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25. Outcome-based regulations to encourage reduced impact logging - Chris P.A. Bennett*


* 3920 W. 17th Ave, Vancouver V6S 1A5, Canada, Tel. ++(1 604) 222 2049, Fax: ++(1 604) 222 2849, E-mail: cpabenn@interchange.ubc.ca

INTRODUCTION

Widespread adoption of reduced impact logging (RIL), particularly in tropical forests, will probably remain an elusive goal wherever the forestry policy environment is overly prescriptive, dictating how to achieve sustainable forest management (SFM). Instead, the focus should be on forest management outcomes that allow site-specific adaptations as well as sufficient regulatory oversight. Forestry policy development in Indonesia from 1967 to 1999 illustrates the policy problem as well as opportunities to advance RIL.

Over 900 forestry-related laws and presidential and ministerial decrees were issued between 1976 and 1999. Fifty-eight percent of these instruments were ministerial decrees, most of which remained ‘in force’ in 1999 (see Tables 1 and 2). From the mid-1980s to the late-1990s, the number of forestry policies doubled. During the same period, over 14 percent of Indonesia’s natural forest cover, some 17 million ha, was lost (see Table 3).

Table 1. Forestry policy development, 1967 to 1999

Forestry-related laws and decrees

Total

In force

Revised

Revoked

Law (UU)

26

21

3

2

Government regulation (PP)

55

32

2

21

Presidential decree (Keppres)

53

39

9

5

Ministerial decree (SK Menteri)

490

270

94

126

Director General’s decree (SK DirJen)

292

166

38

88

Total

916

528

146

242

%

100

58

16

26

Table 2. Forestry policies issued, 1967 to 1999

Forestry-related laws and decrees

1960 - 1969

1970-1979

1980-1989

1990-1999

Law (UU)

12

0

3

11

Government regulation (PP)

9

11

7

28

Presidential decree (Keppres)

0

11

10

32

Ministerial decree (SK Menteri)

10

38

108

333

Director General’s decree (SK DirJen)

1

51

55

186

Total

32

111

183

590

%

4

12

20

64

Table 3. Deforestation and forestry policy trends


1985

1997

1997 - 1998

Percentage forest covera

74.5 m ha

57.1 m ha

17.4 m ha (14%)

Total forestry-related policiesb issued in 1985 and 1997

229

538

+ 309 (134%)

Source:

a Holmes (2000): Sumatra, Kalimantan and Sulawesi

b Present analysis

The underlying problem

Of this vast array of policies, most were highly prescriptive. Few were devoted to the monitoring, evaluation and regulation of actual forest health. This policy pattern was also typical for concession forest management. Inputs (e.g. financial, personnel, equipment structure), complex licensing and planning processes as well as control of over 60 percent of Indonesia’s land occupied the centre stage of forestry policy development. Forest concessionaires were more concerned with fulfilling the paper exercise of administrative requirements, which prescriptive regulations tend to generate, than with worrying about their impacts on the forest ecosystem (see Table 4). Each administrative requirement has characteristically had both formal and informal cost implications.

This paper argues that the basic problem has not been lack of enforcement and implementation but the nature of the policy framework itself. Prevalent, and often counter-productive, prescriptive regulations should be reoriented towards outcome-based policies to promote RIL as well as other aspects of SFM. Decentralization in Indonesia, whilst a much publicized threat to SFM, is also an opportunity for a paradigm policy shift (that the centre would otherwise have been reluctant to initiate) to encourage groups with access to the forest resource (whether corporate concessions or local communities) to value forests as forests. Unless this happens, widespread investment in RIL strategies will be unlikely.

RIL adoption is fostered by the following outcome-based policies: (1) establishment of secure rights of access to forest resources; (2) adequate recognition of village-based forest management; (3) reform of overly bureaucratic and prescriptive regulations that invite corruption and ineffective inspection; and (4) removal of trade and industry policies that undervalue forest resources.

