6. The costs of SFM and of SISPROF

This section presents estimates for the costs of what could be seen as the scope of a comprehensive “system” towards the sustainable use of forest resources in the Brazilian Amazon that would encompass (i) the exploitation and use of the resources themselves and (ii) the monitoring and control of such exploitation and use by the public sector.

As will be recalled, in its early stages SISPROF referred only to a part of the present system of control, the data bank. The system performed independently of the other pillars and in parallel with some other internal, already computerized, IBAMA systems, such as SISMAD (commercialization of wood and wood-products), SISPROT (administrative protocol of documents and processes), SISREG (technical registry of activities, firms, professionals, etc.) and others. With the conception and development of the “validation of data” and “geo-processing” pillars, the control system came to be seen as a “whole” constituted of interdependent parts. The acronym SISPROF was maintained and the “data bank” pillar incorporated the old SISMAD. The three pillars – now SISPROF – nevertheless are restricted to the role of the state in enforcing and promoting the sustainable use of forest resources through the employment of a modern computerized and integrated set of instruments capable of providing greater effectiveness to the actions of the public power in promoting, monitoring and controlling the use of the resources.

The basis of a “system” for the sustainable use of forest resources is directly related to the operations of exploitation and use of the resources, as well as to the monitoring and control of these activities. That part of the system referring to the exploitation of the resources itself is in charge of those that directly perform these activities for their own private economic benefit, that is, private companies, organized rural communities, rural producers, etc. Nevertheless, such exploitation, to be a legitimate and integral part of a “system” of sustainable use of the country’s forest resources, must respect three basic premises, namely, to be carried out in an ecologically sustainable, economically viable and socially just manner, something that must be reflected in standards, norms and rules established by the public power and subject to assessment and verification.

Figure 6.1 gives a brief idea of the scope of this more comprehensive “system” of SFM.

As has been remarked previously, at present it is possible to distinguish in Amazonia 48 basic different combinations of forest management, which can be classified in accordance with the object of management – or forest resource under management, the social character, the complexity of the exploitation, the environment and the control regime of the management. Such combinations mean significant differences in legislation, techniques, technology, costs and production rates. Consequently, a certain “technological package”, which could comply with those three premises mentioned above, would correspond to each of these combinations.

Through field visits carried out in 2001, it has been found that out of the 48 possible basic combinations 10 would already have been in practice in the region. Among them, those that involve wood/timber in high lands, and are carried out in an individual character by companies or persons, on an industrial scale and through a control regime per area, account for more than 84 per cent of the total number of PMFS in Amazonia (see Table 6.1).

Figure 6.1: Diagram of a system of sustainable forest management

Sustainable use of forest resources
Public power Federal Government (IBAMA), state governments (OEMAs) and municipalities, etc.	Productive sector Companies, rural communities, rural producers, private industry, etc.
SISPROF Three pillars: geo-processing, data bank, data validation.	Activities Pre-exploitation, exploitation and post-exploitation.
- Updating and recycling of technicians to act in the control and orientation of the productive sector. - Development of methodology for technical field visits/auditing/follow-up. - Adequate infrastructure and equipment. - Narrowing contacts among federal, state and municipal levels of government.	- Sustainable use of resources. - Production of goods. - Generation of employment. - Generation of income.

Table 6.1: Number of PMFS visited in 2001, according to classification of management

Brazil already has at its disposal a “technological package” for the most representative combination (number 1 in Table 6.1), that is, a series of pre-defined technical procedures concerning pre-exploitation, exploitation and post-exploitation activities of forest management. The development of such a package originated from SUDAM studies and trials back in 1978⁴⁶, in

