C17

Equity in forest-based enterprises: the foundation of sustainable forest management

K.A. Monk ¹ and A. Cropper ²

Abstract

Sustainable forest management is now firmly established as part of mainstream development programmes, but the complexities of its multiscale implementation as both a technical and social approach have yet to be overcome. Increasingly, the focus is on development of innovative enterprises, particularly in multistakeholder partnerships with local forest-based or forest-margin communities. We raise a number of influencing issues involving guidelines, leadership and governance systems. In particular, we underline the continuing importance of fundamental awareness of equity and gender. We review why these issues matter and how they are playing themselves out. We do not necessarily answer the questions raised.

Introduction

The goal of sustainable forest management (SFM), or how to realize the full value for forest services in an ecological, economical and equitable manner, is now firmly established as the target of many development programmes. This is a comprehensive concept requiring multiscale landscape management. Although multiscale Criteria and Indicators (C&I) for SFM are being developed (Prabhu, Colfer and Shepherd, 1998), in practice SFM is most frequently applied to individual forest management units. Larger-scale concepts such as carbon offset trading now seem to be also focusing down to this level. The criteria by which the spatial organization of such enterprises is determined, and at what levels equitable sharing among beneficiaries is finally deemed reasonable, are rarely articulated. As decision-making, managerial responsibility and commercial exploitation become increasingly localized, we must plan ways to integrate multiple uses of forests, as well as ask who should initiate, manage and profit from these multiple uses. Ideally, these problems at the higher level should be subsumed by a mechanism that makes national C&I a sum of the parts of the local C&I, using these as a planning as well as a management tool. This has rarely taken place, but it is the logical next step.

First, we should clearly define the identity and claim of indigenous and local communities to the resources, and what constitutes traditional knowledge and lifestyle based on these resources. The Convention for Biological Diversity (CBD), for example, recognizes both categories of communities, but does not define them. The reference is to "indigenous and local communities embodying traditional lifestyles relevant for the conservation and sustainable use of biological diversity." [authors' italics]. Within the CBD and in subsequent discussions, this important sentence is shortened to "indigenous communities", a phrase with sweeping assumptions. Here, we simply highlight the need to be aware of perceptions of stakeholder identities.

Second, SFM has inherent implications for business development. Contrary to the collective approach demanded by SFM, most commercial enterprises engage in a battle for comparative advantage. We rarely talk of the challenges and trade-offs for local communities partnering commercial and/or public entities or running forest-based enterprises alone. We especially ignore the fundamental issue of equity within and between commercial and local community-based enterprises, and between community and individual. It is easy to talk about equity; harder to define, implement or monitor it. It is a political notion rather than a specific rule. We suggest that we need to consider trade-offs and benefits associated with who might develop what enterprise at what point in the development process, in terms of natural justice, as well as finance. We review three questions within the context of equitable development of enterprises based on forest resources: 

• Are there guidelines that indicate when and in what circumstances an enterprise should be commercially or community based?
• Should community-based enterprises be communal or individually led?
• If individually led within a local community, what role would the community-based governance system play?

We believe it is essential to have inclusive discussion of criteria and processes to clarify and, if possible, systematize approaches to these issues to bring People and Forests into Harmony in the future.

Are there guidelines that indicate when and in what circumstances an enterprise should be commercially or community based?

Within the context of SFM programmes, we define a commercial company as one originating from a group that does not have direct links or claims to the land. A community-based enterprise is one set up by a local forest-based or forest-margin community. We have found no real analysis of why an SFM enterprise should be commercial or run by a community. Based on experiences in two major programmes, the European Union-funded Leuser Development Programme in Sumatra, Indonesia, and the Iwokrama Rain Forest Programme in Guyana, we offer some general comparisons in Table 1.

There are few sets of principles for business partnerships available from SFM programmes (Higman et al., 1999). Using those from the Iwokrama International Centre for Rain Forest Conservation and Development (2003), Table 2 compares their significance when applied to a commercial or community-based enterprise.

These principles imply that partners will be mainly international, reflecting an expectation of foreign direct investment (FDI), with regulatory control being provided directly by Iwokrama; Guyana's local regulatory mechanisms are still being developed. Incorporation of sustainable development principles into commercial enterprises is still widely seen as improving community relations through community consultations, dialogue and local community development programmes (Holliday et al., 2002; Zarsky and Gallagher, 2003).