The paper concludes with a section on challenges and opportunities. Acceptance of outcome-based policies faces formidable barriers from both entrenched rent-seekers and policy-makers who believe the problems of the past have simply resulted from lack of effective enforcement.

Table 4. Regulation of a natural forest management concession, Central Kalimantan, 1995

Typea concession management actionsb

Number of decrees, circulars, laws governing

ARTICLE OF THE CONSTITUTION (UU)

1

PRESIDENTIAL DECREE (Keppres)

2

GOVERNMENT REGULATION (PP)

3

MINISTER’S DECREE (SK)

10

DIRECTOR GENERAL’S DECREE (SK) or CIRCULAR (SE)

37

LITBANG (SE)/Agency for Forest Research and Development

1

KANWIL/Ministry of Forestry’s Provincial Representative (SE)

12

DINAS KEHUTANAN (SE)/Provincial Forestry Inspection and Extension Service

3

Total

69

Source: Bennett, 1999

Notes:

a The various regulatory levels deal with land-use mapping, planning, road building, logging, log transport, replanting, community development.

b Ninety-five percent of the above results in yearly, quarterly or monthly reporting after field implementation. There are about 14 monthly reports, and four quarterly reports. Obtaining report/proposal approval related to an instruction may involve a few to several intermediate stages. The total of 69 instructions/regulations is probably an underestimate. The compiler of the regulations noted only 3 of the 20 instructions dealing with the Village Development or Bina Desa Hutan/PMDH program.

VALUING FORESTS AS FORESTS

The challenge of advancing RIL in particular, and SFM in general, is to change the behaviour of major groups that extract forest resources in a way which ensures sustainability over large areas; as opposed to selecting discrete projects supported by external sources of assistance. To date, the vast array of forestry management rules and regulations in Indonesia has failed to do so. Subsidized RIL and rehabilitation have fallen far short of goals. The key challenge is how to encourage forest resource managers, be they small-scale community initiatives or corporate concessionaires, to value forests as forests (production forests as natural forest) rather than as a lucrative salvage means to a timber plantation end (Bennett, 2000).

Four major policy enabling conditions are required to persuade these groups to do this and, above all, to invest in RIL. RIL adoption will be fostered by the following outcome-based policies. Each is necessary but none is sufficient by itself to achieve a sustainable outcome:

(1) Establishment of secure rights of access to forest resources

First and foremost is the persistent problem of uncertainties surrounding rights of access to forest resources. Forest managers who face uncertainty about the future are not likely to invest in it. Rights of access to forest resources are notoriously insecure, limiting and vague. Licensing generally focuses on specific utilization rather than overall resource management. Past experience of concessions has demonstrated that without secure rights of access, forest managers will have little interest in investing in a second cut and only concentrate on safeguarding their access to primary forest. Instead of seeking ways to gain the agreement of forest villagers to participate in protecting logged-over areas, concessionaires, in collusion with forest inspectors, have been prepared to turn a blind eye to encroachment of logged-over areas to reduce the risk of encroachment into primary production forests.

As long as forest tenure remains insecure and enforcement institutions weak, Indonesia’s forests will remain as open access resources. Security in public lands means leases with predictable, objective and transparent outcome-based criteria for lease extension to provide the certainty of future returns to investment such as RIL.

(2) Recognition of village roles in forest management

For too long a time, local communities have been excluded formally from forest resource management. Past policies for community participation in forest management have been unduly restrictive or half-hearted. Many village communities have long-established (adat) forest and non-forest lands that predate the granting of concessions; communities with forests within their village boundaries hold the key to protecting Indonesia’s forest resources. Typically perceived as liabilities (illegal loggers and shifting cultivators), they are potentially key assets in the quest for SFM. Being indigenous and more numerous than outsiders, they offer the only realistic means of policing the forests. They stand to lose most from forest degradation and (in collaboration with the government) should see the value of accepting responsibility for conserving some forest areas. Provided they have legal legitimacy, they can bar illegal loggers (even those with organized support) from their forest areas (Bennett, 1999).