Curuá-Una, Pará, when for the first time inventory and mapping of 100 per cent of tree individuals (so-called logistical inventory) was carried out, together with the establishment of 100 ha of units of work, the planning of logging tracks and other procedures. Since then, various governmental research institutions – such as INPA (National Research Institute of Amazonia) and EMBRAPA – and other non-governmental organizations (like IMAZON and TFF) and also private companies (like Mil Madeiras) have been making significant contributions to this Brazilian technological package aimed at the sustainable exploitation of timber in the Amazon. IMAZON and TFF, for example, have been involved in the Amazon with research and development of reduced impact logging (RIL) systems. RIL systems are being developed worldwide in response to societal demands for forest conservation and environmental protection. Briefly put, RIL systems use a set of best harvesting techniques that reduce damage to the residual forest, reduce soil disturbance, protect water quality, reduce fire risk and help maintain regeneration and protection of biological diversity. The FAO model code of forest harvesting, for instance, provides the basis for the design of RIL systems, and typically includes most, if not all, of the following activities: pre-harvest inventory and mapping of trees, pre-harvest planning of roads and tracks/trails, pre-harvest vine cutting, directional felling, efficient utilization of felled trunks, minimum ground disturbance, etc.

As put forward by Holmes, T.P. et al.⁴⁷, although relatively little is, as yet, known about the economics of RIL, the available evidence suggests that RIL systems and methods provide multiple financial, marketing and labour force advantages. Recent research in the Amazon, such as that carried out by Barreto, P. et al.⁴⁸ of IMAZON, show that RIL increased profitability relative to conventional logging. Other evidence suggests, for example, that RIL techniques reduce the volume of timber wasted in harvesting operations, decreasing average cost and increasing the volume of timber supplied from a fixed resource base. Although limited, these results tend to throw some doubts on presumptions that ecologically benign harvestings are always more expensive and result in losses of competitive advantages vis-à-vis conventional logging.

The question of whether or not SFM is technically and economically possible in the natural forests of Amazonia has been an issue subject to some research, but with results that tend to be controversial and, therefore, whose conclusive evidence, at least for some, may still depend on further verification to be more definitively established on a general level. Since it is not our purpose to deal with this debate and controversy here, we limit ourselves to presenting estimates of the costs of forest management activities based on the available evidence of RIL systems currently being applied in the region, recognizing that these RIL systems and methods, though not sufficient, are a necessary component in the design of SFM systems. The costs presented in Table 6.2, extracted from Holmes, T.P. et al., op.cit., are considered representative for eastern Amazonia, as well as for more capital-intensive firms that work in bigger, relatively flat, areas and with an exploitation intensity between 20 to 30 m³/ha.

Table 6.2: Forest management costs in eastern Amazonia (based on RIL activities) – US$/m³ – 1996

Activity	Cost (US$/m3
Pre-harvest Block layout Inventory Vine cutting Data processing Mapmaking	1.04 0.22 0.42 0.12 0.09 0.19
Harvest planning Tree hunting Tree marking Road planning Log deck construction	0.16 0.00 0.13 0.02 0.01
Infrastructure Road construction Log deck construction Skid trail layout	0.55 0.14 0.14 0.27
Harvest Felling and bucking Skidding Log deck operations	3.14 0.62 1.24 1.28
Support, logistics, supervision	0.32
Activities sub-total	5.21
Overhead	0.52
Stumpage cost	7.61
Waste adjustment	0.09
Training	0.21
Total cost	13.64

Notes: (1) Overhead refers to administrative support (office, phone, fax, computers, etc.); (2) Stumpage cost refers to price of “harvesting rights” on a per hectare basis, divided by standard volume.

As reported by Simula, M.⁴³, although cost estimates for forest management in the Amazon appear to vary among authors, and higher figures than those in Table 6.2 may have been found, the cited author believes that the costs estimated by Holmes, T.P. et al., op.cit., are still reasonable indications, even though local factors (accessibility, commercial volumes, etc.) can have a major impact.

Table 6.3: IBAMA’s direct costs of visits (field visit fees) and price of ATPFs or stamps – per m³ of wood/timber

Notes: (1) based on an average area size of 125 ha, and on 25m³/ha intensity of exploitation ; (2) based on an average area size of 570 ha, and on 25m³/ha intensity of exploitation; (3) based on an average transportation cargo size of 11m³ of logs per truck. Exchange rate used was R$3.30/US$1.00.

