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In many countries, forest resources represent a significant natural asset that can be used to produce a wide range of economic, environmental and social goods and services. Revenues from harvesting forest resources generate income for resource owners and encourage the conservation and sustainable management of those resources. Taxes paid by the forest industry also generate revenues that the government can use to support economic development and other government policies and programmes.

In 1988, a report by the Food and Agriculture Organization of the United Nations (FAO) identified a number of economic issues in the forestry sector in Fiji that should be considered further (Rizer, 1988). These included the following:

A further request for FAO assistance in the above areas was made by the Permanent Secretary of the Ministry of Fisheries and Forests (MoFF) in 2003 (Mathias, 2003). This report addresses the first two of the above issues and will also comment on the remaining issues, in particular the cost-benefit analysis of the sector.

The remainder of this report is in seven main sections. Section two briefly describes the concept of economic rent: what it means; how it is calculated; and why it is so important. The third and fourth sections of the report describe the trends and current status of the forestry sector and the forest revenue system in Fiji. Section five describes the data and calculations used in the analysis of economic rent in the sector and presents the results of this analysis. Section six discusses the taxation of the industry and section seven presents some information about the costs and benefits of the forestry sector to Fiji. Conclusions and recommendations are presented in the final section of the report.

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