Current policies do not recognize and defend rights and reasonable responsibilities for community-based forest management adequately (see below). Local communities generally perceive the forest as being one of several interrelated components within traditional village boundaries; they can be knowledgeable and responsible partners in dialogue about land use and allocation provided they are given genuine opportunities (as opposed to token representation) and trust in the process. Contrary to popular perceptions, there are also important opportunities for joint management between communities and corporate concessions. Unfortunately, the existing policy framework does not allow for these kinds of initiatives.

Ignoring a role for local people in decision-making over the fate of forest resources within their village areas is tantamount to inviting illegal logging and agricultural encroachment. Diligent RIL implementation by a forest concessionaire is meaningless if the forest areas are converted by people whose only hope of access rights is to farmland. They will not deter illegal loggers from making their life easier by hastening the conversion to agricultural activities.

(3) Reform of overly-bureaucratic regulations

The present system of forest regulation with its vast corpus of decrees, instructions, circulars and mandatory ‘guidelines’, has been largely ineffective while incurring high costs and inviting corruption (note the byzantine process of obtaining a concession license). In the case of natural production forests, the present regulatory framework for natural resource management is based upon highly prescriptive interventions and the regulation of inputs (equipment inventories, personnel, financial structure), none of which conveys adequate information about the actual impact of logging. Simpler and more useful regulations could be developed that focus attention less on pre-logging inputs, and more on post-logging outcomes, such as indications of actual recovery of the forest stand after logging (Bennett, 1998).

Resource managers should be left to find their own management solutions provided they stay within designated ecosystem impact thresholds, judged according to objectively verifiable measures (residual stand damage, skid trail disturbance, gap size, diameter at breast height etc.). Simpler and easier for many stakeholders (especially community forest managers) to understand, outcome-based assessments of forest management performance would also be understood more readily by other stakeholders in both central and regional agencies (journalists, NGOs, parliamentary commissions, etc.). This, in turn, might exert more pressure on forestry agencies to perform better than they have done in the past.

(4) Removal of policies that undervalue forest resources

A wide range of trade and investment policies results in the under-valuation of forest resources, by providing barriers to a competitive domestic log market and reducing demand (e.g. restrictive industry licensing and log-export restrictions). Although reducing demand is urged by many observers to reduce illegal logging, it has the perverse effects of favouring non-forest uses of forested areas, together with persuading local government that economic growth and development are in agriculture (e.g. agricultural plantation or smallholder tree crop development), not forestry (Bennett, 1999). The less valuable the forest resources, the less interest owners will have in maintaining the forest ecosystem that supplies them.

In summary, sustainable gains from higher value forest resources will occur where rights of access are equitable and secure, and extraction is bounded by reasonable and enforceable regulations. These in turn will promote investment in RIL.

Costs of prescriptive policies

The basis of forestry policy development in Indonesia has been to prescribe forest operations and organization (Bennett, 1998). In practical terms, this has meant the regulation of inputs such as:

The costs of negotiating forest bureaucracies can be high, representing foregone income for investment. Table 4 gives an indication of the problem. How much does this translate into? Industry estimates range around the US$ 10/m3 mark. Based upon administrative requirements rather than verifiable biophysical indicators of forest health, the regulatory procedures have invited endless opportunities for corruption. Without more objective performance criteria, forest managers have been powerless to object and risk licensing, permit and planning delays. Community forest managers that may yet be permitted to log natural forests would find the administrative burden prohibitive (Bennett, 1998).

Less professional forest managers welcome a way to avoid the consequences of their high-impact logging. Thus, the paperwork that prescriptive, input-based regulation generates invites mismanagement (notably bribes to evade compliance) and diverts regulatory oversight from the forest ecosystem to forest offices. It is a sad fact that, in the past, some government inspectors have been more willing to provide official services (signing of licenses, permits and approvals) to bad forest concessionaires who must ‘invest’ more in obtaining such official approvals than the better concessionaires. In short, the Indonesian experience has been that licensees lie’.