Table 6.3 provides average values for the two specific costs charged by IBAMA on those that carry out PMFS, and/or transport timber, and/or process timber: the technical/auditing visit fees, and ATPFs or the stamps of origin. These are costs directly borne by PMFS holders, timber transporters/merchants or manufacturers. As can be seen from Table 6.3, costs of auditing visits (previous and follow-up technical visits) amount to almost US$ 0.02 per m³ (average cost for management plans with 570 ha area), while ATPFs are worth US$ 0.27 per m³, or a stamp of origin that would cost US$ 0.30 per m³. PMFS technical auditing visit fees would therefore add a very small burden to the costs of forest management activities in Amazonia, as presented in Table 6.2. The costs of ATPF or stamps of origin would be supported by the other agents of the chain of custody, namely, transporters/merchants and manufacturers that buy and/or process timber (logs) from PMFS.

Contrary to what Simula, M., op.cit., suggests, the costs currently charged by IBAMA do not seem to be a cause of concern in terms of the additional burden levied on forest management specifically, since these more direct costs of control (previous and follow-up technical auditing) are, as we show, much less than the costs of preparation of the strategic annual operational forest management plan – pre-harvest and harvest planning (as is generally asserted and as stated by Simula, control should cost less than planning).

As can be seen, if we move up on the scale of control of the other links of the chain of custody, IBAMA’s charges are relatively much higher. The unit cost per m³ of timber (logs) transported out of a PMFS site, as currently charged by IBAMA, is US$ 0.27 in the case of ATPFs, or will be US$ 0.30 in the case of the new control document that shall replace the ATPFs, the “Green stamp of origin”. Even so, and looking at the costs of forest management in Table 6.2, this maximum additional cost of US$ 0.30/m³ does not represent too heavy a burden on the unit costs of managed logs that are transported and enter into the gates of manufacturing/processing units in the Amazon.

Having looked at the monitoring and control prices/costs imposed directly by IBAMA on the production and circulation of timber (logs) from PMFS, we should now attempt to see whether or not, and how much, the new SISPROF instruments would increase the costs of controlling and ensuring the availability of sustainable timber in the Amazon. Are the control fees currently imposed by IBAMA (or proposed by IBAMA, in the case of the stamps of origin) sufficient, or not, to cover the new costs of SISPROF and, therefore, are these costs borne entirely by the agents directly involved in the production and circulation of timber from PMFS? What would be the increment in “transaction costs”, due to the control provided by the new system, in terms of carrying out forest management in Amazonia?

Table 6.4, on the costs of SISPROF, provides the values of expenditure incurred by IBAMA in (i) conceiving and developing the system, (ii) establishing it, and (iii) operating and maintaining it. Items (i) and (ii) are investment costs borne by the Federal Government/IBAMA, i.e. “once for all” expenditures, already incurred by Brazilian society, that were necessary to create the system, while item (iii) would be running expenses necessary for operating the system efficiently on a yearly basis and, therefore, necessary to ensure that, through its operation, the purposes of the control system are being accomplished or, in other words, necessary to guarantee a systematic and adequate capacity of recovering the investments that have been made by Brazilian society. It should be remembered that the “validation of data” costs refer solely to PMFS, while the costs of the other pillars, “geo-processing” and “data bank”, refer to all three basic activities that the system aims to control, that is, they include the execution of the controls related to processing authorizations/deforestation licences, forest replacement and PMFS, as well as the subsequent issuing of the respective ATPFs or stamps of origin.

As may be gathered from Table 6.4, the grand total amount of SISPROF’s costs has reached the considerable sum of US$ 6.76 million, out of which US$ 2.762 million have been accounted for as investment costs (conception and development plus establishment of the system) and US$ 3.998 million as operation and maintenance costs (these computed on a yearly basis).