Table 1. A comparison of enterprises run commercially and communally

Table 2. Implications of Iwokrama business principles for business-partner choice

The Iwokrama principles may reinforce outsider perceptions of local communities as passive recipients of benefits rather than proactive business leaders. Even so, these benefits include valid improvements such as "best practice" wages and working conditions, and/or environmental conditions. Such benefits may also include infrastructural support. The principles also accentuate equitable participation, though we highlight constraints to this materializing in Table 2.

The principles developed at Iwokrama also reflect the complexity of defining exactly how such enterprises should be developed and by whom. Iwokrama, for example, deals with enterprise development on three levels:

• Community-based enterprises - communally and individually run - that provide income for local communities not Iwokrama, directly or indirectly based on the forest resources, e.g. aquarium fish trade.
• Best practice experimental enterprises based directly on forest resources that may or may not make a profit for Iwokrama, the local communities and the government, e.g. timber extraction, ecotourism.
• Indirect enterprises set up specifically to provide an income for Iwokrama, e.g. branding, merchandise.

These principles must therefore be much more complex to guide the specific contractual arrangements for any undertaking at whatever level.

Should community enterprises be communal or individually led?

All local enterprise development has several functions:

• generation of income;
• improving standards of living;
• reducing burden on local and national governments to support local communities;
• developing local human resources;
• if based on, or linked to, natural resources -
  • improving natural resource management;
  • emphasizing or legalizing land claims.

A possible implicit assumption within development projects is that community-based enterprises means communally, rather than individually, led. Factors influencing such a decision within a system of SFM include:

• The extent of traditional community-use versus traditional personal-use of the particular resource being considered for commercialization;
• The extent to which communal use is for ecosystem services and personal use for more consumptive and economic gain;
• The differences between systems of ownership of different natural resources;
• The workforce required to develop the resource - can processing, for example, be a communal action, or be done individually? The development of traditional knowledge into information products or books uses communal knowledge, but a specialist group of locals transform this knowledge into the products. Should these people therefore gain more financially than the local community? What if the traditional knowledge is not communally held but protected by an elite few?
• The clarity of contractual agreements based on communal consensus: Are communally owned enterprises more difficult to set up than individual enterprises?

Distribution of profits of communal enterprises raises several issues:

• Do all villagers receive equal rewards, or are they paid according to involvement?
• If enterprises exploit indigenousness, then who is indigenous and to what extent?
• Do profits go to individuals or does the traditional leader council or local government body have the right to allocate the profits?

These questions may cause third parties to prefer to work with individuals rather than with communal landowners.

If these enterprises are individually led within a local community, what role would community-based governance systems play?

Communities are run in many different ways. Local leaders may be appointed or elected under traditional or government-imposed arrangements. The two systems may exist in parallel, with traditional leaders being voted in as government representatives.

Whatever their origins, community leaders are important in implementing donor programmes in local communities, as it is impractical to engage directly with every individual. They are also significant in mitigating negative impacts of change, especially when wealth increases. When no system exists to encourage the skills needed to manage increased wealth, poorly planned loans are wasted, profits squandered, and alcohol and drug abuse increases. Change must also be managed as younger people absorb new ideas and take control of finances, becoming the new elite.

In 1996, Iwokrama staff encouraged a local representative system that now has significant influence within its communities and which is recognized in many ways by the state. The North Rupununi District Development Board (NRDDB) is a form of non-governmental organization, comprising all 14 village-elected representatives (men and women), and representatives from other groups developed by Iwokrama to encourage natural resource management awareness. These include the Makushi Research Unit (awareness and ownership of traditional culture), Community Environmental Workers (direct programme-village links), Bina Hill Institute (local training centre), and Junior Wildlife Clubs (recently supported by the Audubon Society with Iwokrama).

In 1996, few villages could communicate confidently with outsiders. Direct contact with the government or donors was weak. In 2003, all 14 locally elected leaders have worked for Iwokrama at one time or another, the NRDDB acts as a direct collaborator with development agencies, and they have an effective community radio. The NRDDB has become a pivotal organization through which outsiders must work, and it is beginning to exert more power over individual villages. It is thus moving from an information centre to a new form of governance. Researchers, for example, who wish to work with a specific village within the North Rupununi, must apply for permission from the NRDDB. Villages wanting to start specific projects must apply through the NRDDB. Its role in selecting enterprise activities is also evolving rapidly, though not without controversy within the area. As the NRDDB grows, so too do the villages themselves, and it will be instructive to track the evolution of the relationship.

