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4 Factors affecting forest resources

This chapter attempts to describe the main factors that directly or indirectly affect forest resources. It includes economic development that has the capacity both for initiating conservation efforts as well as leading to further degradation of forests in a country like Bhutan that is economically growing at an accelerated rate.

4.1 General

Bhutan's economy is a basic need-based economy with predominance of the agriculture, livestock and forestry sectors. These sectors have been partly monetized. The human population is increasing exponentially and the agriculture consists largely of subsistence farming and animal husbandry. Rugged mountains dominate the terrain and make the building of roads and other infrastructure difficult and expensive. Most of the industrial sector is technologically old and lacks new investment. In spite of this, Bhutan is making continual progress in expanding its nation's productive base to improve its social welfare.

4.2 Human population

The current population growth rate of about 2.9 percent per annum is quite high. It raises serious concern about the sustainability of forest resources because many studies in different parts of the world have established a negative relationship between the rate of population growth and the rate of deforestation, ecological degradation and loss of resiliency of natural resource systems (FRA, 1990). Figure 10 provides a graphical representation of the past and expected growth pattern of the human population in Bhutan between 1997 to 2011 (Annex 3, Table A3.1).

Fig. 10. Population growth

There are varying estimates of population and its growth (MPFD, 1991). This report utilizes estimates used by Ministry of Planning, which indicates that the 640,000 people of Bhutan mostly live in about 1,000 villages organized into 20 dzongkhags and 197 gewogs. These predictions assume that in future the population will increase at a decreasing rate. Despite of this optimistic assumption the requirements from forests will keep on increasing for some time to come, although perhaps at a lesser rate.

4.3 Agriculture

Agriculture directly competes with forests for land to feed the growing Bhutanese population. The area under cultivation is increasing (Fig. 11). Most suitable land is already in agriculture and the potential for additional allocations to agriculture is limited due to the rugged terrain. The cropping pattern varies across the country. In western Bhutan, high altitude rice is the primary food crop. Similarly wheat and buckwheat form the major food crops in central Bhutan while maize is the main source of food in the eastern Bhutan.

Fig. 11. Area under cultivation

Forests are part of the Bhutanese farming system and help to conserve agricultural productivity. The farmers sustain their farm productivity by regular application of organic manure developed through recycling animal bedding (forest leaf litter) with dung. Most of the farmers depend entirely on this method to rejuvenate their farm fields.

Market opportunities are providing economic incentives for change in land use. For example, the improved export market is increasing the demand of additional land to raise more horticulture crops such as apples, oranges and cardamom and it has led to encroachment into forest areas (Wangchuk, 1998, NRSA, 1996). Similarly, the emphasis on cultivation cash crops like potatoes is increasing in central and eastern Bhutan.

4.4 Livestock

Dependency on forests for grazing livestock adversely affects forests. About 90 percent of the rural households own livestock. Livestock are an integral part of the Bhutanese farming system and support agriculture through provision of manure for fertiliser and draught power. The value of livestock as a source of cash income is increasing with better marketing of butter, cheese and meat. Annex 3, Table A3.2gives a breakdown of the livestock population by type of animal. In the absence of reliable data, there are doubts about the declining trend in the population trend of livestock (Fig. 12) presented by government statistics (VIII FYP, 1996).

Fig 12. Population trend of livestock

Households in the eastern and central part of Bhutan have more livestock per household than in the western, northern and southern part of Bhutan (NRAS, 1996). Figure 13 indicates this gradient among different districts of Bhutan.

Fig 13. Average number of livestock per household in different districts

Animals are usually herded into the forest for grazing, leading to degradation. The pressure to feed increasing numbers of animals prompts herders to girdle forest trees to expand their pastures. The trampling of forest soil by domestic animals has also initiated gully formation at many locations.

The government plans to nationalize, improve and lease the pasture areas for better control on grazing and to improve the productivity of the pastures and livestock. The large pasture owners resist this move. The proposal provides for leasing the pastures for a period of 30 years with the condition that they will be improved. The size of each leased area depends on the livestock owned by the herder and the ecological resiliency of the pasture. The present norm is about 2.5 ha per livestock unit in the alpine region, 0.4 ha per livestock unit in the temperate region and 0.2 ha per livestock unit in the subtropical region.

4.5 Human development

The state of natural resource conservation is generally thought to be positively related to the level of human development. High investment priority to ensure basic access to health, education and essential social services may be considered as a long-term positive investment for natural resource conservation. Almost every family in Bhutan now has shelter and access to land holdings with an entitlement to free education and medical treatment. The role and share of women in employment is increasing. During the last decade (1984-1994), the per capita GDP (real) has grown from 1,652 to 2,418 Nu (Bhutanese currency), the adult literacy rate has gone up from 28 percent to 46 percent and the life expectancy has increased from 47.4 to 66 years. This has lifted the position of Bhutan from a low to a medium human development country (Annex 3, Table A3.3).

4.6 Economic development

Unlike human development, economic development is generally correlated with decline of natural resources. The rapid economic development of Bhutan has transformed many of its social values and institutions, including people's traditional perceptions about forests. The traditional perception was of community ownership with unlimited access to the forest for firewood, timber and food. In contrast the modern perception is of government ownership with limited access, a source of monetary income and the potential for other forms of economic land use. This perception has evolved with the enactment of the Forest Act of 1969 through which the state assumed full authority and control of the forests and has subsumed the role of local institutions (Wangchuk, 1998).

