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Reid and Howard (1994)

Unsustainable logging in Guatemala is substantially (21-55 percent) more profitable than logging operations that integrated some sustainability considerations.

Hardner and Rice (1997)

Sustainable forest management practices in Pará (Brazil) are clearly financially inferior than unsustainable practices.

Bruenig (1990)

Timber liquidation generates the highest profits in Sabah, Malaysia.

Kollert et al (1995)

Estimates of the financial returns from eight sustainable forest management options tested in Malaysia, indicate that they all generate positive results, but that these are also lower than could be obtained in the short-term through unsustainable practices.

Howard and Valerio (1996)

Financial returns from sustainable forest management are competitive compared with those of cattle ranching and crop production in three regions of Costa Rica. However, defying this conclusion, evidence shows that unsustainable forest practices continue. The authors attribute this to the comparatively undesirable patterns of cash flows generated by sustainable forest management practices, to the lack of land ownership security and to sheer ignorance about the financial benefits of sustainable forest management.

Mendoza and Ayemou (1992)

The analysis of several forest management options in Côte d'Ivoire reveal that sustainable harvesting reduces profitability considerably compared with a strategy of resource depletion.

Howard et al (1996)

A simulation model of the Chimanes forest in Bolivia shows that sustainable practices will reduce profitability by 35-67 percent.

FAO (1997)

A case-study in the Brazilian Amazon shows that reduced impact logging and other more sustainable harvesting techniques increase costs, but only slightly. It also suggests that future benefits may compensate for these costs in the long-run.

Kishor and Constantino


Analysis of four competitive alternative uses of forest land in Costa Rica show that the "cut and run" forest depletion option is the most profitable one and far more profitable than the sustainable forest management option.

Johns et al (1996)

Study of Paragominas Region (Brazil) shows that reduced impact logging (involving directional felling, climber cutting, improved planning and less waste) is profitable. These measures increased the net present value of the timber harvest by 34 percent.

"Even though felling and skidding resulted in substantial damage to trees left in the forest, including commercial species, timber was regenerating rapidly."

Product or type of benefit


Costa Rica



Peninsular Malaysia

Roundwood (market value)






NWFPs (market and non-market values)






Carbon storage (non-market value)






Pharmaceutical (non-market value)






Ecotourism/recreation (market and non-market values)






Watershed protection (non-market values)






Non-use value (non-market value)






Option value (non-market value)






Type of action

Examples of specific projects or policies

Direct Government investment in the forest sector or in related sectors

Road construction

Hydropower investments

Government command and control regulations

Conservation area protection

Obligation to replant harvested areas

Prohibition to harvest without a permit

Obligation to prepare forest management plans as a condition for intervening in forest areas

Log export bans

Fiscal, price or monetary policies

Subsidies affecting forest raw materials or other inputs

Subsidies affecting competitive uses of lands, such as cattle ranching

Plantation subsidies

Price controls

Subsidies affecting forest harvesting or manufacturing

Forest products taxes

Subsidized credit

Foreign exchange policies affecting competitive uses of lands

Provision of services

Delimitation, demarcation and land titling

Actions to promote exports

Settlement of frontier areas

Country and source

Period of Analysis

Estimated proportion of economic rent captured by the government (%)

NICARAGUA (Gray and Hagerby, 1997)



VENEZUELA (Centeno, 1995)



INDONESIA (Reid Collins, 1993)



INDONESIA (Myers and Kent, 1997)





PENINSULAR MALAYSIA (Vincent et al, 1993)



SABAH (Vincent, 1991)



SARAWAK (Vincent, 1991)



GHANA (Gronow, 1996)



CAMEROON (Grut et al, 1991)



CAMEROON (World Bank, 1997)



CAMBODIA (Global Witness, 1997)



2 With, for example, real discount rates as high as 20 percent per year determining investment decisions in many countries.

3 Including wood-composite products and an array of non-wood substitute products.

4 For example, average plantation growth rates of nearly 20 cubic meters per hectare per year are already quite common and are greatly exceeded in new planting and in existing plantations in some countries such as Brazil (see Figure 1).

5 Bull (1998); Reid and Rice (1997); and Varangis (1992).

6 For example, a value for carbon storage of US$ 2,000 per hectare would be equal, if summed across the total global forest estate, to US$ 1,000 per capita.

7 Of course, a value of only US$ 10 per tonne of carbon is open to question. Some analysts believe that this value may be as low as US$ 5 per tonne. Still, this does not alter the fact that carbon sequestration is one of the most important global non-market benefits of forests.

8 Gregersen, and others have questioned the soundness of paying forest owners for merely protecting their forests and doing nothing with an old growth forest that has no net carbon sequestration value (see, for example, Gregersen et al, 1998).

9 Although, for example, Colombia is resisting efforts to build the linking stretch of the Trans-American Highway, for fear of opening-up remote forest areas.

10 Forest concessions are permits issued by governments for exclusive rights to access forest resources for the production of wood or other forest products, usually with the additional requirement that the forest area is managed in a certain way.

11 Economic rent, in the context of forest management, is the surplus revenue from the sale of roundwood harvested in the forest after taking into account all the costs of harvesting and forest management, including an allowance for a normal return on the capital invested in the forest operation. Governments can capture part of all of the economic rent by levying a variety of forest charges. Any economic rent that is not captured by the government, is obtained by producers and consumers in the form of excess profits and cheap wood products.

12 Director-general of the World Wide Fund for Nature.

13 Corruption can be defined as: "the sale by government officials of government property for personal gain" (Shleifer, and Vishney, 1993) or "behavior on the part of officials in the public sector, whether politicians or civil servants, in which they improperly and unlawfully enrich themselves, or those close to them, by the misuse of public power entrusted to them" (Transparency International, 1996).

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