programmes, institution-building in state forest administration and services, and proper planning and supervising of harvest operations. To establish proper economic incentives for concessionaires implementing sustainable management practices, a support scheme is proposed comprising direct area-dependent payments to sustainable management, technical assistance, and education and training. Further needs are a number of supplementary policies such as organization of rural communities and NGOs in forestry, research, training in social sciences, political awareness programmes, production and consumption studies, marketing activities, and schemes to promote improved utilization of timber. Finally, an institutional set-up is needed to coordinate the effort and transfer of resources on international and national level, and an international monitoring unit must be established.

The total annual resources needed to implement these different elements in an overall strategy to protect and implement sustainable management practices in tropical rain forests is estimated at US$ 2,25 bn annually over 20-30 years. Of this, the area-dependent payments to concessionaires to compensate for increased costs or loss of revenue amount to US$ 1 bn [Bach and Gram, 1993] (see section 4). If the cost outside producer countries2 is subtracted, then the average cost in each producer country is appr. US$ 44,5 mn. If furthermore the cost of area-dependent payments is subtracted, then the result is US$ 24.5 mn annually in each producer country. This gives a crude estimate of the resources needed, even though the difference between countries such as, eg. Brazil and Ghana of course will be significant.

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