The narrow economic base of Bhutan is broadening (Fig. 14) with a declining share of the agriculture sector (agriculture, livestock and forestry) in GDP from 54.9 percent in 1985 to 38 percent in 1995 and an increasing share of the production sector (Annex 3, Table A3.4). Hydro-electricity projects have been the major contributor to this growth and continue to possess high potential to contribute to the future economic growth of Bhutan.

Fig. 14. Broadening of the economic base of Bhutan

Bhutan initiated modern planned economic development through the formulation and implementation of a five year plan (FYP) in 1961. The first two plans emphasized the establishment of basic infrastructure and subsequent plans have broadened the scope to economic development, self-reliance and the preservation of the country's cultural identity.

Like other developing countries, Bhutan uses a combination of financial resources including local resources, foreign aid and international loans to finance its economic development. The current economic polices of Bhutan allow market forces to operate and are strengthening the private sector to achieve faster growth. Bhutan may have to identify parallel sources of financing to sustain and complement its planned economic growth. Hydroelectric generation and forestry are the two main potential candidates for this purpose.

4.7 Inter and intra-sectoral growth

During the last decade, while the economy as a whole grew at about 6.8 percent (Annex 3, Table A3.5), the agriculture sector as a whole (agriculture, livestock and forestry) grew at an annual rate of about 2.9 percent. The power (hydro-power generation, etc.) sector grew at a rate of about 48 percent while the forestry sub-sector grew only 1 percent. Considering the importance of the forestry sector in maintaining the hydropower potential of Bhutan, investment in forestry was very low.

Current high rate of inflation makes long-term prediction difficult. However, long-term predictions for Bhutanese forestry are necessary because of the high population growth rate and increasing rate of deforestation. The number of livestock is expected to remain about the same or decline. The agriculture, livestock and forestry sub-sectors are expected to grow at about 2.5 percent, 3 percent and 2 percent, respectively, during the current five year plan and maintain this rate over the next two decades. The economy is expected to maintain the current rate of growth of about 7 percent during next two decades (Annex 3, Tables A3.6 and A3.7).

Under such a roughly static future economic growth scenario, it may be prudent to assume that the current dynamics and economic factors affecting forests will remain same. Therefore, population growth and the pace of development may well define the rate and amount of deforestation and conservation over the next two decades.

4.8 Economic linkages with other sectors

The linkage between the forestry sector and other sectors of the economy is through agriculture in terms of land, soil, air and water requirements; animal husbandry in terms of shelter, fodder and grazing demand; the power sector in terms of fuelwood and sustained water flow; the household sector in terms of labour; overall demand from the household and public sector; royalties and taxes of the public sector; the forest-based manufacturing sector in terms of raw material and the balance of payments in terms of imports and exports of forestry products.

With a broadening of the economic base, the value-added share of agriculture and animal husbandry in the GDP is declining (Annex 3, Table A3.6) but the pressure from these two sectors on the forest is not going down because these sectors continue to grow, although at a lesser rate. During the last decade (1978-89), the area of agriculture has increased at about 6 percent and that of forest has declined at about 1.4 percent per annum. The percentage of animal feed coming from forests has gone up from 30 percent to 67 percent (MPFD, 1991). Conservation measures, including a ban on large scale felling of trees, are reducing the share of forests in the GDP (Fig 15) (Annex 3, Table A3.6).

Fig 15. Contribution of forestry to economic growth

The second economic linkage is between forests and hydroelectric power generation. Since a major share of the past economic growth and the projected rapid growth of the secondary production sector is tied to hydro-electric power generation, there is a need to ensure sustained regulated water flow with the least amount of silt from catchment areas. Hydroelectric power generation in Bhutan is almost synonymous with economic development because of its immediate positive impact on the country's balance of payments and down-stream development activities. Hydropower sector is the largest contributor to the country's exchequer. Proper watershed management, including the conservation of biological diversity, contributes to the sustainability of this vital source of income for the country (MPFD, 1991).

A rough estimate of total employment in the forestry sector is 25,000 people (MPFD, 1991). This includes about 20,000 person-years of employment from non-monetary fuelwood collection. The annual demand from the private sector to the forestry sector is about 300 million Nu (Bhutanese currency). The annual demand from the public sector is much lower, about 70 million Nu. No estimate is available of total royalties and taxes. The total value of fuelwood, taking into account its energy value and the opportunity cost of collection, is about 200 million Nu. The value of animal feed production in the forests is estimated to be around 300 million Nu. Further research is needed to quantify the economic impact of forestry in protecting catchment areas for hydropower generation.

4.9 Market interference

The government is involved in the forest products market and maintains a differential pricing policy for forest products in urban and rural areas, which often provides an incentive to divert some of the subsidized (high value but low priced) forest products from rural into urban areas, indicating the difficulty of enforcing forest regulations.

4.10 Summary

Pressures from human population, agriculture, and livestock coupled with monetization and development of the economy are adversely affecting forest sustainability. The rate of growth of the forestry sector is slow. The challenge for the forestry sector is to keep up with the overall economic growth rate, maintain its share of production, provide necessary support to other sectors, particularly hydropower generation, and improve the economic health of local people living around forests. Other challenges include accelerating its own rather low economic growth, primarily through increasing value addition, intensive forestry activities, and lesser government involvement in forest product markets. Further, development of human resources combined with a reduction in the population growth rate, as complementary efforts are also vital to improve sustainability of forest resources.

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