Table 6.4: The costs of SISPROF

Stages/processes of SISPROF	Unit	Unit cost (in US$ 1.00)	Total cost (in US$ 1.00)
1. System’s conception and development 1.1 Geo-processing 1.1.1 Human resources Consultant/developer Geo-processing technician 1.1.2 Images/maps/licences Landsat images (digital) Vegetation maps/land use 1:100,000 ArcView licence	01 (06m) 02 (12m) 220 (/year) 650 60	2,500.00 1,500.00 315.00 28.50 358.00	586,195.00 160,305.00 15,000.00 36,000.00 69,300.00 18,525.00 21,480.00
1.2 Data bank 1.2.1 Human resources SISPROF Coordinator System analyst/data bank manager Programmer/developer IBAMA’s technicians (part-time 50%) Stamp/security document consultant 1.2.2 Licences/software Oracle licence (two processors) Delphi 5.0 licence Linux server licence Windows 2000 XP Microsoft Office Professional XP	01 (24m) 01 (24m) 02 (24m) 03 (24m) 01 (06m) 02 12 01 60 60	2,600.00 2,000.00 1,200.00 1,000.00 1,500.00 31,725.00 189.00 572.00 320.00 310.00	350,690.00 60,000.00 48,000.00 57,600.00 72,000.00 9,000.00 63,450.00 2,268.00 572.00 19,200.00 18,600.00
1.3 Validation of data 1.3.1 Human resources Consultant/developer 1.3.2 Images/charts/licences ArcView Office premium Windows	02 (18m) 4 licences 4 licences 4 licences	2,000.00 150.00 330.00 320.00	75,200.00 72,000.00 600.00 1,320.00 1,280.00
2. System’s establishment 2.1 Geo-processing 2.1.1 Training to operate with the ArcView	100 tech.	420,00	2,176,313.30 42,000.00 42,000.00
2.2 Data bank 2.2.1 Human resources Technicians for analysis and registry of data in 23 bases of IBAMA Digitizers in IBAMA’s bases 2.2.2 Equipment File server DELL 2600 Pentium IV HD20Gb, 256 MB Laser printer of 8 ppm Ink-jet printer Pentium IV Notebook, active matrix 2.2.3 Training of technicians Training for operation of SISPROF in 23 bases of IBAMA Training for IBAMA’s technicians 2.2.4 Making/establishing stamp Making of stamps (for 12 months) Publicity material and training (manuals, folders, posters, etc.)	46 (12m) 46 (12m) 01 60 23 16 03 23 54 9,000.00 15,000	1,000.00 350.00 18,570.00 782.85 370.00 114.50 1,285.70 800.00 420.00 0.02 0.35	1,051,270.10 552,000.00 193,200.00 18,570.10 46,971.00 8,510.00 1,832.00 3,857.00 18,400.00 22,680.00 180,000.00 5,250.00
2.3 Validation of data 2.3.1 Equipment and materials Pick-up with four-wheel traction AutoTrac GPS+cable, antenna, connector Office material (various) Equipment for field visits Fax sets Furniture for bases 2.3.2 Other services Telephone line	46 46 72 kits 23 kits 72 kits 23 23 23	20,000.00 2,000.00 503.10 100.00 260.00 200.00 300.00 100.00	1,083,043.20 920,000.00 92,000.00 36,223.00 2,300.00 18,720.00 4,600.00 6,900.00 2,300.00
3. System’s operation and maintenance 3.1 Geo-processing 3.1.1 Purchase of images and geo-referenced charts 3.1.2 Maintenance/technical assistance to operational bases of IBAMA	220/year 02 techs.	315.00 1,500.00	3,997,975.18 105,300.00 69,300.00 36,000.00
3.2 Data bank 3.2.1 Human resources Technicians for analysis and registry of data in 23 bases of IBAMA Digitizers in IBAMA’s bases Technicians of IBAMA headquarters Data bank manager Programmer/developer 3.2.2 Maintenance of equipment/network Micro-computers/printers Expedient material: printer cartridges, toner, CDs and paper Maintenance of IBAMA’s network	46 (12m) 46 (12m) 03 (12m) 01 (12m) 01 (12m) 23 bases/year 23 bases/year 23 bases/year	1,000.00 350.00 1,000.00 2,000.00 1,200.00 900.00 1,500.00 600.00	888,600.00 552,000.00 193,200.00 36,000.00 24,000.00 14,400.00 20,700.00 34,500.00 13,800.00
3.3 Validation of data 3.3.1 Human resources Consultant/developer Temporary technicians for field visits (wages plus daily stipends) IBAMA’s technicians for field visits (wages, social duties, plus daily stipends) Digitizers 3.3.2 Equipment and materials Reproduction of the digital manual Forms for visits on PMFS 3.3.3 Other hired or paid services Execution of field visits (air travel tickets, consumption material, etc.) Making of the digital report Printing of annual report Distribution of annual report Hosting of the home page 3.3.4 Training Forest management courses for recycling IBAMA’s personnel Forest management courses for other technicians and professionals (costs of instructors only) Training for technical field visits and operation of the accessory programmes 3.3.5 Other events Promotion of annual meeting for evaluation, and planning for next	02 (12m) 54 (04m) 54 (04m) 1,400 forms 200 CDs 1,400 forms 1,400 visits 15,000 CDs 5,000 books 390 (posting) 1 page 2 courses 28 courses 150 participants 91 participants	2,000.00 3,840.00 5,280.00 0.63 1.00 0.48 528.20 2.00 3.00 4.00 241.18 30,000.00 840.00 560.00 600.00	3,004,075.18 24,000.00 829,440.00 1,140,480.00 882.00 200.00 672.00 739,480.00 30,000.00 15,000.00 1,560.00 241.18 60,000.00 23,520.00 84,000.00 54,600.00
4. Grand total (1+2+3)			6,760,483.48