THE NATURE OF OUTCOME-BASED POLICIES

Outcome-based policies favour local innovation to raise forest revenue (i.e. provided it is within acceptable impact thresholds), whereas prescriptive regulations tend to offer far less room for new approaches (activities that are not explicitly prescribed). Outcome-based policies focus on readily verifiable biophysical indicators of post-harvest recovery of the forest ecosystem, lending themselves to transparent and objective inspection systems for monitoring and evaluation. These should, as far as possible, be developed according to the characteristics of forest ecotypes. Periodically, in the light of research and practical experience, these indicators should be modified if not replaced.

In the case of natural production dipterocarp forests in Kalimantan, indicators could be damage to the residual stand, site disturbance, canopy opening, tree-diameter limits and inventory of recovering stands. The first three indicators can be assessed in the logging year itself when access to the site is easiest. The fourth would be assessed at intervals some years after logging.

Box 1. Potential indicators of post-harvest recovery for development of outcome-based forest management regulations to encourage RIL

(1) Residual stand

The incidence and severity of damage to the residual stand or pohon inti provides a direct indication of the quality of the second cut (35 to 50 years after the first cut in a lowland dipterocarp forest). According to the TPTI, no fewer than 25 trees with dbh between 30 and 50 cm should remain after logging. An alternative approach would be to replace the rule mandating a minimum of 25 residual trees and minimum dbh of 50 cm (60 cm in so-called limited production forests) for harvestable trees with minimum dbh thresholds for major species groups to be logged and no stipulation for residual trees (M. Leighton, pers. comm 1996; Nolan, 1997). This is the case for tropical forests in some other countries. The dbh for harvestable trees would be based upon knowledge of their habitat, growth and fruiting characteristics.

(2) Site disturbance

Site disturbance (ranging from superficial soil disturbance to complete removal of the upper soil layers), typically along the skid trails, is caused by the felling and extraction of trees (e.g. through the action of bulldozers, particularly where skid trails are not pre-designed and constructed). This damage affects some trees of the second cut, but primarily those recruited for the third cutting cycle. According to results from the STREK project, Bertault and Sist (1995 and 1997) suggest a conservative threshold for both parameters of around 30 percent.

(3) Gap size

The degree of canopy opening or gap size has important implications for recruitment of commercial species. Gaps that are too large will provide disproportional advantages to pioneer species and adverse microclimatic and ecological conditions for remaining trees and recruitment of desirable species. This parameter is less well understood. Suggestions for allowable gap size over say 100 ha, typically range from 10 to 30 percent.

(4) Post-harvest tree growth

A fourth kind of indicator of forest regeneration could be assessed two to four years after logging by measuring the population of seedlings, saplings, poles and larger trees. Recovery of tree populations within acceptable limits of deviation from original species composition is arguably the most direct indicator of recovery of overall forest biodiversity. As such, this indicator is also a proxy for biodiversity and general ecological recovery within the forest, which could be replaced by more direct measures of biodiversity as they become practical assessment tools for regulators. Assessment of tree demography represents the most direct measure of regeneration within the exploitation cycle, but also the most difficult one because of the difficult access to sites due to vegetation regrowth. The first three indicators, however, can give an adequate indication of regeneration outcome shortly after logging.

Source: Bennett, 1998

Regulating the outcome-based ‘what’ rather then the prescriptive ‘how to’ as the goal of forest management is more likely to take into account site-specific ecological and social constraints to sustainable forest management. Forest managers should be allowed maximum freedom to decide their own resource management system within agreed and readily understood thresholds of harvesting impact that will allow recovery of ecosystem integrity. Planning remains important, but need not be a sophisticated and complex management plan (which for concessionaires can take years to be approved formally, following rigid rules of content that are not sufficiently adaptive). Management guidelines should provide forest managers with the information they need to adapt their practices to local conditions while ensuring sustainable outcomes. They should not be mandatory instructions. As a general rule, forest management regulations should not prescribe specific action but rather proscribe unacceptable impacts.

