Comparison of harvesting costs for the first logging operation under Conventional Logging and Reduced-Impact Logging showed that for the conditions of this study, RIL increases the average logging cost per m³ by a factor of 1.2 as compared to CL. However, this differential includes the cost of training and of conducting damage assessments. For future harvests it can be assumed that these introductory costs will no longer apply. In addition, gaining experience with RIL over time will lead to increased productivity and hence, a comparative reduction in RIL costs.
Holmes et al. (1999) compared the costs and revenues of RIL and CL in eastern Amazonia. Their study showed that the introduction of RIL techniques led to a 3% cost reduction relative to CL. Based on a case study carried out in East Kalimantan (Indonesia) Elias (1998) estimated that the costs under RIL increase by 1% in comparison to CL. However, Elias excluded harvest planning costs from his study. These costs were included in the present study and also in the study by Holmes et al.
The increased cost of harvesting with RIL as calculated for the FSPA is substantially higher than found in these two studies. Two important differences may the difficult topography and the high annual rainfall within the concession area. The latter leads to long periods during which operations must be entirely suspended.
Profit from harvesting in this study was estimated at RM 29/m3 and RM 45/m³ under the CL system and the RIL system respectively. However, considering the extracted volume, 4,005 m³/100 ha NPA under CL vs. 1,942 m³/100 ha NPA, the CL system is more profitable. The total profit per 100 ha NPA amounts to RM 117,566 under CL as compared to only RM 88,318 under the RIL system.
The high extraction volume in the first harvesting operation under CL strongly influences the results of the CBA with regard to the 40-year calculation period. The results show that both harvesting systems are economically viable at a discount rate of 10%. Disregarding the negative environmental and social costs connected with CL, this system is more profitable than the RIL system. This is also due to the effect of discounting over a 40-year period which essentially eliminates the advantage of a higher commercial RIL volume and revenue in the second harvest.
According to company records, the volume extracted between 1994 and 1999 averaged 44.5 m³/ha under conventional logging. However, field inventories indicated that an additional 20 m³/ha (+45%) was actually extracted. This additional volume was used in the construction of culverts, bridges, and camp buildings.
The high logging intensity in combination with careless extraction methods under CL results in a high percentage (54%) of severely and fatally damaged trees in the residual stand. In addition, the productive forest area is reduced by 13% due to skidtrails and log landings.
Simulation with the DIPSIM model, using data for 21 harvesting units in the FSPA, indicates that both harvesting intensity and soil compaction associated with skidtrails and landings reduce the overall value of the forest resource. 40 years after the initial harvest the gross commercial volume of conventionally logged stands amounts to 196 m³/ha. This stands in a sharp contrast to a commercial gross stocking of 303 m³/ha in primary forest stands.
The introduction of RIL techniques reduced the damage to the residual stand to 28%. This reduction is a product of more careful logging practices and a lower harvesting intensity. RIL planning procedures and harvesting regulations (maximum slope, reservation of potential crop trees and fruit trees, etc.) reduce the impact on both forest soils and residual stands. This damage reduction leads to an increased quality of the future harvestable stand. The area loss due to skidtrail construction was reduced from 13% under CL to only 4% under RIL. Improved felling and trimming techniques and, even more importantly, the reduction of timber wastage such as rejected logs and second trimmings, led to an increase in the recovery of timber resources under RIL as compared to CL.
DIPSIM simulations support the sustainability of RIL techniques. 40 years after the initial harvest the gross commercial volume of stands that were logged with RIL is projected to reach 317 m³/ha, a slight increase from the 303 m3/ha measured at the time of the initial harvest.
Capacity limits for the development of the forestry sector are set by two critical factors in the economic chain: the available resources with their production potential and opportunities provided by markets. The global supply of logs has been and continues to be reduced, as suppliers reach the limit of their primary forest resources (ITTO, 1999).
The results of the DIPSIM simulations show that the potentially extractable volume of commercial timber 40 years after the initial harvest is project to reach 85 m³/ha under RIL as compared to only 23 m³/ha under CL. These figures indicate the non-sustainability of the CL system over a longer-term period, due to its failure to provide a continuous timber supply at constant levels.
It has been suggested that the increased stocking levels of potential crop trees, combined with higher volume increments, could permit a reduced cutting cycle under RIL as compared to CL (Kleine, 1997). Any proposals to change the length of the cutting cycle should, however, be approached cautiously, because these could neutralise at least some of the positive benefits attained with RIL (Pinard et al., 2000). On the other hand, if it can be credibly demonstrated that RIL leads to the achievement of pre-determined target levels in commercial timber stocks, then such an adjustment of the cutting cycle length would be justified.
An assessment of post-harvesting stand conditions under RIL suggests that benefits for silviculture and biodiversity conservation are potentially significant. This is supported by the economic analysis considering the values of NTFPs, recreational opportunities, soil conservation benefits, carbon stocks, and biodiversity, as well as timber values. The economic analysis demonstrates that RIL provides a significantly higher level of welfare to society as a whole as compared to CL.
Nevertheless, from the viewpoint of a timber concessionaire, conventional logging at present is more profitable than RIL under the conditions evaluated in this study.
It should be emphasised that the application of RIL techniques in the FSPA is still at an early stage. There are ample opportunities for further improvements in cost cutting, increasing harvesting intensity and sales revenues, as well as in improving the skills and efficiency of the forest workers and machines.
The volume extracted during the first harvest is important in determining the relative financial viability of RIL as compared to CL. Restriction of harvesting on steep slopes or in stream buffers results in reduced commercial volume available for harvest. Although some of this timber could be harvested with appropriate harvesting technology (e.g., cable systems or helicopters on steep slopes), foregone timber represents a high opportunity cost for the concessionaire (Pinard et al., 2000).
Nevertheless, experience in the FOMISS Projects suggests that the harvesting intensity under RIL might be increased by about 20% without jeopardising the RIL objectives. As indicated by the sensitivity analysis, RIL would be more profitable than CL if the harvesting intensity were increased about 30%, to 36 m³/ha NOA. This conclusion is based on changing a single variable (volume), without considering other factors that might also contribute to increased economic viability of RIL. Heavy cutting, however, would seriously compromise the benefits of RIL. A study carried out in East Kalimantan, Indonesia demonstrated that RIL was only able to reduce logging damage by 50% in comparison with CL when the felling intensity was less than 8 trees/ha. Above this threshold, the effectiveness of RIL in limiting forest damage was significantly reduced (Sist & Bertault, 1998). Thus, any increase in harvesting intensity under RIL should be very carefully assessed.
Over time, experience with the application of RIL will permit operators to reduce harvesting costs and thus increase the profitability of the RIL system. However, as indicated by the sensitivity analysis, a reduction of 30% in harvesting costs would be required to make RIL more profitable than CL (without consideration of other influencing factors). Such a large reduction appears difficult to achieve by itself. However, the sensitivity analysis also indicates that only a slight reduction in harvesting costs, coupled with a 20% increase in harvesting intensity during the first cut, would be sufficient to make RIL more profitable than CL.
Based on the results of the sensitivity analysis it is evident that incentive systems, such as certification premiums or carbon trading payments, would significantly motivate the introduction of RIL techniques. Several incentive systems with potential application for sustainable forest management are discussed in the following section.