In terms of annual operation and maintenance, more specifically related to field actions for monitoring and controlling PMFS, which include training and other support actions in forest management (item 3.3 of Table 6.4), it can be verified that a total of US$ 3.004 million would be necessary, every year, to provide an efficient implementation of this part of SISPROF. Assuming that the present total authorized exploitation volume of timber (logs) from audited and apt PMFS in the Amazon is of the order of 9 million m³, it would cost US$ 0.33 per m³ of timber for IBAMA to run this part of the control apparatus, yearly.

Now, that figure is quite higher than the control fee of almost US$ 0.02 per m³ currently charged by IBAMA to PMFS holders/producers to cover costs of technical/auditing field visits. Therefore, there would seem to be an amount of US$ 0.31 per m³ of managed timber that is borne by federal budget, and thus by society at large. But it can also be seen that the US$ 0.31 difference per m³ could be in part, if not totally, dissipated by the charges imposed on the other links of the chain. When we bring in the total costs of US$ 0.994 million necessary for the annual operation and maintenance of the other pillars of the system (geo-processing and data bank) and divide these costs only by those same 9 million m³ of managed apt timber – which would mean a control cost of US$ 0.11 per m³ of timber (logs) coming from PMFS and entering the market, as opposed to the present US$ 0.27/m³ (in the case of ATPFs) or US$ 0.30/m³ (in the case of the proposed “Green Stamp”) charged by IBAMA – it becomes clear that the surplus that IBAMA gets here can serve to reduce by US$ 0.16/m³ or US$ 0.19/m³ the apparent total loss that it had to support.

Although it may appear that there remains a difference (because the form of calculation takes into account only managed timber) of US$ 0.15/m³ or US$ 0.12/m³, that IBAMA may still have to bear, it should not be forgotten that this loss may certainly be offset by the gains that IBAMA gets from the fees charged on each m³ of timber (logs) that comes from authorized deforestation (were the costs of “validating data” from deforestation taken into account, the end-result of control costs per m³ of authorized and transported timber leaving deforestation sites would be much lower than the present fees charged by IBAMA, either in the case of ATPFs, as well as, and even more, in the case of the proposed new fees of the “Red Stamps”). This is particularly fortunate, since deforestation would then end up paying for the control costs of forest management, at least from the point of view of the workings of SISPROF and the fees charged (even more in the case of those proposed) by IBAMA.

What emerges quite clearly from the above discussion is that the system is capable of paying for itself. The more forest management there is in the Amazon, i.e. the more there are PMFS that are well controlled, apt and producing timber in the region, the cheaper will be the unit costs of control per m³ of sustainably managed timber. Moreover, the system does not at all “overcharge” or burden forest management. On the contrary, given the bases and lines on which it is built, SISPROF is rightly formulated in terms of how much and who should be bearing the greater portions of monitoring and control costs of forest management, i.e. those that have to pay the higher fees to cover these costs are those located in the other links more towards the end of the timber chain of custody, namely, merchants and manufacturers and, of course, those that use timber from deforestation. Forest management thus appears to be stimulated by SISPROF. From the point of view of these features, it is doubtful whether any other existing proposal with regard to a monitoring and control system for forest management in the Brazilian Amazon can outrank SISPROF.