Objections. Among the objections to the concept of outcome-based policies for forest management are: (1) difficulty for field managers to understand; (2) insufficient knowledge for application to complex ecosystems; (3) risk of waiting for outcomes; and (4) some SFM requirements have to be prescriptive. The answers to these legitimate concerns are:

(1) Difficulty for field managers to understand. Persons responsible for the enterprise must understand the purpose of the policies and how they will be monitored and evaluated. Thereafter, they will develop their own operational guidelines that may indeed be prescriptions for keeping within acceptable impact thresholds.

(2) Insufficient knowledge for application to complex ecosystems. If we do not know enough to establish impact thresholds, how can we know enough for prescriptive regulations? In the case of outcome-based regulations, conservative thresholds and indicators are set initially.

(3) Risk of waiting for outcomes. It is neither necessary nor desirable to wait for the final outcome of a forest management period, (e.g. lease). For example, post-harvest impacts give immediate indications of the likelihood of natural recovery; growth and yield data (as in sample plots) can give a more dynamic indication over time. Sanctions for poor performance can therefore be applied long before the end of a lease.

(4) Some SFM requirements have to be prescriptive. This is valid. Management plans need to conform to prescribed standards. Indeed, management plans form a basis for evaluating whether planned outcomes are being achieved. Other outcomes such as equitable relationships with local communities and avoidance of externality problems such as watershed degradation present particular problems. The point is that every effort should be made to hold forest managers accountable for the outcome of their actions, constraining them as little possible to find their own site-specific solutions.

CHALLENGES AND OPPORTUNITIES

Enhancing forest income for re-investment in RIL. RIL does not stand for reduced income logging. Immediate efficiency gains in labour and equipment productivity can be made from the design and pre-construction of skid trails (Klassen, 1996). There are compelling arguments about the long-term economic benefits of RIL adoption (Pinard et al., 1995). Unless, long-term profitability is enhanced through equitable and secure tenure, and policy constraints on the market value of forest resources and lower-cost regulatory procedures (formal and informal) are reduced, adoption of RIL is likely to remain confined to the relatively few enterprises that can be supported by external funding such as Clean Development Mechanisms (CDM) and carbon offsets.

Forest inspection. Implementation of outcome-based regulation obviously requires inspection services to reorient the way they operate. The inspection of forest operations must extend to the forest. This has long-term implications for training and institutional incentives. The simplicity and verifiability of outcome-based regulation lead to greater transparency, allowing stakeholders (local government, other government departments, NGOs, journalists, researchers and analysts) to observe the quality of forest management. This, in turn, could act as a proxy audit of government forest inspection services, making it more difficult for these service providers to pursue rent-seeking by threatening arbitrary and spurious accusations that forest managers are in breach of procedures. Random audits by independent inspectors of forest managers and inspectors alike would be helped by a simpler regulatory framework. Thus, outcome-based forest management regulations would allow far-reaching deregulation and debureaucratization reforms, creating a more efficient and widely-understood regulatory framework.

Regional forest stewardship performance. Such policies could also be adapted for evaluation of the performance of districts or provinces as stewards of public forest resources, and budgetary disbursements, especially resource rent taxes, being contingent on good performance. Improved and lower cost remote sensing could offer monitoring and evaluation from the local to the national level.