A community-based representative or governance system can have significant roles in implementation of development processes and in mitigating the negative impacts of communal or individual enterprises bringing in more wealth, but it can also stifle individual entrepreneurship.

Conclusions

Several mechanisms now exist to develop commercial-community partnerships. Their experimental and unusual nature is reflected in the slow uptake of the funds, however, which suggests that these linkages in the forest sector are still not viewed comfortably. Our paper has reviewed three questions, with the following conclusions.

Are there guidelines that indicate when and in what circumstances an enterprise should be commercially or community based?

Few guiding principles are available, although inherent in any such project is the fact that it must follow environmental and social best practice. Commercial forest certification systems and the Center for International Forestry Research's (CIFOR) programme on C&Is bring some issues of equity to commercial enterprises, but we do not know yet what constitutes best practice for promoting community enterprise development within SFM. Every programme is experimental. Multiscale usage of forests is fluid. Activities once considered national prerogatives can be moved to new scales with innovative financial mechanisms. Growing international investment interest in carbon offset trading with direct linkages to local communities underlines this blurring of categories. Few analyses exist on the subject and individual projects work very much in isolation, so that the potential for significant exploitation is great.

Should community-based enterprises be communal or individually led?

Although an implicit assumption in development projects is that they should be led by the community, the decision should be taken based on local circumstances and objectives. This is particularly important in considering intellectual property rights agreements and how the profits should be divided. Even so, we note the importance of individual entrepreneurship.

In considering these two questions in particular, it is possible to generalize this situation and underline the challenge of "institutionalizing" local communities in business in both developed and developing countries.

If individually led within a local community, what role would the community-based governance system play?

Our experience has shown that a local system of representation is essential, including the capability to communicate within and outside the group. The extent of their control on the community must be cleared defined and accepted.

To prevent these issues of equity remaining marginalized and ad hoc, we need to do far more to sensitize governments. Governments and donors present "model sites" as policy models, gaining much publicity, but we do not see replication of these models. This may be because special consideration is given by the host government to the model project in recognition that the underlying structures and legislation are rarely in place. Hence, the project is voted a success, but the lack of underlying structures prohibit further uptake by society and it therefore fails as a model. We should consider here whether an over-reach by donors therefore exists when going straight to local communities. We recognize that many development projects encouraging enterprise development assume relevant national structures and practices are in place. In most cases, they are not and so we are sidetracked into supporting and campaigning for the creation of these foundation blocks of legislation and structures. Time, money and resources are diverted from their original purpose. These needs contrast strongly with the unwillingness of donors to support any activity of this kind over the long-term. This dichotomy in needs and approaches accounts for a lot of the start-stops that we see. Continuity of effort and of funding is essential. We need to ensure that the foundations for these activities are in place. It is high time we took a more strategic and logical path to development projects so that donors provide more effective funding situations.

Finally, the complexities of forest management and the changing background to forest development are major challenges to making real progress in sustainable enterprises with local communities. But those challenges must be met. The alternative is that poor communities directly dependent on forest resources continue to be marginalized by both the business and political communities.

References

Iwokrama International Centre for Rain Forest Conservation and Development. 2003. Five-year review 1998-2002. Georgetown, Guyana, IICRFCD.

Higman, S., Bass, S., Judd, N., Mayers J. & Nussbaum, R. 1999. The sustainable forestry handbook. London, Earthscan.

Holliday, C.O., Schmidheriny, S. & Watts P. 2002. Walking the talk: The business case for sustainable development. Sheffield, UK, Greenleaf Publishing Ltd.; San Francisco, USA, Berrett-Koehler Publishers Inc.

Prabhu, R., Colfer, C. & Shepherd, G. 1998. Criteria and indicators for sustainable forest management: new findings from CIFOR's forest management unit level research. Rural Development Forestry network paper 23a.

Zarsky, L. & Gallagher, K. 2003. Searching for the Holy Grail. Presented at WWF-UK Workshop on International Investment Frameworks for Sustainable Development: Framing the Debate. London, 10 March 2003. (also available at: http://www.ase.tufts.edu/gdae/highlights/holy_grail.pdf)

¹ School of Animal and Microbial Science, University of Reading, Reading, Berks, United Kingdom. [email protected]

² 2 Mt. Anne Drive, Cascade, Port of Spain, Trinidad and Tobago. [email protected]