RIL and governance. International thinking about environmental resource management is beginning to recognize the importance of outcome-based approaches (World Bank, 2000). But powerful vested interests at national and local levels will probably oppose the kinds of policy changes proposed in this paper. (Some support for this opposition may come from the good intentions of those who feel that the only problem in the past was lack of enforcement of existing regulations.) Rent-seeking officials and short-sighted forest managers shy away from the light of more transparent and objectively verifiable indicators of SFM. During Indonesia’s preparations for decentralization, much has been made of the lack of capacity at the local government level. A more critical factor is lack of accountability of local government for the consequences of their forest resource management decisions. Heads of Regencies (Bupatis) and Regional Parliamentary Representatives (DPRD) do not readily appreciate planning beyond five years. Small-scale concessions of one year in duration have been handed out in East Kalimantan, some allegedly within existing concessions - hardly an inducement to adopting RIL. In the short term, transparency campaigns to reveal the location and ownership of all production forest leases, preferably coupled with up-to-date information of forest cover, may head off some of the more egregious misallocation and mismanagement of forest resources, empowering adopters of RIL to claim tenure security.

KNOWLEDGE GAPS AND RECOMMENDATIONS

Knowledge gaps

First, methodologies are needed for cost-effective integration of remote sensing or aerial photography with ground-based inspection of outcome-based criteria of SFM, in particular RIL. This should allow identification of the more serious impacts, especially large canopy gaps, destructive road building and encroachment and heavy impact illegal logging, which would in turn trigger closer inspections.

Second, comprehensive outcome-based regulations for RIL are required, adapted for specific forest ecosystems and the consultative process by which this can be achieved and periodically reviewed.

Recommendations to encourage adoption of RIL methods

The principle of outcome-based regulations needs to be explicitly incorporated in forestry policy development. Adoption of RIL should be rewarded by allowing deregulation and debureaucratization of irrelevant regulations. This would require independent inspections.

Development agencies need to recognize that removing policy constraints to equitable and secure tenure and to increased resource value constitute powerful incentives for investment in RIL that are easier to sustain than external funding mechanisms.

REFERENCES

Bennett, C.P.A. 2000. Opposition to decentralisation of forest resource management in Indonesia. Working Paper, Development Planning Assistance, Sub-Project: SP-81 Natural Resource Management Policy under Decentralization, Bappenas - Hickling (CIDA), Draft 25 June 2000.

Bennett, C.P.A. 1999. Logging for conservation: Forest concessions as contributors to conservation in Kerinci Seblat National Park and its buffer zone. World Bank Supervision Draft Report, 22 December 2000.

Bennett, C.P.A. 1998. Outcome-based policies for sustainable logging in community forests. In: Incomes from the forest: Methods for the development and conservation of forest products for local communities, Ed. Wollenberg, E. & Ingles, A. Chapter 10, p. 203-220. Bogor, Centre for International Forestry Research.

Bertault, J.-G. & Sist, P. 1995. Impact de l’exploitation en forêt naturelle. Bois et Forêts des Tropiques, 245: 5-20.

Bertault, J.-G. & Sist, P. 1997. An experimental comparison of different harvesting intensities with reduced-impact and conventional logging in East Kalimantan, Indonesia. Forest Ecology and Management, 94: 209-218.

Holmes, D. 2000. Deforestation in Indonesia - A review of the situation in Sumatra, Kalimantan and Sulawesi. World Bank, draft consultant’s report, 25 February 2000.

Klassen, A.W. 1996. Report on an operational trial and the evaluation of the harvested stand. Natural Resources Management Project, Report No. 70. MoF-Bappenas-USAID, Jakarta.

Klassen, A.W. 1994. Avoidable logging waste. Natural Resources Management Project, Report No. 37. MoF-Bappenas-USAID, Jakarta.

Nolan, T. 1997. TPTI Silvicultural system and associated harvesting activities in relation to sustainable forest management. Position Paper. Indonesian Tropical Forest Management Project, Jakarta.

Pinard, M.A., F.E. Putz, J. Tay & T.E. Sullivan. 1995. Creating timber harvest guidelines for a reduced-impact logging project in Malaysia. Journal of Forestry, 93(10): 41-45.

World Bank. 2000. Environment News, December 2000.


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